The U.S. Department of Labor’s Employee Benefits Security Administration announced a proposed rule that would expand its Abandoned Plan Program to include individual account plans, including 401(k) plans, of companies in Chapter 7 bankruptcy (a “Chapter 7 Plan”). Under the current rule, only large financial institutions and other asset custodians can serve as administrators of abandoned plans, and a plan is considered abandoned only after no contributions or distributions have been made for at least 12 months.

The Department of Labor’s Employee Benefits Security Administration (EBSA) is proposing to allow bankruptcy trustees to take advantage of the agency’s Abandoned Plan Program regulations under ERISA to terminate, wind up, and distribute retirement plan benefits to former employees of bankrupt companies.