State:
Free Special Resources
Get Your FREE Special Report. Download Any One Of These FREE Special Resources, Instantly!
Featured Special Report
Claim Your Free Cost Per Hire Calculator
This handy calculator lets you plug in your expenses for recruiting, benefits, salaries, and more.

Graphs automatically generate to show you your annual cost per hire and a breakdown of where you are spending the most money.

Download Now!
February 15, 2007
Labor Department Publishes New 401(k) Rule

The U. S. Department of Labor (DOL) has published an interim final rule requiring the distribution of 401(k) type benefits for missing non-spouse beneficiaries from terminated plans to be rolled into individual retirement accounts (IRAs).

For a Limited Time receive a FREE Compensation Market Analysis Report! Find out how much you should be paying to attract and retain the best applicants and employees, with customized information for your industry, location, and job. Get Your Report Now!

The rule provides plan fiduciaries of terminated plans and qualified termination administrators (QTAs) of abandoned plans with a fiduciary safe harbor for making distributions on behalf of participants or beneficiaries who fail to make an election regarding a form of benefit distribution, commonly referred to as missing participants or beneficiaries. The rule also establishes a procedure for financial institutions holding the assets of an abandoned individual account plan to terminate the plan and distribute benefits to the plan's participants or beneficiaries, with limited liability.   The regulation also contains model notices for notifying participants or beneficiaries of the plan's termination and distribution options.

"Our rule ensures workers' beneficiaries won't suffer a tax penalty when a retirement plan is terminated," says Bradford P. Campbell of the Department of Labor. 

The Pension Protection Act (PPA) amended the Internal Revenue Code to allow the rollover of certain retirement benefits of a deceased participant into a tax-favored inherited IRA created on behalf of a non-spouse beneficiary.  The new rule, and a related proposed class exemption, conforms to the PPA by amending existing distribution requirements for terminated defined contribution plans, including abandoned plans, to require rollovers into inherited IRAs for missing non-spouse beneficiaries. 

The regulations and proposed class exemption are published in the February 15, 2007 Federal Register.  While the rule will be effective 30 days after publication in the Federal Register, the public is invited to submit written comments on both the interim final rule and the proposed exemption.  Comments may also be submitted  by email to e-ORI@dol.gov or through the federal e-rulemaking portal at www.regulations.gov .

 

Featured Free Resource:
Cost Per Hire Calculator
   
   
 
 
Twitter  Facebook  Linked In
Follow Us
CT-WEB02
Copyright © 2016 Business & Legal Resources. All rights reserved. 800-727-5257
This document was published on http://Compensation.BLR.com
Document URL: http://compensation.blr.com/Compensation-news/Benefits-Leave/Retirement-Savings-401k/Labor-Department-Publishes-New-401k-Rule/