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Statement of Need: Thousands of individual account plans have, for a variety of reasons, been abandoned by their sponsors, creating problems for plan participants, administrators, financial institutions (e.g., banks, insurance companies, mutual funds), the courts and the Federal government. At present, the potential liability and costs attendant to terminating such plans and distributing the assets inhibits financial institutions and others from taking on this responsibility. Due to ongoing administrative costs and other factors, the continued maintenance of such plans is often not in the interest of the participants and beneficiaries. This rulemaking will establish a procedure for a financial institution that holds the assets of such a plan to terminate the plan and distribute its assets to the participants and beneficiaries. The rulemaking will also include standards for determining when plans may be terminated pursuant to this procedure and for carrying out the functions necessary to distribute benefits and shut down plan operations.

Summary of the Legal Basis: Section 505 of ERISA provides that the Secretary may prescribe such regulations as the Secretary finds necessary and appropriate to carryout the provisions of title I of the Act. Section 403(d)(1) provides that, upon termination of such a plan, the assets shall be distributed generally in accordance with the provisions that apply to defined benefit plans, "except as otherwise provided in regulations of the Secretary." ERISA section 3(16)(A) permits the Secretary to issue regulations designating an administrator for a plan where the plan document makes no designation and the plan sponsor cannot be identified.

Alternatives: Alternatives will be considered following a determination of the scope and nature of the regulatory guidance needed by the public.

Anticipated Costs and Benefits: Preliminary estimates of the anticipated costs and benefits will be developed, as appropriate, following a determination regarding the alternatives to be considered.

Risks: Failure to provide guidance in this area will leave the retirement benefits of participants and beneficiaries in abandoned plans at risk of being significantly diminished by ongoing plan administrative expenses, rather than distributed to participants and beneficiaries in connection with a timely and orderly termination of the plan.