Pension Benefit Guaranty Corporation 

95-1 

July 28, 1995 

REFERENCE: 

 [*1] >4050> 

29 CFR 2617 Determination of Plan Sufficiency & Termination of Sufficient Plans 

OPINION: 

I write in response to your letter requesting the opinion of the Pension Benefit Guaranty Corporation (the "PBGC")

as to whether assets held in trust by * * * Bank (the "Bank") for unidentified participants in a terminated pension plan

should be forwarded to the PBGC. Specifically, you inquire whether the assets should be forwarded to the PBGC

pursuant to the Retirement Protection Act of 1994, or whether the assets instead should be forwarded to the State of

California pursuant to California's escheat laws. 

In your correspondence, as augmented by subsequent telephone conversations with the staff attorney assigned to

this matter, you state that the Bank holds approximately $ 412 in trust for certain individuals who were participants in

a defined benefit pension plan (the "Plan") sponsored by a company that went out of business some years ago. The Plan

was terminated in 1975, and all assets other than those which the Bank now holds in trust were distributed to participants.

The Bank incurred its trust obligation with regard to the undistributed assets when the Bank acquired the assets of a

former [*2] trustee of the Plan. Despite repeated efforts, the Bank has been unable to identify the participants to whom

the remaining assets should be distributed. The Bank had no involvement with the Plan while it was ongoing, the sponsor

of the Plan is no longer in existence, and no records exist that would enable the Bank to identify the participants. 

Section 776 of the Retirement Protection Act Of 1994 ("RPA") provides rules for the distribution of benefits under

a defined benefit pension plan terminating in a standard termination, with regard to participants whom a plan

administrator cannot locate after a diligent search. See Retirement Protection Act, Subtitle F, Title VII, § 776(a),

Uruguay Round Agreements Act, Pub. L. No. 103-465, 108 Stat. 4809 (1994). Pursuant to these rules, the administrator

of such a plan will be required to (1) transfer a missing participant's designated benefit to the PBGC or purchase an

annuity from an insurer to satisfy the plan's liability to the missing participant, and (2) provide the PBGC with such

information and certifications regarding the benefit or annuity as the PBGC may require. Id. Amounts transferred to the

PBGC under these rules will [*3] be treated as assets under a pension plan trusteed by the PBGC, which will take steps

to locate missing participants and serve as an information clearinghouse for missing participants for whom plan

administrators have purchased annuities. Id. The RPA's missing participant provisions will be effective with respect to

distributions that occur in plan years beginning after the PBGC promulgates final regulations implementing the

provisions' terms. RPA § 776(e). The PBGC has not yet promulgated final regulations implementing the rules the RPA

sets forth. Because the distributions with respect to the Plan occurred some twenty years ago, the RPA's missing

participant rules are inapplicable to this case. 

Consequently, the pre-RPA rules governing distribution of assets to missing participants apply to the Plan. The

PBGC has opined that a plan administrator hoping to complete a final distribution of assets in connection with the

termination of a plan that has sufficient assets to pay for benefits under the plan generally must purchase an annuity for

missing participants. The only exception is for participants whose benefits are valued at $ 3500 or less and who would

otherwise receive a [*4] lump sum distribution; a plan administrator may open individual interest-bearing accounts for

such participants at federally-insured institutions. If an administrator cannot locate an institution willing to offer such

accounts, PBGC will permit the use of a pooled account, provided that the accounts are maintained by fiduciaries who

keep current records and fulfill other duties. Preamble to the PBGC Regulations on Standard Terminations, 57 Fed. Reg.

59,206, 59,214-15 (Dec. 14, 1992); PBGC Opinion Letter 91-8 (concerning missing participants in connection with

termination of a multiemployer pension plan). 

Because pre-RPA rules do not provide for the transfer to the PBGC of missing participants' benefits under the Plan,

the PBGC cannot assert control over the assets in question and the Bank should not transfer these assets to the PBGC.
PBGC cannot opine as to how California law may apply to this situation; we note that Title I of the Employee Retirement

Income Security Act ("ERISA") provides that state laws are preempted insofar as they "relate to" covered employee

benefit plans. 29 U.S.C. § 1144. As you may know, the United States Department of Labor is responsible for interpreting

[*5] and enforcing ERISA's preemption provisions. 

You indicate that it would be helpful if the PBGC regulations implementing the RPA's missing participant provisions

were to provide guidance with respect to terminated plans as to which banks hold assets for unidentifiable participants

in trust, inasmuch as such assets may be acquired by banks through acquisition of other trust companies. Although we

appreciate your suggestion, as previously noted, Congress limited applicability of the RPA's missing participant

provisions to defined benefit pension plans that terminate in standard terminations after the effective date of regulations

promulgated by the PBGC. 

If you have any questions, please contact the staff attorney assigned to this matter, Amanda Jaffe, at (202) 326-4028.

James J. Keightley 

General Counsel