PART 2578—RULES AND REGULATIONS FOR ABANDONED PLANS Authority: 29 U.S.C. 1135; 1104(a); 1103(d)(1). Source: 71 FR 20837, Apr. 21, 2006, unless otherwise noted. § 2578.1 Termination of abandoned individual account plans. (a) General. (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. (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 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. (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. (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. (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. (iv) Plan asset information. (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. e.g., (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. (d) Winding up the affairs of the plan. (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. (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. (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 ( 2 (iii) Report delinquent contributions. (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. (v) Pay reasonable expenses. (B) Expenses of plan administration shall be considered reasonable solely for purposes of paragraph (d)(2)(v)(A) of this section if: ( 1 ( 2 ( i ( ii ( 3 (vi) Notify participants. ( 1 ( 2 ( 3 i ( ii ( 4 ( 5 ( i i.e., ( ii ( iii ( iv 1 ( 6 ( 7 ( 8 ( 9 (B)( 1 ( 2 (vii) Distribute benefits. (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 ( 2 1 (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. (ix) Final Notice. (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 § 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 § 2550.404a-3(d)(1)(v)( C (H) A statement that the information being provided in the notice is true and 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. (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 (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 § 2578.1(j)(4) of this chapter, designated by a bankruptcy trustee described in § 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. (g) Qualified termination administrator. (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. (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. (j) Special rules for Chapter 7 ERISA Plans In general. (2) Deemed abandonment. (3) Qualified termination administrator. (4) Eligible designee. (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 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. (i) Qualified termination administrator information. (ii) Plan information. (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. (iv) Fiduciary breaches. (v) Plan asset information. (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. e.g., (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. (7) Winding up the affairs of the plan. (i) Delinquent contributions. (ii) Report fiduciary breaches. (iii) Distributions. (iv) Pay reasonable expenses. 2 (B) Notwithstanding paragraph (j)(7)(iv)(A) of this section, in lieu of the requirements in paragraph (d)(2)(v)(B)( 2 (8) Rule of accountability. [89 FR 43659, May 17, 2024] 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. provide a description of the facts and circumstances indicating plan abandonment 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 Sincerely, [ Name and address of qualified termination administrator or appropriate designee [89 FR 43665, May 17, 2024] 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)) [89 FR 43665, May 17, 2024] 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)) [89 FR 43665, May 17, 2024] 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 or name of plan name of the plan sponsor For plans deemed abandoned pursuant to 29 CFR 2578.1(j)(2), replace the immediately preceding sentence with: We have determined that you have an interest in the Plan, either as a plan participant or beneficiary. Your account balance on [ date account balance Your distribution options under the Plan are { add a description of the Retirement Plan's distribution options enter a description of the election process established by the qualified termination administrator { Select the next paragraph from options 1 through 4, as appropriate. { 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 § 2550.404a-3(d)(1)(i) or (ii). 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 If fee information is known, include the following sentence: name of the financial institution add a statement of fees, if any, that will be paid from the participant or beneficiary's individual retirement plan { Option 2: If this notice is for a participant or beneficiary whose account balance will be distributed in accordance with the conditions of § 2550.404a-3(d)(1)(iii)), complete and include the following paragraph. 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 { insert whichever is applicable: or If the transfer will be to an individual retirement plan, insert the following sentence: 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: insert whichever is applicable: name of the financial institution add a statement of fees, if any, that will be paid from the individual's account { Option 3: If this notice is for a participant or beneficiary whose account balance meets the conditions of § 2550.404a-3(d)(1)((iv), complete and include the following paragraph. 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: insert whichever is applicable: name of the financial institution add a statement of fees, if any, that will be paid from the individual's account { Option 4: If this notice is for a participant or participant's spouse who will be distributed an annuity under § 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. 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: name, address and phone number of the provider 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 [89 FR 43665, May 17, 2024] Appendix E to Part 2578—Model Abandoned Plans Final Notice [89 FR 43665, May 17, 2024]