Abandoned Plan Regulations

Published date17 May 2024
Record Number2024-09029
Citation89 FR 43636
CourtEmployee Benefits Security Administration
SectionRules and Regulations
Federal Register, Volume 89 Issue 97 (Friday, May 17, 2024)
[Federal Register Volume 89, Number 97 (Friday, May 17, 2024)]
                [Rules and Regulations]
                [Pages 43636-43675]
                From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
                [FR Doc No: 2024-09029]
                [[Page 43635]]
                Vol. 89
                Friday,
                No. 97
                May 17, 2024
                Part IIIDepartment of Labor-----------------------------------------------------------------------Employee Benefits Security Administration-----------------------------------------------------------------------29 CFR Parts 2520, 2550, and 2578Abandoned Plan Regulations and Prohibited Transaction Exemption 2006-06
                for Services Provided in Connection With the Termination of Abandoned
                Individual Account Plans; Interim Final Rules
                Federal Register / Vol. 89 , No. 97 / Friday, May 17, 2024 / Rules
                and Regulations
                [[Page 43636]]
                -----------------------------------------------------------------------
                DEPARTMENT OF LABOR
                Employee Benefits Security Administration
                29 CFR Parts 2520, 2550, and 2578
                RIN 1210-AC04
                Abandoned Plan Regulations
                AGENCY: Employee Benefits Security Administration, Department of Labor.
                ACTION: Interim final rules with request for comments.
                -----------------------------------------------------------------------
                SUMMARY: This rulemaking amends the Abandoned Plan Program regulations
                that provide streamlined procedures for the termination of, and
                distribution of benefits from, individual account pension plans that
                have been abandoned by their sponsoring employers. The regulations,
                which were adopted in 2006 under the Employee Retirement Income
                Security Act of 1974, as amended (``ERISA''), did not cover individual
                account pension plans whose sponsors are in liquidation under chapter 7
                of the U.S. Bankruptcy Code. These interim final rules expand the
                regulations to cover these plans so that bankruptcy trustees may use
                the Abandoned Plan Program's streamlined procedures to terminate and
                wind them up. Other technical amendments also are being made to improve
                the efficiency and operation of the Abandoned Plan Program. The
                amendments will affect employee benefit plans (primarily small defined
                contribution plans), participants and beneficiaries, service providers,
                and individuals appointed to serve as bankruptcy trustees under chapter
                7 of the U.S. Bankruptcy Code. The Department is also issuing an
                amendment to PTE 2006-06, the prohibited transaction exemption
                accompanying the Abandoned Plan Program regulations, elsewhere in this
                issue of the Federal Register.
                DATES:
                 Effective Date. These interim final rules are effective on July 16,
                2024.
                 Comment Due Date. Comments on these interim final rules are due on
                July 16, 2024.
                ADDRESSES: Interested persons are encouraged to submit their comments
                on these interim final rules online. You may submit comments,
                identified by RIN 1210-AC04, by either of the following methods:
                 Federal eRulemaking Portal: www.regulations.gov. Follow the
                instructions for submitting comments.
                 Mail: Office of Regulations and Interpretations, Employee Benefits
                Security Administration, Room N-5655, U.S. Department of Labor, 200
                Constitution Avenue NW, Washington, DC 20210, Attn: Amendments to the
                Abandoned Plan Program regulations interim final rules RIN 1210-AC04.
                 Instructions: All submissions must include the agency name and
                Regulatory Identifier Number (RIN 1210-AC04) for this rulemaking. If
                you submit comments online, do not submit paper copies. Warning: Do not
                include any personally identifiable or confidential business
                information that you do not want publicly disclosed. Comments are
                public records that are posted online as received and can be retrieved
                by most internet search engines.
                 Docket: Comments will be available to the public, without charge,
                online at the Federal eRulemaking Portal at http://www.regulations.gov,
                on the Department's website at http://www.dol.gov/agencies/ebsa, and at
                the Public Disclosure Room, Employee Benefits Security Administration,
                Room N-1513, 200 Constitution Ave., NW, Washington, DC 20210. The
                plain-language summary of the interim final rules of not more than 100
                words in length required by the Providing Accountability Through
                Transparency Act of 2023, and any other background documents, also can
                be accessed at the Federal eRulemaking Portal at https://www.regulations.gov.
                FOR FURTHER INFORMATION CONTACT: Thomas M. Hindmarch or Jason Dewitt,
                Office of Regulations and Interpretations, Employee Benefits Security
                Administration, (202) 693-8500. This is not a toll-free number.
                SUPPLEMENTARY INFORMATION:
                A. Summary Overview
                 On April 21, 2006, the Department of Labor issued three regulations
                that established the Employee Benefits Security Administration's (EBSA)
                Abandoned Plan Program to facilitate the orderly and efficient
                termination of, and distribution of benefits from, individual account
                pension plans that have been abandoned by their sponsoring
                employers.\1\
                ---------------------------------------------------------------------------
                 \1\ 71 FR 20820. See also, 73 FR 58459 (Oct. 7, 2008) for
                subsequent amendments with regard to distributions on behalf of a
                missing non-spouse beneficiary.
                ---------------------------------------------------------------------------
                 The first regulation establishes standards for determining when
                individual account plans may be considered ``abandoned'' and procedures
                by which financial institutions, called ``qualified termination
                administrators'' (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 (ERISA).\2\ The second regulation provides a fiduciary
                safe harbor for QTAs 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.'' \3\ The third regulation establishes a
                simplified method for filing a terminal report for abandoned individual
                account plans.\4\
                ---------------------------------------------------------------------------
                 \2\ 29 CFR 2578.1.
                 \3\ 29 CFR 2550.404a-3. This safe harbor also is available to
                fiduciaries of terminated individual account plans that are not
                abandoned.
                 \4\ 29 CFR 2520.103-13.
                ---------------------------------------------------------------------------
                 The 2006 regulations were accompanied by a prohibited transaction
                exemption, PTE 2006-06, which facilitates the goal of the Abandoned
                Plan Program by permitting a QTA who meets the conditions in the
                exemption to select itself or an affiliate to carry out the termination
                and winding-up activities specified in the 2006 regulations. The
                exemption also allows a QTA to pay itself or an affiliate for those
                services.\5\
                ---------------------------------------------------------------------------
                 \5\ See PTE 2006-06, 71 FR 20855 (Apr. 21, 2006) as amended at
                73 FR 58629 (Oct. 7, 2008) (distributions on behalf of a missing
                non-spouse beneficiary).
                ---------------------------------------------------------------------------
                 For the reasons set forth in the 2006 preamble, the Abandoned Plan
                Program regulations strictly limit who may be a QTA.\6\ To be a QTA, an
                entity must:
                ---------------------------------------------------------------------------
                 \6\ 71 FR at 20821.
                ---------------------------------------------------------------------------
                 (1) 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 and
                 (2) hold assets of the plan on whose behalf it will serve as the
                QTA.\7\
                ---------------------------------------------------------------------------
                 \7\ 29 CFR 2578.1(g).
                ---------------------------------------------------------------------------
                 As a result of these conditions, bankruptcy trustees ordinarily do
                not qualify as QTAs under the Abandoned Plan Program regulations. This
                means the regulations and the class exemption generally are not
                available with respect to plans whose sponsors are in liquidation under
                chapter 7 of the Bankruptcy Code. This was expressly acknowledged and
                discussed in the preamble when the Department published the Abandoned
                Plan Program regulations in 2006.\8\
                ---------------------------------------------------------------------------
                 \8\ 71 FR at 20821.
                ---------------------------------------------------------------------------
                 For several reasons, the Department decided to revisit its decision
                to preclude bankruptcy trustees from serving as QTAs. The Department
                believed and continues to believe that when an individual account plan
                [[Page 43637]]
                sponsor is in liquidation in a chapter 7 bankruptcy case, the plan
                should be terminated and wound up in an orderly and efficient manner.
                In bankruptcy cases, as with abandoned plans generally, the sponsor
                usually is not able to carry out this function. Instead, the Department
                expected that, in chapter 7 bankruptcy cases, the appointed bankruptcy
                trustee would take the necessary steps to terminate the plan, wind up
                its affairs, and distribute plan benefits.
                 The issue of the bankruptcy trustee's authority to terminate and
                wind up the plan was addressed by the enactment of 11 U.S.C. 704(a)(11)
                as part of the Bankruptcy Abuse Prevention and Consumer Protection Act
                of 2005 (BAPCPA).\9\ Under that provision, when an entity that sponsors
                an individual account plan is liquidated under chapter 7 of the
                Bankruptcy Code, the appointed bankruptcy trustee administering the
                liquidation proceeding is required to continue to perform the plan
                administration obligations that would otherwise be required of the
                bankrupt entity.\10\
                ---------------------------------------------------------------------------
                 \9\ Public Law 109-8, 119 Stat. 23.
                 \10\ Section 704(a)(11) refers to whether the debtor (or any
                entity designated by the debtor) serves as the administrator (as
                defined in ERISA section 3) of an employee benefit plan. ERISA
                section 3(16) defines the ``administrator'' as the plan sponsor in
                the absence of any designation in the plan document of another
                person as administrator.
                ---------------------------------------------------------------------------
                 Based on its experience administering the Abandoned Plan Program,
                the Department concluded that the termination of individual account
                plans of sponsors in liquidation under chapter 7 (Chapter 7 ERISA
                Plans) could be improved by including bankruptcy trustees as QTAs and
                providing streamlined termination and winding up procedures that are
                applicable to them \11\ Thus, on December 12, 2012, the Department
                published proposed amendments to the 2006 regulations.\12\ The purpose
                of the regulatory action was to advance the interests of participants
                and beneficiaries by:
                ---------------------------------------------------------------------------
                 \11\ The proposal referred to these plans as ``chapter 7
                plans.'' The new term ``Chapter 7 ERISA Plans'' is used in these
                interim final rules for avoidance of confusion regarding the term
                ``plan'' used in the bankruptcy context.
                 \12\ 77 FR 74063. The Department also published in the same
                issue of the Federal Register proposed amendments to class exemption
                PTE 2006-06 addressing the various transactions related to the
                proposed amendments to the regulations. 77 FR 74055.
                ---------------------------------------------------------------------------
                 (1) facilitating the orderly and efficient termination of Chapter 7
                ERISA Plans,
                 (2) reducing administrative burden and costs imposed on Chapter 7
                ERISA Plans that terminate in accordance with the regulations, and
                 (3) providing an avenue for bankruptcy trustees to discharge their
                duties under ERISA and the Bankruptcy Code with respect to Chapter 7
                ERISA Plans.
                Other technical amendments were also proposed to improve the operation
                of the program.
                 The Department received seven written comment letters on the 2012
                proposal, on behalf of bankruptcy trustees, service providers and
                financial institutions, the Federal Deposit Insurance Corporation
                (FDIC) in its receivership role, and plan participant representatives.
                The commenters generally supported the program's expansion to include
                Chapter 7 ERISA Plans and identified several areas in which they
                thought the proposal could be improved. The written comments on the
                2012 proposal are available on the Department's website.\13\
                ---------------------------------------------------------------------------
                 \13\ Available at www.dol.gov/agencies/ebsa/laws-and-regulations/rules-and-regulations/public-comments/1210-AB47.
                ---------------------------------------------------------------------------
                 The Department has concluded that expanding the Abandoned Plan
                Program regulations to cover Chapter 7 ERISA Plans and making other
                technical changes in response to the public comments would result in an
                improved Abandoned Plan Program. The Department acknowledges that it
                has been over 10 years since the comment period closed. However, the
                purposes of the regulatory action and the rationale for the changes
                discussed in the 2012 proposal continue to be relevant, and the
                program's expansion to include Chapter 7 ERISA Plans and adoption of
                certain other technical improvements would advance the interests of
                participants and beneficiaries in abandoned plans.
                 The Department is relying on its earlier proposal, its
                consideration of comments on that proposal, and its understanding of
                the challenges facing these plans to finalize these interim final
                rules. The Department acknowledges the delay in finalizing the rules
                and therefore also believes another round of public comments would help
                it evaluate the further program expansions suggested by some
                stakeholders and other possible program improvements to address
                potential changes in marketplace circumstances and stakeholder
                experiences with abandoned plans. Accordingly, the Department is
                adopting these amendments to the Abandoned Plan Program regulations in
                the form of interim final rules with a request for comments.
                B. Abandoned Plan Program Special Rules for Chapter 7 ERISA Plans--
                Sec. 2578.1
                 The new provisions for Chapter 7 ERISA Plans are contained in
                paragraph (j) of 29 CFR 2578.1. The amendments extend the Abandoned
                Plan Program's termination and winding up procedures to Chapter 7 ERISA
                Plans. New paragraph (j) is largely an overlay on the existing program.
                This overlay approach enabled the Department to adapt the 2006
                regulations to Chapter 7 ERISA Plans without overhauling the framework
                of the Abandoned Plan Program.
                 In terminating a Chapter 7 ERISA Plan, a QTA would generally apply
                the ``winding up procedures'' in paragraph (d) of Sec. 2578.1 except
                to the extent that such procedures are modified by paragraph (j).
                Paragraph (j) provides that such plans are deemed abandoned upon the
                bankruptcy court's entry of an order for relief in the plan sponsor's
                liquidation proceeding. Paragraph (j) then allows the bankruptcy
                trustee or an ``eligible designee'' to be the QTA, terminate and wind
                up the plan using the streamlined procedures, and pay itself reasonable
                compensation from plan assets for these services. A corresponding edit
                to paragraph (e) of Sec. 2578.1 makes clear that the limited relief
                from ERISA's fiduciary liability provisions applies to a bankruptcy
                trustee that complies with paragraph (j)(7). When EBSA has determined
                that the QTA (whether bankruptcy trustee or eligible designee) has
                completed its responsibilities under the program, EBSA will provide a
                letter to the QTA entitled Receipt of Final Notice.
                 Paragraph (j) allows and in some cases mandates the bankruptcy
                trustee to appoint an ``eligible designee'' to terminate and wind up
                the plan under the streamlined procedures of the Abandoned Plan
                Program. Paragraph (j) recognizes only two types of eligible designees:
                 an entity that can serve as a QTA under paragraph (g) of
                Sec. 2578.1 (i.e., an entity 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 Internal Revenue Code and that holds assets of the
                plan on whose behalf it will serve as the QTA).
                 a person who has served within the previous five years as
                a bankruptcy trustee in a case under chapter 7 of the Bankruptcy Code
                (referred to herein as the ``independent bankruptcy trustee
                practitioner'').
                 If appointed, the eligible designee would serve as the plan's QTA
                and
                [[Page 43638]]
                would terminate and wind up the plan in accordance with these interim
                final rules. In this regard, the eligible designee's responsibilities
                in winding up the affairs of the plan would be the same as those of the
                bankruptcy trustee if it had elected to act as the QTA. While the
                United States Trustee Program maintains oversight authority of the
                bankruptcy trustee under 28 U.S.C. 586, including the performance of
                trustee duties under 11 U.S.C. 704,\14\ the Department emphasizes that
                the use of the Abandoned Plan Program and winding up procedures under
                paragraphs (d) and (j) of section 2578.1 are governed by ERISA (and
                subject to Department oversight).
                ---------------------------------------------------------------------------
                 \14\ Bankruptcy administrators oversee the administration of
                bankruptcy cases filed in Alabama and North Carolina.
                ---------------------------------------------------------------------------
                 The eligible designee is acting under the authority of ERISA and 29
                CFR 2578.1(j) and the designation under the IFR does not confer upon
                any party to the bankruptcy proceeding the ability to make a claim upon
                any bond held by the eligible designee under the Federal Rules of
                Bankruptcy Procedure.\15\ The Department views the bankruptcy trustees'
                and eligible designees' activities under the Abandoned Plan Program as
                subject to ERISA and Department oversight. This would include, for
                example, a bankruptcy trustee's designation of an independent
                bankruptcy trustee practitioner as an eligible designee, a bankruptcy
                trustee's or eligible designee's hiring of plan service providers, and
                a bankruptcy trustee's or eligible designee's decision to pay itself or
                another service provider from plan assets.\16\
                ---------------------------------------------------------------------------
                 \15\ See 11 U.S.C. 322; Federal Rule of Bankruptcy Procedure
                2010.
                 \16\ See Kirschenbaum v. U.S. Dept. of Labor (In re Robert Plan
                Corp.), 777 F.3d 594 (2d Cir. 2015) (bankruptcy courts do not have
                jurisdiction to award compensation to a chapter 7 bankruptcy trustee
                and retained professionals out of assets in a 401(k) plan governed
                by ERISA).
                ---------------------------------------------------------------------------
                 While the procedures and requirements in these interim final rules
                are voluntary, in the Department's view, a bankruptcy trustee that
                follows the interim final rules should generally be able to reduce its
                administrative burden and costs.\17\ A more detailed description of the
                cost savings attributable to relieving the bankruptcy trustee from the
                obligation to file annual reports can be found in the Regulatory Impact
                Analysis section of this preamble.
                ---------------------------------------------------------------------------
                 \17\ A bankruptcy trustee that decides not to use the
                streamlined procedures of the program will not have the fiduciary
                relief provided under the program with respect to the termination
                and winding up of the plan and will have to complete and file all
                annual reports (past due or otherwise) and furnish the attendant
                summary annual reports to participants as would be required of any
                other plan administrator. The Department expects that the costs
                savings to the plan and its participants and beneficiaries will also
                be an important factor for bankruptcy trustees in deciding to use
                the program.
                ---------------------------------------------------------------------------
                1. Bankruptcy Trustee as Qualified Termination Administrator--Sec.
                2578.1(j)(3)
                 These interim final rules generally adopt the provision from the
                2012 proposal that allows the bankruptcy trustee in the case to elect
                to serve as the QTA. For purposes of the interim final rules, the
                bankruptcy trustee in the case includes the interim trustee appointed
                after the order for relief is entered, as well as an elected trustee if
                applicable.\18\ The bankruptcy trustee would have to satisfy the
                winding up procedures in paragraphs (d) and (j) of Sec. 2578.1 as
                discussed herein. A bankruptcy trustee that satisfies the conditions of
                the interim final rules is entitled to reasonable compensation for its
                services and also is entitled to the fiduciary liability relief
                provided by paragraph (e) of Sec. 2578.1.
                ---------------------------------------------------------------------------
                 \18\ See 11 U.S.C. 702(b) and (d).
                ---------------------------------------------------------------------------
                 As stated above, commenters were generally supportive of the
                program's expansion to include Chapter 7 ERISA Plans. One commenter
                expressed the view that the goals of the Abandoned Plan Program could
                be furthered by reducing the role of the bankruptcy trustee as much as
                possible in favor of having another QTA (i.e., the plan's asset
                custodian eligible to serve under paragraph (g)) wind up these plans.
                The commenter stated that a chapter 7 bankruptcy trustee must always
                remain ``disinterested'', which meant that the trustee could not
                represent the interests of both the bankruptcy estate and an adverse
                party to the estate at the same time. The commenter cited several
                specific concerns with a bankruptcy trustee having ongoing
                responsibilities to an ERISA plan until its termination. The concerns
                included the trustee's lack of expertise in monitoring ERISA plan
                termination; perceived conflicts between a trustee's role with respect
                to the bankruptcy estate and as QTA for the terminating ERISA plan; and
                interaction between the requirements of the proposal and the
                established practices of seeking bankruptcy court approval for any
                ``out-of-the-ordinary-course-activity'' in administering the bankruptcy
                estate. The commenter also expressed concern that an ongoing role for
                the bankruptcy trustee could conflict with its obligation to close the
                estate expeditiously. For these reasons, the commenter believed that a
                chapter 7 bankruptcy trustee's responsibilities should be discharged by
                the appointment of an asset custodian eligible designee as QTA and the
                provision of information in the trustee's possession to the QTA.
                 The Department has carefully considered this comment and has made
                some changes in these interim final rules, as discussed below,
                including requiring that the bankruptcy trustee appoint an eligible
                designee to be the QTA in certain circumstances. In considering the
                potential breadth of the changes, the Department was mindful of the
                fact that, in BAPCPA, Congress assigned the obligations of an ERISA
                plan administrator to chapter 7 bankruptcy trustees. Therefore, it does
                not appear that Congress saw a fundamental conflict between a trustee's
                role with respect to the bankruptcy estate and its role in terminating
                the ERISA plan. As a result of this statutory assignment of
                responsibility, the Department does not believe it is appropriate to
                adopt a framework in which the chapter 7 bankruptcy trustee would have
                no ongoing obligation to the plan after appointment of an eligible
                designee.\19\
                ---------------------------------------------------------------------------
                 \19\ One commenter argued that Sec. 704(a)(11) does not make
                the chapter 7 bankruptcy trustee the plan administrator but rather
                requires it to ``perform the obligation required of the
                administrator[.]'' In this circumstance, the Department does not
                believe there is a meaningful distinction between the two. The
                Bankruptcy Abuse Prevention and Consumer Protection Act of 2005,
                Report of the Committee on the Judiciary House of Representatives,
                to accompany S. 256, states at p. 19: ``[T]he bill streamlines the
                appointment of an ERISA administrator for an employee benefit plan,
                under certain circumstances, to minimize the disruption that results
                when an employer files for bankruptcy relief.'' The report states at
                page 96: ``Subsection (a) of section 446 of the Act amends
                Bankruptcy Code section 521(a) to require a debtor, unless a trustee
                is serving in the case, to serve as the administrator (as defined in
                the Employee Retirement Income Security Act of 1974) of an employee
                benefit plan if the debtor served in such capacity at the time the
                case was filed. Section 446(b) amends Bankruptcy Code section 704 to
                require the chapter 7 trustee to perform the obligations of such
                administrator in a case where the debtor or an entity designated by
                the debtor was required to perform such obligations. Section 446(c)
                amends Bankruptcy Code section 1106(a) to require a chapter 11
                trustee to perform these obligations.'' Report is available at
                www.congress.gov/congressional-report/109th-congress/house-report/31/1.
                ---------------------------------------------------------------------------
                2. Appointing an Eligible Designee as QTA--Sec. 2578.1 (j)(4) and
                (j)(5)
                 The 2012 proposal featured a provision that allowed bankruptcy
                trustees to appoint eligible designees to wind up Chapter 7 ERISA
                Plans, rather than the bankruptcy trustee serving as the QTA. Although,
                as discussed in the following preamble sections, public comments
                disagreed on the proper scope and effect of such an appointment,
                commenters focusing on the appointment provision generally
                [[Page 43639]]
                supported the idea. Accordingly, these interim final rules adopt the
                appointment feature with certain modifications.
                (a) Who may be an eligible designee?
                 These interim final rules change the 2012 proposal's limits on who
                may be an eligible designee. An eligible designee is an important
                position under the interim final rules because, after accepting its
                appointment, the eligible designee serves as the QTA and is responsible
                for terminating and winding up the plan in accordance with the interim
                final regulations.
                 Under the proposal, an ``eligible designee'' was strictly limited
                to 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 Internal Revenue
                Code, and that holds assets of the Chapter 7 ERISA Plan. Thus, an
                eligible designee could be the plan's asset custodian at the time of
                abandonment, or another entity chosen by the bankruptcy trustee.
                 Under these interim final rules, the bankruptcy trustee may appoint
                either a plan asset custodian described above or an independent
                bankruptcy trustee practitioner to be the eligible designee. An
                independent bankruptcy trustee practitioner is not the trustee for that
                particular chapter 7 case, but has served within the previous five
                years as a bankruptcy trustee in a case under chapter 7 of the
                Bankruptcy Code. The person could have served as a bankruptcy trustee
                in a case under chapter 7 pursuant to an appointment by the United
                States Trustee (or a bankruptcy administrator, if applicable) to a
                panel for chapter 7 liquidations, pursuant to an election, or by
                another reason such as being the bankruptcy trustee in a chapter 11
                case that converts to a chapter 7 case. In addition, to be an eligible
                designee, the independent bankruptcy trustee practitioner must
                acknowledge its ERISA fiduciary status in writing.\20\
                ---------------------------------------------------------------------------
                 \20\ See U.S. Department of Justice, Executive Office for United
                States Trustees, Handbook for Chapter 7 Trustees, p. 2-1. (October
                1, 2012), for a discussion of eligibility to serve on a panel.
                ---------------------------------------------------------------------------
                 The decision to appoint an eligible designee to be the QTA is
                voluntary on the part of the bankruptcy trustee unless it determines
                that the Chapter 7 ERISA Plan is owed delinquent contributions
                (employer and employee) of more than a de minimis amount, as defined in
                the interim final rules. In that case, the interim final rules require
                the bankruptcy trustee to appoint an eligible designee. This change
                responds to comments expressing concern about potential conflicts of
                interest if the same bankruptcy trustee is assigned to represent the
                interests of the estate and to terminate the ERISA plan, and more
                specifically, the requirement to take reasonable steps to collect
                delinquent contributions on behalf of the plan unless such amounts are
                de minimis. The interim final rule mandates appointment of an eligible
                designee in these circumstances so as to address commenters' perceived
                potential for a conflict of interest on the part of the bankruptcy
                trustee. The Department stresses, however, that the bankruptcy trustee
                retains fiduciary responsibility under section 404(a) of ERISA for
                prudently and loyally selecting and monitoring the eligible designee.
                 These interim final rules also define ``eligible designee'' to
                address comments asking for clarification that an entity or person is
                not an eligible designee unless it acknowledges and accepts that
                designation. Some commenters were concerned that a bankruptcy trustee
                could force an entity to be an eligible designee and suggested that a
                bankruptcy trustee's appointment of and acceptance by the eligible
                designee should be formalized in writing. In response to these
                comments, the interim final rules clarify in paragraphs (j)(4)(i) and
                (ii) of Sec. 2578.1 that, in addition to the other specified
                conditions, an eligible designee must accept such designation in
                writing. The Department does not believe it is necessary to prescribe
                rules for exactly how a bankruptcy trustee and an eligible designee
                should effect the designation and acceptance. However, the Department
                seeks comment on whether a model acceptance would be useful.
                (b) What conditions are necessary to appoint an eligible designee?
                 The conditions to appoint an eligible designee are set forth in
                paragraphs (j)(5)(ii) through (v) of Sec. 2578.1.
                 First, prior to designating an eligible designee, a bankruptcy
                trustee must make reasonable and diligent efforts to determine whether
                the plan is owed any contributions (employer and employee). Whether the
                plan is owed more than a ``de minimis'' amount of contributions will
                determine whether an eligible designee must be appointed. It will also
                determine whether the eligible designee as QTA must take reasonable
                steps to collect 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. Whether the trustee's efforts to make this
                determination are ``reasonable and diligent'' will depend on the facts
                and circumstances of the case.
                 One commenter indicated that bankruptcy trustees may in some cases
                have difficulty obtaining records from the debtor's former management.
                Unfortunately, the Department's experience confirms that inadequate or
                missing records can be a common situation with abandoned plans, and
                this can impact the ability to determine whether delinquent
                contributions are owed. The Department recognizes that when a
                bankruptcy trustee is locating, updating, or recreating records to
                determine if any contributions are owed to the plan, they could incur a
                cost that will exceed the amount of any delinquent contributions.
                Consequently, the Department is of the view that a bankruptcy trustee
                will not have failed to make reasonable and diligent efforts to
                determine whether the plan is owed any contributions merely because the
                trustee reasonably concludes in good faith that it is impossible, or
                would involve significant cost to the plan in relation to the plan's
                total assets, to update or locate the necessary records to make the
                necessary determination. The bankruptcy trustee, after making such
                conclusion, may proceed for purposes of the obligation to collect
                delinquent contributions (discussed below) as if the plan is owed no
                more than a de minimis amount of contributions.
                 Second, at the time of the designation, the bankruptcy trustee must
                notify the eligible designee of its findings with respect to the amount
                of delinquent contributions. This notification applies regardless of
                whether the eligible designee is an asset custodian or an independent
                bankruptcy trustee practitioner, and it will enable the eligible
                designee to take appropriate action.
                 Third, the bankruptcy trustee must establish procedures for the
                eligible designee to have reasonable access to documents in the
                bankruptcy trustee's possession that may be needed to wind up the plan.
                There is no specific list of documents contemplated by this provision,
                but examples include payroll records, participant lists, plan
                documents, trust statements, or other similar records.
                 Fourth, the bankruptcy trustee is responsible for selecting and
                monitoring the eligible designee in accordance with ERISA section
                404(a)(1)(A) and (B). One commenter expressed the view that chapter 7
                bankruptcy trustees in general do not have expertise regarding the
                termination of ERISA plans. The
                [[Page 43640]]
                commenter argued that the chapter 7 trustee's obligation to the plan
                should terminate upon an eligible designee's appointment. As discussed
                above, the Department does not believe that terminating the chapter 7
                bankruptcy trustee's obligation upon appointment of an eligible
                designee would be consistent with the structure designed by Congress.
                Accordingly, in the interim final rules, the duty to monitor the
                eligible designee is ongoing throughout the termination and winding up
                process until all plan assets are distributed.
                 Fifth, a reporting condition attaches to the bankruptcy trustee
                even after the eligible designee has terminated the plan. If the
                bankruptcy estate is still open after the eligible designee winds up
                the plan and the bankruptcy trustee, either directly or through
                monitoring and communicating with the eligible designee, discovers
                evidence of a fiduciary breach by a prior plan fiduciary (e.g., the
                debtor) during this period, the bankruptcy trustee must notify the
                Department of this evidence. See discussion of paragraph (j)(7)'s
                reporting requirement below.
                3. Winding up the Affairs of the Plan--Sec. 2578.1(d) and (j)(7)
                (a) In General
                 The ``winding up'' steps for Chapter 7 ERISA Plans are in
                paragraphs (d) and (j)(7) of Sec. 2578.1. These rules generally are
                the same as the rules for abandoned plans in the 2006 regulations,
                though there are two noteworthy differences.
                 The first major difference is with respect to delinquent
                contributions. These interim final rules require a QTA of a Chapter 7
                ERISA Plan that is owed more than a de minimis amount of contributions
                (which would be determined based on both employer and employee
                contributions, combined) to take reasonable steps to collect delinquent
                contributions on behalf of the Chapter 7 ERISA 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. To avoid potential conflicts of interest
                between the bankruptcy trustee's duties to the bankruptcy estate and
                the bankruptcy trustee's duties to the Chapter 7 ERISA Plan, paragraph
                (j) of these interim final rules mandates that the bankruptcy trustee
                appoint an eligible designee when there is an obligation to collect
                delinquent contributions (i.e., the amount of delinquent contributions
                is more than de minimis).
                 The second major difference is with respect to reporting evidence
                of a fiduciary breach that involves plan assets by a prior plan
                fiduciary. These interim final rules require any QTA to a Chapter 7
                ERISA Plan to report to the Department any activities that the QTA
                believes may be evidence of fiduciary breaches by a prior plan
                fiduciary (e.g., the debtor).
                 The justification for these two differences is that bankruptcy
                trustees, by virtue of their knowledge and control of the debtor's
                estate and ERISA plan, are in a position to:
                 (1) know of the liquidating sponsor's delinquent contributions and
                to facilitate the collection of these delinquencies, and
                 (2) discover evidence of fiduciary breaches by prior plan
                fiduciaries.
                 Paragraph (j)(5)(i) of Sec. 2578.1 contains two alternative tests
                to define what is considered a de minimis amount of delinquent
                contributions, for purposes of the requirement to collect the
                contributions described above.
                 The first test focuses directly on the amount of contributions owed
                to the plan and provides that delinquent contribution amounts are de
                minimis if they are $2,000 or less. As noted above, this would be
                determined taking into account both delinquent employee and employer
                contributions. The Department estimates that $2,000 fairly represents
                what it typically would cost to review the bankruptcy case and to file
                a liquidated proof of claim, two steps ERISA's fiduciary standards
                would require in bankruptcy cases with delinquent contributions in need
                of protection. As such, the first test allows a plan owed only $2,000
                or less in delinquent contributions to avoid potentially costly
                collection efforts.
                 The second test focuses on the ``net worth'' of the source of
                recovery. The test provides that delinquent contribution amounts
                greater than $2,000 are to be considered de minimis if the property
                from which to collect delinquent contributions is an amount (i.e., a
                realizable value) that is equal to or less than $2,000 net of all
                enforceable liens and applicable exemptions. In effect, delinquent
                contributions (whatever the actual amount) are considered de minimis in
                amount when property in the bankruptcy case is likely equal to or less
                than the $2,000 de minimis amount. Although the plan has a legitimate
                claim against the bankruptcy estate, this test dispenses with the need
                to pursue a claim where it is reasonably evident there is insufficient
                property of value from which to collect delinquent contributions or to
                cover the plan's cost of filing a liquidated proof of claim. As part of
                the general request for comments in Section F of the preamble below,
                the Department is specifically asking for comment on the definition of
                ``de minimis'' in these interim final rules.
                 The de minimis rule in these interim final rules was added in
                response to comments expressing concern about the bankruptcy trustee's
                obligations to collect delinquent contributions. One commenter opposed
                placing any responsibility to collect delinquent contributions on
                chapter 7 bankruptcy trustees. The commenter noted that outside of the
                bankruptcy context, QTAs are obligated only to report known
                delinquencies to the Department, rather than taking steps to collect
                the delinquent contributions. The commenter also asserted that
                bankruptcy trustees do not generally have working knowledge of the
                prior business operations of the debtor.
                 Commenters also addressed whether the requirement to collect
                delinquent contributions creates a conflict of interest for chapter 7
                bankruptcy trustees. One commenter asserted that bankruptcy trustees
                would face a conflict of interest in every case in which there is a
                reasonable likelihood that there are unpaid plan contributions due from
                the debtor or any other potential liability that the debtor (and now
                the bankruptcy estate) owes the plan. The commenter suggested, as one
                possibility, that a panel of chapter 7 trustees with special training
                could be appointed to liquidate ERISA plans. As another alternative,
                the commenter suggested that chapter 7 trustees should be permitted to
                provide the Department with a list of delinquencies they have
                reasonably discovered. On the other hand, a different commenter did not
                see any conflict between the role of the chapter 7 trustee and the
                obligation to collect delinquent contributions, as the commenter stated
                that the contributions due to ERISA plans that are attributable to
                workers' deferred wages are not the property of the estate under the
                Bankruptcy Code. The commenter further stated that because employer
                contributions are claims entitled to priority under the Bankruptcy
                Code, it is particularly important for the chapter 7 trustee to
                determine whether any delinquent employer contributions are owed to the
                plan. The commenter suggested that the chapter 7 trustee's obligations
                to collect delinquent employer contributions should be phrased as the
                trustee's obligation to pay amounts consistent with the payment
                priorities in section 507(a)(4) and (a)(5) of the Bankruptcy Code, and
                to file a claim for any excess amounts.
                 After consideration of these comments, the Department continues to
                [[Page 43641]]
                believe that the bankruptcy trustee's knowledge and control over the
                debtor's estate in combination with its obligations under BAPCPA
                justify the interim final rules' requirement to designate an eligible
                designee as the QTA to take reasonable steps to collect delinquent
                contributions of more than a de minimis amount. This approach is not
                based on the belief that chapter 7 bankruptcy trustees have access to
                information on the business' operation prior to the entity filing for
                bankruptcy, but rather on the bankruptcy trustee's existing control and
                access to current information. However, the obligation will not attach
                if the plan is owed no more than a de minimis amount of contributions.
                Further, the interim final rules in certain instances mandate that the
                bankruptcy trustee appoint an eligible designee to assume its
                responsibilities under the program with respect to the plan to avoid
                placing the bankruptcy trustee in conflict with the bankruptcy
                estate.\21\ In such cases, the bankruptcy trustee would still be under
                an obligation to cooperate with the designee in the performance of
                those duties.
                ---------------------------------------------------------------------------
                 \21\ One commenter sought from the Department a list of approved
                QTAs; however, the Department does not keep such a list.
                ---------------------------------------------------------------------------
                (b) Payment of Fees and Expenses
                 Because the winding up rules in the interim final rules are
                essentially the same for Chapter 7 ERISA Plans as they are for
                abandoned plans, the provisions governing payment of fees and expenses
                from plan assets also are essentially the same for both kinds of plans.
                The fee provisions generally provide that plan assets may be used to
                pay reasonable expenses of plan termination. What is reasonable is
                judged in light of industry rates for ordinary plan administration
                under ERISA.\22\ Consequently, these provisions do not allow a
                bankruptcy trustee or eligible designee to charge attorney-level rates
                for plan administration activities of termination and winding up the
                plan.
                ---------------------------------------------------------------------------
                 \22\ Under Sec. 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 website (see
                https://www.askebsa.dol.gov/AbandonedPlanSearch/).
                ---------------------------------------------------------------------------
                 Several commenters addressed this aspect of the proposal. One
                commenter expressed support for the proposal on the bases that that
                there should be no reason for chapter 7 trustees to charge higher fees
                for ordinary plan administration services and the fee limitation would
                help preserve the value of participants' retirement savings. Other
                commenters believed that chapter 7 bankruptcy trustees should not be
                limited to charging plan administration industry rates for their
                services, since their compensation would normally be higher for
                bankruptcy case administration. One commenter indicated the fee
                provisions would be a disincentive for chapter 7 bankruptcy trustees to
                take an active role in the termination and winding up activities.
                Another commenter asserted that chapter 7 trustee compensation is
                routinely reviewed by the presiding bankruptcy judge and the Department
                would be permitted to object in bankruptcy proceedings if it thought a
                trustee's compensation exceeded statutory limits.
                 The Department declines to make the specific changes requested by
                the commenters but has revised these interim final rules to include a
                limited exception to the general rule regarding fees. The limited
                exception would apply to services provided by the eligible designee in
                connection with the duty to collect delinquent contributions on behalf
                of the plan. Under the exception, the fees must be consistent with
                rates ordinarily charged by firms or individuals representing or
                assisting a bankruptcy trustee in performing similar collection
                services on behalf of an estate in a chapter 7 proceeding. This limited
                exception applies to activities such as filing proofs of claims,
                tracing assets, responding to objections, motion practice, and
                litigation on behalf of the plan, but it does not apply to determining
                whether the plan is owed contributions. The act of determining whether
                a plan is owed a contribution is a routine act of plan administration
                and is therefore covered under the general rule rather than the
                exception.
                4. Rule of Accountability--Sec. 2578.1(j)(8)
                 The interim final rules retain the rule of accountability from the
                proposal. Paragraph (j)(8) provides that the bankruptcy trustee or
                eligible designee shall not, for themselves or the other, through
                waiver or otherwise, seek a release from liability under ERISA, or
                assert a defense of derived immunity (or similar defense) in any action
                brought against the bankruptcy trustee or eligible designee arising out
                of its conduct under the regulation.
                 The rule of accountability, as proposed, was based on the fact that
                the ERISA plan and its assets are not part of the estate. Accordingly,
                the rule merely sought to preserve this legal distinction by preventing
                bankruptcy trustees from using bankruptcy courts to insulate themselves
                from liability under ERISA for fiduciary breaches.\23\
                ---------------------------------------------------------------------------
                 \23\ See Kirschenbaum, 777 F.3d at 597.
                ---------------------------------------------------------------------------
                 The Department received several comments on the proposed rule of
                accountability. One commenter supported the proposed rule on the basis
                that paragraph (e) of Sec. 2578.1 already limits ERISA liability for
                QTAs. Another commenter expressed concern that the rule of
                accountability would result in bankruptcy trustees' unwillingness to
                participate in the Abandoned Plan Program because the commenter
                believed the rule would interfere with the trustee's ability to seek
                bankruptcy court approval even when required to do so by the Bankruptcy
                Code. The commenter provided an example stating that bankruptcy
                trustees must seek bankruptcy court approval to hire appraisers, real
                estate brokers and auctioneers. The commenter recommended that the
                Department require that the Department be provided sufficient notice to
                object and have an opportunity to be heard regarding any proposed
                action in the bankruptcy court.
                 The Department does not believe the rule of accountability
                interferes with action required under the Bankruptcy Code. As stated in
                the preamble to the proposal, paragraph (j)(8) does not prevent a
                bankruptcy trustee from asking a court to resolve an actual dispute
                involving a plan or from obtaining an order required under the U.S.
                Bankruptcy Code. However, the rule of accountability would bar a
                trustee from seeking a ruling from a court for approval of its actions
                as a QTA. For example, as discussed above, the Department does not
                believe a bankruptcy court has jurisdiction to approve the payment to a
                professional from assets of the plan.
                 The Department continues to believe that the rule of accountability
                strikes the correct balance by permitting bankruptcy trustees to
                continue existing practices under the Bankruptcy Code while preventing
                them from seeking additional comfort from a bankruptcy court regarding
                compliance with ERISA as set forth in the Abandoned Plan Program.
                Beyond this principle, the Department did not adopt the commenter's
                suggestion to eliminate the rule of accountability in favor of the
                Department receiving notice and opportunity to be heard regarding any
                proposed action in the bankruptcy court.
                 One commenter expressed the view that the proposal did not go far
                enough in ensuring that bankruptcy courts do
                [[Page 43642]]
                not relieve chapter 7 trustees from their obligations to plans. The
                commenter asked the Department to include additional information
                providing guidance on the manner in which the Department would prevent
                bankruptcy courts from discharging bankruptcy trustees from acting as
                fiduciaries with respect to the plans. As noted above, the Department
                believes it has struck an appropriate balance in this regard and
                therefore the Department has not included additional statements or
                information on this issue.
                 The Department seeks commenters' views on the construct of the rule
                of accountability in these interim final rules and whether specific
                changes are recommended.
                C. Technical Comments Unrelated to the Expansion to Chapter 7 ERISA
                Plans
                 Several comment letters raised technical issues dealing with the
                Abandoned Plan Program in general, as opposed to Chapter 7 ERISA Plans
                specifically. The major comments are addressed below.
                1. Removal of Statement of Investigation From the Notice of Plan
                Abandonment--Sec. 2578.1(c)(3)
                 Consistent with the proposal, these interim final rules remove the
                requirement that a QTA state whether it or any affiliate is, or in the
                past 24 months was, 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.
                QTAs were required to include this statement in the notice of plan
                abandonment furnished to the Department before a plan could be deemed
                terminated and wound up.\24\
                ---------------------------------------------------------------------------
                 \24\ See paragraph (c)(3)(i)(C) of Sec. 2578.1 in the 2006
                final regulations.
                ---------------------------------------------------------------------------
                 Although such information alone would not bar a person from serving
                as a QTA, the statement served as a flagging mechanism to help the
                Department identify arrangements that potentially were not in the best
                interests of plan participants and beneficiaries. However, in the
                preamble to the 2012 proposal, the Department stated that generally it
                can determine from its own records whether a person is, or in the past
                24 months was, the subject of such an investigation. Additionally, some
                otherwise qualified persons have expressed reluctance to serve as a QTA
                if they must affirm in a notice to the federal government that they or
                an affiliate are or were under such an investigation, examination, or
                enforcement action.\25\
                ---------------------------------------------------------------------------
                 \25\ See 77 FR 74068.
                ---------------------------------------------------------------------------
                 The Department proposed to remove the requirement as unnecessary in
                light of other information sources available to the Department. The
                Department received two comments supporting the removal of the required
                statement of investigation. There were no comments opposing elimination
                of the requirement. Therefore, for the reasons stated in the proposal,
                the Department is removing the required investigation statement. In
                conjunction with removing the statement, the Department is removing a
                definition of the term ``affiliate'' from paragraph (h)(2) of Sec.
                2578.1 of the 2006 regulations, which was applicable only to the
                investigation statement. The generally applicable definition of the
                term ``affiliate'' in paragraph (h)(1) of Sec. 2578.1 remains in
                effect.
                2. Forfeitures/Small Accounts--Sec. 2578.1(d)(2)(ii)
                 With respect to applying the forfeiture provision in paragraph
                (d)(2)(ii) of section 2578.1 of the 2006 regulations, one commenter
                asked for clarification that a QTA can employ a de minimis exception
                for very small accounts where the cost of locating a participant would
                use up the account balance. The commenter noted that the general
                guidelines for winding up the affairs of a plan currently permit a QTA
                to treat as forfeited an account balance that is less than the
                estimated share of plan expenses allocable to the account.\26\ The
                commenter asked for clarification or revision to the provision so that
                the rule would cover the estimated costs of locating the participant in
                addition to the estimated share of plan expenses allocable to the
                account.
                ---------------------------------------------------------------------------
                 \26\ 29 CFR 2578.1(d)(1)(ii).
                ---------------------------------------------------------------------------
                 Although forfeitures are permitted under these interim final rules,
                they are permitted only after a reasoned judgment that a participant's
                allocable share of anticipated plan expenses is likely to exceed their
                account balance. The Department's view is that it is not reasonable to
                assume that every participant with a small account balance will be
                missing. Therefore, allocating a predetermined search cost for
                participants whom the QTA has no reason to believe are missing would
                not ordinarily be considered reasonable for purposes of the forfeiture
                provision.
                 On the other hand, if a QTA were to determine that it must search
                for a specific participant--for example, if a Notice of Plan
                Termination sent to that participant was returned ``undeliverable''--
                the reasonable cost of searching for the participant would be a
                permissible plan expense and could be allocated entirely to the account
                of the missing participant in accordance with the principles in EBSA
                Field Assistance Bulletin 2003-03.\27\ Accordingly, the Department
                determined that no changes are needed to the 2006 regulations, which
                leave such forfeiture determinations to a case-by-case determination
                based on the relevant facts and circumstances.
                ---------------------------------------------------------------------------
                 \27\ Whether the cost of a particular search is reasonable
                depends on the facts and circumstances of the case. The Department,
                however, notes that a QTA should avoid search methods that cost more
                than the participant's account balance. See EBSA Field Assistance
                Bulletin 2014-01. For example, if the cost of a particular search
                method were to exceed the missing participant's account balance, the
                QTA should consider less costly search methods, such as those
                identified in FAB 2014-01. However, if the QTA reasonably determines
                that the cost of any of the available search methods would exceed
                the missing participant's account balance, the QTA may avoid a
                search and treat the account as forfeited under paragraph (d)(2)(ii)
                of section 2578.1.
                ---------------------------------------------------------------------------
                 In this regard, the Department also seeks comment on the current
                provision in 2578.1(d)(2)(ii)(B) for allocating expenses to participant
                accounts in the absence of a governing plan document provision. The
                provision permits expenses to be allocated on a pro rata basis
                (proportionately in the ratio that each individual account balance
                bears to the total of all individual account balances) or per capita
                basis (allocated equally to all accounts). Do commenters believe that
                this flexibility is appropriate? For example, should the Department
                consider adding provisions to the regulation that would provide
                guidelines for the types of fees and circumstances that would be
                appropriate for per capita versus pro rata methods of allocation?
                3. Distribution Alternatives/Missing Participants
                 Under the 2006 regulations, missing participant accounts were
                generally required to be distributed to individual retirement plans. In
                the case of a distribution by a QTA in 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 QTA to the public at the time of the distribution, the
                QTA may distribute a missing or non-responsive participant's account
                balance to:
                 (i) an interest-bearing federally insured bank or savings
                association account in the name of the participant or beneficiary;
                [[Page 43643]]
                 (ii) the unclaimed property fund of the State in which the
                participant's or beneficiary's last known address is located; or
                 (iii) an individual retirement plan offered by a financial
                institution other than the QTA to the public at the time of the
                distribution.\28\
                ---------------------------------------------------------------------------
                 \28\ Paragraphs 2578.1(d)(vii)(B)(1) and 2550.404a-3(d).
                ---------------------------------------------------------------------------
                 Commenters requested that the Department raise the $1,000 threshold
                to $5,000 and eliminate the condition that the amount be less than the
                minimum amount required to be invested in an individual retirement plan
                product offered by the QTA to the public at the time of the
                distribution. This would allow QTAs to distribute more accounts of
                missing or non-responsive participants to bank or savings accounts or
                State unclaimed property funds than under the current rule. According
                to the commenters, individual retirement plans (e.g., IRAs) for very
                small balances are not profitable or widely available, and though some
                financial institutions offer IRAs with low minimum-balance
                requirements, they tend to do so only as a way to create and maintain
                relationships with customers who, unlike missing and non-responsive
                participants, are likely to regularly contribute to and grow their
                accounts. The commenters suggested that their recommended changes could
                increase the likelihood that more asset custodians would elect to serve
                as QTAs than under the current system, thereby eliminating more
                abandoned plans.
                 The Department is not adopting the commenters' suggestions at this
                time but seeks additional comment on the merits of various distribution
                options. The Department's regulations regarding default distributions
                and the Abandoned Plan Program historically have preferred IRAs to
                other distribution options for several reasons. A distribution that
                qualifies as an eligible rollover distribution from a qualified plan,
                which is handled by a trustee-to-trustee transfer into an individual
                retirement plan, will avoid immediate taxation. An eligible direct
                rollover results in the deferral of income tax, avoids 20 percent
                mandatory withholding, and avoids any 10 percent additional tax for
                early distributions that might otherwise apply.\29\ Funds in the
                individual retirement plan continue to grow on a tax-deferred basis so
                that funds are not subject to federal income tax until distributed.\30\
                ---------------------------------------------------------------------------
                 \29\ See Code Sec. Sec. 402(a), 3405(c), and 72(t).
                 \30\ Depending on state law, state and local income taxes also
                may be subject to deferral.
                ---------------------------------------------------------------------------
                 In contrast, funds transferred to a bank/savings account or State
                unclaimed property fund generally are subject to income taxation,
                mandatory income tax withholding, and a possible additional tax for
                premature distributions. Moreover, any interest that accrues after the
                transfer would generally be subject to income taxation upon
                accrual.\31\
                ---------------------------------------------------------------------------
                 \31\ See e.g., IRS Rev. Rul. 2020-24, Withholding and Reporting
                With Respect to Payments From Qualified Plans to State Unclaimed
                Property Funds.
                ---------------------------------------------------------------------------
                 Another option is the Pension Benefit Guaranty Corporation's
                Missing Participants Program for Defined Contribution Plans pursuant to
                29 CFR 4050.201-207 (PBGC Program). In Field Assistance Bulletin 2021-
                01, the Department provided a temporary enforcement policy under which
                it will not pursue violations under section 404(a) of ERISA against
                either responsible plan fiduciaries of terminating defined contribution
                plans or QTAs of abandoned plans when a missing or non-responsive
                participant's or beneficiary's account balances are transferred to the
                PBGC Program rather than to an IRA, certain bank accounts, or to a
                State unclaimed property fund, as specified in 29 CFR 2550.404a-3. The
                plan fiduciary or QTA must comply with the guidance in the FAB and act
                in accordance with a good faith, reasonable interpretation of section
                404 of ERISA with respect to matters not specifically addressed in the
                FAB.
                 The Department is continuing that temporary enforcement policy
                under these interim final rules. As described below in its general
                request for comments in Section F, the Department requests comment on
                whether the PBGC Program gives missing participants a better chance
                than the other available distribution options of being reunited with
                their retirement savings and should therefore be formally incorporated
                into the Department's regulation at 29 CFR 2550.404a-3. The Department
                further requests comments on whether the PBGC Program should be used as
                a replacement for all other distribution options in the case of plans
                eligible for the PBGC Program.
                 Also, with respect to missing participants, the Department requests
                comments on the methods of providing the participant notices required
                under 2550.404a-3. One commenter asserted that notices provided before
                an involuntary cash out distribution are provided by certified mail.
                The Department seeks comment on whether this is the common way of
                providing notice in that context. The Department also seeks comment on
                whether QTAs are generally unable to rely on the electronic disclosure
                safe harbors in 29 CFR 2520.104b-1 because they are unable to satisfy
                the conditions for the safe harbors, and if so, whether additional
                guidance would be useful on the use of electronic disclosure
                technologies to provide notices under the Abandoned Plan Program
                regulations.
                4. Distributions/Missing Participants/IRAs Offered by Institutions
                Other Than the QTA--Paragraph (d)(2)(vii)(B)(1) of Sec. 2578.1 &
                2550.404a-3
                 One commenter asked for clarification on whether a QTA must accept
                distributions above $1,000 on behalf of missing or non-responsive
                participants or if they may instead distribute the account balance to
                an individual retirement plan offered by an institution other than the
                QTA.
                 Although the interim final rules generally contemplate that a QTA
                will designate itself as the provider of an individual retirement plan
                for such participants, this outcome is not required under the interim
                final rules (or the 2006 regulations). A QTA may distribute such
                account balances to an individual retirement plan offered by an
                institution other than the QTA, provided that the conditions of the
                interim final rules are satisfied, including those set forth in Sec.
                2550.404a-3. A QTA would be responsible as a fiduciary for the
                selection of this provider, as set forth in paragraph (e) of Sec.
                2578.1 (entitled ``Limited liability'').
                5. Distributions/Deceased Participants--Sec. 2550.404a-3(d)(1)(v)
                 Sometimes a QTA will know that a missing participant whose account
                balance is greater than $1,000 is deceased and that there is no
                designated beneficiary, or the beneficiary also is deceased. In such
                circumstances, the 2006 regulations require the QTA 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 was advised that, in some cases, providers of individual
                retirement plans will not accept such distributions.
                 The 2012 proposal contained a special rule to address this
                situation. As proposed, the special rule would conditionally permit
                QTAs 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, instead of to an individual retirement
                plan. The conditions allowed such a transfer if the QTA reasonably and
                in good faith finds that the participant and named
                [[Page 43644]]
                beneficiary, if applicable, were deceased, and includes in the Final
                Notice filed with the Department the identity of the deceased
                participant (and beneficiary as applicable) and the basis for the
                finding.\32\ The proposal's preamble solicited comments on whether the
                proposed conditions sufficiently safeguard the rights of participants
                and beneficiaries and asked in particular whether a QTA should be
                prohibited from making these transfers if the QTA has actual knowledge
                that a descendant of the deceased participant or beneficiary has a
                claim.
                ---------------------------------------------------------------------------
                 \32\ A commenter sought additional guidance on what would
                constitute a valid basis for determining that a participant is
                deceased. The reasonable and good faith standard is a factual
                standard that would require evaluation of all the surrounding
                circumstances.
                ---------------------------------------------------------------------------
                 Commenters raised three general concerns about the workability of
                the special rule. First, QTAs often do not have beneficiary designation
                forms in their possession because the responsibility for maintenance of
                such forms was retained by the sponsor or delegated to another person
                who either cannot be located or no longer maintains possession of the
                records. Thus, in this scenario, QTAs cannot determine whether a living
                beneficiary exists. Second, often the participant's estate is
                designated (either affirmatively or by default) as the participant's
                beneficiary, and because estates cannot be ``deceased'' in the normal
                sense of that word, commenters indicated that the special rule should
                not be available in this circumstance. Third, QTAs sometimes are on
                notice that a descendant of the deceased participant or beneficiary
                claims to have a valid right under probate law and such descendant may
                or may not be a designated beneficiary under the plan terms and ERISA.
                In these circumstances, the commenters cautioned against outcomes that
                could lead to escheatment.
                 After considering the public comments, these interim final rules
                adopt the proposal's special rule permitting transfer of the deceased
                participant's account balance to an appropriate bank account or State
                unclaimed property fund in the name of the participant, even if the
                account balance exceeds $1,000, but with several modifications in
                response to the matters raised by the commenters intended to facilitate
                the termination and winding up of abandoned plans.
                 The first modification clarifies that the special rule is available
                for situations when, despite reasonable and good faith efforts, the QTA
                is unable to locate plan records that identify a beneficiary. See Sec.
                2550.404a-3(d)(1)(v)(A)(2). The interim final rules make clear that the
                special rule is available in these circumstances only if the QTA first
                conducts a reasonable search, consistent with the requirements of
                section 404 of ERISA, for the participant's beneficiary designation
                form.
                 Second, the special rule was expanded to cover situations when the
                beneficiary is the estate of the participant, without regard to whether
                the designation was affirmative or by default. See Sec. 2550.404a-
                3(d)(1)(v)(B). However, availability of the special rule in these
                circumstances, depends on the QTA meeting certain conditions.
                 One condition is that the QTA first must make reasonable and good
                faith efforts to determine whether or not an estate exists before a
                transfer is permitted under the special rule. These interim final rules
                do not specify a method for satisfying this condition, as it will
                depend on the facts and circumstances of the particular case. However,
                the mere fact that an executor or administrator of an estate has not
                affirmatively contacted the QTA would not be sufficient evidence for
                the QTA to reach the requisite finding required by the condition.
                 Another condition is that the QTA must reasonably and in good faith
                find that it is unable to establish an individual retirement plan for
                the benefit of the estate of the participant. For example, this might
                occur if a QTA were to conclude that it is precluded by law from
                establishing an individual retirement plan for the benefit of an estate
                (as opposed to an individual) or if a bankruptcy trustee is unable
                after reasonable efforts to locate an individual retirement plan
                provider who will accept such a distribution.
                 Third, in response to concerns about potential litigation and
                competing claims by descendants and others, the special rule contains a
                new limitation--in no circumstance is the special rule available if the
                QTA has actual knowledge of any claims of a person purporting to have a
                right to all or part of the deceased participant's account. See
                paragraphs (d)(1)(v)(A)(4) and (B)(2) of Sec. 2550.404a-3. For
                example, this might occur if the descendant of a deceased participant
                contacts the QTA in writing to assert a purported interest in the
                decedent's account balance. The Department agrees with the commenters
                that, in these circumstances, the QTA is on notice of the existence of
                a person who is or may become eligible to receive a benefit from the
                plan and that a transfer under the special rule may be inconsistent
                with or frustrate the rights of such person.
                 Finally, these interim final rules adopt the requirement that the
                QTA must document the relevant findings under the special rule and
                include this information in the Final Notice to the Department. See
                paragraph (d)(1)(v)(c) of Sec. 2550.404a-3. This condition serves at
                least two purposes. First, it protects participants and beneficiaries
                by ensuring a determination of death is not premature and that
                reasonable and diligent efforts to find designated beneficiaries
                occurred. Second, it also prevents abuse of the special rule, limiting
                the number of transfers to bank or savings accounts or State unclaimed
                property funds.
                6. QTA's Limited Liability--Sec. 2578.1(e)
                 Several commenters also asked the Department to make additional
                confirmations regarding the scope of liability of QTAs. One commenter
                asked whether the relief afforded by the Abandoned Plan Program
                regulations would extend to functions that are not addressed in the
                regulations, such as responding to domestic relations orders relating
                to benefits under the plan. The Department believes that it has
                constructed a regulatory framework that serves to minimize to the
                greatest extent possible the liability and exposure of QTAs who carry
                out their responsibilities in accordance with the provisions of the
                regulation. However, the limited liability provisions focus on the
                QTAs' activity winding up the affairs of the plan. For areas not
                addressed in the Abandoned Plan Program regulations, QTAs can look to
                the Department's more general guidance provided through advisory
                opinions, information letters, field assistance bulletins, interpretive
                bulletins, and other compliance assistance materials already available
                that address duties and obligations beyond the specific winding up
                affairs performed by QTAs.
                 Another commenter asked about the liability of the QTA after the
                abandoned plan is terminated and assets are distributed, particularly
                with respect to missing participants. The commenter urged the
                Department to clarify that a QTA that has substantially complied with
                the Abandoned Plan Program regulations would have no continuing
                liability for subsequent actions taken by the transferee of the assets.
                In this regard, paragraph (e)(ii) of Sec. 2578.1 provides that the QTA
                is not responsible for monitoring a service provider selected in
                accordance with Sec. 2550.404a-3, which provides a safe harbor for
                fiduciaries in connection with distributions from terminated
                [[Page 43645]]
                individual account plans. However, the Department cautions that it is
                unable to confirm that limited liability is available for
                ``substantial'' compliance. The Department is also unable to confirm in
                response to a similar comment that fiduciary relief would necessarily
                be available for certain activities of the QTA even if the QTA fails to
                meet every applicable requirement of the program. The extent of the
                QTA's liability would depend on the surrounding facts and
                circumstances.
                7. Notices and Special Terminal Report--Sec. 2578.1(c)(3) and (j)(6),
                Sec. 2578.1(d)(2)(ix), and Sec. 2520.103-13
                 In response to a comment, the Department added spaces in the model
                notices to identify fiduciary breaches, as is required in connection
                with Chapter 7 ERISA Plans under these interim final rules.
                Specifically, the spaces were added in the Notification of Intent to
                Serve as a QTA to be used in connection with Chapter 7 ERISA Plans
                (Appendix C to part 2578) and in the Final Notice (Appendix E to part
                2578). The commenter also asked why there is a Notice of Plan
                Termination in Appendix D part 2578 when the Appendix A to part 2550
                appears to serve the same function of providing a model notice to be
                used for participant contributions. The Department agrees that the two
                model notices serve similar functions but the model notice in Appendix
                D to part 2578 contains a provision specific to the QTA context. The
                Department believes that it is most user friendly to provide the model
                notice for participant contributions as an appendix to part 2578 where
                other model notices that are specific to the Abandoned Plan Program are
                located. However, the Department made other minor and clarifying edits
                to the model forms included in the appendices to the Abandoned Plan
                Program regulations.
                 In response to comments, these interim final rules also streamline
                and update the process for filing notices and reports in two
                significant ways. First, the Special Terminal Report for Abandoned
                Plans (STRAP), see Sec. 2520.103-13 is now a single, stand-alone form,
                as opposed to a collection of data from various parts of the Form 5500
                Annual Return/Report of Employee Benefit Plan. Second, the interim
                final rules establish a new optional online method to file the STRAP
                and other notices, as opposed to the existing email or paper-based
                system.
                 With respect to the STRAP, the Department added language to 29 CFR
                2520.103-13(b) to clarify that content requirements of the STRAP must
                be provided in accordance with the instructions for the STRAP posted on
                the Department's website. Pursuant to Sec. 2520.103-13(b)(1), which
                authorizes the collection of plan information, the Department added a
                question to the STRAP to assist the Department in understanding the
                types of defined contribution plans that are terminated under the
                Abandoned Plan Program (e.g., single-employer, multiemployer, multiple-
                employer, 401(k), 403(b) plans, etc.). These interim final rules add
                new paragraphs (b)(6) and (7) to Sec. 2520.103-13, which ask for the
                total number of distributions and the number of distributions to
                missing participants included in that total. Because the Department
                often requests this information, these interim final rules add this
                information requirement to the STRAP to improve the efficiency of the
                program. In this regard, the Department is considering including a
                provision in the final rules that would either explicitly require QTAs
                to maintain records regarding the location of distributions of the
                accounts of missing participants, or that would require such
                information be provided in the STRAP. The Department seeks comment on
                these potential requirements as well as the extent to which QTAs
                currently maintain records on the location of these accounts and the
                length of time that the records are kept.
                 Since the STRAP is now a stand-alone form, the Department can no
                longer rely on the penalties and perjury statement embedded in the Form
                5500 Annual Report. Accordingly, new paragraph (b)(8) adds a penalties
                and perjury statement to the content requirements of Sec. 2520.103-13.
                 The Department also eliminated from the STRAP the requirements to
                report plan administrator identification information, whether the plan
                is collectively bargained, and the effective date of the plan. The
                Department concluded that information is not needed on the STRAP and
                should be available from prior Form 5500 filings for the plan or can be
                requested from the QTA to the extent the information is relevant in a
                particular case under the Abandoned Plan Program. The STRAP form and
                the instructions will be available on the Abandoned Plan Program
                section of EBSA's website.
                 The new optional online filing system--called the ``Abandoned Plan
                Program Online Filing System''--will provide a more efficient
                alternative method for QTAs to submit required notices to the
                Department because it will streamline the process. The Department will
                issue a press release when the online filing system becomes available.
                At that time, instructions for completing and filing notices and the
                STRAP through the online filing system will be available on the
                Abandoned Plan Program section of EBSA's website. The online system
                also will benefit the Department by enabling its staff to more
                efficiently receive, process, and review notices and STRAPs, which in
                turn will benefit QTAs and participants of the plans they are winding
                up. The Department expects that QTAs who opt to electronically submit
                notices and the STRAP will make fewer errors due to the web-based
                procedures and instructions that can ensure greater accuracy of data.
                The Department also expects transcription and other errors by the
                Department will be fewer because of the automated process that will
                occur when submissions are received electronically.
                 The new online filing system is voluntary under these interim final
                rules pending the adoption of the final rules. The Department is
                inclined to make the online filing system the exclusive method of
                filing Abandoned Plan Program notices and the STRAP. Accordingly, the
                Department is interested in receiving comments on whether it should
                make electronic filing mandatory as part of the final rules.
                D. Internal Revenue Code Qualification Requirements
                 As it did in connection with the existing Abandoned Plan Program,
                the Department conferred with representatives of the Internal Revenue
                Service (IRS) regarding the qualification requirements under the
                Internal Revenue Code as applied to plans that are terminated pursuant
                to 29 CFR 2578.1, as modified by these interim final rules. The IRS has
                informed the Department that the modification in these interim final
                rules does not impact the correction principles currently memorialized
                in section 6.02(2)(e)(i) of Revenue Procedure 2021-30, 2021-31 IRB 172.
                Section 6.02(2)(e)(i) of Revenue Procedure 2021-30 provides that the
                permitted correction for a failure that results from the employer
                having ceased to exist, no longer maintaining the plan, or for similar
                reasons is to terminate the plan and distribute plan assets to
                participants and beneficiaries in accordance with standards and
                procedures substantially similar to those set forth in Sec. 2578.1,
                applicable to individual account plans, provided that the following
                four conditions are met. First, the correction must comply with
                standards and procedures substantially similar to those set forth in
                Sec. 2578.1. Second, the QTA, based on plan records located and
                updated in accordance with
                [[Page 43646]]
                Sec. 2578.1(d)(2)(i), must have reasonably determined whether, and to
                what extent, the survivor annuity requirements of sections 401(a)(11)
                and 417 of the Internal Revenue Code apply to any benefit payable under
                the plan and must take reasonable steps to comply with those
                requirements (if applicable). Third, each participant and beneficiary
                must have been provided a nonforfeitable right to their accrued
                benefits as of the date of deemed termination under Sec. 2578.1(c)(1),
                subject to investment gains and losses between that date and the date
                of distribution. Fourth, participants and beneficiaries must receive
                notification of their rights under section 402(f) of the Internal
                Revenue Code. Notwithstanding the foregoing, as set forth in Section
                6.02(2)(e)(i) of Revenue Procedure 2021-30, the IRS reserves the right
                to pursue appropriate remedies under the Internal Revenue 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.
                 The Department received several comments on the QTAs'
                responsibilities regarding the survivor annuity requirements under
                sections 401(a)(11) and 417 of the Internal Revenue Code. Paragraph
                (d)(2)(vii)(B)(2) of Sec. 2578.1 states that with respect to
                distributions to participants or beneficiaries who fail to make an
                election as to the distribution of benefits, a QTA that determines the
                survivor annuity requirements apply may distribute benefits ``in any
                manner reasonably determined to achieve compliance with those
                requirements.'' This provision was included in the 2006 regulations
                after consultation with the IRS. Commenters on the 2012 proposal asked
                for additional guidance on reasonable compliance with the requirements.
                Commenters also indicated that QTAs may experience practical
                difficulties complying with the survivor annuity requirements due to
                lack of recordkeeping and lack of available annuity options for small
                amounts.
                 The Department believes that additional information and
                consultation with the IRS and the Department of the Treasury are
                needed, as the survivor annuity requirements are within their
                jurisdiction.\33\ Accordingly, the Department requests additional
                comments on practical difficulties faced by QTAs complying with the
                survivor annuity requirements.
                ---------------------------------------------------------------------------
                 \33\ See section 101 of Reorganization Plan No. 4 of 1978, 5
                U.S.C. App.
                ---------------------------------------------------------------------------
                E. Comments on Additional Expansion of, or Procedural Changes to, the
                Abandoned Plan Program
                1. Expand Scope of Abandoned Plan Program to Plans of Sponsors in
                Liquidation or Receivership
                 A few commenters asked that the Abandoned Plan Program be expanded
                to cover a broader range of plans. For instance, one commenter
                requested that the Department consider expanding the 2006 regulations
                to cover plans of debtors in liquidation under chapter 11 of the
                Bankruptcy Code and plans of businesses in state receivership. Another
                commenter requested that the Department consider expanding the 2006
                regulations to cover plans of failed insured depository institutions
                for which the FDIC as receiver acts as the plan sponsor and
                administrator.
                 With respect to plans of debtors in liquidation under chapter 11 of
                the Bankruptcy Code, the Department does not believe it has a basis for
                concluding that plans are effectively abandoned as a result of the
                sponsor's chapter 11 petition. Further, expanding the scope of the 2006
                regulations to a broad range of receivership situations was not
                included in the proposal, and the Department does not believe it has an
                adequate public record regarding those other circumstances to ensure
                the Abandoned Plan Program is properly structured to address unique or
                different issues that may be presented. Accordingly, the Department is
                not expanding the scope of the program at this time, as requested by
                some commenters.
                 Nonetheless, based on the public comments submitted, greater
                expansion of the program may further the interests of participants and
                beneficiaries in such plans, and the Department believes exploration of
                such possible expansions of the Abandoned Plan Program is merited. As
                part of the general request for comments in Section F of the preamble
                below, the Department is specifically asking for comments on whether--
                and, if so, how--to extend the framework of the Abandoned Plan Program
                to cover plans whose sponsors are in bankruptcy under chapter 11 of the
                Bankruptcy Code, or receivership under the FDIC or other applicable
                federal or state law.
                2. Expand Definition of QTA to Other Service Providers
                 Outside of the bankruptcy context, the program's definition of a
                QTA requires the QTA to be both eligible to serve as a trustee or
                issuer of an individual retirement plan, within the meaning of Internal
                Revenue Code section 7701(a)(37), and to hold assets of the abandoned
                plans. Several commenters asked the Department to expand the definition
                of a QTA so that recordkeepers and third-party administrators could
                serve that role. According to the commenters, these parties may be in a
                greater position than the asset custodian to have data that would be
                useful in the process of terminating a plan, and this expansion could
                increase the number of plans terminated under the Abandoned Plan
                Program. The commenters suggested the Department could limit the
                expansion to parties that are regulated by the Securities and Exchange
                Commission (SEC), noting that the Department had previously declined to
                expand the definition of a QTA to recordkeepers and third-party
                administrators due, in part, to lack of standards and oversight.\34\
                One commenter noted that in the case of a plan in which the employer
                serves as the trustee, there may technically not be an asset custodian
                that ``holds'' assets of the plan, rendering these plans ineligible to
                participate in the Abandoned Plan Program.
                ---------------------------------------------------------------------------
                 \34\ 71 FR at 20821 (``Although the Department recognizes the
                critical role that recordkeepers, third-party contract
                administrators and other service providers to plans can and will
                play in the process of winding up the affairs of an abandoned plan,
                the Department nonetheless believes that, 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. In developing
                its criteria for QTAs, the Department limited QTA status to trustees
                or issuers of an individual retirement plan within the meaning of
                section 7701(a)(37) of the Code because the standards applicable to
                such trustees and issuers are well understood by the regulated
                community and the Department is not aware of problems attributable
                to weaknesses in the existing Code and regulatory standards for such
                persons. The Department believed that the Code and regulatory
                standards could be adopted for purposes of this regulation without
                imposing unnecessary costs and burdens on either plans or potential
                QTAs. The Department notes that, while commenters did propose
                varying procedures and criteria for defining QTA status, there was
                no consensus among the commenters as to what regulatory standards
                might be applicable to such persons. For these reasons, the
                Department is adopting the definition of `qualified termination
                administrator' without change from the proposal.'').
                ---------------------------------------------------------------------------
                 The Department is not persuaded by the commenters to expand the
                definition of a QTA as requested at this time. The Department continues
                to believe that regulatory oversight of the QTA is an important
                safeguard of abandoned plans. Further, the Department has concerns
                about service providers taking custody or control of plan assets under
                circumstances in which they have no authorization from the plan sponsor
                to do so. The existing rule, under which QTAs may engage, on
                [[Page 43647]]
                behalf of the plan, such service providers as are necessary for the QTA
                to carry out its responsibilities, remains preferable.\35\ However, the
                Department welcomes additional comment on this issue, and in
                particular, how the SEC's existing regulations applicable to
                recordkeepers and third-party administrators would protect the
                interests of the abandoned plans and their participants and
                beneficiaries.
                ---------------------------------------------------------------------------
                 \35\ 2578.1(d)(2)(iv).
                ---------------------------------------------------------------------------
                3. Plans With Small Asset Balances/Plans Funded Through Annuities
                 One commenter encouraged the Department to consider a limited and
                expedited QTA process for plans with only a small amount of total
                assets, such as a few thousand or even a few hundred dollars. In such
                cases, charging the plan to cover the costs of the Abandoned Plan
                Program may deplete some plans' remaining assets. The commenter
                envisioned that parties holding the assets could provide the Department
                with pre-termination reports with relevant information and the
                Department could then approve immediate distributions to remaining
                participants where such persons can be located. Commenters also raised
                the issue of plans that are funded through annuities and noted that
                there does not appear to be a mechanism for a QTA to be paid from the
                plan's assets when the annuity contract does not permit deduction of
                service fees.
                 While the Department is sympathetic to these concerns, it has not
                made any changes to these interim final rules in response. A change to
                the program to provide a special procedure for plans with few assets
                would require careful consideration of how best to protect the
                interests of the participants and beneficiaries in these plans and
                would benefit from additional public comment. Additionally, there does
                not appear to be a ready means of adapting the program to plans funded
                by annuities that do not permit deduction of service fees. The
                Department welcomes additional comment on these areas that may inform
                future regulatory activity.
                4. Requested Procedure for Future Program Changes
                 One commenter asked whether the program could be structured in a
                way to allow changes to be implemented more frequently and more
                quickly. The commenter noted that the program is currently structured
                as a series of regulations and a prohibited transaction exemption,
                which require notice and opportunity for public comment before adoption
                of changes, while other programs such as the Department's Delinquent
                Filer Voluntary Compliance Program, are published as notices.
                 The Department believes that the structure of the existing program
                in the form of regulations and a prohibited transaction exemption
                benefits affected parties by providing certainty beyond what could be
                provided in the form of an enforcement policy or other type of notice.
                That structure does not prevent the Department from issuing opinions or
                other subregulatory guidance interpreting or clarifying the program's
                requirements.
                F. Request for Comments
                 The Department believes that the interim final rules address the
                major comments raised with respect to the 2012 proposal and improve the
                program, especially with respect to the inclusion of Chapter 7 ERISA
                Plans. However, as noted above, the Department acknowledges that the
                2012 proposal was published more than 10 years ago and that these
                regulations have been published as interim final rules with a request
                for comments. This approach will enable bankruptcy trustees to begin
                taking advantage of the voluntary termination and winding up procedures
                almost immediately, while allowing for comments and possible further
                improvement of the Abandoned Plan Program. Although the Department will
                accept comments from interested persons on all aspects of these interim
                final rules in accordance with the instructions for submitting comments
                in the ADDRESSES section of this document, the Department specifically
                invites comments on the following subjects.
                 First, comments are requested on the two alternative tests in
                paragraph (j)(5)(i) of section 2578.1 for determining whether
                contributions are de minimis in amount, including whether the $2,000
                threshold is sufficiently protective of plan participants and
                beneficiaries and whether the Department should add a provision for
                indexing that threshold for inflation. Any comments suggesting that the
                $2,000 threshold is too low should suggest a specific dollar threshold
                with supporting analysis.
                 Second, the Department requests comment on the requirement for
                eligible designees to take reasonable steps to collect 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, and
                the expansion of the definition of eligible designee to include an
                independent bankruptcy trustee practitioner.
                 Third, comments are requested on whether, and if so, how, to extend
                the framework of the Abandoned Plan Program to cover plans whose
                sponsors are in liquidation under chapter 11 of the Bankruptcy Code,
                state receivership, or receivership under the FDIC. Commenters on this
                issue are encouraged to explain the need for such an extension for each
                type of liquidation or receivership, including the anticipated costs
                and benefits to affected parties.
                 Fourth, the Department is interested in comments on whether it
                should incorporate the PBGC Program into 29 CFR 2578.1. On December 22,
                2017, PBGC established the PBGC Program to hold retirement benefits for
                missing participants and beneficiaries in most terminated defined
                contribution plans and to help those participants and beneficiaries
                find and receive those benefits. See 29 CFR 4050.201-207. The PBGC
                cites multiple benefits of the PBGC Program, including: (1) benefits of
                any size can be transferred to the PBGC; (2) periodic active searches
                by the PBGC increase the likelihood of connecting missing participants
                with their benefits; (3) benefits are not diminished by ongoing
                maintenance fees or distribution charges; (4) transferred amounts grow
                with interest (at the applicable Federal mid-term rate); (5) transfers
                to the PBGC Program result in the deferral of income tax, avoid the 20
                percent mandatory withholding, avoid any 10 percent additional tax, and
                grow on a tax deferred basis, and (6) lifetime income options are
                available for balance transfers that are non-de minimis ($7,000 after
                December 31, 2023). As stated in the preamble to the PBGC's final rule
                adopting the PBGC Program, the Department intended to look into what
                changes are needed to its safe harbor regulation (29 CFR 2550.404a-3)
                so that transfers to the PBGC by terminating individual account plans
                would be eligible for relief under the safe harbor.\36\ Thereafter, in
                FAB 2021-01, the Department announced a temporary enforcement policy
                under which it will not pursue violations under section 404(a) of ERISA
                against either responsible plan fiduciaries of terminating defined
                contribution plans or QTAs of abandoned plans in connection with the
                transfer of a missing or non-responsive participant's or beneficiary's
                account balance to the
                [[Page 43648]]
                PBGC in accordance with the PBGC Program rather than to an IRA, certain
                bank accounts, or to a State unclaimed property fund, as specified in
                29 CFR 2550.404a-3. Such plan fiduciaries and QTAs must comply with the
                guidance in the FAB and act in accordance with a good faith, reasonable
                interpretation of section 404 of ERISA with respect to matters not
                specifically addressed in the FAB. As noted above, the Department is
                continuing the temporary enforcement policy under these interim final
                rules and is specifically interested in stakeholder views on whether
                the PBGC Program should be formally incorporated into the Department's
                regulation at 29 CFR 2550.404a-3 as an alternative to other available
                distribution options for missing or non-responsive participants and
                beneficiaries or perhaps as a replacement for plans that meet the
                requirements of the PBGC Program for all other distribution options for
                such persons. The goal of the change would be to give missing
                participants a better chance than under other distribution options of
                being reunited with their retirement savings. For example, the PBGC
                Program would establish a known, centralized repository that would
                preserve a participant's account balance and, where the account exceeds
                certain threshold amounts ($7,000 after December 31, 2023), permit
                missing participants to elect distribution in the form of an annuity to
                ensure lifetime income as well as in a lump sum. The PBGC Program also
                could reduce administrative burdens in particular on abandoned defined
                contribution plans, especially with respect to small accounts, accounts
                of deceased participants, and accounts subject to the Internal Revenue
                Code's joint and survivor annuity rules.
                ---------------------------------------------------------------------------
                 \36\ 82 FR 60800. Previously, the PBGC Program covered only the
                PBGC-insured single-employer defined benefit plans as part of the
                standard termination process. The PBGC Program was expanded to cover
                defined contribution plans (e.g., 401(k) plans), and certain other
                defined benefit plans that terminate on or after January 1, 2018.
                ---------------------------------------------------------------------------
                 To the extent commenters support the transfer of the accounts of
                missing and non-responsive participants to the PBGC under the Abandoned
                Plan Program, the Department is interested in comments addressing
                additional changes to 29 CFR 2578.1 that would facilitate such
                transfers. For example, should the Department consider modifying the
                definition of a QTA to allow third party administrators (TPAs) or other
                entities that do not currently satisfy paragraph (g) of 29 CFR 2578.1
                to act as a QTA solely for the purposes of winding up an abandoned plan
                by transferring all of the accounts of missing and non-responsive
                participants to the PBGC? \37\ If so, what conditions should be imposed
                on TPAs or other entities? For example, should the TPA or other entity
                be required to demonstrate in the notice of intent to serve as QTA that
                it has the authority under existing documentation to direct the
                custodian to pay distributions to participants and beneficiaries?
                ---------------------------------------------------------------------------
                 \37\ Paragraph (g) defines a qualified termination administrator
                as an entity that (1) 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) holds assets of
                the plan that is found abandoned pursuant to paragraph (b).
                ---------------------------------------------------------------------------
                 Fifth, to the extent commenters do not support replacing all the
                current distribution options under 29 CFR 2550.404a-3 with the PBGC
                Program, the Department is interested in comments on whether the
                current Abandoned Plan Program options for distributions to State
                unclaimed property funds should be expanded. The Department has engaged
                over time with a range of stakeholders on issues surrounding missing
                and unresponsive participants, including State unclaimed property
                funds. See, e.g., GAO Report 19-88 ``Federal Action Needed to Clarify
                Tax Treatment of Unclaimed 401(k) Plan Savings Transferred to States
                (January 2019); and Report of the ERISA Advisory Council, ``Voluntary
                Transfers of Uncashed Checks from ERISA Plans to State Unclaimed
                Property Programs'' (November 2019). The ERISA Advisory Council
                concluded that State unclaimed property funds ``have a number of
                features that may decrease the risk of the funds being depleted by
                account fees and increase the likelihood that [m]issing [p]articipants
                will be reunited with their lost retirement savings.'' \38\ Following
                the ERISA Advisory Council report, the National Association of
                Unclaimed Property Administrators \39\ proposed that the Department
                develop a uniform, nationwide regulation for the voluntary transfer to
                unclaimed property funds of uncashed lump sum distribution checks, cash
                outs of $5,000 or less pursuant to Internal Revenue Code Sec.
                411(a)(11), required minimum distributions, and plan mandated lump sum
                distributions at normal retirement age.\40\ The Department is
                interested in comments on the merits of such a limited voluntary option
                being added to the Abandoned Plan Program.\41\
                ---------------------------------------------------------------------------
                 \38\ ERISA Advisory Council Report--Voluntary Transfers of
                Uncashed Checks from ERISA Plans to State Unclaimed Property
                Programs (November 2019) at p. 39.
                 \39\ The National Association of Unclaimed Property
                Administrators (NAUPA) is a network of the National Association of
                State Treasurers (NAST) which leads and facilitates collaboration
                among administrators in their efforts to reunite unclaimed property
                with the rightful owner. NAUPA's membership consists of unclaimed
                property administrators representing the governments of all 50
                states, the District of Columbia, the Commonwealth of Puerto Rico,
                U.S. Virgin Islands, several Canadian provinces, and Kenya.
                 \40\ The Department has issued opinions and other guidance that
                takes the position that section 514 of ERISA preempts State
                unclaimed property laws that require a plan fiduciary of an ERISA
                employee pension benefit plan to distribute or transfer the accrued
                benefits of a missing participant to the state. Advisory Opinion 94-
                41A (Dec. 7, 1994); Advisory Opinion 79-30A (May 14, 1979); Advisory
                Opinion 78-32A (Dec. 22, 1978); Information Letter to Mr. Willis E.
                Sullivan, III Chair, Drafting Committee to Revise Uniform Unclaimed
                Property Act National Conference of Commissioners on Uniform State
                Laws (March 3, 1995).
                 \41\ The Department also notes that the SECURE 2.0 Act of 2022
                requires the Department to establish and maintain an online
                searchable database, to be called the Retirement Savings Lost and
                Found, that will, among other things allow individuals to search for
                the contact information of the administrators of certain types of
                retirement plans, with respect to which the individual is or was a
                participant or beneficiary. As it moves forward with the development
                of the Retirement Savings Lost and Found, the Department intends to
                evaluate its impact on the Abandoned Plan Program.
                ---------------------------------------------------------------------------
                 Sixth, the Department is interested in whether 29 CFR 2550.404a-3
                should be amended to permit the distribution of Code section 403(b)
                individual annuity contracts and Code section 403(b)(7) individual
                custodial accounts. A terminating Code section 403(b) plan must
                distribute all accumulated benefits to all participants and
                beneficiaries as soon as administratively practicable after termination
                of the plan.\42\ The IRS has addressed terminating 403(b) plans in
                Revenue Ruling 2011-7, 2011-10 IRB 534, including issues related to
                delivery to participants or beneficiaries of a fully paid individual
                annuity contract or an individual certificate evidencing fully paid
                benefits under a group annuity contract. Revenue Ruling 2020-23, 2020-
                47 IRB 1028, involved a terminating Code section 403(b) plan with
                403(b)(7) custodial accounts where the plan made in-kind distributions
                of individual custodial accounts (ICAs) to those participants and
                beneficiaries who did not affirmatively elect a distribution or a
                direct rollover to an eligible retirement plan.\43\ The Department is
                [[Page 43649]]
                interested in comments on whether the Abandoned Plan Program should
                expressly address distribution of an annuity contract or an ICA to a
                missing or non-responsive participant or beneficiary compared to a
                default rollover to an individual retirement plan or a transfer to the
                PBGC in the case of a Code section 403(b) plan with 403(b)(7) custodial
                accounts.\44\ The Department is also seeking comments on whether the
                distribution framework set forth in 29 CFR 2550.404a-3 is consistent
                with Revenue Rulings 2011-7 and 2020-23.
                ---------------------------------------------------------------------------
                 \42\ 26 CFR 1.403(b)-10(a)(1).
                 \43\ Section 110 of Division O of the Further Consolidated
                Appropriations Act, 2020, Public Law 116-94, 133 Stat. 2534 (2019)
                known as the Setting Every Community Up for Retirement Enhancement
                Act of 2019 (SECURE Act), directed the Secretary of the Treasury to
                issue guidance providing that the plan administrator or custodian of
                a terminating Code section 403(b) plan with 403(b)(7) custodial
                accounts may distribute an ICA in kind to a participant or
                beneficiary of the plan. Section 110 also provided that the in-kind
                distribution of the ICA would be tax-deferred, similar to the
                treatment of fully paid individual annuity contracts under Rev. Rul.
                2011-7, until amounts are actually paid to the participant or
                beneficiary. Contemporaneous with the publication of Rev. Rul. 2020-
                23, the IRS published Notice 2020-80, 2020-47 IRB 1060 requesting
                comments on the application of the annuity and survivor provisions
                of section 205 of ERISA, in connection with in-kind distribution of
                an ICA from a terminating Sec. 403(b) plan.
                 \44\ The PBGC Program will accept a transfer from a terminating
                or abandoned Code section 403(b) plan with 403(b)(7) custodial
                accounts, but not from a 403(b) annuity contract plan. See 29 CFR
                4050.201(a)(2) and fn. 8 of the preamble of PBGC's final missing
                participant rule at 82 FR 60800, 60802 (2017).
                ---------------------------------------------------------------------------
                 Seventh, the Department is interested in comments on whether
                provisions should be added to the Abandoned Plan Program specifically
                addressing participants in abandoned plans for whom benefits were
                previously forfeited pursuant to Treasury regulation Sec. 1.411(a)-
                4(b)(6), because the plan could not locate them. That regulation
                provides that a right to a benefit is not treated as forfeitable
                ``merely because the benefit is forfeitable on account of the inability
                to find the participant or beneficiary to whom payment is due, provided
                that the plan provides for reinstatement of the benefit if a claim is
                made by the participant or beneficiary for the forfeited benefit.''
                G. Regulatory Impact Analysis
                1. Background and Need for Regulatory Action
                 As stated earlier in this preamble, this document contains
                amendments to three 2006 regulations that facilitate the termination
                of, and distribution of benefits from, individual account pension plans
                that have been abandoned by their sponsoring employers. The primary
                effect of the amendments is to extend the 2006 regulations to Chapter 7
                ERISA Plans. The amendments also make other minor, unrelated changes to
                the 2006 regulations to include: (1) the elimination of the requirement
                that QTAs state in a notice to the Department 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; and (2) conditional permission for
                QTAs to transfer the account balances of certain decedents to an
                appropriate bank account or a state's unclaimed property fund
                regardless of the size of the account balance. The need for the
                amendments is explained in detail above in this preamble, as well as
                the preamble to the 2012 proposal.
                 The Department has examined the effects of these amendments as
                required by Executive Order 12866,\45\ Executive Order 13563,\46\ the
                Congressional Review Act,\47\ the Paperwork Reduction Act of 1995,\48\
                the Regulatory Flexibility Act,\49\ section 202 of the Unfunded
                Mandates Reform Act of 1995,\50\ and Executive Order 13132.\51\
                ---------------------------------------------------------------------------
                 \45\ Regulatory Planning and Review, 58 FR 51735 (Oct. 4, 1993).
                 \46\ Improving Regulation and Regulatory Review, 76 FR 3821
                (Jan. 21, 2011).
                 \47\ 5 U.S.C. 804(2) (1996).
                 \48\ 44 U.S.C. 3506(c)(2)(A) (1995).
                 \49\ 5 U.S.C. 601 et seq. (1980).
                 \50\ 2 U.S.C. 1501 et seq. (1995).
                 \51\ Federalism, 64 FR 43255 (Aug. 10, 1999).
                ---------------------------------------------------------------------------
                2. Executive Orders 12866 and 13563 Statement
                 Executive Orders 13563 and 12866 direct agencies to assess all
                costs and benefits of available regulatory alternatives and, if
                regulation is necessary, to select regulatory approaches that maximize
                net benefits (including potential economic, environmental, public
                health and safety effects, distributive impacts, and equity). Executive
                Order 13563 emphasizes the importance of quantifying both costs and
                benefits, of reducing costs, of harmonizing and streamlining rules, and
                of promoting flexibility. It also requires federal agencies to develop
                a plan under which the agencies will periodically review their existing
                significant regulations to make the agencies' regulatory programs more
                effective or less burdensome in achieving their regulatory objectives.
                The Department identified the amendments to the 2006 regulations as
                part of a retrospective regulatory review project consistent with the
                principles of Executive Order 13563. The changes will improve the
                overall efficiency of the program established under the 2006
                regulations, increase its usage, and substantially reduce burdens and
                costs on bankruptcy trustees (or their designees) terminating the plans
                of sponsors in chapter 7 liquidation, the plans of bankrupt sponsors,
                and the participants in these plans.
                 Under Executive Order 12866, ``significant'' regulatory actions are
                subject to the requirements of the executive order and review by the
                Office of Management and Budget (OMB). As amended by Executive Order
                14094 \52\ entitled ``Modernizing Regulatory Review,'' section 3(f) of
                the executive order defines a ``significant regulatory action'' as an
                action that is likely to result in a rule (1) having an annual effect
                on the economy of $200 million or more (adjusted every 3 years by the
                Administrator of OIRA for changes in gross domestic product); or
                adversely affect in a material way the economy, a sector of the
                economy, productivity, competition, jobs, the environment, public
                health or safety, or State, local, territorial, or tribal governments
                or communities; (2) creating serious inconsistency or otherwise
                interfering with an action taken or planned by another agency; (3)
                materially altering the budgetary impacts of entitlement grants, user
                fees, or loan programs or the rights and obligations of recipients
                thereof; or (4) raising legal or policy issues for which centralized
                review would meaningfully further the President's priorities or the
                principles set forth in this Executive order, as specifically
                authorized in a timely manner by the Administrator of OIRA in each
                case. OMB has determined that these amendments are a significant
                regulatory action under section 3(f)(4) of E.O. 12866.
                ---------------------------------------------------------------------------
                 \52\ 88 FR 21879 (April 6, 2023).
                ---------------------------------------------------------------------------
                3. Affected Entities
                 The group of entities affected by the amendments consists of
                affected abandoned plans as defined under the 2006 regulations, Chapter
                7 ERISA Plans newly eligible to utilize the abandoned plan rules, and
                the financial firms and bankruptcy trustees who serve as QTAs.
                 Based upon Department records it is estimated that approximately
                1,340 plans identify as abandoned plans to the Department each year;
                these plans average approximately 6.4 participants per plan, for a
                total of roughly 8,549 participants (1,340 plans x 6.38 participants
                per plan). The Department assumes this level of utilization will
                continue and uses it as an estimate for the group of plans wound up
                annually under the 2006 regulations.
                 The Department used the following information and approach to
                estimate the additional plan load created by the amendments. There are
                three key data points required to estimate the impact of the
                regulations: (1) bankruptcy rates, (2) defined contribution plan
                prevalence (offer rates), and (3) utilization rates.
                [[Page 43650]]
                The Department assumes that the plan sizes will be similar to that
                experienced under the 2006 regulations; therefore, data regarding the
                offer rates are restricted to smaller establishments (defined as under
                50 employees). Finally, the source for bankruptcy rates, uscourts.gov,
                reports in the aggregate; therefore, the Department's estimates use
                this aggregate rate, which may differ from that of certain subgroups,
                such as smaller firms.
                 Data from uscourts.gov for chapter 7 bankruptcies filed between
                2018 and 2022 support an estimate of 12,900 chapter 7 cases being filed
                annually.\53\ Census Bureau data on county business patterns \54\
                indicate that approximately 75 percent of establishments are small, and
                BLS data \55\ show the Defined Contribution plan offer rate for small
                firms is around 48%. Due to the lack of available data regarding the
                rate of utilization by defined contribution plans during chapter 7
                proceedings, the Department has constructed estimates at 10, 25, and
                100 percent utilization rates. The estimated costs are shown in Table 1
                below.
                ---------------------------------------------------------------------------
                 \53\ A weighted average of the past 5 years data is calculated
                for years 2018-2022 as: (13,906 x 30%) + (13,678 x 25%) + (14,324 x
                20%) + (10,803 x 15%) + (8,131 x 10%) & 12,890. The weights were
                chosen to account for the distortion during the Covid-19 pandemic.
                https://www.uscourts.gov/statistics-reports/analysis-reports/bankruptcy-filings-statistics/bankruptcy-statistics-data.
                 \54\ https://data.census.gov/cedsci/table?q=private%20sector%20establishments%20by%20size&tid=CBP2019.CB1900CBP.
                 \55\ BLS data accessed 08/22/2022 https://data.bls.gov/cgi-bin/srgate, lesser of series (NBU22000000000000227372 &
                NBU22000000000000127372) for 2021 data.
                 Table 1--Summary of Estimated Cost of Amendments at Selected Plan Utilization Rates
                ----------------------------------------------------------------------------------------------------------------
                 Estimated cost Estimated cost Estimated cost
                 change at a change at a change at a
                 Component of Interim Final Rule 10% 25% 100%
                 utilization utilization utilization
                 rate rate rate
                ----------------------------------------------------------------------------------------------------------------
                Additional Plans................................................ 466 1,166 4,662
                Additional Participants......................................... 2,973 7,439 29,744
                ----------------------------------------------------------------------------------------------------------------
                Notice to Plan Sponsor (to locate by QTAs)...................... .............. .............. ..............
                Notice to DOL (on plan abandonment/program utilization)......... $51,088 $127,831 $511,103
                Bankrupt Plans (Court Order) (Trustee appt)..................... 11,540 28,875 115,451
                Notice to Participants.......................................... 38,781 97,037 387,980
                Final Notice.................................................... 14,004 35,040 140,101
                Chapter 7 ERISA Plans (Fiduciary Breach) (to DOL as part of 5,938 14,859 59,410
                 abandonment notice)............................................
                Special Terminal Report (to DOL)................................ 187,383 461,591 1,801,906
                Safe Harbor..................................................... .............. .............. ..............
                Class Exemption Familiarization................................. .............. .............. ..............
                 -----------------------------------------------
                 308,735 765,232 3,015,950
                ----------------------------------------------------------------------------------------------------------------
                Note: Costs include costs for labor and materials & postage where relevant.
                 A 10 percent utilization rate yields an estimate of approximately
                1,800 plans and 11,500 participants in total, after the amendment.\56\
                Using a 100 percent utilization rate results in an estimate of roughly
                6,000 plans with 38,300 participants using the program each year.\57\
                Using a utilization rate of 25 percent in the calculations, which the
                Department will use as the estimate here, results in approximately
                1,200 additional plans (with roughly 7,500 participants \58\ utilizing
                the Abandoned Plan Program due to the amendments, bringing the
                estimated annual utilization numbers to 2,500 plans with 16,000
                participants).\59\
                ---------------------------------------------------------------------------
                 \56\ 1,800 [ap] 1,806 = [(12,900 CHPT 7) x (48% small plans
                offering DC plans) x (75.3% proportion of small plans) x (10%
                abandonment rate of plans with firms in CHPT 7)] + (1,340 plans
                currently using the program); 11,500 participants [ap] 11,522 =
                1,806 plans x 6.38 participants.
                 \57\ 6,000 [ap] 6,002 = [(12,900 CHPT 7) x (48% small plans
                offering DC plans) x (75.3% proportion of small plans)] + (1,340
                plans currently using the program); 38,300 participants [ap] 38,293
                = 6,002 plans x 6.38 participants per plan.
                 \58\ 1,200 [ap] 1,166 = (12,900 CHPT 7) x (48% small plans
                offering DC plans) x (75.3% proportion of small plans) x (25%
                abandonment rate of plans with firms in CHPT 7).
                 \59\ 2,506 = (1,340 plans currently using the program) + (1,166
                new plans); 16,000 participants [ap] 15,988 = 2,506 plans x 6.38
                participants.
                ---------------------------------------------------------------------------
                 The Department estimates that approximately 1,031 QTAs (including
                bankruptcy trustees) will act to establish user accounts to use the
                online filing system with the Department, which is described in section
                C.7 of this preamble.
                4. Benefits
                a. Benefits of Expanding Regulations to Chapter 7 ERISA Plans
                 The amendments to the 2006 regulations provide critical guidance
                that will encourage the orderly and efficient termination of Chapter 7
                ERISA Plans and distribution of account balances, thereby increasing
                the retirement income security of participants and beneficiaries in
                such plans. Absent the standards and procedures set forth in the
                amendments, some bankruptcy trustees may lack the necessary guidance to
                properly terminate Chapter 7 ERISA Plans and distribute benefits to
                participants and beneficiaries. Specifically, the amendments clarify
                the bankruptcy trustee's (or, as applicable, the eligible designee's)
                obligations as QTA with respect to updating plan records, calculating
                account balances, selecting, and monitoring service providers,
                distributing benefits, and paying fees and expenses.
                 The Department believes that providing this guidance and allowing
                bankruptcy trustees to serve or designate others to serve as QTAs will
                lead to administrative cost savings for bankruptcy trustees who choose
                to use these interim final rules. The Department has not quantified
                these benefits because it does not have sufficient information
                regarding the characteristics of Chapter 7 ERISA Plans. The Department
                expects that bankruptcy trustees will decide to use the termination and
                winding up procedures in the interim final rules based on their
                individual assessment of whether it would be more cost effective to
                terminate a plan under or outside of the regulatory safe harbors.
                 One of the potential administrative cost savings that would result
                from the amendments is that Chapter 7 ERISA Plans would file one
                streamlined
                [[Page 43651]]
                termination report at the end of the winding up process in lieu of
                filing Form 5500 Annual Return/Reports. Additionally, Chapter 7 ERISA
                Plans that are not eligible for the small plan audit waiver of 29 CFR
                2520.104-46 (generally, plans with fewer than 100 participants) would
                avoid incurring costly audit fees that otherwise would diminish plan
                assets.
                 Other benefits of the amendments include enhancements to retirement
                security of individuals in Chapter 7 ERISA Plans because of the
                requirements that QTAs, with certain exceptions: (1) take reasonable
                steps to collect delinquent contributions on behalf of the plan, taking
                into account the value of plan assets involved, the likelihood of a
                successful recovery, and the expenses expected to be incurred in
                connection with the collection of contributions, and (2) report to the
                Department delinquent contributions (employer and employee) owed to the
                plan, and any activity believed to be evidence of other fiduciary
                breaches by a prior plan fiduciary that involve plan assets.
                 Removing barriers to winding down the plans may result in
                preserving the value of, and hastening access to, the participants'
                assets. A potential benefit is the reduction of the likelihood of
                becoming a missing participant. As time passes, record accuracy can
                degrade as former employees move. In these instances, funds may be
                transferred into a low yielding account meant to preserve the assets.
                By preventing the employee from becoming a missing participant and
                giving them access to their funds, plan participants can invest the
                assets according to their risk tolerances. Each of these benefits
                affect the value of the participants' assets in a positive manner.
                b. Benefits of Other Amendments to the 2006 Regulations
                 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
                QTAs) of terminated individual account plans can directly transfer a
                missing or non-responsive 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 in cases where
                certain conditions are satisfied. As stated above in this preamble,
                Sec. 2550.404a-3 is being amended to conditionally permit QTAs to
                transfer the account balances of certain decedents to an appropriate
                bank account or a state's unclaimed property fund, regardless of the
                size of the account balance. The amendments would remove an obstacle to
                greater usage of the Abandoned Plan Program by eliminating the need to
                establish individual retirement plans for the account balances of known
                deceased participants with no known, living named beneficiary that are
                over $1,000 when it is unlikely that anyone will claim the funds in
                such plans.
                c. Benefits Associated With Amendment To Eliminate Statement of Past or
                Present Investigations
                 As stated above in this preamble, Sec. 2578.1 is being amended to
                remove the statement of past or present investigations in the notice of
                plan abandonment from the QTA to the Department (see Sec.
                2578.1(c)(3)(i)(B)). The Department believes that, at present, this
                statement is unnecessary and may even discourage firms to serve as
                QTAs, undermining the use of the Abandoned Plan Program. The Department
                holds this belief because EBSA's Office of Enforcement is easily able
                to run searches to determine whether potential QTAs are under
                investigation by the Department. By encouraging more potential QTAs to
                wind up abandoned plans in accordance with the Abandoned Plan Program
                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.
                5. Costs
                 The Department estimates that the cost associated with these
                interim final rules, at a 25 percent utilization rate by firms in
                bankruptcy would total approximately $765,232, as shown in Table 1
                above. These costs would result from the estimated 1,166 Chapter 7
                ERISA Plans that decide to use the termination and winding up
                procedures in the interim final rules and the estimated 1,031 QTAs
                (including bankruptcy trustees) that choose to create accounts with the
                Department's online filing system in order to file their STRAPs
                electronically. These costs are quantified and discussed in more detail
                in the Paperwork Reduction Act section, below.
                6. Cost Savings
                 As discussed above, the costs associated with these interim final
                rules total approximately $870,059. Participation in the Abandoned Plan
                Program is burden reducing in that it relieves participating plans from
                their obligation to comply with Form 5500 Annual Reporting requirements
                and Summary Annual Report requirements for the period of bankruptcy
                and/or program utilization.
                 The Department estimates that the average period of bankruptcy
                proceedings for Chapter 7 ERISA Plans is 2.5 years. Therefore, absent
                the Abandoned Plan Program, the 1,166 Chapter 7 ERISA Plans estimated
                to participate in the Abandoned Plan Program each year would be
                obligated to file an average of 3.5 Form 5500-SFs and 3.5 accompanying
                Summary Annual Reports--one Form 5500-SF filing and accompany Summary
                Annual Report for each year the Chapter 7 ERISA Plan was in bankruptcy
                proceedings and/or abandoned, and one terminal Form 5500-SF filing and
                accompanying Summary Annual Report.\60\ These Chapter 7 ERISA Plans
                would each also need to apply for an EFAST2 credential in order to
                electronically file Form 5500-SFs.\61\
                ---------------------------------------------------------------------------
                 \60\ The Department notes that this figure is an average for
                burden calculation purposes. A relatively equal number of plans
                would file three and four Form 5500-SFs and accompanying Summary
                Annual Reports.
                 \61\ EFAST2 credentials are issued on an individual basis and
                are valid indefinitely unless a period of three calendar years
                passes without use. The Department assigns the cost of
                credentialling to each case to provide a conservative estimate. It
                constitutes roughly 7 percent of the total cost of filing per plan.
                ---------------------------------------------------------------------------
                 The Department estimates that the approximate cost per plan to file
                a Form 5500-SF is $302, the cost for similarly sized plans to create
                and distribute a Summary Annual Report is approximately $87, and the
                cost to apply for an EFAST2 credential is approximately $39.\62\
                Therefore, the total cost savings in Form 5500 filing relief is
                $1,234,391 (1,166 Chapter 7 ERISA Plans x 3.5 Form 5500-SF filings x
                $302), the total cost savings in Summary Annual Report requirements
                relief is $355,326 (1,166 Chapter 7 ERISA Plans x 3.5 Summary Annual
                Reports x $87), and the total cost savings from not having to apply for
                EFAST2 credentials is $45,575 (1,166 plans x $39).\63\
                ---------------------------------------------------------------------------
                 \62\ Estimates are based on time estimates in supporting
                statements which are available at reginfo.gov associated with
                control numbers 1210-0040 and 1210-0110 and wage rate estimates
                maintained by EBSA. For a description of the Department's
                methodology for calculating wage rates, see https://www.dol.gov/sites/default/files/ebsa/laws-and-regulations/rules-and-regulations/technical-appendices/labor-cost-inputs-used-in-ebsa-opr-ria-and-pra-burden-calculations-july-2017.pdf.
                 \63\ Totals differ due to rounding.
                ---------------------------------------------------------------------------
                [[Page 43652]]
                 The total cost savings is $1,635,292 ($1,234,391 + $355,326 +
                $45,575). When compared against the $765,232 in new costs for Chapter 7
                ERISA Plans, the net cost savings resulting from this expansion of the
                Abandoned Plan Program is $870,059 annually.
                H. Paperwork Reduction Act
                 In accordance with the Paperwork Reduction Act of 1995 (PRA) (44
                U.S.C. 3506(c)(2)(A)), the Department solicited comments concerning the
                information collection requirements (ICRs) included in the December 12,
                2012 proposed amendments to the 2006 regulations at 77 FR 74063 and the
                proposed amendments to the class exemption PTE 2006-06 at 77 FR 74055.
                At the same time, the Department also submitted the ICR to OMB in
                accordance with 44 U.S.C. 3507(d). The Department received seven
                comments on the proposal. One commenter raised several questions about
                the model notices associated with 29 CFR 2578.1. The Department
                responded to the commenter, including by making some changes to the
                model notices, as discussed above in section C.7. of the preamble.
                Another commenter suggested that in the context of the potential
                expansion of the program to include FDIC receivers, the FDIC receiver
                should not be required to review ERISA section 408(b)(2) notices and
                prepare and distribute ERISA section 404(a)(5) notices detailing fees
                and costs for a plan that is being terminated. As the Department did
                not expand the program to include FDIC receivers as part of these
                interim final rules, this comment was not addressed.
                 The changes made by these interim final rules affect the existing
                OMB Control Number 1210-0127. A copy of the ICR for OMB Control Number
                1210-0127 may be obtained by contacting the PRA addressee listed in the
                following sentence or at www.RegInfo.gov. For additional information,
                contact: James Butikofer, Office of Research and Analysis, U.S.
                Department of Labor, Employee Benefits Security Administration, 200
                Constitution Avenue NW, Room N-5718, Washington, DC 20210; or
                [email protected]. The OMB will consider all comments that they receive
                on or before June 17, 2024. Comments and recommendations for the
                information collection should be sent within 30 days of publication of
                this notice to www.reginfo.gov/public/do/PRAMain. Find this particular
                information collection by selecting ``Currently under 30-day Review--
                Open for Public Comments'' or by using the search function.
                 The Department assumes that most of the tasks that will be
                undertaken by QTAs to terminate and wind up plans are the same as those
                required in normal plan administration, such as calculating or
                distributing benefits, and therefore are not accounted for as burden in
                this analysis because they are either part of the usual business
                practices of plans or have already been accounted for in ICRs for other
                statutory and regulatory provisions under title I of ERISA.
                 The interim final rules require QTAs to furnish a series of notices
                and a report in the process of terminating and winding up plans. For
                instance, before winding up a plan, the QTA (other than the QTA of a
                Chapter 7 ERISA Plan) must make reasonable efforts to locate or
                communicate with the plan sponsor, such as by sending a notice to the
                last known address of the plan sponsor notifying the sponsor of the
                intent to terminate and wind up the plan and allowing the sponsor an
                opportunity to respond. Following the QTA's finding of abandonment, or
                when there is an entry of an order for relief for a Chapter 7 ERISA
                Plan, the QTA must file with the Department a notice of plan
                abandonment that contains core information about the plan and the
                person electing to be the QTA. The QTA then must furnish to each
                participant or beneficiary a notice with information about the
                termination, the person's account balance, and requesting that such
                person elect a form of distribution. Upon terminating and distributing
                the assets of the plan, the QTA must file a final notice to the
                Department stating that the plan has been terminated and all the plan's
                assets have been distributed. In conjunction with the final notice, the
                QTA must file the Special Terminal Report for Abandoned Plans (STRAP)
                in accordance with instructions published by the Department. The STRAP
                may be filed electronically using the Department's online filing system
                when it becomes available. If a QTA chooses to use the online filing
                system, the QTA will be required to create an account with the
                Department. The Department estimates the burden of these notices and
                reports as a cost burden to the plan because the QTA uses plan assets
                to pay for the notices and STRAP. The only burden reported as hour
                burden is the burden incurred by plan administrators themselves for
                compliance with the safe harbor for non-abandoned plans, which are
                information collection requests (ICRs) subject to the PRA. The hour and
                cost burden associated with these ICRs are summarized in Table 2 below.
                 Table 2--PRA Hour and Cost Burden
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                 Incremental Incremental
                 cost burden hours burden Cost burden Hours burden
                 Component of interim final rule associated associated associated associated Total cost Total hours
                 with with with existing with existing burden burden
                 amendments amendments regulations regulations
                 (a) (b) (c) (d) (a + c) (b + d)
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                Notice to Plan Sponsor (to locate by QTAs).............. $0 0 $8,442 335 $8,442 335
                Notice to DOL (on plan abandonment/plan utilization).... 0 1,360 0 1,563 0 2,924
                Chapter 7 ERISA Plans (Court Order) (Trustee appt)...... 0 292 0 0 0 292
                Notice to Participants.................................. 47,238 539 54,287 620 101,526 1,159
                Final Notice............................................ 0 389 0 447 0 835
                Chapter 7 ERISA Plans (Fiduciary Breach) (to DOL as part 0 136 0 0 0 136
                 of abandonment notice).................................
                Special Terminal Report (to DOL)........................ 0 3,949 0 4,539 0 8,488
                Safe Harbor............................................. 0 0 44,816 42,026 44,816 42,026
                Class Exemption Familiarization......................... 0 583 0 670 0 1,253
                 -----------------------------------------------------------------------------------------------
                 Total............................................... 47,238 7,248 107,545 50,200 154,783 57,449
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                Note: Cost burdens include costs for materials and postage where relevant.
                [[Page 43653]]
                1. Notice to Plan Sponsor
                 This provision only applies to plans that are not Chapter 7 ERISA
                Plans therefore the changes to this component are caused by updating
                inputs and not by any changes to the rule. The Department estimates
                that for each of these estimated 1,340 plans, a QTA would require 10
                minutes of clerical staff time at an hourly labor rate of $63.45 to
                complete the information on the plan sponsor notice, and five minutes
                of an accountant's time at an hourly labor rate of $116.86 to review
                and sign the notice.\64\ This results in approximately 223 hours of
                clerical staff time with an associated cost burden of $14,171 (223
                hours x $63.45 per hour) and 112 hours of an accountant's time with an
                associated cost burden of $13,049 (112 hours x $116.86 per hour).\65\
                ---------------------------------------------------------------------------
                 \64\ For a description of the Department's methodology for
                calculating wage rates, see https://www.dol.gov/sites/default/files/ebsa/laws-and-regulations/rules-and-regulations/technical-appendices/labor-cost-inputs-used-in-ebsa-opr-ria-and-pra-burden-calculations-july-2017.pdf.
                 \65\ Burden estimates presented in the text are rounded to the
                nearest hour; however, in calculating equivalent costs, unrounded
                burden estimates are used.
                ---------------------------------------------------------------------------
                 These notices are sent by a method requiring acknowledgement of
                receipt. Therefore, mailing costs include $6.25 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 $8,442 for the 1,340 notices
                (1,340 notices x ($6.25/notice + $0.05/notice)). These components
                result in a total estimated cost associated with the 2006 regulations
                notices to plan sponsors of $35,662.
                2. Notice of Plan Abandonment to the Department
                 The Department estimates that for each of the estimated 2,506 plans
                participating in the Abandoned Plan Program (1,340 non-Chapter 7 ERISA
                Plans and 1,166 Chapter 7 ERISA Plans), a QTA may utilize 30 minutes of
                a clerical worker's time at an hourly rate of $63.45 to fill in the
                needed information on the notice. The Department also assumes that 40
                minutes of an accountant's time with an hourly rate of $116.86 will be
                required to prepare required plan information, and to review and sign
                the forms. This results in about 1,253 hours (2,506 plans x 30 minutes)
                of clerical staff time with an equivalent cost burden of $79,503 (1,253
                hours x $63.45 per hour), and 1,671 hours (2,506 plans x 40 minutes) of
                an accountant's time with an equivalent cost burden of $195,234 (1,671
                hours x $116.86 per hour) for a total estimated equivalent cost burden
                of $274,737. Based upon recent filing trends between QTAs and the
                Department, 100 percent of plans are expected to furnish the
                information electronically at de minimis cost.
                3. Bankruptcy Trustee's Appointment--Chapter 7 ERISA Plans
                 For an estimated 1,166 Chapter 7 ERISA Plans, an additional cost
                would be incurred for the QTA to attach to the notice of plan
                abandonment a copy of the order entered in the case reflecting the
                bankruptcy trustee's appointment to administer the case. The Department
                estimates that it will take 10 minutes of an accountant's time to
                prepare the required statement and collect required documents and five
                minutes of clerical time to make required copies. This is expected to
                impose an additional burden of approximately 194 hours (1,166 plans x
                10 minutes) for accountants with an equivalent cost of $22,710 (194
                hours x $116.86 per hour). For the clerical professionals, the burden
                is estimated at 97 hours (1,166 plans x 5 minutes) with an equivalent
                cost of $6,165 (97 hours x $63.45 per hour). This results in a labor
                cost of approximately $28,875 to produce the notice of bankruptcy
                trustee's appointment.
                 The rule requires the order entered in the case reflecting the
                bankruptcy trustee's appointment to be included with the notice of plan
                abandonment. Based upon recent filing trends between QTAs and the
                Department, 100 percent of plans are expected to furnish the
                information electronically at de minimis cost.
                4. Notice to Participants and Beneficiaries
                 Data provided by EBSA's Office of Enforcement show that the average
                abandoned plan contains 6.38 participants. As stated previously, the
                Department estimates that approximately 1,340 abandoned plans will
                apply each year. This covers approximately 8,549 participants (1,340
                plans x 6.38 participants per plan). In light of the expansion of the
                2006 regulations to cover plans of sponsors in chapter 7 liquidation,
                the Department estimates that there will be a roughly 90 percent
                increase in applications, bringing the total number of filings up to
                2,506.\66\ Assuming that Chapter 7 ERISA Plans have roughly the same
                number of participants as abandoned plans, the total number of
                participants affected would be approximately 15,988 (2,506 plans x 6.38
                participants per plan).
                ---------------------------------------------------------------------------
                 \66\ The estimation of additional plans is explained in detail
                in Section 3 Affected Plans of this document.
                ---------------------------------------------------------------------------
                 The Department estimates that for each of the estimated 2,506
                terminating plans, a QTA will utilize 15 minutes of an accountant or
                similar professional's time to prepare and review the plan's notices to
                participants and beneficiaries. Clerical staff will spend two minutes
                per participant preparing and mailing the notices. This results in
                approximately 533 hours (2,506 plans x 6.38 participants per plan x 2
                minutes per participant) of clerical staff time with an equivalent cost
                of $33,815 (533 hours x $63.45 per hour) and 627 hours (2,506 plans x
                15 minutes per plan) of an accountant or similar professional's time
                with an associated cost burden of approximately $73,213 (627 hours x
                $116.86 per hour). This results in an estimated cost of approximately
                $107,028 for labor to produce the notices to participants and
                beneficiaries.
                 The Department estimates that this notice, on average, is two pages
                and must be furnished to the last known address of each participant or
                beneficiary. The Department received comments in response to the 2012
                proposal suggesting that postage cost estimates for this component
                should reflect certified mail. The Department has increased its
                estimates of the postage costs accordingly but is also seeking comments
                above on the use of certified mail. The mailing and material costs for
                paper notices are estimated to be $6.35 per mailing (2 pages x $.05 per
                page + $6.25 postage). The Department estimates that 15,988
                participants (2,506 plans x 6.38 participants per plan) will receive
                the notice by mail, creating a mailing cost burden of $101,526.
                Combining this cost with the labor to produce the notices, the total
                cost is estimated at approximately $208,554.
                5. Final Notice
                 The Department estimates that for each of the estimated 2,506
                terminating plans, a QTA will utilize 10 minutes of an accountant's
                time to review the forms in the Final Notice to the Department.
                Clerical staff will spend, on average, 10 minutes per plan preparing
                and mailing the notices. This results in about 418 hours (2,506 plans x
                10 minutes) of clerical staff time with an equivalent cost of $26,501
                (418 hours x $63.45 per hour) and 418 hours of an accountant's time
                (2,506 plans x 10 minutes) with an equivalent cost of $48,809 (418
                hours x $116.86 per hour). This results in an estimated labor cost of
                approximately $75,309 to produce the Final Notices.
                [[Page 43654]]
                Based upon recent filing trends between QTAs and the Department, 100
                percent of plans are expected to furnish the information electronically
                at de minimis cost.
                6. Reporting Requirement for Prior Plan Fiduciary Breaches
                 As discussed earlier in this preamble, the amendments would require
                QTAs of Chapter 7 ERISA Plans (whether they are bankruptcy trustees or
                eligible designees) to report to the Department delinquent
                contributions (employer and employee) owed to the plan, and any
                activity that the QTA believes may be evidence of other fiduciary
                breaches by a prior plan fiduciary that involve plan assets. When
                applicable, this information must be reported in conjunction with the
                filing of the Final Notice or Notice of Plan Abandonment. If, after the
                completion of the winding up of the plan, the bankruptcy trustee, in
                administering the debtor's estate, discovers additional information
                that it believes may be evidence of fiduciary breaches by a prior plan
                fiduciary that involve plan assets, the bankruptcy trustee must report
                such activity to the Department in a time and manner specified in
                instructions developed by the Department.
                 While the Department has no basis for estimating the percentage of
                arrangements that will be subject to each of these reporting
                provisions, the Department assumes for purposes of this analysis that a
                report will be required for 20 percent of Chapter 7 ERISA Plans. Thus,
                given an estimated 1,166 Chapter 7 ERISA Plans, the Department
                estimates that 233 plans will need to report such information. The
                Department anticipates that 30 minutes of a financial professional's
                time and five minutes of clerical time will be required to prepare and
                process the information. The Department therefore estimates that the
                burden for plans will be approximately 117 hours of an accountant's
                time (233 plans x 30 minutes) at an equivalent cost of $13,626 (233
                hours x $116.86 per hour) and 19 hours of clerical time (233 plans x 5
                minutes) at an equivalent cost of $1,233 (19 hours x $63.45 per hour).
                This results in an estimated labor cost of approximately $14,859 to
                produce and distribute notices of fiduciary breaches to the Department.
                 The Department assumes that the reporting of this information will
                be made with the Notice of Plan Abandonment or Final Notice; based upon
                recent filing trends between QTAs and the Department, 100 percent of
                plans are expected to furnish the information electronically at de
                minimis cost.
                7. Special Terminal Report for Abandoned Plans (29 CFR 2520.103-13)
                 The Department estimates that it will take plans 3.25 hours to file
                the STRAP in accordance with the instructions on the Department's
                website. It is assumed that an accounting professional working at a
                cost of $116.86 per hour will perform this task resulting in a burden
                of 8,145 hours (2,506 plans x 3.25 hours) and an equivalent cost of
                $951,766 (8,145 hours x $116.86 per hour).
                 The Department assumes all STRAPs will be submitted electronically
                once the Department's online filing system becomes available. To
                achieve this, QTAs (including bankruptcy trustees) will need to set up
                user accounts the first time they serve as a QTA and use the
                Department's new online submission system. The Department estimates
                that 1,031 QTAs (including bankruptcy trustees) will set up user
                accounts each year. It is assumed that a compensation and benefits
                professional will take 20 minutes to complete this task resulting in a
                burden of 344 hours (1,031 QTAs x 20 minutes) and an equivalent cost of
                $40,298 (344 hours x $117.26 per hour). Combining these figures results
                an estimated labor cost of $992,065 to prepare and submit the STRAPs.
                8. 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
                1,136,306 participants and beneficiaries will receive notices from
                24,897 plan sponsors. The Department estimates that a benefits manager
                will spend approximately 10 minutes per plan preparing the notices.
                This results in 4,150 hours of benefits manager burden (24,897 plans x
                10 minutes) at an equivalent cost of $559,892 (4,150 hours x $134.93
                per hour). Clerical professionals will spend, on average, two minutes
                per notice preparing and distributing the 1,136,306 notices. This
                results in 37,877 hours of clerical burden (1,136,306 notices x 2
                minutes) at an equivalent cost of $2,403,287 (37,877 hours x $63.45 per
                hour). It is assumed that 5.8 percent of participants will receive the
                notice by first class mail and 94.2 percent will receive the notice
                electronically at de minimis cost. The Department estimates that
                mailing the notices will produce a cost burden of $44,816 (1,136,306
                participants x 5.8 percent receiving mailed notices) x ($0.63 for
                postage + ($0.05 per page x 1 page)).\67\ Thus, the notice required
                under the Safe Harbor for Distributions from Terminated Individual
                Account Plans produces a total hour burden of 42,026 hours at an
                equivalent cost of $2,963,179 and a total cost burden of $44,816 for
                materials and postage. These costs are borne by non-Abandoned Plans and
                are not attributable to the amendments expanding the 2006 regulations
                to Chapter 7 ERISA Plans.
                ---------------------------------------------------------------------------
                 \67\ The Department estimates approximately 94.2% of
                participants receive disclosures electronically under the combined
                effects of the 2002 electronic disclosures safe harbor and the 2020
                electronic safe harbor. The Department estimates that 58.2% of
                participants will receive electronic disclosures under the 2002 safe
                harbor. According to the National Telecommunications and Information
                Agency (NTIA), 40.0% of individuals age 25 and over have access to
                the internet at work. According to a Greenwald & Associates survey,
                84.0% of plan participants find it acceptable to make electronic
                delivery the default option, which is used as the proxy for the
                number of participants who will not opt-out of electronic disclosure
                that are automatically enrolled (for a total of 33.6% receiving
                electronic disclosure at work). Additionally, the NTIA reports that
                40.4% of individuals age 25 and over have access to the internet
                outside of work. According to a Pew Research Center survey, 61.0% of
                internet users use online banking, which is used as the proxy for
                the number of internet users who will affirmatively consent to
                receiving electronic disclosures (for a total of 24.7% receiving
                electronic disclosure outside of work). Combining the 33.6% who
                receive electronic disclosure at work with the 24.7% who receive
                electronic disclosure outside of work produces a total of 58.2%. The
                remaining 41.8% of participants are subject to the 2020 safe harbor.
                According to the 2019 American Community Survey, 86.6% of the
                population has an internet subscription. The Department estimates
                that 0.5% of electronic disclosures will bounce back and will need
                to be sent a paper disclosure. Accordingly, for the 41.8% of
                participants not affected by the 2002 safe harbor, 86.1%, or an
                additional 36.0% (41.8% x 86.1%), are estimated to receive
                electronic disclosures under the 2020 safe harbor. In total, the
                Department estimates that 94.2% (58.2% + 36.0%) would receive
                electronic disclosures.
                ---------------------------------------------------------------------------
                9. Abandoned Plan Class Exemption, PTE 2006-06
                 PTE 2006-06 permits a QTA of an individual account plan that has
                been abandoned by its sponsoring employer to select itself or an
                affiliate to provide services to the plan in connection with the
                termination of the plan, and to pay itself, or an affiliate, fees for
                these services, provided that such fees are consistent with the
                conditions of the exemption. The exemption also permits
                [[Page 43655]]
                a QTA to: (1) designate itself or an affiliate as a provider of an
                individual retirement plan or other account; (2) select a proprietary
                investment product as the initial investment for the rollover
                distribution of benefits for a participant or beneficiary who fails to
                make an election regarding the disposition of such benefits; and (3)
                pay itself or its affiliate in connection with the rollover.
                 Currently, PTE 2006-06 and the accompanying Abandoned Plan Program
                regulations do not cover plans of sponsors involved in chapter 7
                bankruptcy proceedings. In this regard, bankruptcy trustees do not meet
                the definition of QTA as set forth in the existing Abandoned Plan
                Program regulations and the class exemption. The amendments expand the
                definition of QTA to include bankruptcy trustees and certain persons
                designated by them to act as QTAs in terminating and winding up the
                affairs of abandoned plans. The Department believes that the amendments
                to the Abandoned Plan Program regulations and PTE 2006-06 will
                incentivize many bankruptcy trustees to carry out plan terminations
                consistent with ERISA, which will ultimately benefit participants and
                beneficiaries of such plans by ensuring abandoned plans are terminated
                in an orderly and cost-effective manner.
                 Compliance with the amendments to the Abandoned Plan Program
                regulations is a condition of the amendment to the class exemption;
                therefore, the costs and benefits that would be associated with
                complying with the amendment to the class exemption have been described
                and quantified in connection with the economic impact of the regulatory
                amendments. In its current form, PTE 2006-06 requires, among other
                things, that fees and expenses paid to the QTA 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 QTA (or affiliate) for the same or
                similar services provided to customers that are not plans terminated
                pursuant to the Abandoned Plan Program regulations, if the QTA (or
                affiliate) provides the same or similar services to such other
                customers. The amended class exemption provides an exception for
                services provided in connection with the duty to collect delinquent
                contributions on behalf of the plan. The exception judges what is
                reasonable in light of industry rates ordinarily charged by firms or
                individuals representing or assisting a bankruptcy trustee in
                performing similar collection services on behalf of an estate in a
                chapter 7 proceeding. The class exemption, in its current form, also
                requires that QTAs 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 form. Accordingly, the recordkeeping burden attributable to the
                amendment will be handled by the QTA 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 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 all QTAs will take advantage of
                the exemption, the hour burden attributable to supervisory duties for
                QTAs of abandoned plans (including familiarization costs for new QTAs)
                is expected to be one half hour for each QTA, or 1,253 hours (2,506
                plans x 30 minutes). Assuming a financial manager's wage rate of
                $190.63 per hour, this supervisory cost is expected to total $238,859
                ($190.63 per hour x 1,253 hours).
                 Also, in certain limited circumstances, the current exemption PTE
                2006-06 requires QTAs to provide the Department with a statement under
                penalty of perjury that services were performed and a copy of the
                executed contract between the QTA and a plan fiduciary or plan sponsor.
                The Department does not include burden for these requirements as the
                burden is small, and the statement and contract can be included with
                other notices sent to the Department.
                 Below is a summary of the burden:
                 Type of Review: Revision of Existing Collection.
                 Agency: Employee Benefits Security Administration, Department of
                Labor.
                 Title: Notices for Terminated Abandoned Individual Account Plans.
                 OMB Number: 1210-0127.
                 Affected public: Individuals or households; business or other for-
                profit; not-for-profit institutions.
                 Respondents: 28,434.
                 Responses: 1,162,551.
                 Frequency of Response: One time.
                 Estimated Total Burden Hours: 42,026.
                 Cost Burden: $2,963,179.
                I. Regulatory Flexibility Act
                 The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) applies
                to most Federal rules that are subject to the notice and comment
                requirements of section 553(b) of the Administrative Procedure Act (5
                U.S.C. 551 et seq.). Unless an agency certifies that such a rule will
                not have a significant economic impact on a substantial number of small
                entities, section 603 of the RFA requires the agency to present a final
                regulatory flexibility analysis at the time of the publication of the
                rulemaking describing the impact of the rule on small entities. Small
                entities include small businesses, organizations, and governmental
                jurisdictions. For purposes of analysis under the RFA, the Department
                considers a small entity to be an employee benefit plan with fewer than
                100 participants.\68\ The basis of this definition is found in section
                104(a)(3) of ERISA, which permits the Secretary of Labor to prescribe
                simplified annual reports for welfare benefit plans that cover fewer
                than 100 participants. While some large employers may have small plans,
                in general, small employers maintain most small plans. Thus, the
                Department believes that assessing the impact of these final
                regulations on small plans is an appropriate substitute for evaluating
                the effect on small entities. The definition of small entity considered
                appropriate for this purpose differs, however, from a definition of
                small business that is based on size standards promulgated by the Small
                Business Administration (SBA) (13 CFR 121.201) pursuant to the Small
                Business Act (15 U.S.C. 631 et seq.). The Department requested comments
                on the appropriateness of this size standard at the proposed rule stage
                and received no adverse responses.
                ---------------------------------------------------------------------------
                 \68\ The Departments consulted with the Small Business
                Administration Office of Advocacy in making this determination, as
                required by 5 U.S.C. 603(c) and 13 CFR 121.903(c) in a memo dated
                June 4, 2020.
                ---------------------------------------------------------------------------
                 The Abandoned Plan Program is a voluntary program intended to
                provide a cost effective, streamlined option for winding up abandoned
                plans. The Department believes that these amendments will expand usage
                of the Abandoned Plan Program and help to preserve the assets of
                Chapter 7 ERISA
                [[Page 43656]]
                Plans, thereby maximizing benefits ultimately payable to participants
                and beneficiaries and improving economic efficiency.
                 Essentially all abandoned plans are assumed to be small plans.
                Therefore, the more detailed discussion earlier in the preamble on the
                costs of the amendments is applicable to this analysis of costs under
                the RFA. As discussed previously in the RIA section, the costs
                associated with the amendments to the Abandoned Plan Program total
                approximately $765,232 and affect approximately 1,166 plans in a given
                year. This is an average of $656.29 per plan. This cost is net of the
                savings described in section 6 above, which are expected to be roughly
                $1,400 per plan attributable to the STRAP replacing multiple years of
                reporting requirements.
                 The most recent Private Pension Plan Bulletin estimates that there
                were 257,699 plans with less than 10 participants in 2020, which is the
                size group most consistent with historical utilization trends.
                Comparing this group with the estimated 1,166 plans that may use the
                program annually indicates that they represent less than 0.5 percent of
                very small defined contribution plans which is not a substantial number
                of the small plans affected.\69\
                 The Department also examined the costs relative to the participant
                asset balances in the group of plans assumed to be most likely to
                utilize the program. For a participant in the smallest plans measured
                by the number of participants and average per participant account
                balance, the roughly $103 per participant cost represents, on average,
                a 2.4 percent reduction in their account balance, which is not a
                significant impact. The distributions of participant account balance
                reductions are presented in Table 3 below, by plan size, for all small
                plans.
                 Table 3--Cost as a Percentage of Balance
                 [Per participant]
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                 10th 25th 75th 90th
                 Plan size percentile percentile Median Mean percentile percentile
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                0-9..................................................... 2.37 0.51 0.14 0.06 0.05 0.02
                10-19................................................... 2.18 0.59 0.20 0.11 0.08 0.04
                20--29.................................................. 2.18 0.63 0.23 0.13 0.10 0.06
                30--39.................................................. 2.26 0.66 0.25 0.14 0.11 0.06
                40--49.................................................. 2.16 0.66 0.26 0.15 0.12 0.07
                50--59.................................................. 2.13 0.66 0.27 0.16 0.13 0.07
                60--69.................................................. 2.09 0.67 0.27 0.17 0.13 0.07
                70--79.................................................. 2.13 0.69 0.28 0.17 0.14 0.07
                80--89.................................................. 2.06 0.68 0.28 0.17 0.14 0.08
                90--99.................................................. 1.91 0.66 0.28 0.17 0.14 0.07
                --------------------------------------------------------------------------------------------------------------------------------------------------------
                Source: 2020 Private Pension Plan Bulletin Research File, EBSA.
                Notes: Excludes plans reporting no assets and no participants.
                 Due to the small number of small plans involved and relatively low
                cost per plan and participant, the Assistant Secretary of the Employee
                Benefit Security Administration hereby certifies under 5 U.S.C. 605
                that this rule will not have a significant economic impact on a
                substantial number of small entities
                ---------------------------------------------------------------------------
                 \69\ Employee Benefits Security Administration, Private Pension
                Plan Bulletin: Abstract of 2020, Table B1, (2022).
                ---------------------------------------------------------------------------
                J. Congressional Review Act
                 This amendment is subject to the Congressional Review Act
                provisions of the Small Business Regulatory Enforcement Fairness Act of
                1996 (5 U.S.C. 801 et seq.) and will be transmitted to the Congress and
                the Comptroller General for review. The interim final rule is not a
                ``major rule'' as that term is defined in 5 U.S.C. 804, because it is
                not likely to result in (1) an annual effect on the economy of $100
                million or more; (2) a major increase in costs or prices for consumers,
                individual industries, or Federal, State, or local government agencies,
                or geographic regions; or (3) significant adverse effects on
                competition, employment, investment, productivity, innovation, or on
                the ability of United States-based enterprises to compete with foreign-
                based enterprises in domestic and export markets.
                K. Unfunded Mandates Reform Act
                 For purposes of the Unfunded Mandates Reform Act of 1995 (Pub. L.
                104-4), the rule does not include any Federal mandate that will result
                in expenditures by state, local, or tribal governments in the aggregate
                of more than $100 million, adjusted for inflation, or increase
                expenditures by the private sector of more than $100 million, adjusted
                for inflation.
                L. Federalism Statement
                 Executive Order 13132 (August 4, 1999) outlines fundamental
                principles of federalism and requires the adherence to specific
                criteria by Federal agencies in the process of their formulation and
                implementation of policies that have substantial direct effects on the
                States, the relationship between the national government and the
                States, or on the distribution of power and responsibilities among the
                various levels of government. This rule does not have federalism
                implications because it has no substantial direct effect on the States,
                on the relationship between the national government and the States, or
                on the distribution of power and responsibilities among the various
                levels of government. Section 514 of ERISA provides, with certain
                exceptions specifically enumerated, that the provisions of Titles I and
                IV of ERISA supersede any and all laws of the States as they relate to
                any employee benefit plan covered under ERISA. The requirements
                implemented in the rule do not alter the fundamental provisions of the
                statute with respect to employee benefit plans, and as such would have
                no implications for the States or the relationship or distribution of
                power between the national government and the States.
                List of Subjects
                29 CFR Part 2520
                 Accounting, Employee benefit plans, Pensions, Reporting and
                recordkeeping requirements.
                29 CFR Part 2550
                 Employee benefit plans, Employee Retirement Income Security Act,
                Employee stock ownership plans, Exemptions, Fiduciaries, Investments,
                Investments foreign, Party in interest, Pensions, Pension and Welfare
                Benefit Programs Office, Prohibited transactions, Real estate,
                Securities, Surety bonds, Trusts and Trustees.
                [[Page 43657]]
                29 CFR Part 2578
                 Employee benefit plans, Pensions, Retirement.
                 For the reasons set forth in the preamble, the Department of Labor
                amends 29 CFR chapter XXV as follows:
                PART 2520--RULES AND REGULATIONS FOR REPORTING AND DISCLOSURE
                0
                1. The authority citation for part 2520 is revised to read as follows:
                 Authority: 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. 2520.101-5 also
                issued under 29 U.S.C. 1021(f). Sec. 2520.101-6 also issued under 29
                U.S.C. 1021(k). Sec. 2520.103-13 also issued under 29 U.S.C. 1023.
                Secs. 2520.102-3, 2520.104b-1, 2520.104b-3, and 2520.104b-31 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.
                0
                2. Revise Sec. 2520.103-13 to read as follows:
                Sec. 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 Sec.
                2578.1(d)(2)(viii) of this chapter shall be in the form published by
                the Department in the Abandoned Plans section of the Employee Benefits
                Security Administration's website and shall contain the information 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.
                 (b) Contents. The terminal report described in paragraph (a) of
                this section shall contain the following information in accordance with
                the instructions to the terminal report published by the Department in
                the Abandoned Plans section of the Employee Benefits Security
                Administration's website:
                 (1) Identification information concerning the plan, the qualified
                termination administrator, and, if applicable, the bankruptcy trustee.
                 (2) The total assets of the plan as of the date the plan was deemed
                terminated under Sec. 2578.1(c) of this chapter, prior to any
                reduction for termination expenses and distributions to participants
                and beneficiaries.
                 (3) The total termination expenses paid by the plan and an
                identification of each service provider and amount received, itemized
                by expense.
                 (4) The total distributions made pursuant to Sec.
                2578.1(d)(2)(vii) of this chapter and a statement regarding whether any
                such distributions were transfers under Sec. 2578.1(d)(2)(vii)(B) of
                this chapter.
                 (5) The identification, fair market value and method of valuation
                of any assets with respect to which there is no readily ascertainable
                fair market value.
                 (6) The total number of distributions.
                 (7) The number of distributions to missing participants included in
                the total number of distributions reported in paragraph (b)(6) of this
                section.
                 (8) A statement that the information being provided in the report
                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.
                 (c) Method of filing. The terminal report described in paragraph
                (a) of this section shall be filed in accordance with instructions
                pertaining to terminal reports of qualified termination administrators
                published by the Department in the Abandoned Plans section of the
                Employee Benefits Security Administration's website.
                 (d) When to file. The qualified termination administrator shall
                file the terminal report described in paragraph (a) of this section
                within two months after the end of the month in which the qualified
                termination administrator satisfies the requirements in Sec.
                2578.1(d)(2)(i) through Sec. 2578.1(d)(2)(vii), and Sec. 2578.1(j)(7)
                as applicable, 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 Sec. 2578.1 of this chapter or by a bankruptcy
                trustee described in Sec. 2578.1(j)(3) of this chapter or an eligible
                designee described in Sec. 2578.1(j)(4) of this chapter.
                 (2) Filing of a report under this section by the qualified
                termination administrator shall not relieve any person from any
                obligation under part 1 of title I of ERISA.
                PART 2550--RULES AND REGULATIONS FOR FIDUCIARY RESPONSIBILITY
                0
                3. The authority citation for part 2550 is revised to read as follows:
                 Authority: 29 U.S.C. 1135, sec. 102, Reorganization Plan No. 4
                of 1978, 5 U.S.C. App. at 727 (2012) and Secretary of Labor's Order
                No. 1-2011, 77 FR 1088 (Jan. 9, 2012). Section 2550.401c-1 also
                issued under 29 U.S.C. 1101. Sections 2550.404a-2 and 2550.404a-3
                also issued under sec. 657, Pub. L. 107-16, 115 Stat. 38. Sections
                2550.404a-5, 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.
                0
                4. Revise Sec. 2550.404a-3 to read as follows:
                Sec. 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 Sec. 2578.1(g) or (j)(3) 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.
                 (2) This section shall apply to an individual account plan only
                if--
                 (i) In the case of an individual account plan that is an abandoned
                plan within the meaning of Sec. 2578.1 of this chapter, such plan was
                intended to be maintained as a tax-qualified retirement plan in
                accordance with the requirements of section 401(a) or 403(a), or as a
                tax deferred annuity plan in accordance with section 403(b) of the
                Internal Revenue Code of 1986 (Code); or
                 (ii) In the case of any other individual account plan, such plan is
                maintained in accordance with the requirements of section 401(a),
                403(a), or 403(b) of the Code at the time of the distribution.
                 (3) The standards set forth in this section apply solely for
                purposes of determining whether a fiduciary meets the requirements of
                this safe harbor. Such standards are not intended to be the exclusive
                means by which a fiduciary might satisfy their responsibilities under
                the Act with respect to making distributions described in this section.
                 (b) Distributions. This section shall apply to a distribution from
                a terminated individual account plan if, in connection with such
                distribution:
                 (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
                [[Page 43658]]
                plan, Sec. 2578.1(d)(2)(vi) of this chapter, and
                 (2) The participant or beneficiary failed to elect a form of
                distribution within 30 days of the furnishing of the notice described
                in paragraph (b)(1) of this section.
                 (c) Safe harbor. A fiduciary that meets the conditions of paragraph
                (d) of this section shall, with respect to a distribution described in
                paragraph (b) of this section, be deemed to have satisfied its duties
                under section 404(a) of the Act with respect to the distribution of
                benefits, selection of a transferee entity described in paragraph
                (d)(1)(i) through (v) of this section, and the investment of funds in
                connection with the distribution.
                 (d) Conditions. A fiduciary shall qualify for the safe harbor
                described in paragraph (c) of this section if:
                 (1) The distribution described in paragraph (b) of this section is
                made to any of the following transferee entities--
                 (i) To an individual retirement plan within the meaning of section
                7701(a)(37) of the Code;
                 (ii) In the case of a distribution on behalf of a designated
                beneficiary (as defined by section 401(a)(9)(E) of the Code) who is not
                the surviving spouse of the deceased participant, to an inherited
                individual retirement plan (within the meaning of section 402(c)(11) of
                the Code) established to receive the distribution on behalf of the
                nonspouse beneficiary;
                 (iii) In the case of a distribution by a qualified termination
                administrator (other than a bankruptcy trustee described in Sec.
                2578.1(j)(3) of this chapter or an eligible designee described in Sec.
                2578.1(j)(4)(ii) of this chapter) 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:
                 (A) An interest-bearing federally insured bank or savings
                association account in the name of the participant or beneficiary,
                 (B) The unclaimed property fund of the State in which the
                participant's or beneficiary's last known address is located, or
                 (C) An individual retirement plan (described in paragraph (d)(1)(i)
                or (d)(1)(ii) of this section) offered by a financial institution other
                than the qualified termination administrator to the public at the time
                of the distribution; or
                 (iv) In the case of a distribution by a bankruptcy trustee as
                described in Sec. 2578.1(j)(3) of this chapter or an eligible designee
                as described in Sec. 2578.1(j)(4)(ii) of this chapter with respect to
                which the amount to be distributed is $1,000 or less and such
                bankruptcy trustee or eligible designee, 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--
                 (A) The qualified termination administrator may disregard the
                $1,000 threshold therein if the qualified termination administrator
                reasonably and in good faith finds that--
                 (1) The participant is deceased;
                 (2) The designated beneficiary or beneficiaries are deceased or
                unable to be identified based on records located and updated pursuant
                to Sec. 2578.1(d)(2)(i) of this chapter;
                 (3) The estate of the participant is not the designated
                beneficiary; and
                 (4) The qualified termination administrator has no actual knowledge
                of any claims by any person to all or part of the deceased
                participant's account.
                 (B) If the estate of the participant is the designated beneficiary,
                the qualified termination administrator may disregard the $1,000
                threshold therein if the qualified termination administrator reasonably
                and in good faith finds that--
                 (1) An estate does not exist or cannot be found;
                 (2) The qualified termination administrator has no actual knowledge
                of any claims by any person to all or part of the deceased
                participant's account; and
                 (3) The qualified termination administrator is unable to establish
                an individual retirement plan for the benefit of the estate of the
                participant.
                 (C) A summary of the pertinent findings made in paragraph
                (d)(1)(v)(A) or (B) of this section must be included in the notice
                described in Sec. 2578.1(d)(2)(ix)(G) (the Final Notice) of this
                chapter, including the basis for the findings (including the name and
                last known address of the beneficiary, if known) and an attestation
                that the qualified termination administrator has the full name and last
                known address of the deceased participant.
                 (2) Except with respect to distributions to State unclaimed
                property funds (described in paragraph (d)(1)(iii)(B) of this section),
                the fiduciary enters into a written agreement with the transferee
                entity which provides:
                 (i) The distributed funds shall be invested in an investment
                product designed to preserve principal and provide a reasonable rate of
                return, whether or not such return is guaranteed, consistent with
                liquidity (except that distributions under paragraph (d)(1)(iii)(A) of
                this section to a bank or savings account are not required to be
                invested in such a product);
                 (ii) For purposes of paragraph (d)(2)(i) of this section, the
                investment product shall--
                 (A) Seek to maintain, over the term of the investment, the dollar
                value that is equal to the amount invested in the product by the
                individual retirement plan (described in paragraph (d)(1)(i) or
                (d)(1)(ii) of this section), and
                 (B) Be offered by a State or federally regulated financial
                institution, which shall be: a bank or savings association, the
                deposits of which are insured by the Federal Deposit Insurance
                Corporation; a credit union, the member accounts of which are insured
                within the meaning of section 101(7) of the Federal Credit Union Act;
                an insurance company, the products of which are protected by State
                guaranty associations; or an investment company registered under the
                Investment Company Act of 1940;
                 (iii) All fees and expenses attendant to the transferee plan
                (described in paragraph (d)(1)(i) or (d)(1)(ii) of this section) or
                account (described in paragraph (d)(1)(iii)(A) of this section),
                including investments of such plan, (e.g., establishment charges,
                maintenance fees, investment expenses, termination costs and surrender
                charges), shall not exceed the fees and expenses charged by the
                provider of the plan or account for comparable plans or accounts
                established for reasons other than the receipt of a distribution under
                this section; and
                 (iv) The participant or beneficiary on whose behalf the fiduciary
                makes a distribution shall have the right to enforce the terms of the
                contractual agreement establishing the plan (described in paragraph
                (d)(1)(i) or (d)(1)(ii) of this section) or account (described in
                paragraph (d)(1)(iii)(A) of this section), with regard to their
                transferred account balance, against the plan or account provider.
                 (3) Both the fiduciary's selection of a transferee plan (described
                in paragraph (d)(1)(i) or (d)(1)(ii) of this section) or account
                (described in paragraph (d)(1)(iii)(A) of this section) and the
                investment of funds would not result in a prohibited transaction under
                section 406 of the Act, or if so prohibited such
                [[Page 43659]]
                actions are exempted from the prohibited transaction provisions by a
                prohibited transaction exemption issued pursuant to section 408(a) of
                the Act.
                 (e) Notice to participants and beneficiaries. (1) Content. Each
                participant or beneficiary of the plan shall be furnished a notice
                written in a manner calculated to be understood by the average plan
                participant and containing the following:
                 (i) The name of the plan;
                 (ii) A statement of the account balance, the date on which the
                amount was calculated, and, if relevant, an indication that the amount
                to be distributed may be more or less than the amount stated in the
                notice, depending on investment gains or losses and the administrative
                cost of terminating the plan and distributing benefits;
                 (iii) 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 plan administrator (or other fiduciary)
                identified in paragraph (e)(1)(vii) of this section of that election;
                 (iv) A statement explaining that, if a participant or beneficiary
                fails to make an election within 30 days from receipt of the notice,
                the plan will distribute the account balance of the participant or
                beneficiary to an individual retirement plan (i.e., individual
                retirement account or annuity described in paragraph (d)(1)(i) or
                (d)(1)(ii) of this section) and the account balance will be invested in
                an investment product designed to preserve principal and provide a
                reasonable rate of return and liquidity;
                 (v) A statement explaining what fees, if any, will be paid from the
                participant or beneficiary's individual retirement plan (described in
                paragraph (d)(1)(i) or (d)(1)(ii) of this section), if such information
                is known at the time of the furnishing of this notice;
                 (vi) The name, address and phone number of the individual
                retirement plan (described in paragraph (d)(1)(i) or (d)(1)(ii) of this
                section) provider, if such information is known at the time of the
                furnishing of this notice; and
                 (vii) The name, address, and telephone number of the plan
                administrator (or other fiduciary) from whom a participant or
                beneficiary may obtain additional information concerning the
                termination.
                 (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 Sec. 2520.104b-
                1(b)(1) of this chapter to the last known address of the participant or
                beneficiary; and
                 (ii) In the case of a notice that is returned to the plan as
                undeliverable, the plan fiduciary shall, consistent with its duties
                under section 404(a)(1) of the Act, take steps to locate the
                participant or beneficiary and provide notice prior to making the
                distribution. If, after such steps, the fiduciary 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 30 days for
                purposes of paragraph (b)(2) of this section.
                 (f) Model notice. The appendix to this part contains a model notice
                that may be used to discharge the notification requirements under this
                section for plans other than abandoned plans. Use of the model notice
                is not mandatory. However, use of an appropriately completed model
                notice will be deemed to satisfy the requirements of paragraph (e)(1)
                of this section. For a model notice for abandoned plans, see Appendix D
                to part 2578.
                0
                5. Add Appendix A to part 2550 to read as follows:
                Appendix A to Part 2550--Model Notice for Section 404a-3
                NOTICE OF PLAN TERMINATION
                [DO NOT USE FOR ABANDONED PLANS]
                [Date of notice]
                [Name and last known address of plan participant or beneficiary]
                Re: [Name of plan]
                Dear [Name of plan participant or beneficiary]:
                 This notice is to inform you that [name of the plan] (the Plan)
                has been terminated.
                 We have determined that you have an interest in the Plan, either
                as a plan participant or beneficiary. Your account balance in the
                Plan on [date] is/was [account balance]. We will be distributing
                this money as permitted under the terms of the Plan and federal
                regulations. {If applicable, insert the following sentence: The
                actual amount of your distribution may be more or less than the
                amount stated in this notice depending on investment gains or losses
                and the administrative cost of terminating your plan and
                distributing your benefits.{time}
                 Your distribution options under the Plan are {add a description
                of the Plan's distribution options{time} . It is very important that
                you elect one of these forms of distribution and inform us of your
                election. The process for informing us of this election is {enter a
                description of the Plan's election process{time} .
                 If you do not make an election within 30 days from your receipt
                of this notice, your account balance will be transferred directly to
                an individual retirement plan (inherited individual retirement plan
                in the case of a nonspouse beneficiary). {If the name of the
                provider of the individual retirement plan is known, include the
                following sentence: The name of the provider of the individual
                retirement plan is [name, address and phone number of the individual
                retirement plan provider].{time} Pursuant to federal law, your
                money in the individual retirement plan would then be invested in an
                investment product designed to preserve principal and provide a
                reasonable rate of return and liquidity. {If fee information is
                known, include the following sentence: Should your money be
                transferred to the individual retirement plan described, above,
                [name of the financial institution] will charge your account the
                following fees for its services: {add a statement of fees, if any,
                that will be paid from the participant or beneficiary's individual
                retirement plan{time} .{time}
                 For more information about the termination, your account
                balance, or distribution options, please contact [name, address, and
                telephone number of the plan administrator or other appropriate
                contact person].
                 Sincerely,
                [Name of plan administrator or appropriate designee]
                [Name of plan]
                PART 2578--RULES AND REGULATIONS FOR ABANDONED PLANS
                0
                6. The authority citation for part 2578 continues to read as follows:
                 Authority: 29 U.S.C. 1135; 1104(a); 1103(d)(1).
                0
                7. Revise Sec. 2578.1 to read as follows:
                Sec. 2578.1 Termination of abandoned individual account plans.
                 (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 the situations described in
                (a)(1) or (2) of this section.
                 (1) A qualified termination administrator 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.
                 (2) An order for relief under chapter 7 of title 11 of the United
                States Code (the United States Bankruptcy Code) has been entered with
                respect to the plan sponsor.
                 (b) Finding of abandonment. (1) A qualified termination
                administrator (as defined in paragraph (g) of this section) 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 communications from
                [[Page 43660]]
                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 Benefits 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, or if a plan is considered abandoned
                due to the entry of an order for relief under chapter 7 of the United
                States Bankruptcy Code (pursuant to paragraph (j)(2) of this section),
                the plan shall be deemed to be terminated on the ninetieth (90th) day
                following the date of the letter from the Employee Benefits Security
                Administration acknowledging receipt of the notice described in
                paragraph (c)(3) or (j)(6) 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 in
                accordance with instructions published by the Department in the
                Abandoned Plans section of the Employee Benefits Security
                Administration's website a notice of plan abandonment and intent to
                serve as qualified termination administrator 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, email
                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;
                 (ii) Plan information. (A) The name, address, telephone number,
                account number, EIN of the plan sponsor (if known), and plan number
                used on the Form 5500 Annual Return/Report filed for 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 and beneficiaries with
                accounts 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
                [[Page 43661]]
                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 delinquent contributions described in
                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 carry
                out the qualified termination administrator's authority and
                responsibility under 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, except as
                provided pursuant to paragraph (j)(7) of this section (relating to
                Chapter 7 ERISA Plans), 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 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 paragraph
                (d)(2)(ii)(B) of this section;
                 (B) Allocates expenses and unallocated assets in accordance with
                the plan document, 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 the notification required in
                paragraphs (c)(3) or (d)(2)(ix) of this section.
                 (B) Except as provided in paragraph (j)(7)(i) of this section,
                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 the same or similar
                services provided to customers that are not plans terminated pursuant
                to this section, if the qualified termination administrator (or
                affiliate) provides the 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, or in the case of a Chapter 7 ERISA Plan
                (described in paragraph (j)(2) of this section) a statement that the
                plan sponsor is in liquidation under chapter 7 of the United States
                Bankruptcy Code, and, therefore, has been terminated pursuant to
                regulations issued by the U.S. Department of Labor;
                 (3)(i) A statement of the participant's or beneficiary's account
                balance and the date on which it was calculated by the qualified
                termination administrator, and
                 (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
                [[Page 43662]]
                administrator 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 inherited individual retirement plan 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) or (iv) of this chapter, 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 Sec.
                2550.404a-3(d)(1)(i) or (d)(1)(ii) of this chapter) 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
                (described in Sec. 2550.404a-3(d)(1)(i) or (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's or beneficiary's individual retirement plan (described in
                Sec. 2550.404a-3(d)(1)(i) or (d)(1)(ii) of this chapter) or other
                account (described in Sec. 2550.404a-3(d)(1)(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 (described in Sec. 2550.404a-3(d)(1)(i) or
                (d)(1)(ii) of this chapter), qualified survivor annuity, or other
                account (described in Sec. 2550.404a-3(d)(1)(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 qualified
                termination administrator as undeliverable, the qualified termination
                administrator shall, consistent with the duties of a fiduciary under
                section 404(a)(1) of the Act, 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 (vii) of this section,
                furnish to the U.S. Department of Labor in accordance with instructions
                published by the Department in the Abandoned Plans section of the
                Employee Benefits Security Administration's website, a notice, signed
                and dated by the qualified termination administrator, containing the
                following information:
                 (A) The name, EIN, address, email address, and telephone number of
                the qualified termination administrator, including the address, email
                address, and telephone number of the person signing the notice (or
                other contact person, if different from the person signing the notice),
                and if applicable with respect to a Chapter 7 ERISA Plan (as described
                in paragraph (j)(2) of this section), the name, address (including
                email address), and telephone number of the bankruptcy trustee if the
                bankruptcy trustee is not the qualified termination administrator;
                 (B) The name, account number, EIN, and plan number used on the Form
                5500 Annual Return/Report filed for 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) or (j)(7)(iv) of this section;
                 (E) If fees and expenses paid by the plan exceed by 20 percent or
                more the estimate required by paragraph (c)(3)(v)(B) or (j)(6)(vi)(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 delinquent contributions described in
                paragraph (d)(2)(iii) of this section, or if applicable with respect to
                a Chapter 7 ERISA Plan (as described in paragraph (j)(2) of this
                section), an identification of delinquent contributions and evidence of
                other fiduciary breaches described in paragraph (j)(7)(ii) of this
                section (if not already reported under paragraphs (c)(3) or (j)(6) of
                this section);
                 (G) For each distribution in accordance with Sec. 2550.404a-
                3(d)(1)(v) of this chapter (relating to distributions on behalf of
                deceased participants and beneficiaries), a summary of the pertinent
                findings as required by Sec. 2550.404a-3(d)(1)(v)(C) of this chapter;
                and
                 (H) A statement that the information being provided in the notice
                is true and
                [[Page 43663]]
                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 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 paragraphs (d)(2) and (j)(7) 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) and (j)(7) of this section as
                applicable.
                 (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) of 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.
                 (4) If the qualified termination administrator is an eligible
                designee described in Sec. 2578.1(j)(4) of this chapter, designated by
                a bankruptcy trustee described in Sec. 2578.1(j)(3) of this chapter,
                both the bankruptcy trustee and the eligible designee shall be treated
                as the qualified termination administrator for purposes of paragraphs
                (e)(1)(i), (e)(2) and (f) of this section. Nothing in this paragraph
                (e)(4) shall serve to relieve the bankruptcy trustee from its
                obligations under or limit its liability for a failure to comply with
                paragraph (j)(5).
                 (f) Continued liability. 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 found abandoned pursuant to
                paragraph (b) of this section.
                 (h) Affiliate. (1) 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 (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 part 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), (d)(2)(ix), and (j)(6) of this section.
                 (j) Special rules for Chapter 7 ERISA Plans. (1) In general. This
                paragraph (j) contains special rules for individual account plans of
                sponsors in liquidation under chapter 7 of the United States Bankruptcy
                Code (Chapter 7 ERISA Plans). These special rules modify, augment, or
                supersede otherwise applicable provisions in paragraphs (a) through (i)
                of this section.
                 (2) Deemed abandonment. If the sponsor of an individual account
                plan is in liquidation under chapter 7 of the United States Bankruptcy
                Code, the requirements of paragraph (b) do not apply, and the Chapter 7
                ERISA Plan shall be considered abandoned upon the entry of an order for
                relief, except that the plan shall cease to be considered abandoned if
                at any time before the plan is deemed terminated pursuant to paragraph
                (c) of this section, the plan sponsor's chapter 7 liquidation
                proceeding is dismissed or converted to a proceeding under a different
                chapter of the United States Bankruptcy Code.
                 (3) Qualified termination administrator. For a plan deemed
                abandoned under paragraph (j)(2) of this section, the definition of
                ``qualified termination administrator'' in paragraph (g) of this
                section does not apply and only the bankruptcy trustee in the case, or
                an eligible designee (as defined in paragraph (j)(4) of this section),
                may be the qualified termination administrator.
                 (4) Eligible designee. The term ``eligible designee'' means--
                 (i) any person or entity who accepts in writing a designation by
                the bankruptcy trustee and who meets the requirements in paragraph (g)
                of this section; or
                 (ii) an `` independent bankruptcy trustee practitioner.'' An
                independent bankruptcy trustee practitioner is a person other than the
                bankruptcy trustee of the plan sponsor's case, who has served within
                the previous five years as a bankruptcy trustee in a case under chapter
                7 of the Bankruptcy Code, who accepts in writing a designation by the
                bankruptcy trustee and who acknowledges in writing to the bankruptcy
                trustee that they are a fiduciary with respect to the plan.
                 (5) Rules and conditions with respect to designating an eligible
                designee.
                 (i) The term ``de minimis'' in paragraph (j)(7)(i) of this section
                means:
                 (A) Any amount that is equal to or less than $2,000; or
                 (B) Any amount greater than $2,000 if the property from which to
                collect delinquent contributions is a realizable value that is equal to
                or less than $2,000
                [[Page 43664]]
                net of all enforceable liens and applicable exemptions.
                 (ii) Prior to designating an eligible designee, a bankruptcy
                trustee must make reasonable and diligent efforts to determine whether
                the plan is owed any contributions (employer and employee) and the
                amount thereof. If the amount of contributions owed to the plan is more
                than a de minimis amount (as defined under paragraph (j)(5) of this
                section), the bankruptcy trustee shall designate an eligible designee
                (as defined in paragraph (j)(4) of this section) to be the qualified
                termination administrator for all purposes under this section.
                 (iii) The bankruptcy trustee shall at the time of the designation
                notify the eligible designee of its findings on the amount of
                delinquent contributions (employer and employee).
                 (iv) The bankruptcy trustee shall provide an eligible designee with
                reasonable access to any records under the control of the bankruptcy
                trustee that the eligible designee reasonably determines are necessary
                to enable the eligible designee to carry out its responsibilities under
                paragraph (j)(7) of this section.
                 (v) The bankruptcy trustee shall be responsible for the selection
                and monitoring of the eligible designee in accordance with section
                404(a)(1)(A) and (B) of the Act.
                 (6) Notice of intent to serve as qualified termination
                administrator. In lieu of the content requirements in paragraph (c)(3)
                of this section, the qualified termination administrator shall furnish
                to the U.S. Department of Labor a notice of intent to serve as
                qualified termination administrator that is signed and dated by the
                qualified termination administrator and that includes the following
                information:
                 (i) Qualified termination administrator information. The name,
                address (including email address), and telephone number of the
                bankruptcy trustee and, if applicable, the name, EIN, address
                (including email address), and telephone number of any eligible
                designee acting as the qualified termination administrator;
                 (ii) Plan information. (A) The name, address, telephone number,
                account number, EIN of the plan sponsor (if known), and plan number
                used on the Form 5500 Annual Return/Report filed for the plan with
                respect to which the person is serving 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 and beneficiaries with
                accounts in the plan;
                 (iii) Chapter 7 information. A statement that, pursuant to
                paragraph (j)(2) of this section, 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 order or document entered in
                the case reflecting the bankruptcy trustee's appointment or authority
                to administer the plan sponsor's case;
                 (iv) Fiduciary breaches. Any information the qualified termination
                administrator believes may be evidence of other fiduciary breaches
                described in paragraph (j)(7)(ii) of this section.
                 (v) Plan asset information. (A) The estimated value of the plan's
                assets as of the date of the entry of an order for relief,
                 (B) The name, EIN, address (including email address) and telephone
                number of the entity that is holding these assets, and the length of
                time plan assets have been held by such entity, if the 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 delinquent contributions described in
                paragraph (j)(7)(i) of this section;
                 (vi) 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 carry
                out the qualified termination administrator's authority and
                responsibility under 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
                 (vii) 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.
                 (7) Winding up the affairs of the plan. The qualified termination
                administrator shall comply with paragraph (d) of this section except as
                follows:
                 (i) Delinquent contributions. Except for qualified termination
                administrators of plans that are owed no more than a de minimis amount
                of contributions (employer and employee), the qualified termination
                administrator of a plan described in paragraph (j)(2) of this section
                shall, consistent with the duties of a fiduciary under section
                404(a)(1) of the Act, take reasonable steps to collect 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.
                 (ii) Report fiduciary breaches. The qualified termination
                administrator must report 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 that involve plan assets by a prior plan fiduciary. This
                information must be reported to the Employee Benefits Security
                Administration in conjunction with the filing of the notification
                required in paragraph (j)(6) (notice of intent to serve as qualified
                termination administrator) or (d)(2)(ix) (final notice) of this
                section. 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)(6) or (d)(2)(ix) of this
                section that it believes may be evidence of fiduciary breaches that
                involve plan assets by a prior plan fiduciary, the bankruptcy trustee
                shall report such activity to the Employee Benefits Security
                Administration in a time and manner specified in instructions developed
                by the Office of Enforcement, Employee Benefits Security
                Administration, U.S. Department of Labor.
                 (iii) 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 Sec. 2550.404a-3) is not applicable in the case of a
                qualified termination administrator that is the bankruptcy trustee or
                an eligible designee defined under paragraph (j)(4)(ii) of this
                section.
                 (iv) Pay reasonable expenses. (A) If the qualified termination
                administrator is the bankruptcy trustee in the case, or an eligible
                designee as defined in paragraph (j)(4)(ii) of this section, then in
                lieu of the requirements in paragraph (d)(2)(v)(B)(2) of this section,
                such expenses are consistent with industry rates for such or similar
                services ordinarily charged by qualified termination administrators
                defined in paragraph (g) of this section.
                 (B) Notwithstanding paragraph (j)(7)(iv)(A) of this section, in
                lieu of the
                [[Page 43665]]
                requirements in paragraph (d)(2)(v)(B)(2) of this section, expenses
                incurred to comply with paragraph (j)(7)(i) of this section (pertaining
                to collecting delinquent contributions) are consistent with industry
                rates for such or similar services ordinarily approved by bankruptcy
                courts for persons representing or assisting a bankruptcy trustee in
                performing collection duties in chapter 7 matters.
                 (8) Rule of accountability. The bankruptcy trustee or eligible
                designee shall not, for themselves or the other, 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 this regulation.
                0
                8. Add Appendices A through E to part 2578 to read as follows:
                Appendix A to Part 2578--Model Notice of Intent To Terminate Abandoned
                Plan
                NOTICE OF INTENT TO TERMINATE PLAN
                [Date of notice]
                [Name of plan sponsor]
                [Last known address of plan sponsor]
                Re: [Name of plan and account number or other identifying
                information]
                Dear [Name of plan sponsor]:
                 This letter is a notice of intent to terminate the above
                referenced plan and distribute benefits in accordance with the U.S.
                Department of Labor's Abandoned Plan Program. We will initiate the
                termination process under the Abandoned Plan Program unless you
                contact us within 30 days of your receipt of this notice. See 29 CFR
                2578.1.
                 Our basis for taking this action is that our records reflect
                that there have been no contributions to, or distributions from, the
                plan within the past 12 months. {If the basis for sending this
                notice is under 29 CFR 2578.1(b)(1)(i)(B), complete and include the
                sentence below rather than the sentence above.{time} Our basis for
                taking this action is {provide a description of the facts and
                circumstances indicating plan abandonment{time} .
                 We are sending this notice to you because our records show that
                you are the sponsor of the subject plan. 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 all costs,
                civil penalties, excise taxes, etc. as a result of your acts or
                omissions with respect to this plan. The termination of this plan by
                us will not relieve you of your liability for any such costs,
                penalties, taxes, etc. Federal law also requires us to notify the
                U.S. Department of Labor, Employee Benefits Security Administration,
                of the termination. For information about the federal law governing
                the termination of abandoned plans, you may contact the U.S.
                Department of Labor at 1.866.444.EBSA (3272) or https://www.dol.gov/agencies/ebsa/about-ebsa/ask-a-question/ask-ebsa.
                 Please contact [name, address, and telephone number of the
                person, office, or department that the sponsor must contact
                regarding the plan] within 30 days in order to prevent this action.
                Sincerely,
                [Name and address of qualified termination administrator or
                appropriate designee]
                 Appendix B to Part 2578--Model Notice of Plan Abandonment and Intent
                To Serve as Qualified Termination Administrator (for Plans Found
                Abandoned Pursuant to 29 CFR 2578.1(b))
                BILLING CODE 4510-29-P
                [[Page 43666]]
                [GRAPHIC] [TIFF OMITTED] TR17MY24.020
                [[Page 43667]]
                [GRAPHIC] [TIFF OMITTED] TR17MY24.021
                [[Page 43668]]
                [GRAPHIC] [TIFF OMITTED] TR17MY24.022
                Appendix C to Part 2578--Model Notice of Intent To Serve as Qualified
                Termination Administrator (for Plans Deemed Abandoned Pursuant to 29
                CFR 2578.1(j)(2))
                [[Page 43669]]
                [GRAPHIC] [TIFF OMITTED] TR17MY24.023
                [[Page 43670]]
                [GRAPHIC] [TIFF OMITTED] TR17MY24.024
                [[Page 43671]]
                [GRAPHIC] [TIFF OMITTED] TR17MY24.025
                Appendix D to Part 2578--Model Notice of Plan Termination
                NOTICE OF PLAN TERMINATION
                [Date of notice]
                [Name and last known address of plan participant or beneficiary]
                Re: [Name of plan]
                Dear [Name of plan participant or beneficiary]:
                 {Insert as applicable [We are] or [I am]{time} writing to
                inform you that the [name of plan] (Plan) has been terminated
                pursuant to regulations issued by the U.S. Department of Labor. The
                Plan was terminated because it was abandoned by [name of the plan
                sponsor]. {For plans deemed abandoned pursuant to 29 CFR
                2578.1(j)(2), replace the immediately preceding sentence with: The
                Plan was terminated because [name of the plan sponsor] is in chapter
                7 bankruptcy and the business is shutting down.{time}
                 We have determined that you have an interest in the Plan, either
                as a plan participant or beneficiary. Your account balance on [date]
                is/was [account balance]. We will be distributing this money as
                permitted under the terms of the Plan and federal regulations. 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 the Plan and distributing
                your benefits.
                 Your distribution options under the Plan are {add a description
                of the Retirement Plan's distribution options{time} . It is very
                important that you elect one of these forms of distribution and
                inform us of your election. The process for informing us of this
                election is {enter a description of the election process established
                by the qualified termination administrator{time} .
                {Select the next paragraph from options 1 through 4, as
                appropriate.{time}
                {Option 1: If this notice is for a participant or beneficiary,
                complete and include the following paragraph in cases in which the
                account balance will be distributed in accordance with the
                conditions of Sec. 2550.404a-3(d)(1)(i) or (ii).{time}
                 If you do not make an election within 30 days from your receipt
                of this notice, your account balance will be transferred directly to
                an individual retirement plan (inherited individual retirement plan
                in the case of a nonspouse beneficiary) maintained by {insert the
                name, address, and phone number of the provider if known, otherwise
                insert the following language [a bank or insurance company or other
                similar financial institution]{time} . Pursuant to federal law,
                money transferred to an individual retirement plan will be invested
                in an investment product designed to preserve principal and provide
                a reasonable rate of return and liquidity. {If fee information is
                known, include the following sentence: Should your money be
                transferred into an individual retirement plan, [name of the
                financial institution] charges the following fees for its services:
                {add a statement of fees, if any, that will be paid from the
                participant or beneficiary's individual retirement
                plan{time} .{time}
                {Option 2: If this notice is for a participant or beneficiary whose
                account balance will be distributed in accordance with the
                conditions of Sec. 2550.404a-3(d)(1)(iii)), complete and include
                the following paragraph.{time}
                 If you do not make an election within 30 days from your receipt
                of this notice, and your account balance is $1,000 or less, federal
                law permits us to transfer your
                [[Page 43672]]
                balance to {insert whichever is applicable: ``an interest-bearing
                federally insured bank account;'' ``an unclaimed property fund of
                the State of your last known address;'' or ``an individual
                retirement plan (inherited individual retirement plan in the case of
                a nonspouse beneficiary).''{time} {If the transfer will be to an
                individual retirement plan, insert the following sentence: Pursuant
                to federal law, your money would then be invested in an investment
                product designed to preserve principal and provide a reasonable rate
                of return and liquidity.{time} {If known, include the name,
                address, and telephone number of the financial institution or State
                fund into which the individual's account balance will be transferred
                or deposited. If the individual's account balance is to be
                transferred to a financial institution and fee information is known,
                include the following sentence: Should your money be transferred
                into {insert whichever is applicable: ``an individual retirement
                plan'' or ``bank account,'' [name of the financial institution]
                charges the following fees for its services: {add a statement of
                fees, if any, that will be paid from the individual's
                account{time} .{time}
                {Option 3: If this notice is for a participant or beneficiary whose
                account balance meets the conditions of Sec. 2550.404a-
                3(d)(1)((iv), complete and include the following paragraph.{time}
                 If you do not make an election within 30 days from your receipt
                of this notice, and your account balance is $1,000 or less, federal
                law permits us to transfer your balance to an individual retirement
                plan (inherited individual retirement plan in the case of a
                nonspouse beneficiary). Pursuant to federal law, your money, if
                transferred to an individual retirement plan would then be invested
                in an investment product designed to preserve principal and provide
                a reasonable rate of return and liquidity. However, if after
                exercising reasonable and good faith efforts, we cannot find an
                individual retirement plan provider who will accept your balance, we
                will transfer the balance to an interest-bearing federally insured
                bank account or to the unclaimed property fund of the State of your
                last known address. {If the bankruptcy trustee or eligible designee
                knows where it will send the participant's or beneficiary's money,
                modify the preceding sentence accordingly and include the name,
                address, and telephone number of the financial institution or State
                fund into which the individual's account balance will be transferred
                or deposited. If the individual's account balance is to be
                transferred to a financial institution and fee information is known,
                include the following sentence: Should your money be transferred
                into {insert whichever is applicable: ``an individual retirement
                plan'' or ``a bank account,''{time} , [name of the financial
                institution] charges the following fees for its services: {add a
                statement of fees, if any, that will be paid from the individual's
                account{time} .{time}
                {Option 4: If this notice is for a participant or participant's
                spouse who will be distributed an annuity under Sec.
                2578.1(d)(vii)(B)(2) to meet the survivor annuity requirements in
                sections 401(a)(11) and 417 of the Internal Revenue Code (or section
                205 of ERISA), complete and include the following paragraph.{time}
                 If you do not make an election within 30 days from your receipt
                of this notice, your account balance will be distributed in the form
                of a qualified joint and survivor annuity or qualified preretirement
                annuity as required by the Internal Revenue Code. {If the name of
                the annuity provider is known, include the following sentence: The
                name of the annuity provider is [name, address and phone number of
                the provider].{time}
                 For more information about the termination, your account
                balance, or distribution options, please contact [name, address, and
                telephone number of the qualified termination administrator and, if
                different, the name, address, and telephone number of the
                appropriate contact person].
                Sincerely,
                [Name of qualified termination administrator or appropriate
                designee]
                [Name of plan]
                Appendix E to Part 2578--Model Abandoned Plans Final Notice
                [[Page 43673]]
                [GRAPHIC] [TIFF OMITTED] TR17MY24.026
                [[Page 43674]]
                [GRAPHIC] [TIFF OMITTED] TR17MY24.027
                [[Page 43675]]
                 Signed at Washington, DC, this 22nd day of April, 2024.
                Lisa M. Gomez,
                Assistant Secretary, Employee Benefits Security Administration, U.S.
                Department of Labor.
                [FR Doc. 2024-09029 Filed 5-16-24; 8:45 am]
                BILLING CODE 4510-29-C
                

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT