401(k) Assets Stuck in Limbo: Plan Sponsor Bankruptcy Explained

Lawmakers have asked the Labor Department to ensure Steward Health Care System LLC preserves the benefits of nearly 30,000 workers and retirees during its bankruptcy, highlighting the sometimes precarious state of retirement assets after the company’s bankruptcy filing. a company.

Procedures are in place to ensure that a bankrupt employer does not separate plan participants and beneficiaries from the savings they have accumulated over the years, and the Department of Labor can take special steps to entrust 401 assets (k) to their rightful owners. ‘accounts after terminating a plan.

The two most common types of bankruptcy proceedings plan sponsors are subject to, Chapter 7 and Chapter…