The Pension Benefit Guaranty Corporation (PBGC) is proposing to expand its existing Missing Participants Program to cover terminated 401(k)s and “most other defined contribution plans and certain defined benefit plans that aren't currently covered by the program.”
For over 20 years, PBGC's Missing Participants Program has connected people—missing when their pension plans terminated—to their retirement benefits. Currently, the program is open only to PBGC-insured single-employer plans.
“Many people associate PBGC with paying benefits for people in failed plans, but our mission is broader than that,” observes PBGC Director Tom Reeder. “We are also responsible for enhancing retirement security for American workers and retirees. One of the ways to do that is to connect them with their retirement savings.”
Under a proposed rule newly floated by PBGC and slated for formal publication in the Federal Register on September 20, 2016, the program would be expanded to cover missing participants in most terminated defined contribution plans, such as 401(k) and profit sharing plans. Perhaps most important, instead of establishing an individual retirement account (IRA) at a financial institution for each missing participant account, these plans would have the option of transferring benefits to PBGC.
“PBGC would then hold the money, add the missing participant to its online searchable database, and periodically search for the participant,” Reeder explains. “Participant accounts would not be diminished by ongoing maintenance fees or distribution charges and would be paid out with interest.”
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