Labor Department Announces Final Rules to Help Workers In Abandoned 401(k) Plans

Archived News Release — Caution: Information may be out of date.

Washington, DC - The U.S. Department of Labor today announced the publication of final rules and a class exemption that allow financial institutions to take responsibility for abandoned 401(k) plans and distribute the plans’ assets to covered workers and their families. The department estimates that 1,650 401(k) plans, covering 33,000 workers, are abandoned by their sponsors each year.

“Today’s rules will help workers gain access to their retirement benefits by empowering financial institutions that hold the assets of abandoned plans,” said Assistant Secretary of Labor Ann L. Combs. “Based on public reaction to the proposed rules, we are very encouraged by the willingness of the financial and plan service provider community to work together to address the abandoned plan problem for the thousands of workers whose benefits are unavailable to them.”

The department currently deals with abandoned plans on a case-by-case basis, often with the involvement of the courts. The final rules provide standards for determining when a plan is abandoned and establishes a process for winding up the affairs of the plan and distributing benefits to workers. The final rules should eliminate the need for costlier court approvals and allow workers to gain access to their benefits sooner. The recommendations of the department’s Employee Retirement Income Security Act Advisory Council contributed to this important initiative.

The final rules will be effective 30 days after publication in the Federal Register. A fact sheet explaining the final rules can be found at www.dol.gov/ebsa. The regulations and exemption are to be published in the April 21, 2006 Federal Register.

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Archived News Release — Caution: Information may be out of date.

Contact Name: David James/Gloria Della
Phone Number: 202.693.4676/202.693.8666