According to EBSA, these plans were abandoned due to corporate crises or neglect, and this action, which was conducted through EBSA’s abandoned plan program, will give plan participants control over the fate of their retirement savings.
“The abandoned plan program provides a streamlined process for efficiently winding up abandoned plans,” said Assistant Secretary for Employee Benefits Security Phyllis C. Borzi. “The alliance between J.P. Morgan and ADP is an excellent example of how custodians and recordkeepers can team up to terminate abandoned plans and help workers, and we encourage others to do the same.”
The abandoned plan program was developed by EBSA to create a process for wrapping up the affairs of abandoned individual account plans so that benefit distributions are made to participants and beneficiaries. Otherwise, custodians of such abandoned plans would lack the authority to terminate the plans and make benefit distributions.
In the case of J.P. Morgan and ADP, papers filed with the DOL indicate that Emergent Business Services LLC abandoned its defined contribution (DC) pension plan in 2006, and plan participants were unable to access the benefits they had earned. However, the cooperation between J.P. Morgan and ADP means that these participants will soon have control over their retirement savings.
According to the DOL, J.P. Morgan, the plan’s asset custodian, elected to serve as the “qualified termination administrator” under the program, and chose ADP, the plan’s recordkeeper, to carry out the activities necessary to terminate and wind up the plan. ADP, as agent, filed the necessary papers with the department on behalf of J.P. Morgan. In addition to the Emergent Business Services plan, J.P. Morgan and ADP have elected to terminate and wind up approximately 180 other abandoned plans under the program, affecting approximately 690 plan participants and beneficiaries, and involving almost $3 million in assets.
A pension plan generally is considered abandoned, under the EBSA abandoned plan program, if 12 consecutive months pass in which no contributions to or distributions from the plan are made, and if a qualified termination administrator determines that the sponsor no longer exists, cannot be located or is otherwise unable to maintain the plan. To date, almost $75 million in distributions have been made under the program.
More information on the abandoned plan program is available at www.dol.gov/ebsa/compliance_assistance.html#section9.