EBSA Rules On Distributions To Missing Nonspouses

The Employee Benefits Security Administration has developed a regulation that could affect how retirement plans handle participant deaths.

EBSA, an arm of the U.S. Department of Labor, has issued an interim final rule setting the rules that apply when the beneficiaries of the dead participants are neither husbands nor wives, and the “nonspouse beneficiaries” are missing.

EBSA developed the regulations to implement provisions of the Pension Protection Act of 2006 that permit 401(k) plans and other “individual account” plans to transfer a dead participant’s benefit directly to an individual retirement plan established on behalf of a designated nonspouse beneficiary.

The new regulations require plans that want “safe harbor” relief to put benefits for a missing nonspouse beneficiary into an “individual retirement plan that fully complies with [Internal Revenue] Code requirements,” EBSA officials write today in a preamble to the interim final rule, which appears today in the Federal Register.