The Pension Benefit Guaranty Corporation (PBGC) issued a final rule on December 22, 2017 to expand its Missing Participants Program for terminated single-employer pension plans to additional types of plans.
The expansion was authorized by Congress in the Pension Protection Act of 2006 (PPA). The expanded program includes participants and beneficiaries in terminating defined contribution plans, such as 401(k)s, PBGC-insured multiemployer plans, and small professional service pension plans not insured by the PBGC. The new rule applies to 401(k)-type plans and small professional service plans that terminate on or after January 1, 2018. The program will be available to PBGC-insured multiemployer plans that terminate after 2018.
The Missing Participants Program for terminated single-employer pension plans has helped countless participants locate their benefits by providing a searchable database of participants who could not be located by their former employers at the time of plan termination. Employers terminating plans are required to pay out all benefits owed to participants and beneficiaries. Participants who cannot be found are listed on the PBGC online database which includes the information necessary for participants to locate their benefits. The success of the single-employer Missing Participants Program prompted Congress to authorize expansion of the program.
Initially the list of missing participants may not include many from the new types of plans since the list adds names going forward and will not include participants missing from plans that terminated before the effective dates.
In the Missing Participants Program employer participation varies by plan type.
Employer participation is required for PBGC-insured plans, namely single-employer and multiemployer pension plans.
Employer participation is voluntary for non-PBGC-insured plans, such as 401(k)-type plans and small professional service pension plans.1
The program presents two ways for employers with terminating defined contribution plans, such as 401(k)s, and small professional plans to participate. 2
Before listing a participant as missing a diligent search is required when the plan does not know the location of the participant with reasonable certainty. If a plan knows the location of a participant but the participant fails to cash a distribution check or does not respond to a notice of a distribution, then a diligent search is not required and the participant can be listed as missing.
The final rule specifies criteria for a diligent search that differ by plan type.
Other highlights of the proposed rule include:
A brief description of the expanded Missing Participants Program.
PBGC press release on expanding the Missing Participants Program
Read the Pension Rights Center’s comments on the proposed rule.
Read the Pension Rights Center’s comments on the PBGC’s Request for Information.
1Small professional service plans are pension plans with 25 or fewer participants, such as plans of medical and dental practices.
2The Missing Participant Program for defined contribution plans includes 403(b) plans.
3See Employee Benefits Security Administration, Field Assistance Bulletin 2014-01.
4The PPA gave PBGC the option to require the reporting of missing participant names and account locations when accounts are not transferred to the PBGC.
5See Employee Benefits Security Administration, Field Assistance Bulletin, 2014-01.