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September 2003
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Beginning in FY 2000, EBSA initiated an enforcement project to locate
pension plans, particularly 401(k) plans, which have been abandoned by
fiduciaries through death, neglect, bankruptcy, or incarceration and to
determine if a fiduciary could be located to perform fiduciary functions such as
terminating the plan, distributing the plan’s assets and filing appropriate
financial reporting forms such as the terminal annual report.
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In the event that no fiduciary is located, EBSA takes an active role in
the appointment of an independent fiduciary so that participants and
beneficiaries can receive their earned benefits.
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The orphan plan initiative assists at-risk populations, specifically those
participants who are in danger of losing some or all of their retirement
savings.
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In many orphan plan situations fiduciaries have deserted the plan and
effectively abdicated their responsibilities. As a result, participants are
unable to exercise any rights they may have under the plan; plan assets are not
being actively managed; individual participant accounts may not be credited
accurately; and reports required to be filed are not prepared.
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Since the inception of the project to June 30, 2003 EBSA has opened a
total of 785 orphan plan civil cases and closed 609. Over $214.2 million has
either been protected or returned to plans. Sixty-eight independent fiduciaries
have been appointed in 64 separate cases. Seven criminal cases have been opened
under the project and one has been closed, with an individual being indicted and
convicted.
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By providing a real, practical and efficient solution, PWBA’s
credibility and reliability is enhanced within the employee benefits industry.
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Coordination activities with the Pension Benefit Guaranty Corporation have
been undertaken and resulted in agreement that both agencies will share
information and, where appropriate, will work in concert to ensure that
participants of defined benefit plans potentially adversely affected by orphan
plan situations are protected and joint efforts are pursued aggressively.
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This fact sheet has been developed by the U.S. Department
of Labor, Employee Benefits Security Administration, Washington, DC 20210.
It will be made available in alternate formats upon request: Voice phone:
202.693.8664; TTY: 202.501.3911. In addition, the information in this fact
sheet constitutes a small entity compliance guide for purposes of the Small
Business Regulatory Enforcement Fairness Act of 1996.
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