Abandoned Plans: DOL Initiative (Posted February 15, 2004) Technical Tip 38: The following question and answer are from the DOL Q&A Session at the 2000 ASPPA Annual Conference: What can service providers do to get DOL to step in when they hold assets of an orphaned plan? Sometimes we don’t have the information needed to determine allocations of the assets among participants or, if we do, we don’t have a Trustee fiduciary to direct the distribution. Should we call the DOL? DOL Response: The Office of Enforcement and the Office of Chief Accountant of the DOL, as well as the IRS, are looking at the situation of orphan plans. This National Initiative, started in FY 1999, is called the Orphan Plans project, and deals with situations where plans have been abandoned by plan sponsors and fiduciaries, or fiduciaries have completely abdicated their responsibilities to administer plans prudently and in the sole interest of the participants. The objective of the initiative is to (1) identify plans which have been abandoned by fiduciaries because of death, neglect, bankruptcy or incarceration; (2) determine if the fiduciary is available to make fiduciary decisions such as the termination of the plan and the distribution of plan assets; (3) require fiduciaries to fulfill their duties, file appropriate compliance forms, and ensure that proper actions are undertaken to protect and deliver promised benefits; and (4) where possible, identify and penalize plan officials who do not fulfill their responsibilities to plan participants. If upon investigation of the orphan plan, it is determined that there is no viable party to administer the plan, the DOL may go to court and appoint an independent fiduciary to take over the administration of the plan. Unfortunately, this would require that the plan cover the expenses of the independent fiduciary but this is still considered a better alternative than having the trust remain with no one to administer the plan. The independent fiduciaries appointed by the court would be encouraged to make all distributions to all participants, terminate the plan and file all final reports. Because the Orphan Plans project is a national initiative, DOL would welcome any referrals from service providers who could identify such potential cases. In DOL Advisory Opinion 83-43A, it is stated that, in those cases where a plan administrator may not be determined by the direct application of ERISA section 3(16), it is the view of the Department that, in the absence of regulations, the "administrator" is the person or persons actually responsible, whether or not under the terms of the plan, for the control, disposition, or management of the cash or property received by or contributed to the plan, irrespective of whether such control, disposition or management is exercised directly by such person or persons or indirectly through an agent or trustee designated by such person or persons. Although this ruling did not arise in an orphan plan setting, the position taken therein by the Department may have implications with respect to orphan plans. The IRS has a similar position as to the identity of the plan administrator. (See Treas. Reg. §1.414(g)-1(b)(4)). In addition, issues are raised where a service provider such as a trustee knows that a plan is an orphan plan but just continues to collect fees from plan assets. Comment by the RLR&C ERISA attorneys: You should be aware that that there are many issues concerning orphan plans that must still be addressed by the DOL and the IRS concerning the power to distribute without court order, filing of delinquent Forms 5500 and mandatory plan amendment to meet current law. Hopefully, the DOL will work with the IRS and the private sector to address these additional issues in the near future. In the meantime plan participants, trustees and other fiduciaries should work with ERISA counsel and the government agencies on an ad hoc basis. Caveat: The answer was drafted by the program moderators, including Fred Reish, based on their understandings of discussions with four senior officials of the Employee Benefits Security Administration (EBSA) of the U.S. Department of Labor. As a result, it does not represent a formal or binding position statement by the EBSA. View all Tips © 2012 Reish Luftman Reicher & Cohen, a Professional Corporation Important notice: Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner's situation. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of your situation.