WASHINGTON - The Pension and Welfare Benefits Administration proposed a rule change that would allow pension plans to receive interest-free loans and extensions of credit from their sponsors or service providers for unanticipated Y2K computer problems. Pension plans would need to reimburse employers or service providers for the loans afterward.
This would help pension plans prevent disruptions in participants' loans, providing temporary overdraft protection or protecting transfers from one investment option to another.
While the Labor Department believes most plans will continue to operate without interruption, "Our exemption gives plans access to additional resources in prudently planning for all Y2K contingencies," said Alan Lebowitz, deputy assistant Labor Secretary.
Separately, the DOL proposed a regulation allowing small pension plans to continue to be exempt from audits if at least 95% of their assets are held by regulated financial institutions and they give participants information about those institutions. The proposal would apply only to plans with fewer than 100 participants. Small plans with less than 95% of their assets held by regulated financial institutions would be subject to audits unless they got additional bonding coverage.
The Labor Department also announced it will give participants answers to the 15 most frequently asked questions about cash balance conversions. Questions will be answered via a dedicated toll-free hot line; the DOL Web site at www.dol.gov/dol/pwba; and e-mail at [email protected]