Some of your clients may soon hear from the government that Uncle Sam has cash for them.
The Employee Benefits Security Administration (EBSA), part of the U.S. Department of Labor, is preparing to help MetLife Inc. and Brighthouse Financial Inc. dispose of about 1,600 retirement plans that look as if they might be abandoned, and to shut down another 400 plans with a very low asset value.
The EBSA Abandoned Plan Program could help MetLife and Brighthouse return about $116 million in plan assets to about 20,000 plan participants, officials say. Distributions could average about $6,000 per participant.
(Related: DOL Looks to Rescue Orphans)
Ascensus Trust Company will help MetLife and Brighthouse put the plans in the Abandoned Plan Program, officials announced today.
MetLife carved its individual life and annuity operations out to form Brighthouse a year ago.
The Abandoned Plan Program staff will help the companies review any 401(k) plans or other individual account plans that have had no known activity for at least 12 consecutive months.
An asset custodian may be able to hand a plan over to the government’s Abandoned Plan Program if the plan has had no contributions or distributions for at least 12 months.
Before handing the plan over, the custodian must first make reasonable efforts to find the plan sponsor, officials say.
The Abandoned Plan Program will consider taking responsibility for a plan if the asset manager cannot locate the sponsor, the sponsor no longer exists, or the sponsor is unable to maintain the plan.
Clients and their financial professionals can find information about plans that are already in the Abandoned Plan Program system here.
MetLife drew attention to the problems companies have with administering old, potentially abandoned retirement plans earlier this year, when it noted that it had improved its efforts to locate pension plan participants and discovered that the increased accuracy of its participant counts had changed pension benefits obligation estimates.
MetLife said today, in a statement about the abandoned plan arrangement, that DOL officials had asked the company to help develop a way to ensure that participants in abandoned defined contribution plans get their benefits.
“Through this agreement, MetLife has a procedure, aligned with the DOL’s policies and procedures, to help impacted participants stay financially protected throughout retirement,” the company said.
— Read, also:
- JPMorgan, ADP to wind up 180 abandoned DC plans
- PenChecks Offers Abandoned Plan Service
- When Sponsors Abandon Their 401(k) Plans