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Washington

Labor Department partners with 2 life insurance companies on abandoned plans

Updated with correction

The Department of Labor will work with Metropolitan Life Insurance Co. and Brighthouse Life Insurance Co. in its campaign to determine if retirement plans have been abandoned by their plan sponsors, the agency said Tuesday.

In conjunction with the Labor Department, MetLife and Brighthouse will try to determine whether more than 2,000 retirement plans for which they are the custodian are abandoned. If plans are found to be abandoned, the companies will submit them to the DOL's Abandoned Plan Program, which might result in distributions of up to about $116 million to 20,000 participants, according to a news release from the DOL. Ascensus Trust Co., a record keeper, will be submitting plans to the Abandoned Plan Program on behalf of MetLife and Brighthouse.

The Labor Department's Employee Benefits Security Administration approached the two companies regarding the assets covered by the Employee Retirement Income Security Act that had no activity for at least 12 consecutive months, according to the news release.

An abandoned plan is one that has had no contributions to or distributions from it for a period of at least 12 consecutive months, the DOL said in the release. Abandoned plans may then be appropriate for the APP, "after making reasonable efforts to locate the plan sponsor, it is determined that the sponsor no longer exists, cannot be located, or is unable to maintain the plan," the release said.

What constitutes a reasonable effort is a question many industry professionals have been asking. Late last month, the American Benefits Council offered to work with the DOL to provide guidance to plan sponsors on finding missing participants.