Source: https://www.federalregister.gov/documents/2012/12/12/2012-29500/amendments-to-the-abandoned-plan-regulations
Timestamp: 2017-03-29 13:28:12
Document Index: 601791825

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:: Amendments to the Abandoned Plan Regulations
A Proposed Rule by the Employee Benefits Security Administration on 12/12/2012
74063-74097
https://www.federalregister.gov/d/2012-29500
12/11/2012 at 08:45 am.
On April 21, 2006, the Department of Labor (the Department) issued three regulations (the Abandoned Plan Regulations) that collectively facilitate the orderly, efficient termination of, and distribution of benefits from, individual account pension plans that have been abandoned by their sponsoring employers.[1] The first of these regulations, codified at 29 CFR 2578.1, establishes standards for determining when individual account plans may be considered “abandoned” and procedures by which financial institutions (so-called “qualified termination administrators” or “QTAs”) holding the assets of such plans may terminate the plans and distribute benefits to participants and beneficiaries, with limited liability under title I of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1002 et seq. The second regulation, codified at 29 CFR 2550.404a-3, provides a fiduciary safe harbor for qualified termination administrators to make distributions on behalf of participants and beneficiaries who fail to elect a form of benefit distribution (these participants and beneficiaries are sometimes referred to as missing participants or beneficiaries). The third regulation, codified at 29 CFR 2520.103-13, establishes a simplified method for filing a terminal report for abandoned individual account plans. Also on April 21, 2006, the Department granted a prohibited transaction exemption, PTE 2006-06, which facilitates the goal of the Abandoned Plan Regulations by permitting a qualified termination administrator, who meets the conditions in the exemption, to, among other things, select itself or an affiliate to carry out the termination and winding up activities specified in the Abandoned Plan Regulations, and to pay itself or an affiliate fees for those services.[2] For the reasons set forth in the 2006 preamble, the Abandoned Plan Regulations strictly limit who may be a qualified termination administrator.[3] Specifically, in order to be a qualified termination administrator, an entity, first, must be eligible to serve as a trustee or issuer of an individual retirement plan within the meaning of section 7701(a)(37) of the Internal Revenue Code (Code) and, second, must hold assets of the plan on whose behalf it will serve as the qualified termination administrator.[4] As a result of these conditions, bankruptcy trustees ordinarily do not qualify as qualified termination administrators under the Abandoned Plan Regulations. This fact was acknowledged when the Department published the Abandoned Plan Regulations in 2006.[5] However, for several reasons, the Department is revisiting its earlier decision to preclude bankruptcy trustees from serving as qualified termination administrators. Pursuant to 11 U.S.C. 704(a)(11), enacted as part of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Public Law 109-8, 119 Stat. 23, when an entity that sponsors an individual account plan is liquidated under chapter 7 of title 11 of the United States Code, the court administering the liquidation proceeding (and/or U.S. Trustee) will appoint a bankruptcy trustee to, among other things, continue to perform the obligations that would otherwise be required of the bankrupt entity with respect to the plan. Therefore, the bankruptcy trustee often is responsible for administering the plan, which may include taking the steps necessary to terminate the plan, wind up the affairs of the plan, and distribute plan benefits.[6] While the U.S. Bankruptcy Code imposes these obligations on bankruptcy trustees, it does not provide guidance or standards for carrying out such activities.
In general, this rulemaking proposes to extend the basic framework of the Abandoned Plan Regulations to plans (i.e., chapter 7 plans) whose sponsors are undergoing liquidation under chapter 7 of title 11 of the United States Code.[7] The provisions of the existing Abandoned Plan Regulations would apply to chapter 7 plans in much the same way they apply now to abandoned plans, except to the extent that they are modified by this proposal to reflect fundamental differences between abandoned plans and chapter 7 plans. In this regard, the most significant amendments to the existing Abandoned Plan Regulations are contained in proposed paragraph (j) of 29 CFR 2578.1. Other less significant or conforming amendments are needed to other parts of § 2578.1 and to the other two regulations (§ 2550.404a-3 and § 2520.103-13) constituting the Abandoned Plan Regulations. Section D of this preamble describes the major proposed changes (the so-called chapter 7 amendments) to the Abandoned Plan Regulations. This rulemaking, however, also proposes to make certain technical changes to the Abandoned Plan Regulations that are unrelated to chapter 7 plans. These amendments are discussed in section E of this preamble. Section F of this preamble discusses the results of the Department's consultation on this proposal with the Internal Revenue Service. Section G contains a detailed Regulatory Impact Analysis. For purposes of readability, the proposed rulemaking republishes the Abandoned Plan Regulations in their entirety, as revised, rather than the specific amendments only.
Proposed paragraph (j) of § 2578.1 contains the special rules for chapter 7 plans. This paragraph contains four subparagraphs. Subparagraph (1) sets forth rules for when such plans may be considered abandoned and who may serve as qualified termination administrators. These rules are in lieu of the general rules in paragraphs (b) and (g) of § 2578.1, which do not apply to chapter 7 plans. Subparagraph (2) sets forth the content requirements for the notice of plan abandonment that qualified termination administrators of chapter 7 plans must send to the Department. These content requirements are in lieu of the content requirements in paragraph (c)(3) of § 2578.1, which apply to abandoned plans in general. Subparagraph (3) sets forth special rules for winding up chapter 7 plans. These special rules are in lieu of some, but not all, of the winding up procedures in paragraph (d) of § 2578.1. Subparagraph (4) contains a rule of accountability that is applicable to bankruptcy trustees. The requirements of each of these subparagraphs are described in detail below.
Proposed paragraph (j)(1)(i) is a timing rule. It provides that a chapter 7 plan shall be considered abandoned upon the entry of an order for relief. No other findings must be made. The bankruptcy trustee then may establish itself or an eligible designee as the qualified termination administrator. Whether to establish itself or an eligible designee as the qualified termination administrator is optional on the part of the bankruptcy trustee. Abandonment status, on the other hand, is not optional; it is achieved by operation of law upon the entry of an order for relief. Proposed paragraph (j)(1)(i) contains a limitation on this status. If at any time before the plan is deemed terminated (plans generally will be deemed to be terminated on the ninetieth (90th) day following the date of the letter from EBSA acknowledging receipt of the notice of plan abandonment), the plan sponsor's chapter 7 proceeding is dismissed or converted to a proceeding under chapter 11 of title 11 of the United States Code, the plan shall not be considered abandoned pursuant to paragraph (j)(1).[8] The Department believes that a plan should not be considered abandoned merely because its sponsor is in reorganization.[9] (c) Who May Serve as a Qualified Termination Administrator
Proposed paragraph (j)(1)(ii) makes it clear that bankruptcy trustees may serve as qualified termination administrators even if they do not satisfy the rule in paragraph (g) of § 2578.1 that allows only large financial institutions and other asset custodians described in section 7701(a)(37) of the Code to be qualified termination administrators. Except as provided in paragraph (j), a bankruptcy trustee serving as qualified termination administrator would follow the same termination and winding-up procedures in the Abandoned Plan Regulations as would any other qualified termination administrator. The proposal also allows a bankruptcy trustee the option of designating someone else to serve as the qualified termination administrator. In this regard, however, the proposal strictly limits who the bankruptcy trustee may designate. Proposed paragraph (j)(1)(ii) provides that an “eligible designee” is any person or entity designated by the bankruptcy trustee that is eligible to serve as a trustee or issuer of an individual retirement plan, within the meaning of section 7701(a)(37) of the Code, and that holds assets of the chapter 7 plan. Thus, an eligible designee could be the plan's asset custodian at the time of abandonment or another entity chosen later by the bankruptcy trustee.[10] The bankruptcy trustee would be responsible for the selection and monitoring of any eligible designee in accordance with section 404(a)(1) of ERISA.
Proposed paragraph (j)(2) provides that, in accordance with the deemed termination provisions in paragraph (c)(1) and (c)(2) of § 2578.1, the qualified termination administrator must furnish to the Department a notice of plan abandonment that meets the content requirements in paragraph (j)(2). This notice essentially is the same as the notice of plan abandonment described in paragraph (c)(3) of § 2578.1 except for modifications that take into account information specific to chapter 7 plans and bankruptcy trustees. A proposed model “Notification of Plan Abandonment and Intent to Serve as Qualified Termination Administrator” reflecting the content requirements of proposed paragraph (j)(2) is being added for chapter 7 plans as Appendix C. Therefore, Appendices C and D have been re-proposed as Appendix D and Appendix E respectively. Paragraph (j)(2)(i) provides that the notice must include the name and contact information of the bankruptcy trustee and, if applicable, the name and contact information of the eligible designee acting as the qualified termination administrator pursuant to proposed paragraph (j)(1). Paragraph (j)(2)(ii) requires information about the chapter 7 plan that the qualified termination administrator is winding up. Paragraph (j)(2)(iii) requires a statement that the plan is considered to be abandoned due to an entry of an order for relief under chapter 7 of the U.S. Bankruptcy Code, and a copy of the notice or order entered in the case reflecting the bankruptcy trustee's appointment to administer the plan sponsor's chapter 7 case. Paragraph (j)(2)(iv)(A) and (B) require the estimated value of the plan's assets as of the entry of an order for relief; the name, employer identification number (EIN), and contact information for the entity holding the plan's assets; and the length of time plan assets have been held by such entity, if held for less than 12 months. Paragraph (j)(2)(iv)(C) and (D) require identification of any assets with respect to which there is no readily ascertainable fair market value, as well as information, if any, concerning the value of such assets, and an identification of known delinquent contributions. Paragraph (j)(2)(v) requires the name and contact information of known service providers to the plan. It also requires an identification of any services considered necessary to wind up the plan, the name of the service provider(s) that is expected to provide such services, and an itemized estimate of expenses for winding up services expected to be paid out of plan assets by the qualified termination administrator. Paragraph (j)(2)(vi) requires a statement indicating that the information provided in the notice is true and complete based on the knowledge of the person electing to be the qualified termination administrator, and that the information is being provided by the qualified termination administrator under penalty of perjury.
Paragraph (d) of § 2578.1 sets forth specific steps that a qualified termination administrator must take to wind up an abandoned plan and, with respect to most such steps, the standards applicable to carrying out the particular activity. Under the proposal, paragraph (d) applies to chapter 7 plans except as modified by the provisions in proposed paragraph (j)(3).
Proposed paragraph (j)(3)(i) contains a conditional requirement to collect delinquent contributions. Specifically, this paragraph provides that the qualified termination administrator of a chapter 7 plan shall, consistent with the duties of a fiduciary under section 404(a)(1) of ERISA, take reasonable and good faith steps to collect known delinquent contributions on behalf of the plan, taking into account the value of the plan assets involved, the likelihood of a successful recovery, and the expenses expected to be incurred in connection with collection. If the bankruptcy trustee designates an eligible designee as defined in proposed paragraph (j)(1)(ii), the bankruptcy trustee shall at the time of such designation notify the eligible designee of any known delinquent contributions. This collection requirement includes both participant contributions withheld from employee paychecks, but not forwarded by the debtor to the plan, as well as delinquent employer contributions owed by the debtor. This collection requirement applies to any qualified termination administrator to a chapter 7 plan whether it is a bankruptcy trustee or an eligible designee.[11] The Department's present belief is that bankruptcy trustees, by virtue of their knowledge and control of the debtor's estate and of the debtor's ERISA plan, are in the best position both to know of the liquidating sponsor's delinquent contribution debts to the plan and to collect these delinquencies (or to notify the eligible designee so that it can collect them). However, the Department is interested in knowing whether, and under what circumstances, the qualified termination administrator's duty to collect would unavoidably conflict with any duties the bankruptcy trustee may have under the U.S. Bankruptcy Code as the representative of the debtor's estate. Please be specific about when, if ever, such conflicts might arise, whether and why such conflicts are disabling, and the specific provisions of the U.S. Bankruptcy Code that impose the conflicting obligations.
Proposed paragraph (j)(3)(ii) contains a requirement to report activity to the Department that may be evidence of fiduciary breaches by prior plan fiduciaries. Specifically, the qualified termination administrator of a chapter 7 plan (whether a bankruptcy trustee or eligible designee) must report known delinquent contributions (employer and employee) owed to the plan, and any activity that the qualified termination administrator believes may be evidence of other fiduciary breaches by a prior plan fiduciary that involve plan assets. Thus, for example, evidence of embezzlement by a prior plan fiduciary would be required to be reported. The proposal limits the reporting requirement to evidence of any fiduciary breaches that “involve plan assets” by a prior plan fiduciary. This limitation is intended to prevent a reporting requirement when no plan assets are involved. The Department intends to use this information to pursue and remedy fiduciary breaches where appropriate. Beyond this reporting requirement, a qualified termination administrator to a chapter 7 plan ordinarily will have no further obligations under the Abandoned Plan Regulations with respect to such prior breaches, except with respect to collecting delinquent contributions owed to the plan.[12] Information concerning fiduciary breaches must be reported in conjunction with the filing of the notice of plan abandonment (paragraph (j)(2)) or the final notice (paragraph (d)(2)(ix)). If the qualified termination administrator uses the model notices, such information may be included in the sections designated for other information. If the bankruptcy trustee designates an eligible designee, the bankruptcy trustee must provide the eligible designee with records under the control of the bankruptcy trustee to enable the eligible designee to carry out its responsibility to report information about fiduciary breaches. In the case of an eligible designee, if after the eligible designee completes the winding up of the plan, the bankruptcy trustee, in administering the debtor's estate, discovers additional information not already reported in the notification required in paragraphs (j)(2) or (d)(2)(ix) that it believes may be evidence of fiduciary breaches that involve plan assets by a prior plan fiduciary, the bankruptcy trustee must report such activity to EBSA in a time and manner specified in instructions developed by EBSA's Office of Enforcement. This supplemental reporting requirement is needed to address circumstances when the bankruptcy trustee discovers information concerning fiduciary breaches after the eligible designee has completed the termination and winding up process.
Third, proposed paragraph (j)(3)(v) does not grant a bankruptcy trustee the ability to designate itself or an affiliate as the transferee of distribution proceeds. The Abandoned Plan Regulations provide that qualified termination administrators must distribute benefits in accordance with the form of distribution elected by the participant or beneficiary, and when the participant or beneficiary fails to make an election, the qualified termination administrator has the ability to designate itself or an affiliate as the transferee of the distribution proceeds. (See paragraph (d)(2)(vii)(C) of § 2578.1.) Typically this would occur where the qualified termination administrator has its own proprietary investment vehicle, such as an individual retirement plan within the meaning of section 7701(a)(37) of the Code. The proposal does not extend this option to bankruptcy trustees based on the Department's understanding that bankruptcy trustees do not maintain proprietary investment vehicles within the meaning of section 7701(a)(37) of the Code.
Proposed paragraph (j)(3)(vi) addresses fees that a bankruptcy trustee may pay to itself, or others, from the plan's assets in connection with following the termination and winding-up procedures in the proposed amendments. Subparagraph (A) of paragraph (j)(3)(vi) contains the applicable standard in cases where the bankruptcy trustee is the qualified termination administrator. Subparagraph (B) of paragraph (j)(3)(vi) contains the applicable standard in cases when the bankruptcy trustee appoints an eligible designee to serve as the qualified termination administrator.[13] The different standards in these subparagraphs are needed for two reasons: first, expense rates normally charged by bankruptcy trustees for administering estates of chapter 7 debtors may not be appropriate for purposes of carrying out the duties and responsibilities under the proposed amendments with respect to ERISA plans, and second, bankruptcy trustees are not likely to have significant experience in terminating and winding up the affairs of such plans. Finally, subparagraph (C) of paragraph (j)(3)(vi) regulates payments to the bankruptcy trustee by the eligible designee.
Pursuant to proposed paragraph (j)(3)(vi)(A), the qualified termination administrator (i.e., when the bankruptcy trustee is the QTA) is permitted to pay, from plan assets, no more than the reasonable expenses of carrying out his or her authority and responsibility under the proposed amendments. Expenses of plan administration shall be considered reasonable if they are for services necessary to wind up the affairs of the plan and distribute benefits (see § 2578.1(d)(2)(v)(B)(1)), if they are consistent with industry rates for the same or similar services ordinarily charged by qualified termination administrators who are not bankruptcy trustees (see proposed paragraph (j)(3)(vi)(A)), and if their payment would not constitute a prohibited transaction (see § 2578.1(d)(2)(v)(B)(3)). This standard is intended to make clear that bankruptcy trustees should look to the rates ordinarily charged by qualified termination administrators who are not bankruptcy trustees, e.g., banks and other asset custodians. Samples of these rates are available to the public in filings made to the Department.[14] These filings may be a helpful source of information for bankruptcy trustees.
Proposed paragraph (j)(3)(vi)(C) provides that an eligible designee may pay from plan assets to a bankruptcy trustee the reasonable expenses that the bankruptcy trustee incurs in selecting and monitoring the eligible designee. This provision follows from the requirement in proposed paragraph (j)(1)(ii) that the bankruptcy trustee is responsible for the selection and monitoring of the eligible designee. Whether an expense is “reasonable” ordinarily depends on the facts and circumstances surrounding the particular expense. However, the Department notes that the rates charged to the plan by the bankruptcy trustee for selecting and monitoring the eligible designee are to be judged in relation to the rates charged by a plan fiduciary for similar services, rather than the generally higher fees charged by bankruptcy trustees for legal services provided to the bankruptcy estate. In any event, pursuant to proposed paragraph (j)(3)(vi)(C), the eligible designee would apply the rules in paragraph (d)(2)(v) of § 2578.1 in determining whether the payment to the bankruptcy trustee for monitoring services is reasonable. While the Department believes that it would be appropriate for bankruptcy trustees to expect remuneration for providing monitoring services, the Department intends to review closely such remuneration to ensure that arrangements under the proposed amendments are not contrary to the interests of participants and beneficiaries.
Proposed paragraph (j)(4) contains a rule of accountability. The rule provides that a bankruptcy trustee acting as qualified termination administrator, or an eligible designee, shall not, through waiver or otherwise, seek a release from liability under ERISA, or assert a defense of derived judicial immunity (or similar defense) in any action brought against the bankruptcy trustee or eligible designee arising out of its conduct under the proposed amendments. The Department is aware that bankruptcy trustees sometimes request from the bankruptcy court comfort orders seeking relief from ERISA fiduciary liability in their roles as administrators to plans. However, bankruptcy trustees who wind up chapter 7 plans under the Abandoned Plan Regulations benefit from the limited exposure to ERISA liability provided by the regulations. (See paragraph (e) of § 2578.1.) The Department believes the regulatory framework, as constructed, serves to minimize to the greatest extent possible the liability and exposure of qualified termination administrators who carry out their responsibilities in accordance with the provisions of the Abandoned Plan Regulations.[15] As a condition to receiving the benefit of the limited liability provided by the Abandoned Plan Regulations, a bankruptcy trustee would not be permitted to seek a release from liability under ERISA. Paragraph (j)(4) does not prevent a bankruptcy trustee from asking a court to resolve an actual dispute involving a plan or to obtain an order required under the U.S. Bankruptcy Code. However, it does bar a trustee from seeking a ruling from a court for approval of its actions, where a trustee has the power to act without judicial approval. For example, a bankruptcy trustee may not seek court approval of the amount to pay a professional from assets of the plan, but must exercise his or her own judgment. In addition, a bankruptcy trustee may not claim it is not subject to suit for breach of fiduciary duty as to the amount of a payment from an ERISA plan because it previously obtained a court order approving the amount of the payment.
The Abandoned Plan Regulations, in relevant part, provide that, with respect to missing and nonresponsive participants or beneficiaries,[16] qualified termination administrators shall distribute benefits in the form of direct rollovers to individual retirement plans within the meaning of section 7701(a)(37) of the Code. (See § 2578.1(d)(2)(vii)(B).) However, the Abandoned Plan Regulations also contain a special rule for small account balances of $1,000 or less.[17] Under the special rule, a qualified termination administrator may make distributions to certain bank accounts (interest-bearing federally insured bank or savings association accounts) or to State unclaimed property funds. (See 29 CFR 2550.404a-3(d)(1)(iii).) The proposal would add paragraph (d)(iv) to § 2550.404a-3 to make clear that the special rule also is available in the case of chapter 7 plans.
The Abandoned Plan Regulations provide for simplified reporting to the Department for qualified termination administrators that wind up the affairs of abandoned plans. (See 29 CFR 2520.103-13.) The time savings resulting from this abbreviated reporting requirement reduces administrative costs for abandoned plans and preserves account balances, resulting in increased benefits to participants and beneficiaries. The proposed amendments would revise these simplified reporting requirements to make clear that they are available to chapter 7 plans. Specifically, the proposal would revise paragraph (b)(1) of § 2520.103-13 to include identification information about the bankruptcy trustee as well as the qualified termination administrator, if the qualified termination administrator is not the bankruptcy trustee.
The Abandoned Plan Regulations require qualified termination administrators to state whether they, or any affiliate, are, or in the past 24 months were, the subject of an investigation, examination, or enforcement action by the Department, the Internal Revenue Service, or the Securities and Exchange Commission concerning their conduct as a fiduciary or party in interest with respect to any ERISA covered plan. (See § 2578.1(c)(3)(i)(C).) This statement must be included in the notice of plan abandonment furnished to the Department before a plan can be terminated and wound up under the Abandoned Plan Regulations. Although such information does not alone bar a person from serving as a qualified termination administrator, the statement serves as a flagging mechanism to help the Department identify potential arrangements that are not in the best interests of plan participants and beneficiaries. However, the Department is proposing to eliminate this requirement for the following reasons. First, the Department generally can determine from its own records whether a person is, or in the past 24 months was, the subject of an investigation concerning his conduct as a fiduciary or party in interest with respect to any ERISA covered plan. Second, by definition, qualified termination administrators tend to be large financial institutions with many affiliations and, therefore, it may be costly for them to prepare an accurate statement. Third, the requirement appears to deter some qualified persons from serving as qualified termination administrators. In this regard, some individuals have expressed a reluctance to affirm in a notice to the federal government that they or an affiliate are or were under an investigation, examination, or enforcement action by the Department, the Internal Revenue Service, or the Securities and Exchange Commission concerning their conduct as a fiduciary or party in interest with respect to any ERISA covered plan. Because the Department believes that this requirement now is unnecessary and may even discourage the use of the Abandoned Plan Program, it is proposing to remove the requirement from the Abandoned Plan Regulations.
In conjunction with the proposed removal of the investigation statement in § 2578.1(c)(3)(i)(C) referenced above, the Department intends to remove a part of the definition of the term “affiliate” in § 2578.1(h). In the Abandoned Plan Regulations, the term “affiliate” for general purposes of § 2578.1 means any person directly or indirectly controlling, controlled by, or under common control with, the person, or any officer, director, partner or employee of the person. (See § 2578.1(h)(1).) However, for the specific purpose of the requirement for qualified termination administrators to state whether they, or any affiliate are, or in the past 24 months were, the subject of an investigation, examination, or enforcement action by the Department, the Internal Revenue Service, or the Securities and Exchange Commission concerning the their conduct as a fiduciary or party in interest with respect to any ERISA covered plan, the Abandoned Plan Regulations contain a narrower definition in § 2578.1(h)(2). Given the proposal to eliminate this statement regarding investigations, the Department also is proposing to eliminate the narrower definition of “affiliate.” The generally applicable definition of the term “affiliate” would remain in effect. (See modifications in the proposal to paragraph (h) of § 2578.1.)
The Abandoned Plan Regulations generally require the qualified termination administrator to distribute a missing or nonresponsive participant's account balance to an individual retirement plan in the participant's name. (See § 2578.1(d)(2)(vii).) An exception exists for account balances of $1,000 or less, which may be transferred to an interest-bearing, federally-insured bank or savings association account or to the unclaimed property fund of a State, if certain conditions are satisfied. (See § 2550.404a-3(d)(1)(iii).) Sometimes a qualified termination administrator will know that a missing participant whose account balance is greater than $1,000 is deceased and that there is no named beneficiary, or that the named beneficiary also is deceased. In such circumstances, the Abandoned Plan Regulations require the qualified termination administrator to transfer the participant's account balance to an individual retirement plan even if it is unlikely that anyone will ever claim these benefits. The Department has been advised that, in some cases, providers of individual retirement plans will not accept such distributions. The Department is concerned that obstacles like this prevent abandoned plans from being completely terminated and could prevent qualified entities from serving as qualified termination administrators, leaving participants in abandoned plans with no ability to access their retirement benefits. This proposal, therefore, conditionally would permit qualified termination administrators to transfer the account balances of decedents to an appropriate bank account or a state's unclaimed property fund, regardless of the size of the account balance. Such a transfer would be permitted only if the qualified termination administrator reasonably and in good faith finds that the participant and, if applicable, the named beneficiary, are deceased, and includes in the Final Notice to EBSA the identity of the deceased participant and/or beneficiary and the basis for the finding. (See proposed paragraph (d)(1)(v) of § 2550.404a-3.) The Department is soliciting public comments specifically on whether the proposed conditions sufficiently safeguard the rights of participants and beneficiaries. For example, should a qualified termination administrator be prohibited from these transfers if it has actual knowledge that a descendent of the deceased has a claim?
The final step in winding up an abandoned plan under the Abandoned Plan Regulations is filing the Special Terminal Report for Abandoned Plans (STRAP) under § 2520.103-13. As stated in the preamble to the Abandoned Plan Regulations, the purpose of this provision is to provide annual reporting relief relating to abandoned plan filings by qualified termination administrators.[18] The contents of the STRAP include, for example, total assets of the plan as of the deemed termination date, termination expenses paid by the plan, and the total amount of distributions. To file the STRAP, a qualified termination administrator must use the Form 5500 and either the Schedule I or a “Schedule QTA.” Instructions for filing the STRAP are not included in the instructions to the Form 5500 Annual Return/Report of Employee Benefit Plan. Specific instructions for completing and filing the STRAP are on EBSA's Web site at http://www.dol.gov/ebsa/publications/APterminalreport.html. This proposal would amend paragraph (c)(2) of § 2520.103-13 to clarify and update the specific location of these instructions.
As it did in connection with the existing Abandoned Plan Regulations, the Department conferred with representatives of the Internal Revenue Service regarding the qualification requirements under the Code as applied to plans that are terminated pursuant to 29 CFR 2578.1, as modified by the proposed amendments contained in this document. The Internal Revenue Service advised that it would not challenge the qualified status of any plan terminated under § 2578.1 or take any adverse action against, or seek to assess or impose any penalty on, the qualified termination administrator, the plan, or any participant or beneficiary of the plan (including the qualified status of any chapter 7 plan terminated under these proposed amendments) as a result of such termination, including the distribution of the plan's assets, provided that the qualified termination administrator satisfies three conditions. First, the qualified termination administrator, based on plan records located and updated in accordance with § 2578.1(d)(2)(i), reasonably determines whether, and to what extent, the survivor annuity requirements of sections 401(a)(11) and 417 of the Code apply to any benefit payable under the plan and takes reasonable steps to comply with those requirements (if applicable). Second, each participant and beneficiary has a nonforfeitable right to his or her accrued benefits as of the date of deemed termination under § 2578.1(c)(1), subject to income, expenses, gains, and losses between that date and the date of distribution. Third, participants and beneficiaries must receive notification of their rights under section 402(f) of the Code. This notification should be included in, or attached to, the notice described in § 2578.1(d)(2)(vi). Notwithstanding the foregoing, as indicated in the preamble to the final Abandoned Plan Regulations (71 FR 20827), the Internal Revenue Service reserves the right to pursue appropriate remedies under the Code against any party who is responsible for the plan, such as the plan sponsor, plan administrator, or owner of the business, even in its capacity as a participant or beneficiary under the plan.[19] The Internal Revenue Service also advised the Department that chapter 7 bankruptcy trustees using the Abandoned Plan Program would not be expected to use the Employee Plans Compliance Resolution System (EPCRS) as a condition to this relief.
The Department believes that providing this guidance and allowing bankruptcy trustees to serve or designate others to serve as qualified termination administrators will lead to administrative cost savings for trustees that choose to participate in the Abandoned Plan Program. The Department has not quantified these benefits because it does not have sufficient information regarding the characteristics of chapter 7 plans.[20] The Department expects that bankruptcy trustees will decide to participate in the Abandoned Plan Program based on their individual assessment of whether it would be more cost effective to terminate a plan inside or outside of the program.
Benefits Associated with Amendment to Safe Harbor for Distributions from Terminated Individual Account Plans (29 CFR 2550.404a-3): This section provides a safe harbor under which plan fiduciaries (including qualified termination administrators) of terminated individual account plans can directly transfer a missing or nonresponsive participant's account balance directly to appropriate investment vehicles in the participant's name. An exception exists for account balances of $1,000 or less, which may be transferred to an interest-bearing, federally-insured bank or savings association account or to the unclaimed property fund of a state, if certain conditions are satisfied. As stated above in this preamble, § 2550.404a-3 is being amended to conditionally permit qualified termination administrators to transfer the account balances of decedents to an appropriate bank account or a state's unclaimed property fund, regardless of the size of the account balance. The proposed amendments would remove an obstacle to greater usage of the Abandoned Plan Program by eliminating the need to establish costly individual retirement plans for the account balances of known deceased participants that are over $1,000 when it is unlikely that anyone will claim the funds in such plans.
Benefits Associated with Amendment to Eliminate Statement of Past or Present Investigations: As stated above in this preamble, § 2578.1 is being amended to remove the under investigation statement in the notice of plan abandonment from the qualified termination administrator to the Department (see § 2578.1(c)(3)(i)(C)). The Department believes that, at present, this statement is unnecessary and may even discourage use of the Abandoned Plan Program. The statement is unnecessary because EBSA's Office of Enforcement is able to run searches with only de minimis cost to determine whether potential qualified termination administrators are under investigation by the Department. By encouraging more potential qualified termination administrators to wind up abandoned plans in accordance with the Abandoned Plan Regulations, the Department believes abandoned plan terminations will occur more efficiently, and more participants and beneficiaries of abandoned plans will gain access to their benefits.
Cost Burden of Rule Bankrupt plans Chapter 7 (new to this RIA)Abandoned plans—non Chapter 7 (in previous RIA)Terminating plans (in previous RIA)TotalNotice to Plan Sponsor$0$5,500$0$5,500Notice to DOL8,70017,300026,000Bankrupt Plans (Court Order)3,200003,200Notice to Participants3,6007,200010,700Final Notice3,3006,700010,000Bankrupt Plans (Fiduciary Breach)60000600Form 5500 Terminal Report35,60071,2000106,800Safe Harbor004,480,0004,480,000Class Exemption Familiarization9,40018,700028,100Total64,000127,0004,480,0004,670,000
Notice to Plan Sponsor: This notice requirement only applies to plans that are not chapter 7 plans. The Department estimates that for each of these estimated 330 plans, a qualified termination administrator may utilize 10 minutes of clerical staff time at an hourly labor rate of $28.21 to fill in the needed information on the plan sponsor notice, and five minutes of a financial professional's time at an hourly labor rate of $66.36 to review and sign the notice.[21] This results in approximately 83 hours of clerical staff time with an associated cost burden of $1,600 (55 hours x $28.21 per hour) and 27.5 hours of a financial professional's time with an associated cost burden of $1,800 (27.5 hours × $66.36 per hour).[22] The rule requires plan sponsor notices to be sent by a method requiring acknowledgement of receipt. Therefore, mailing costs include $6.35 for postage and email receipt of delivery. The mailing costs include paper and print costs of five cents per page for the one page notice. Therefore, the materials and mailing costs are estimated to be $2,100 for the 330 notices. As indicated in the chart above, there are $5,500 in total costs associated with this requirement ($1,600 clerical, $1,800 financial professional and $2,100 in mailing costs) all imposed on plans filing under the Abandoned Plan Program.
The Department assumes that approximately 80 percent of these initial notices to the Department will be sent by mail and that the rest will be submitted electronically (495 plans × .8 fraction by mail = 396 plans send notice by mail). Therefore, mailing costs include $6.35 for postage and email receipt of delivery. The mailing costs include paper and print cost of five cents per page. The model notice is three pages. Therefore, the materials and mailing cost are estimated to be $2,600 (396 plans × ($6.35 + 3 pages × $.05 per page)) for the 396 notices that will be mailed. The total costs of this component are therefore $26,000 [23] ($8,700 of which are new costs attributable to the chapter 7 plans, which are 1/3 of the affected plans, and $17,300 of which are cost attributable to 2/3 of the affected plans that are not chapter 7 plans).
The model notice to participants is two pages. Therefore, the mailing and material costs are estimated to be 55 cents per mailing (2 × $.05 + $0.45). Of the 2,970 participants (495 plans × 6 participants per plan), 38 percent are expected to receive their notices electronically. The Department estimates that 1,840 participants will receive the notice by mail, creating a mailing cost burden of $1,000. In total, the cost burden from the notice to the participants and beneficiaries requirement is approximately $10,700.[24] Because 1/3 of the affected plans are chapter 7 plans, $3,600 of the burden is expected to be for the chapter 7 plans and $7,100 for the 2/3 of affected plans that are abandoned.
The Department assumes that, as a usual and customary business practice, the final notice to the Department will be sent by a method requiring acknowledgement of receipt. The model final notice is two pages. Therefore, the material costs are estimated to be $.10 per plan and postage of $6.35 per plan. For the 70 percent of plans that are expected to submit their applications by mail, total mailing costs are estimated to be $2,200 for the 495 notices (($6.35 per plan for mailing +$.10 for materials) × 495 plans × .70 fraction of plans submitting by mail). Thus, there is approximately $10,000 in total costs for the final notice. Of that total, approximately $3,300 is dedicated to the 1/3 of affected plans that are chapter 7 plans and $6,700 is attributable to the 330 qualified termination administrator filings for the 2/3 of plans that are abandoned.
Special Terminal Report for Abandoned Plans (29 CFR 2520.103-13): The Department estimates that it will take small plans 3.25 hours to file the STRAP in accordance with the instructions on the Department's web site. It is assumed that a financial accounting professional will perform this task resulting in an hour burden of 1,600 hours and a cost burden of $66.36 per hour resulting in a cost burden of $106,800 (3.25 hours × $66.36 per hour × 495 plans). For STRAPs submitted electronically, no burden is estimated for paper or mailing costs. For the assumed 70 percent of plans that submit their STRAPs by mail, the additional costs will be approximately $100 (495 plans × 6 pages per terminal report × $.05/page × .70 fraction of plans that submit final notices by mail). Thus, the total cost associated with the report is approximately $106,800 ($106,700 in financial accounting costs and $100 in material costs). Of this total, $35,600 is attributable to the 1/3 of plans that are chapter 7 plans and $71,200 is attributable to the 1/3 of plans that are abandoned. Only the chapter 7 plan costs represent new costs.
Safe Harbor for Distributions from Terminated Individual Account Plans (29 CFR 2550.404a-3): The PRA analysis also includes the burden associated with the notice to participants as required under “The Safe Harbor for Distributions from Terminated Individual Account Plans.” To meet the safe harbor, fiduciaries of terminating plans (other than abandoned plans) must furnish a notice to participants and beneficiaries informing them of the plan's termination and the options available for distribution of their account balances. The Department estimates that 3.1 million participants and beneficiaries will receive notices from approximately 39,000 plan sponsors.[25] The Department estimates that clerical professionals will spend, on average, two minutes per notice preparing and distributing the notices. The benefits manager will spend approximately 10 minutes preparing the notice. This results in an equivalent cost burden of $3.5 million calculated as follows: $2.92 million per year (3.1 million participants × .033 hours per participant × $28.21 per hour) in clerical time, and $607,000 (39,000 plans × .167 hours per plan × $93.31 per hour) in benefit manager costs. In addition, the Department assumes that each participant will receive a one page notice by first class mail resulting in a cost burden of $961,000 (3.1 million notices × ($0.45 for postage + ($0.05 per page × 1 page) × 0.62). Thus, with the updated numbers, total cost burden for terminating plans is $4.48 million. This total includes $3.49 million in equivalent costs from plan clerical time ($2.92 million) and plan benefit manager time ($607,000). There is also $961,000 in cost attributable to mailing the notices. These costs are not attributable to the proposed amendments allowing chapter 7 trustees to participate in the Abandoned Plan Program. They reflect the Department's revised estimates of the entire Abandoned Plans Program and take into account the most recent Form 5500 data.
Compliance with the proposed amendments to the Abandoned Plan Regulations is a condition of the proposed amendment to the class exemption; therefore the costs and benefits that would be associated with complying with the proposed amendment to the class exemption have been described and quantified in connection with the economic impact of the proposed regulatory amendments. In its current and proposed amendment form, PTE 2006-06 requires, among other things, that fees and expenses paid to the qualified termination administrator and an affiliate in connection with the termination of an abandoned plan are consistent with industry rates for such or similar services, and are not in excess of rates ordinarily charged by the qualified termination administrator (or affiliate) for the same or similar services provided to customers that are not plans terminated pursuant to the Abandoned Plan Regulations, if the qualified termination administrator (or affiliate) provides the same or similar services to such other customers. The class exemption, in its current and proposed amendment form, also requires that qualified termination administrators ensure that the records necessary to determine whether the conditions of the exemption have been met are maintained for a period of six years, so that they may be available for inspection by any account holder of an individual retirement plan or other account established pursuant to this exemption, or any duly authorized representative of such account holder, the Internal Revenue Service, and the Department. Banks, insurance companies, and other financial institutions that provide services to abandoned plans and their participants and beneficiaries are required to act in accordance with customary business practices, which would include maintaining the records required under the terms of the class exemption, both in its current and proposed amendment form. Accordingly, the recordkeeping burden attributable to the proposed amendment will be handled by the qualified termination administrator and is expected to be small. However, there is an additional cost to directing this process. The Department assumes that a supervisor must devote time to each case in order to study the details of the individual plan, determine whether there have been any violations, and ensure that these details are properly incorporated into the notices. Assuming that all qualified termination administrators will take advantage of the proposed exemption, the hour burden attributable to supervisory duties for qualified termination administrators of abandoned plans (including familiarization costs for new qualified termination administrators) is expected to be one half hour for each qualified termination administrator, or 248 hours. Assuming a financial manager's wage rate of $113.39 per hour, this supervisory cost is expected to total $28,100 ($113.39 × 248). Approximately $9,400 of this cost (1/3 of the costs since 165 of the 495 estimated affected plans are chapter 7 plans) is expected to be attributable to financial manager costs dealing with chapter 7 plans and the remaining $18,700 of costs are attributable to financial managers dealing with the 2/3 of abandoned plans.
Equivalent Costs of Hour Burden: $3,520,000.
Cost Burden: $ 1,150,000.
29 U.S.C. 1021-1025, 1027, 1029-31, 1059, 1134 and 1135; and Secretary of Labor's Order 1-2011, 77 FR 1088 (Jan. 9, 2012). Sec. 2520.101-2 also issued under 29 U.S.C. 1132, 1181-1183, 1181 note, 1185, 1185a-b, 1191, and 1191a-c. Sec. 2520.101-4 also issued under 29 U.S.C. 1021(f). Sec. 2520.101-6 also issued under 29 U.S.C. 1021(k) and Pub. L. 109-280, § 502(a)(3), 120 Stat. 780, 940 (2006). Secs. 2520.102-3, 2520.104b-1 and 2520.104b-3 also issued under 29 U.S.C. 1003, 1181-1183, 1181 note, 1185, 1185a-b, 1191, and 1191a-c. Secs. 2520.104b-1 and 2520.107 also issued under 26 U.S.C. 401 note, 111 Stat. 788.
2. Revise § 2520.103-13 to read as follows:
§ 2520.103-13 Special terminal report for abandoned plans.
(a) General. The terminal report required to be filed by the qualified termination administrator pursuant to § 2578.1(d)(2)(viii) of this chapter shall consist of the items set forth in paragraph (b) of this section. Such report shall be filed in accordance with the method of filing set forth in paragraph (c) of this section and at the time set forth in paragraph (d) of this section.
(1) Identification information concerning the bankruptcy trustee and, if applicable, any eligible designee acting as the qualified termination administrator pursuant to § 2578.1(j)(1)(ii), and the plan being terminated.
(2) The total assets of the plan as of the date the plan was deemed terminated under § 2578.1(c) of this chapter, prior to any reduction for termination expenses and distributions to participants and beneficiaries.
(4) The total distributions made pursuant to § 2578.1(d)(2)(vii) of this chapter and a statement regarding whether any such distributions were transfers under § 2578.1(d)(2)(vii)(B) of this chapter.
(1) On the most recent Form 5500 available as of the date the qualified termination administrator satisfies the requirements in § 2578.1(d)(2)(i) through § 2578.1(d)(2)(vii) of this chapter; and
(d) When to file. The qualified termination administrator shall file the terminal report described in paragraph (a) within two months after the end of the month in which the qualified termination administrator satisfies the requirements in § 2578.1(d)(2)(i) through § 2578.1(d)(2)(vii) of this chapter.
(e) Limitation. (1) Except as provided in this section, no report shall be required to be filed by the qualified termination administrator under part 1 of title I of ERISA for a plan being terminated pursuant to § 2578.1 of this chapter.
Authority: 29 U.S.C. 1135, sec. 102, Reorganization Plan No. 4 of 1978, 5 U.S.C. App. 1 and Secretary of Labor's Order No. 1-2011, 77 FR 1088 (Jan. 9, 2012). Sec. 2550.401c-1 also issued under 29 U.S.C. 1101. Sec. 2550.404a-2 also issued under sec. 657, Pub. L. 107-16, 115 Stat. 38. Sections 2550.404c-1 and 2550.404c-5 also issued under 29 U.S.C. 1104. Sec. 2550.408b-1 also issued under 29 U.S.C. 1108(b)(1). Sec. 2550.408b-19 also issued under sec. 611, Pub. L. 109-280, 120 Stat. 780, 972. Sec. 2550.412-1 also issued under 29 U.S.C. 1112.
4. Revise § 2550.404a-3 to read as follows:
§ 2550.404a-3 Safe harbor for distributions from terminated individual account plans.
(a) General. (1) This section provides a safe harbor under which a fiduciary (including a qualified termination administrator, within the meaning of § 2578.1(g) or (j)(1)(ii) of this chapter) of a terminated individual account plan, as described in paragraph (a)(2) of this section, will be deemed to have satisfied its duties under section 404(a) of the Employee Retirement Income Security Act of 1974, as amended (the Act)), 29 U.S.C. 1001 et seq., in connection with a distribution described in paragraph (b) of this section.
(i) In the case of an individual account plan that is an abandoned plan within the meaning of § 2578.1 of this chapter, such plan was intended to be maintained as a tax-qualified plan in accordance with the requirements of section 401(a), 403(a), or 403(b) of the Internal Revenue Code of 1986 (Code); or
(1) The participant or beneficiary, on whose behalf the distribution will be made, was furnished notice in accordance with paragraph (e) of this section or, in the case of an abandoned plan, § 2578.1(d)(2)(vi) of this chapter, and
(iii) In the case of a distribution by a qualified termination administrator (other than a bankruptcy trustee described in § 2578.1(j)(1)(ii)) with respect to which the amount to be distributed is $1,000 or less and that amount is less than the minimum amount required to be invested in an individual retirement plan product offered by the qualified termination administrator to the public at the time of the distribution, to:
(iv) In the case of a distribution by a bankruptcy trustee as described in § 2578.1(j)(1)(ii) with respect to which the amount to be distributed is $1,000 or less and the bankruptcy trustee, after reasonable and good faith efforts, is unable to locate an individual retirement plan provider who will accept the distribution, to either distribution option described in paragraph (d)(1)(iii)(A) or (B) of this section.
(v) Notwithstanding paragraphs (d)(1)(iii) and (iv) of this section, the $1,000 threshold may be disregarded in any particular case if the qualified termination administrator reasonably and in good faith finds that the participant and, if applicable, the named beneficiary are deceased; and if the qualified termination administrator also includes in the notice described in § 2578.1(d)(2)(ix)(G) (the Final Notice) the identity of the deceased participant and beneficiary and the basis behind the finding.
(2) Manner of furnishing notice. (i) For purposes of paragraph (e)(1) of this section, a notice shall be furnished to each participant or beneficiary in accordance with the requirements of § 2520.104b-1(b)(1) of this chapter to the last known address of the participant or beneficiary; and
6. Revise § 2578.1 to read as follows:
§ 2578.1 Termination of abandoned individual account plans.
(iii) In any case where the amount to be distributed meets the conditions in § 2550.404a-3(d)(1)(iii) or (iv), to an interest-bearing federally insured bank account, the unclaimed property fund of the State of the last known address of the participant or beneficiary, or an individual retirement plan (described in § 2550.404a-3(d)(1)(i) or (d)(1)(ii) of this chapter) or
(B)(1) For purposes of paragraph (d)(2)(vi)(A) of this section, a notice shall be furnished to each participant or beneficiary in accordance with the requirements of § 2520.104b-1(b)(1) of this chapter to the last known address of the participant or beneficiary; and
(1) In accordance with § 2550.404a-3 of this chapter; or
(viii) Special Terminal Report for Abandoned Plans. File the Special Terminal Report for Abandoned Plans in accordance with § 2520.103-13 of this chapter.
(G) For each distribution in accordance with § 2550.404a-3(d)(1)(v) (relating to distributions on behalf of deceased participants and beneficiaries), an identification of the deceased participant and, if applicable, the deceased named beneficiary, and the basis behind the finding required by § 2550.404a-3(d)(1)(v); and
(v) Distributions. Paragraph (d)(2)(vii)(C) of this section (relating to the ability of a qualified termination administrator to designate itself as the transferee of distribution proceeds in accordance with § 2550.404a-3) is not applicable in the case of a qualified termination administrator that is the plan sponsor's bankruptcy trustee.
71 FR 20820. See also 73 FR 58459 for subsequent amendments with regard to distributions on behalf of a missing non-spouse beneficiary.
71 FR 20855.
See 71 FR 20821 (“given the authority and control over plans vested in QTAs under the regulation, QTAs must be subject to standards and oversight that will reduce the risk of losses to the plans' participants and beneficiaries”).
Section 7701(a)(37) of the Code describes an “individual retirement plan” as an individual retirement account described in section 408(a) of the Code, and an individual retirement annuity described in section 408(b) of the Code. Section 408(a) of the Code describes the term “individual retirement account” as meaning a trust created or organized in the United States for the exclusive benefit of an individual or his beneficiaries, if certain requirements are met. Section 408(b) of the Code describes the term “individual retirement annuity” as meaning an annuity contract, or an endowment contract, which meets certain requirements.
For example, in responding to commenters who argued in favor of conferring qualified termination administrator status on bankruptcy trustees in liquidation cases when the debtor also is the plan administrator, the Department, in the preamble to the Abandoned Plan Regulations, stated its view at that time that such individuals are empowered by virtue of their appointment to take the steps necessary to terminate and wind up the affairs of a plan and, therefore, do not need the authority conferred by the Abandoned Plan Regulations. See 71 FR 20821.
A bankruptcy trustee who undertakes these plan responsibilities is a fiduciary within the meaning of section 3(21) of ERISA.
The proposed extension is limited to plans whose sponsors entered liquidation under chapter 7 of title 11 of the United States Code on the theory that such plans are effectively being abandoned by the sponsor as a result of the liquidation. Nonetheless, the Department requests comment on whether there are other similar situations that could or should be covered by the Abandoned Plan Regulations. For example, should the Regulations cover plans whose sponsors are undergoing liquidation under a chapter 11 plan of liquidation? Should the Regulations cover situations when a plan's sponsor enters receivership pursuant to applicable state or federal law (e.g., FDIC receivership)? If the Regulations should be extended to situations beyond the situations covered by the proposed extension, please specifically identify the situation, why the situation should be covered, the costs and benefits of covering the situation, and, if applicable, any state or federal law relevant to the situation.
On the other hand, a plan would not cease to be considered abandoned under proposed paragraph (j)(1) if the sponsor's chapter 7 proceeding is converted to a proceeding under chapter 11 after the plan is deemed terminated. In such circumstances, the qualified termination administrator would be expected to continue winding up the affairs of the plan in accordance with the Abandoned Plan Regulations.
But see note 7.
Any eligible designee should be selected and holding the assets of the chapter 7 plan by the time of the furnishing of the notice of plan abandonment to the Department under paragraph (j)(2) of the proposed amendments.
Under this provision, an eligible designee's duty to collect delinquent contributions is limited expressly to those delinquent contributions it knows about based on the information provided by the bankruptcy trustee at the time of the designation. Thus, an eligible designee would have no duty to collect delinquent contributions if the bankruptcy trustee failed to disclose them to the eligible designee. Nothing in this section imposes an obligation on the eligible designee to conduct an inquiry or review to determine whether there are delinquent contributions with respect to the plan. See § 2578.1(e)(2).
As discussed above, proposed paragraph (j)(3)(i) imposes on a qualified termination administrator to a chapter 7 plan a conditional duty to collect delinquent contributions.
Proposed paragraph (j)(3)(vi)(B) merely confirms that an eligible designee may use the more generally applicable safe harbor at paragraph (d)(2)(v) of § 2578.1 without the special modifications contained in proposed paragraph (j)(3)(v)(A) for bankruptcy trustees.
Under § 2520.103-13, qualified termination administrators must file the Special Terminal Report for Abandoned Plans (STRAP). STRAPs contain total termination expenses paid by a plan and a separate schedule identifying each service provider and the amount received by that service provider, itemized by expense. STRAPs currently are available on the Department's Web site (see http://askebsa.dol.gov/AbandonedPlanSearch/UI/QTASearchResults.aspx).
71 FR 20806.
In this context, a missing or nonresponsive participant or beneficiary is a participant or beneficiary who fails to elect a form of distribution within 30 days from the date the notice of plan termination is furnished by the qualified termination administrator.
The justification for the special rule is set forth in the preamble to the Abandoned Plan Regulations. See 71 FR 20828. The conditions related to the special rule are set forth at 29 CFR 2550.404a-3(d)(1)(iii).
71 FR 20830.
See 71 FR 20827 (further discussion of the Department's response to commenters on the three IRS conditions).
The Department invites public comments regarding the characteristics of chapter 7 plans that may participate in the Abandoned Plan Program.
The Department estimates 2012 hourly labor rates to include wages, other benefits, and overhead based on data from the National Occupational Employment Survey (June 2011, Bureau of Labor Statistics) and the Employment Cost Index (September 2011, Bureau of Labor Statistics); the 2010 estimated labor rates are then inflated to 2012 labor rates.
Any discrepancies in calculations in this section and the table above result from rounding. Estimates are rounded to the nearest $10, $100, $1,000, or $10,000. Hour estimates also are rounded in the text.
$26,000 = $7,000 for clerical cost time + $16,400 for financial professional time + $2,600 for mailing.
$7,000 in clerical costs + $2,700 in financial professional costs + $1,000 in mailing costs.
These estimates for the number of participants and sponsors are based on 2008 Form 5500 Data filings.