On December 12, 2012, the Department of Labor (DOL) published in the Federal Register proposed revisions to its abandoned plan regulations and prohibited transaction class exemption, expanding the scope and refining the terms of that program. The proposal is also summarized in a supporting fact sheet.
As originally constructed in 2006, this program was designed to facilitate the cost-effective dissolution of certain retirement plans abandoned by their sponsors, as defined in the regulation, by:
- Providing procedures by which a “qualified termination administrator” or QTA – generally, a financial institution eligible to serve as an IRA trustee or issuer that is holding assets on behalf of the abandoned plan
– may terminate the plan and distribute its assets to participants and beneficiaries;
- Limiting the ERISA liability of the QTA acting pursuant to those procedures;
- Making available an ERISA fiduciary safe harbor for the QTA to make distributions to participants and beneficiaries who fail to elect a form of distribution;
- Providing a simplified method for filing a final Form 5500 for abandoned defined contribution plans; and
- Permitting, through a prohibited transaction class exemption, the QTA or an affiliate to carry out these procedures for a fee, at industry standard rates, paid from the assets of the plan.
Please see full publication below for more information.