PBGC Expands Missing Participant Program to Defined Contribution Plans

The Pension Benefit Guaranty Corporation (PBGC) has issued a Proposed Rule that would redesign its existing missing participants program for single employer Defined Benefit (DB) plans and to adopt three new missing participants programs that will cover most Defined Contribution (DC) plans, as well as multiemployer DB plans and professional service employer DB plans. All four programs would follow the same basic design. Among the most prominent changes to the existing program would be:

• Provision for fees to be charged for plans to participate in the missing participants program.

• A requirement to treat as ‘‘missing’’ non-responsive distributees with de minimis benefits subject to mandatory cash-out under the plan’s terms.

• More robust requirements for diligent searches, using sponsor and related plan records, free web-search methods, and (subject to waiver) commercial locator services (which would be clearly defined).

• Fewer benefit categories and fewer sets of actuarial assumptions for determining the amount to transfer to PBGC.

• Changes in the rules for paying benefits to missing participants and their beneficiaries.

An important part of all of the missing participants programs will be a new unified pension search database.  This database would include information about missing participants and their benefits and a directory through which members of the public could easily query the database (using a choice of fields) to determine whether it contained information about benefits being held for them. PBGC anticipates that its new pension search database will provide a comprehensive, nationwide, authoritative, reliable, easy to use source of information about missing participants and the benefits being held for them.

‘‘Missing’’ would be defined more specifically than in the current regulation. As explained below, a distributee would be missing if—

(1) For a DB plan, the plan did not know where the distributee was (e.g., a notice from the plan was returned as undeliverable), unless the distributee’s benefit was subject to mandatory ‘‘cashout’’ under the terms of the plan, or

(2) For a DC plan, or a distributee whose benefit was subject to a mandatory cash-out under the terms of a DB plan, the distributee failed to elect a form or manner of distribution.

For DC plans, PBGC proposes to specify simply that a diligent search is one conducted in accordance with DOL guidance, the most recent of which was issued on August 14, 2014 by the Employee Benefits Security Administration (EBSA) in Field Assistance Bulletin No. 2014–01 regarding Fiduciary Duties And Missing Participants In Terminated Defined Contribution Plans (the FAB). The FAB provides guidance about required search steps and options for dealing with the benefits of missing participants in terminated DC plans.

PBGC is proposing to charge a one-time $35 fee per missing distributee, payable when benefit transfer amounts are paid to PBGC, without any obligation to pay PBGC continuing ‘‘maintenance’’ fees or a distribution fee. There would be no charge for amounts transferred to PBGC of $250 or less. There would be no charge for plans that only send information about missing participant benefits to PBGC.

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Overview of Proposed Expanded Missing Participants Program

Proposed Expanded Missing Participants Program FAQs

Read the Proposed Rule