ERIC Supports PBGC’s Efforts to Create Missing Participant Program for 401(k) and Similar Plans

The ERISA Industry Committee (ERIC), along with the Plan Sponsor Council of America (PSCA), and the U.S. Chamber of Commerce (Chamber) today submitted comments to the Pension Benefit Guaranty Corporation (PBGC) supporting the agency’s efforts to implement a missing participants program in 401(k) and similar plans.

The group letter was in response to a PBGC “Request for Information” (RFI) issued June 21 indicating that the agency is soliciting information about a new missing participant program for participants in certain terminating defined contribution plans. The Pension Protection Act of 2006 (PPA) directed the PBGC to create a program whereby plan administrators of defined contribution plans could transfer a missing participant’s benefits to the PBGC upon the termination of the plan.

In responding to a series of questions in the RFI, the letter explained that the group believes there would be significant demand for a missing participants program, as plan sponsors are frequently unable to find IRA providers to accept smaller account balances, particularly those with less than $1,000. ERIC, PSCA, and the Chamber recommended that the PBGC create a program whereby fiduciaries of terminating plans that transfer the accounts for missing participants to the PBGC can be confident that:

1. the funds will be handled appropriately; 
2. the account will be charged no more than reasonable fees; 
3. the participant (once found) will be able to obtain an accounting of the manner in which their funds have been handled by the PBGC; and 
4. the administrative burden is not significant. 

The group recommended that any program be optional, as provided in the PPA.

For a copy of ERIC’s press release, click here.
For a copy of the comment letter, click here.