The PBGC's Missing Participant Program Now Allows Terminating Defined Contribution Plans To Participate

Especially upon plan termination, locating missing participants can be a major headache for plan sponsors, who have a fiduciary obligation to locate participants and distribute benefits under the terminating plan. In one development that may help in this regard, the Pension Benefit Guaranty Corporation ("PBGC") issued final regulations that expand, revise and simplify its Missing Participant program. Most importantly, it now allows defined contribution plans (e.g., 401(k) and profit sharing plans) to participate on a voluntary basis, either by transferring the missing participant's benefit to the PBGC or informing the PBGC of the missing distributee.

"Missing Participants"

For terminating defined contribution plans, the PBGC considers a participant as "missing" if they fail to elect a method of distribution on close-out of the plan, the plan does not know with reasonable certainty the location of the participant, or the participant did not accept a lump sum payment