Abandoned Retirement Plan Services

How To Properly Terminate Abandoned Plans

Abandoned plans cause serious issues for service providers. American Trust Custody Abandoned Retirement Plan Service can help Recordkeepers bring plans of all sizes to a successful resolution, even those plans with other custodians.

While employers launch retirement plans with the best of intentions, every year thousands of plans are abandoned either because the sponsor has ceased business operations or simply becomes unable or unwilling to continue support of the plan. Of course, the risk of plan abandonment is greater now more than ever, given the number of businesses closing due to the COVID-19 pandemic.

Participants in abandoned plans suffer the consequences. Advisors may stop servicing the plan, resulting in investment lineups that may contain underperforming funds. Recordkeepers may scale back services, resulting in participants being unable to manage their accounts. Participants seeking access to loans or hardship distributions may find themselves unable to access funds, with no recourse.

The Department of Labor has addressed these concerns by creating the Abandoned Plan program, providing custodians with a fiduciary safe harbor to help participants regain control of their accounts and access to their savings. If a plan cannot be voluntarily terminated using standard procedures contained within the plan document, the plan may be deemed abandoned and then be unwound utilizing the Department of Labor’s Abandoned Plan procedures.

Terminating A Qualified Plan

Only a Qualified Termination Administrator (QTA) can distribute assets and terminate the plan under this fiduciary safe harbor. A QTA must be a bank, trust company, or other regulated financial institution and must be appointed by the Department of Labor on a plan by plan basis.

American Trust Custody has been appointed by the DOL as a QTA and can assist in the termination of abandoned plans — even those plans not held in custody at American Trust Custody. We follow a stringent set of guidelines and procedures and can assist in participant notices, calculations, and disbursements in compliance with the regulations.

If your plans are in custody with American Trust Custody, we review plan activity on a periodic basis and will contact you in instances when we identity potential abandoned plans that might be candidates for the QTA program. If you have abandoned plans that we haven’t contacted you about or are held with outside custodians, talk to us today to see how we can help you reconnect participants with their retirement savings.

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Consider TRA's 3(16) Fiduciary Services & Plan Administration

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