(a) General. The purpose of this part is to establish standards for
the termination and winding up of an individual account plan (as
defined in section 3(34) of the Employee Retirement Income Security Act
of 1974 (ERISA or the Act)) with respect to which a qualified
termination administrator (as defined in paragraph (g) of this section)
has determined there is no responsible plan sponsor or plan
administrator within the meaning of section 3(16)(B) and (A) of the
Act, respectively, to perform such acts.
(b) Finding of abandonment. (1) A qualified termination
administrator may find an individual account plan to be abandoned when:
(i) Either: (A) No contributions to, or distributions from, the
plan have been made for a period of at least 12 consecutive months
immediately preceding the date on which the determination is being
made; or
(B) Other facts and circumstances (such as a filing by or against
the plan sponsor for liquidation under title 11 of the United States
Code, or communications from participants and beneficiaries regarding
distributions) known to the qualified termination administrator suggest
that the plan is or may become abandoned by the plan sponsor; and
(ii) Following reasonable efforts to locate or communicate with the
plan sponsor, the qualified termination administrator determines that
the plan sponsor:
(A) No longer exists;
(B) Cannot be located; or
(C) Is unable to maintain the plan.
(2) Notwithstanding paragraph (b)(1) of this section, a qualified
termination administrator may not find a plan to be abandoned if, at
any time before the plan is deemed terminated pursuant to paragraph (c)
of this section, the qualified termination administrator receives an
objection from the plan sponsor regarding the finding of abandonment
and proposed termination.
(3) A qualified termination administrator shall, for purposes of
paragraph (b)(1)(ii) of this section, be deemed to have made a
reasonable effort to locate or communicate with the plan sponsor if the
qualified termination administrator sends to the last known address of
the plan sponsor, and, in the case of a plan sponsor that is a
corporation, to the address of the person designated as the
corporation's agent for service of legal process, by a method of
delivery requiring acknowledgement of receipt, the notice described in
paragraph (b)(5) of this section.
(4) If receipt of the notice described in paragraph (b)(5) of this
section is not acknowledged pursuant to paragraph (b)(3) of this
section, the qualified termination administrator shall be deemed to
have made a reasonable effort to locate or communicate with the plan
sponsor if the qualified termination administrator contacts known
service providers (other than itself) of the plan and requests the
current address of the plan sponsor from such service providers and, if
such information is provided, the qualified termination administrator
sends to each such address, by a method of delivery requiring
acknowledgement of receipt, the notice described in paragraph (b)(5) of
this section.
(5) The notice referred to in paragraph (b)(3) of this section
shall contain the following information:
(i) The name and address of the qualified termination
administrator;
(ii) The name of the plan;
(iii) The account number or other identifying information relating
to the plan;
(iv) A statement that the plan may be terminated and benefits
distributed pursuant to 29 CFR 2578.1 if the plan sponsor fails to
contact the qualified termination administrator within 30 days;
(v) The name, address, and telephone number of the person, office,
or department that the plan sponsor must contact regarding the plan;
(vi) A statement that if the plan is terminated pursuant to 29 CFR
2578.1, notice of such termination will be furnished to the U.S.
Department of Labor's Employee Benefits Security Administration;
(vii) The following statement: ``The U.S. Department of Labor
requires that you be informed that, as a fiduciary or plan
administrator or both, you may be personally liable for costs, civil
penalties, excise taxes, etc. as a result of your acts or omissions
with respect to this plan. The termination of this plan will not
relieve you of your liability for any such costs, penalties, taxes,
etc.''; and
(viii) A statement that the plan sponsor may contact the U.S
Department of Labor for more information about the federal law
governing the termination and winding-up process for abandoned plans
and the telephone number of the appropriate Employee Benefit Security
Administration contact person.
(c) Deemed termination. (1) Except as provided in paragraph (c)(2)
of this section, if a qualified termination administrator finds,
pursuant to paragraph (b)(1) of this section, that an individual
account plan has been abandoned, the plan shall be deemed to be
terminated on the ninetieth (90th) day following the date of the letter
from EBSA's Office of Enforcement acknowledging receipt of the notice
of plan abandonment, described in paragraph (c)(3) of this section.
(2) If, prior to the end of the 90-day period described in
paragraph (c)(1) of this section, the Department notifies the qualified
termination administrator that it--
(i) Objects to the termination of the plan, the plan shall not be
deemed terminated under paragraph (c)(1) of this section until the
qualified termination administrator is notified that the Department has
withdrawn its objection; or
(ii) Waives the 90-day period described in paragraph (c)(1), the
plan shall be deemed terminated upon the qualified termination
administrator's receipt of such notification.
(3) Following a qualified termination administrator's finding,
pursuant to paragraph (b)(1) of this section, that an individual
account plan has been abandoned, the qualified termination
administrator shall furnish to the U.S. Department of Labor a notice of
plan abandonment that is signed and dated by the qualified termination
administrator and that includes the following information:
(i) Qualified termination administrator information. (A) The name,
EIN, address, and telephone number of the person electing to be the
qualified termination administrator, including the address, e-mail
address, and telephone number of the person signing the notice (or
other contact person, if different from the person signing the notice);
(B) A statement that the person (identified in paragraph
(c)(3)(i)(A) of this section) is a qualified termination administrator
within the meaning of paragraph (g) of this section and elects to
terminate and wind up the plan (identified in paragraph (c)(3)(ii)(A)
of this section) in accordance with the provisions of this section; and
(C) An identification whether the person electing to be the
qualified termination administrator or its affiliate is, or within the
past 24 months has been, the subject of an investigation, examination,
or enforcement action by the Department, Internal Revenue Service, or
Securities and Exchange Commission concerning such entity's conduct as
a fiduciary or party in interest with respect to any plan covered by
the Act.
[[Page 20839]]
(ii) Plan information. (A) The name, address, telephone number,
account number, EIN, and plan number of the plan with respect to which
the person is electing to serve as the qualified termination
administrator;
(B) The name and last known address and telephone number of the
plan sponsor; and
(C) The estimated number of participants in the plan;
(iii) Findings. A statement that the person electing to be the
qualified termination administrator finds that the plan (identified in
paragraph (c)(3)(ii)(A) of this section) is abandoned pursuant to
paragraph (b) of this section. This statement shall include an
explanation of the basis for such a finding, specifically referring to
the provisions in paragraph (b)(1) of this section, a description of
the specific steps (set forth in paragraphs (b)(3) and (b)(4) of this
section) taken to locate or communicate with the known plan sponsor,
and a statement that no objection has been received from the plan
sponsor;
(iv) Plan asset information. (A) The estimated value of the plan's
assets held by the person electing to be the qualified termination
administrator;
(B) The length of time plan assets have been held by the person
electing to be the qualified termination administrator, if such period
of time is less than 12 months;
(C) An 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
(D) An identification of known delinquent contributions pursuant to
paragraph (d)(2)(iii) of this section;
(v) Service provider information. (A) The name, address, and
telephone number of known service providers (e.g., record keeper,
accountant, lawyer, other asset custodian(s)) to the plan; and
(B) An identification of any services considered necessary to wind
up the plan in accordance with this section, the name of the service
provider(s) that is expected to provide such services, and an itemized
estimate of expenses attendant thereto expected to be paid out of plan
assets by the qualified termination administrator; and
(vi) Perjury statement. A statement that the information being
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.
(d) Winding up the affairs of the plan. (1) In any case where an
individual account plan is deemed to be terminated pursuant to
paragraph (c) of this section, the qualified termination administrator
shall take steps as may be necessary or appropriate to wind up the
affairs of the plan and distribute benefits to the plan's participants
and beneficiaries.
(2) For purposes of paragraph (d)(1) of this section, the qualified
termination administrator shall:
(i) Update plan records. (A) Undertake reasonable and diligent
efforts to locate and update plan records necessary to determine the
benefits payable under the terms of the plan to each participant and
beneficiary.
(B) For purposes of paragraph (d)(2)(i)(A) of this section, a
qualified termination administrator shall not have failed to make
reasonable and diligent efforts to update plan records merely because
the administrator determines in good faith that updating the records is
either impossible or involves significant cost to the plan in relation
to the total assets of the plan.
(ii) Calculate benefits. Use reasonable care in calculating the
benefits payable to each participant or beneficiary based on plan
records described in paragraph (d)(2)(i) of this section. A qualified
termination administrator shall not have failed to use reasonable care
in calculating benefits payable solely because the qualified
termination administrator--
(A) Treats as forfeited an account balance that, taking into
account estimated forfeitures and other assets allocable to the
account, is less than the estimated share of plan expenses allocable to
that account, and reallocates that account balance to defray plan
expenses or to other plan accounts in accordance with (d)(2)(ii)(B) of
this section;
(B) Allocates expenses and unallocated assets in accordance with
the plan documents, or, if the plan document is not available, is
ambiguous, or if compliance with the plan is unfeasible,
(1) Allocates unallocated assets (including forfeitures and assets
in a suspense account) to participant accounts on a per capita basis
(allocated equally to all accounts); and
(2) Allocates expenses on a pro rata basis (proportionately in the
ratio that each individual account balance bears to the total of all
individual account balances) or on a per capita basis (allocated
equally to all accounts).
(iii) Report delinquent contributions. (A) Notify the Department of
any known contributions (either employer or employee) owed to the plan
in conjunction with the filing of either the notification required in
paragraph (c)(3) or (d)(2)(ix) of this section.
(B) Nothing in paragraph (d)(2)(iii)(A) of this section or any
other provision of the Act shall be construed to impose an obligation
on the qualified termination administrator to collect delinquent
contributions on behalf of the plan, provided that the qualified
termination administrator satisfies the requirements of paragraph
(d)(2)(iii)(A) of this section.
(iv) Engage service providers. Engage, on behalf of the plan, such
service providers as are necessary for the qualified termination
administrator to wind up the affairs of the plan and distribute
benefits to the plan's participants and beneficiaries in accordance
with paragraph (d)(1) of this section.
(v) Pay reasonable expenses. (A) Pay, from plan assets, the
reasonable expenses of carrying out the qualified termination
administrator's authority and responsibility under this section.
(B) Expenses of plan administration shall be considered reasonable
solely for purposes of paragraph (d)(2)(v)(A) of this section if:
(1) Such expenses are for services necessary to wind up the affairs
of the plan and distribute benefits to the plan's participants and
beneficiaries,
(2) Such expenses: (i) Are consistent with industry rates for such
or similar services, based on the experience of the qualified
termination administrator; and
(ii) Are not in excess of rates ordinarily charged by the qualified
termination administrator (or affiliate) for same or similar services
provided to customers that are not plans terminated pursuant to this
section, if the qualified termination administrator (or affiliate)
provides same or similar services to such other customers, and
(3) The payment of such expenses would not constitute a prohibited
transaction under the Act or is exempted from such prohibited
transaction provisions pursuant to section 408(a) of the Act.
(vi) Notify participants. (A) Furnish to each participant or
beneficiary of the plan a notice written in a manner calculated to be
understood by the average plan participant and containing the
following:
(1) The name of the plan;
(2) A statement that the plan has been determined to be abandoned
by the plan sponsor and, therefore, has been terminated pursuant to
regulations issued by the U.S. Department of Labor;
(3)(i) A statement of the account balance and the date on which it
was calculated by the qualified termination administrator, and
[[Page 20840]]
(ii) The following statement: ``The actual amount of your
distribution may be more or less than the amount stated in this letter
depending on investment gains or losses and the administrative cost of
terminating your plan and distributing your benefits.'';
(4) A description of the distribution options available under the
plan and a request that the participant or beneficiary elect a form of
distribution and inform the qualified termination administrator (or
designee) of that election;
(5) A statement explaining that, if a participant or beneficiary
fails to make an election within 30 days from receipt of the notice,
the qualified termination administrator (or designee) will distribute
the account balance of the participant or beneficiary directly:
(i) To an individual retirement plan (i.e., individual retirement
account or annuity),
(ii) To an account described in Sec. 2550.404a-3(d)(1)(ii) of this
chapter (in the case of a distribution on behalf of a distributee other
than a participant or spouse),
(iii) In any case where the amount to be distributed meets the
conditions in Sec. 2550.404a-3(d)(1)(iii), 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 (or to an account described in Sec.
2550.404a-3(d)(1)(ii) of this chapter in the case of a distribution on
behalf of a distributee other than a participant or spouse), or
(iv) To an annuity provider in any case where the qualified
termination administrator determines that the survivor annuity
requirements in sections 401(a)(11) and 417 of the Internal Revenue
Code (or section 205 of ERISA) prevent a distribution under paragraph
(d)(2)(vii)(B)(1) of this section;
(6) In the case of a distribution to an individual retirement plan
(or to an account described in Sec. 2550.404a-3(d)(1)(ii) of this
chapter) a statement explaining that the account balance will be
invested in an investment product designed to preserve principal and
provide a reasonable rate of return and liquidity;
(7) A statement of the fees, if any, that will be paid from the
participant or beneficiary's individual retirement plan or other
account (including accounts described in Sec. 2550.404a-3(d)(1)(ii) or
(iii)(A) of this chapter), if such information is known at the time of
the furnishing of this notice;
(8) The name, address and phone number of the provider of the
individual retirement plan, qualified survivor annuity, or other
account (including accounts described in Sec. 2550.404a-3(d)(1)(ii) or
(iii)(A) of this chapter), if such information is known at the time of
the furnishing of this notice; and
(9) The name, address, and telephone number of the qualified
termination administrator and, if different, the name, address and
phone number of a contact person (or entity) for additional information
concerning the termination and distribution of benefits under this
section.
(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 Sec. 2520.104b-1(b)(1) of this
chapter to the last known address of the participant or beneficiary;
and
(2) In the case of a notice that is returned to the plan as
undeliverable, the qualified termination administrator shall,
consistent with the duties of a fiduciary under section 404(a)(1) of
ERISA, take steps to locate and provide notice to the participant or
beneficiary prior to making a distribution pursuant to paragraph
(d)(2)(vii) of this section. If, after such steps, the qualified
termination administrator is unsuccessful in locating and furnishing
notice to a participant or beneficiary, the participant or beneficiary
shall be deemed to have been furnished the notice and to have failed to
make an election within the 30-day period described in paragraph
(d)(2)(vii) of this section.
(vii) Distribute benefits. (A) Distribute benefits in accordance
with the form of distribution elected by each participant or
beneficiary with spousal consent, if required.
(B) If the participant or beneficiary fails to make an election
within 30 days from the date the notice described in paragraph
(d)(2)(vi) of this section is furnished, distribute benefits--
(1) In accordance with Sec. 2550.404a-3 of this chapter; or
(2) If a qualified termination administrator determines that the
survivor annuity requirements in sections 401(a)(11) and 417 of the
Internal Revenue Code (or section 205 of ERISA) prevent a distribution
under paragraph (d)(2)(vii)(B)(1) of this section, in any manner
reasonably determined to achieve compliance with those requirements.
(C) For purposes of distributions pursuant to paragraph
(d)(2)(vii)(B) of this section, the qualified termination administrator
may designate itself (or an affiliate) as the transferee of such
proceeds, and invest such proceeds in a product in which it (or an
affiliate) has an interest, only if such designation and investment is
exempted from the prohibited transaction provisions under the Act
pursuant to section 408(a) of the Act.
(viii) Special Terminal Report for Abandoned Plans. File the
Special Terminal Report for Abandoned Plans in accordance with Sec.
2520.103-13 of this chapter.
(ix) Final Notice. No later than two months after the end of the
month in which the qualified termination administrator satisfies the
requirements in paragraph (d)(2)(i) through (d)(2)(vii) of this
section, furnish to the Office of Enforcement, Employee Benefits
Security Administration, U.S. Department of Labor, 200 Constitution
Avenue, NW., Washington, DC 20210, a notice, signed and dated by the
qualified termination administrator, containing the following
information:
(A) The name, EIN, address, e-mail address, and telephone number of
the qualified termination administrator, including the address and
telephone number of the person signing the notice (or other contact
person, if different from the person signing the notice);
(B) The name, account number, EIN, and plan number of the plan with
respect to which the person served as the qualified termination
administrator;
(C) A statement that the plan has been terminated and all the
plan's assets have been distributed to the plan's participants and
beneficiaries on the basis of the best available information;
(D) A statement that plan expenses were paid out of plan assets by
the qualified termination administrator in accordance with the
requirements of paragraph (d)(2)(v) of this section;
(E) If fees and expenses paid to the qualified termination
administrator (or its affiliate) exceed by 20 percent or more the
estimate required by paragraph (c)(3)(v)(B) of this section, a
statement that actual fees and expenses exceeded estimated fees and
expenses and the reasons for such additional costs;
(F) An identification of known delinquent contributions pursuant to
paragraph (d)(2)(iii) of this section (if not already reported under
paragraph (c)(3)(iv)(D)); and
(G) A statement that the information being provided in the notice
is true and complete based on the knowledge of the qualified
termination administrator, and that the information is being provided
by the qualified termination administrator under penalty of perjury.
(3) The terms of the plan shall, for purposes of title I of ERISA,
be deemed amended to the extent necessary to allow the qualified
termination
[[Page 20841]]
administrator to wind up the plan in accordance with this section.
(e) Limited liability. (1)(i) Except as otherwise provided in
paragraph (e)(1)(ii) and (iii) of this section, to the extent that the
activities enumerated in paragraph (d)(2) of this section involve the
exercise of discretionary authority or control that would make the
qualified termination administrator a fiduciary within the meaning of
section 3(21) of the Act, the qualified termination administrator shall
be deemed to satisfy its responsibilities under section 404(a) of the
Act with respect to such activities, provided that the qualified
termination administrator complies with the requirements of paragraph
(d)(2) of this section.
(ii) A qualified termination administrator shall be responsible for
the selection and monitoring of any service provider (other than
monitoring a provider selected pursuant to paragraph (d)(2)(vii)(B) of
this section) determined by the qualified termination administrator to
be necessary to the winding up of the affairs of the plan, as well as
ensuring the reasonableness of the compensation paid for such services.
If a qualified termination administrator selects and monitors a service
provider in accordance with the requirements of section 404(a)(1) of
the Act, the qualified termination administrator shall not be liable
for the acts or omissions of the service provider with respect to which
the qualified termination administrator does not have knowledge.
(iii) For purposes of a distribution pursuant to paragraph
(d)(2)(vii)(B)(2) of this section, a qualified termination
administrator shall be responsible for the selection of an annuity
provider in accordance with section 404 of the Act.
(2) Nothing herein shall be construed to impose an obligation on
the qualified termination administrator to conduct an inquiry or review
to determine whether or what breaches of fiduciary responsibility may
have occurred with respect to a plan prior to becoming the qualified
termination administrator for such plan.
(3) If assets of an abandoned plan are held by a person other than
the qualified termination administrator, such person shall not be
treated as in violation of section 404 (a) the Act solely on the basis
that the person cooperated with and followed the directions of the
qualified termination administrator in carrying out its
responsibilities under this section with respect to such plan, provided
that, in advance of any transfer or disposition of any assets at the
direction of the qualified termination administrator, such person
confirms with the Department of Labor that the person representing to
be the qualified termination administrator with respect to the plan is
the qualified termination administrator recognized by the Department of
Labor.
(f) Continued liability of plan sponsor. Nothing in this section
shall serve to relieve or limit the liability of any person other than
the qualified termination administrator due to a violation of ERISA.
(g) Qualified termination administrator. A termination
administrator is qualified under this section only if:
(1) It is 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, and
(2) It holds assets of the plan that is considered abandoned
pursuant to paragraph (b) of this section.
(h) Affiliate. (1) Except as provided in paragraph (h)(2) of this
section, the term affiliate 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.
(2) For purposes of paragraph (c)(3)(i)(C) of this section, the
term affiliate means a 50 percent or more owner of a qualified
termination administrator, or any person described in paragraph (h)(1)
of this section that provides services to the plan.
(3) For purposes of paragraph (h)(1) of this section, the term
control means the power to exercise a controlling influence over the
management or policies of a person other than an individual.
(i) Model notices. Appendices to this section contain model notices
that are intended to assist qualified termination administrators in
discharging the notification requirements under this section. Their use
is not mandatory. However, the use of appropriately completed model
notices will be deemed to satisfy the requirements of paragraphs
(b)(5), (c)(3), (d)(2)(vi), and (d)(2)(ix) of this section.
BILLING CODE 4150-29-P
