DOL clarifies rules to liquidate bankrupt companies' retirement plans

The U.S. Department of Labor’s Employee Benefits Security Administration announced a proposed rule and related class exemption that will make it easier for Chapter 7 bankruptcy trustees to distribute assets from bankrupt companies’ retirement plans.

The existing Abandoned Plan Program provides streamlined termination and distribution procedures for abandoned individual account plans, including 401(k) plans, under which benefits may be distributed in a manner that can substantially reduce fees charged to participants’ accounts for, among other things, annual reporting, legal compliance and other administrative services, including termination costs.