Retirement and Health
Care Coverage...
QuestionsandAnswers
forDislocatedWorkers
This publication has been developed by the U.S. Department of Labor,
Employee Benefits Security Administration (EBSA).
To view this and other publications, visit the agency’s website.
To order publications, or to speak with a benefits advisor, contact EBSA.
Or call toll free: 1-866-444-3272
This material will be made available in alternative format to persons with disabilities
upon request:
Voice phone: (202) 693-8644
If you are deaf, hard of hearing, or have a speech disability, please dial 7-1-1 to access
telecommunications relay services.
This booklet constitutes a small entity compliance guide for purposes of the
Small Business Regulatory Enforcement Fairness Act of 1996.
Table of Contents
Protecting Your Health and Retirement Benefits 1
Maintaining Your Health Coverage 2
Enrolling in Another Plan 2
Special enrollment in a spouse’s plan
Continuing in Your Old Plan 4
Who offers COBRA coverage
Electing and paying for coverage
How long COBRA coverage lasts
Possible benefits for trade affected workers
Finding Individual Health Coverage 8
Health Insurance Marketplace®
Medicaid and CHIP
Protecting Your Retirement Assets 10
Access to retirement funds
Consequences of early withdrawal
Safety of retirement assets
Key Documents to Know 15
For More Information 16
RETIREMENT AND HEALTH CARE COVERAGE...QUESTIONS AND ANSWERS FOR DISLOCATED WORKERS
1
Introduction
Plant and business closings, downsizings, and reductions in hours affect employees in numerous
adverse ways. Workers lose income, the security of a steady job and, often, the health and retirement
benets that go along with working full-time. As a dislocated worker, you may have questions about
your benets, such as: What happens to my health benets? Can I keep my health coverage until I get
another job? Do I have access to my retirement funds?
You may have rights to certain health and retirement benet protections even if you lose your job.
If your company provided a group health plan, you may be entitled to temporary continued health
benets if you cannot nd a job immediately. You and your family may also have more affordable
or more generous options for health coverage available to you, such as through a spouse’s plan, the
individual Marketplace, and certain governmental programs.
You should also understand how your retirement benets are affected.
Knowing your rights can help you protect yourself and your family until you are working full-time
again. This booklet addresses some of the common questions dislocated workers ask. There is also
a brief guide to additional resources at the back. Together, they can help you make critical decisions
about your health care coverage and your retirement benets.
Protecting Your Health and Retirement Benefits
The Employee Benets Security Administration enforces the Employee Retirement Income
Security Act (ERISA), which provides rights and protections for private-sector health and
retirement plan participants and their beneciaries.
The Health Insurance Portability and Accountability Act (HIPAA) provides special
enrollment rights in other group health coverage for workers and their family members (for example,
in a spouse’s employer-provided plan).
The Consolidated Omnibus Budget Reconciliation Act (COBRA) provides workers with
the right to continue their health coverage in their former employer’s plan for a limited time after they
lose their jobs.
The Aordable Care Act (ACA) also provides special enrollment rights for individual coverage
in the Health Insurance Marketplace
®
. The ACA includes additional health coverage protections for
dislocated workers and their families. For example, group health plans and Marketplace plans cannot
deny health coverage to individuals due to a preexisting condition.
The following questions and answers explain these laws and how they may affect you.
UNITED STATES DEPARTMENT OF LABOR.
2
Maintaining Your Health Coverage
Q I lost my job. Is there any way I can get health coverage for myself and my
family?
A Even if you are healthy, you never know when you might need health coverage. HIPAA, COBRA,
and the ACA all provide ways for you to stay covered. You may be able to:
n Enroll in another group health plan
n Continue in your old plan
n Find individual health coverage
You, your spouse, and your dependents each have the independent right to decide among various
options for continuing health coverage. For instance, you may enroll in your spouse’s plan, while
one of your dependents may elect COBRA coverage through your former employer’s plan.
Enrolling in Another Plan
HIPAA offers protections for people who lose their jobs and their health coverage. The law provides
additional opportunities to enroll in certain health plans if you lose other coverage or experience
certain life events. The law also prohibits discrimination against employees and their dependents based
on any health factors they may have, including prior medical conditions, previous claims experience,
and genetic information.
For health coverage through an insurance company, state laws may offer additional protections. Check
your plan documents or ask your plan administrator to see if your plan is insured. If it is, visit the
National Association of Insurance Commissoners’
website for contact information for your state.
Q How can I enroll in a new plan?
A One option that may be more cost-effective for maintaining health coverage is special enrollment.
If other employer-sponsored group health coverage is available (for example, through your
spouse’s employer-provided plan) and you are eligible, you should consider special enrollment in
that plan. It allows you and your family to enroll, regardless of enrollment periods. T
o qualify, you
must request enrollment within 30 days of losing eligibility for other coverage.
After you request special enrollment due to your loss of eligibility for other coverage, your new
coverage will begin no later than the rst day of the next month.
You and your family members each have an independent right to choose special enrollment under
an employer-sponsored group health plan for which you or your family members are eligible. A
description of special enrollment rights should be included in the plan materials you received
when you were initially offered the opportunity to sign up for the plan.
RETIREMENT AND HEALTH CARE COVERAGE...QUESTIONS AND ANSWERS FOR DISLOCATED WORKERS
3
Special enrollment rights also arise in the event of a marriage, birth, adoption, or placement for
adoption. You have to request enrollment within 30 days of the event. In special enrollment as a
result of birth, adoption, or placement for adoption, coverage is retroactive to the day of the event.
In the case of marriage, coverage begins on the rst day of the next month.
You and your dependents may also have special enrollment rights if you:
n Lose coverage under a state Children’s Health Insurance Program (CHIP) or Medicaid or
n Are eligible to receive premium assistance under those programs
You or your dependent must request enrollment within 60 days of losing coverage or the
determination of eligibility for premium assistance. You may be eligible under CHIP or Medicaid
for assistance to pay your group health premiums. For more information, see Finding Individual
Health Coverage on page 8.
Q What coverage will I get when I take advantage of a special enrollment
opportunity?
A Employer-sponsored group health plans must offer special enrollees the same benets that would
be available if you were enrolling for the rst time. They cannot require you to pay more for the
same coverage than individuals who enrolled when they were rst eligible for the plan.
Q Can my new plan deny me coverage or benefits because I have a preexisting
condition?
A Under the ACA, an employer-sponsored group health plan cannot deny you coverage due to a
preexisting condition. A group health plan generally cannot limit or deny benets relating to a
health condition that was present before you enrolled.
Q Can my new group health plan deny me or charge me more for coverage
based on my health status?
A No. An employer-sponsored group health plan cannot deny you and your family coverage because
of a health factor, including:
n Health status,
n Physical and mental medical conditions,
n Claims experience,
n Receipt of health care,
n Medical history,
n Genetic information,
n Evidence of insurability, and
n Disability.
UNITED STATES DEPARTMENT OF LABOR.
4
The plan also cannot charge you more than similarly situated individuals because of a health
factor. However, the plan can distinguish among employees by employment-based classications,
such as those who work part-time or in another geographic area, as long as those classications
are genuine and are consistent with the employer’s usual business practice. The plan can establish
different benets or premiums for those different groups.
Continuing in Your Old Plan
Another way to maintain health coverage between jobs is to elect COBRA coverage.
While you may lose health coverage from your former employer, you may have the right to continue
coverage under certain conditions. Health continuation rules enacted under COBRA apply to
dislocated workers and their families as well as to workers who change jobs or whose work hours have
been reduced, thus causing them to lose eligibility for health coverage. This coverage is temporary,
however, and the employee may have to pay the full cost, which may be more than the employee was
paying while employed.
Q Am I eligible for COBRA coverage?
A To be eligible for COBRA coverage:
n You must have been enrolled in your employer’s health plan when you worked,
n The health plan must continue to be in effect for active employees, and
n You must elect COBRA coverage.
Q Which employers are required to oer COBRA coverage?
A Employers with 20 or more employees are usually required to offer COBRA coverage. COBRA
applies to private-sector employees and to most state and local government workers.
In addition, many states have laws similar to COBRA, including those that apply to insurers of
employers with fewer than 20 employees (sometimes called mini-COBRA). Check with your state
insurance commissioner’s ofce to see if such coverage is available to you.
Q What if the company closed or went bankrupt and there is no health plan?
A If there is no longer a health plan, no COBRA coverage is available. However, if the company
offers another plan, you may be eligible for coverage under that plan.
Union members who are covered by a collective bargaining agreement that provides for a medical
plan also may be entitled to continued coverage.
Q How do I find out about COBRA coverage, and how do I elect to take it?
A Employers or health plan administrators must provide an initial general notice if you are entitled
to COBRA coverage. You probably received this initial notice when you were hired.
RETIREMENT AND HEALTH CARE COVERAGE...QUESTIONS AND ANSWERS FOR DISLOCATED WORKERS
5
When you are no longer eligible for health coverage, your employer must provide you with an
election notice regarding your rights to COBRA continuation benets.
Here is the sequence of events:
Within 30 days after your termination or a reduction in hours that causes you to lose health
benets, employers must notify their plan administrators.
Within 14 days after the administrator has received notice from the employer, the plan administrator
must notify you and your covered dependents, in writing, of your right to elect COBRA coverage.
By the 60th day after the written notice is sent or the day health care coverage ceased, whichever
is later, you must respond to this notice and elect COBRA coverage. If you do not respond, you
will lose all rights to COBRA coverage.
Spouses and dependent children covered under your health plan have an independent right to elect
COBRA coverage upon your termination or reduction in hours. If, for instance, you have a family
member with an illness when you are laid off, that person alone can elect coverage.
Certain Trade Adjustment Assistance (TAA) Program participants have a second opportunity to
elect COBRA coverage:
n Individuals who are eligible and receive Trade Readjustment Allowances,
n Individuals who would be eligible to receive Trade Readjustment Allowances, but have
not yet exhausted their unemployment insurance benets, and
n Individuals receiving benets under Alternative Trade Adjustment Assistance or
Reemployment Trade Adjustment Assistance, and who did not elect COBRA during the
general election period.
This second election period is measured 60 days from the rst day of the month in which an
individual is determined eligible for and receives the TAA benets. For example, if an eligible
individual’s general election period runs out at the beginning of the month, they would have
approximately 60 more days to elect COBRA. However, if this same individual meets the
eligibility criteria at the end of the month, the 60 days are still measured from the rst of the
month, in effect giving the individual about 30 days.
You must elect COBRA no later than 6 months after TAA-related loss of coverage. COBRA
coverage chosen during the second election period typically begins on the rst day of that period.
More information about the Trade Act is available on the
website of of the Department of Labor’s
Employment and Training Administration.
Q If I elect COBRA, how much do I pay?
A When you were an active employee, your employer may have paid all or part of your group health
premiums. Under COBRA, as a former employee, you will usually pay the entire premium – that
is, the amount you paid as an active employee plus the amount of the contribution made by your
employer. In addition, there may be a 2 percent administrative fee.
UNITED STATES DEPARTMENT OF LABOR.
6
It is likely that there will be a lapse of a month or more between the date of layoff and the time you
make the COBRA election decision, so you may have to pay health premiums retroactively – from
the time of separation from the company. The rst premium, for instance, will cover the entire time
since your last day of employment with your former employer.
You should also be aware that you have to pay for COBRA coverage even if you do not receive a
monthly statement. If timely payment is not made, the employer may cease providing coverage.
Although they don’t have to do so, some employers may pay for part or all of the cost of health
coverage, including COBRA coverage, for terminating employees and their families as part of a
severance agreement. If you do receive this type of severance benet, talk to your plan administrator
about how this would impact your COBRA coverage or your special enrollment rights.
Q If I elect COBRA, can I later enroll in a Health Insurance Marketplace® plan?
A If you elect COBRA coverage, you will have another opportunity to request special enrollment
in a Marketplace plan or new group health plan if you have a new special enrollment event, such
as marriage, the birth of a child, or exhausting your COBRA coverage. You may also choose to
drop your COBRA continuation coverage and enroll in a Marketplace plan during the annual
Marketplace open enrollment period, even if you have not yet exhausted your COBRA coverage.
You must complete the maximum period of COBRA coverage available (usually 18 months for job
loss) to exhaust your COBRA coverage. If you choose to terminate your COBRA coverage early
or fail to pay your COBRA premiums, you generally will have to wait to enroll in other coverage
until the next open enrollment period for the Marketplace or the new group health plan.
If you decide to change plans, you may want to keep your COBRA coverage until your
Marketplace plan is effective to avoid a gap in coverage.
Q When does COBRA coverage begin?
A Once you elect coverage and pay for it, COBRA coverage begins on the date your health care
coverage stopped, even if that date has already passed.
Q How long does COBRA coverage last?
A Generally, individuals who qualify are initially covered for a maximum of 18 months, but
coverage may end earlier under certain circumstances, including:
n You don’t pay your premiums on time,
n Your former employer decides to discontinue a health plan altogether,
n You obtain coverage with another employer’s group health plan, or
n You qualify for Medicare benets.
RETIREMENT AND HEALTH CARE COVERAGE...QUESTIONS AND ANSWERS FOR DISLOCATED WORKERS
7
Employers may offer longer periods of COBRA coverage, but they are only required to do so
under special circumstances, such as disability (yours or a family member’s), an employee’s death
or divorce, or when an employee’s child ceases to meet the denition of a dependent child under
the health plan.
Q Who can answer other COBRA questions?
A Three federal agencies are responsible for COBRA administration. The Department of Labor
handles questions for private-sector employees. The Department of Health and Human Services
handles questions for state and local government workers. The Internal Revenue Service, as part of
the Department of the Treasury, has other COBRA responsibilities.
You can get more details about COBRA on the Employee Benets Security Administration’s
web
page.
To receive a copy of
An Employee’s Guide to Health Benefits Under COBRA or to speak to
a benets advisor, you can contact the Employee Benets Security Administration
online or call
1-866-444-3272.
For telephone numbers of the Department of Health and Human Services ofce closest to you, call
1-844-USA-GOV1 (872-4681) or visit USA.gov.
Possible benefits for trade aected workers
The Trade Adjustment Assistance Program helps workers who have lost or may lose their jobs due
to negative effects of global trade. This program seeks to provide adversely affected workers with
opportunities to obtain the skills, credentials, resources, and support necessary to become reemployed.
Through grants to states, workers who are part of a worker group that is covered by a certied Trade
Adjustment Assistance petition may be eligible for benets and services such as employment and case
management services, training, job search and relocation allowances, wage supplements for older
workers, and income support (called Trade Readjustment Allowances) while in training. States receive
Trade Adjustment Assistance funds throughout the year. For more information about this program, visit
the Employment and Training Administration’s
website or call 1-888-DOL-OTAA (1-888-365-6822).
The Health Coverage Tax credit expired on December 31, 2021. If you have questions about the
Health Coverage Tax Credit, visit the IRS’s
website.
UNITED STATES DEPARTMENT OF LABOR.
8
Finding Individual Health Coverage
Marketplace Coverage
The Health Insurance Marketplace
®
is another way for workers who lose their jobs to nd
comprehensive health coverage for themselves and their families. You may be eligible for a premium
tax credit that will lower your monthly health insurance bill, and cost-sharing reductions that will
lower your out-of-pocket costs for deductibles, coinsurance, and copayments.
In the Marketplace, you can compare your coverage options and see what your premium, deductibles,
and out-of-pocket costs will be before you decide to enroll. You can also choose between different
categories and types of plans.
A Marketplace plan, like a group health plan, cannot limit or deny you coverage due to a preexisting
health condition.
Q When can I enroll in Marketplace health coverage if I lose my job-based
coverage?
A Losing your job-based health coverage is a special enrollment event that allows you to enroll in
a Marketplace plan outside of the open enrollment period. To qualify for special enrollment, you
must select a plan within 60 days (before or after) of losing your job-based coverage. Keep any
documentation you have of your current coverage and effective dates, because you may need it
when you apply for Marketplace coverage.
Additionally, every year (usually November 1), there is an open enrollment period when anyone
can enroll in a Marketplace plan effective January 1. You also can change from your current
Marketplace plan to another Marketplace plan during open enrollment. Your insurance company
will send you information about any updates to the premiums and benets for your current plan so
you can decide if you want to make changes.
Q If I enroll in coverage through the Marketplace, when does coverage begin?
A The date your coverage will start depends on when you select a plan. For more information, visit
Healthcare.gov.
If you need health coverage in the time between losing your job-based coverage and beginning
coverage through the Marketplace (for example, if you or a family member needs medical care),
you may want to elect COBRA coverage from your former employer’s plan. Electing COBRA
will ensure you have health coverage until the coverage through the Marketplace begins. For more
information, see Continuing in Your Old Plan on Page 4.
You should also consider your new plan’s eligibility requirements, including any waiting period
that applies, and make sure you are covered until you enroll in your new plan.
RETIREMENT AND HEALTH CARE COVERAGE...QUESTIONS AND ANSWERS FOR DISLOCATED WORKERS
9
Q How do I apply for coverage through the Marketplace?
A You can apply for Marketplace coverage online at Healthcare.gov or by calling 1-800-318-2596.
Before you begin, review plans and prices available in your area.
Q When I get a new job, can I change my health coverage?
A When you get a new job, you can consider enrolling in your new employer’s group health plan if
they offer one. Talk to your new employer about eligibility for the new plan, the benets it offers,
and how to enroll.
If you have Marketplace coverage at the time you get a new job, you may no longer be eligible
for any premium tax credit you may have been receiving. If you enroll in health coverage at your
new job, you can end your Marketplace coverage by logging into your account or contacting the
Marketplace call center at
1-800-318-2596. For more information, visit Healthcare.gov.
Medicaid and CHIP
When you ll out a Marketplace application, you also can nd out if you and your family qualify for
free or low-cost coverage from Medicaid and/or the Children’s Health Insurance Program (CHIP).
Medicaid is a state-administered health coverage program for low-income families and children,
pregnant women, the elderly, people with disabilities, and in some states, other adults. While the
Federal government provides a portion of the funding and sets guidelines, states can choose how to
design their program, so Medicaid varies by state. To nd information on your state’s program, visit
Medicaid.gov/state-overviews/index.html.
In addition, children in families who don’t have health coverage due to a temporary reduction in
income (for instance, due to job loss) may be eligible for CHIP, a Federal/state partnership that helps
provide children with health coverage. Like Medicaid, states have exibility with CHIP programs.
They may choose to expand their Medicaid programs, design separate child health insurance programs,
or create a combination of both.
You can apply for and enroll in Medicaid or CHIP any time of year. If you qualify, your coverage can
begin immediately. Visit
Healthcare.gov or call toll-free 1-800-318-2596.
You can also apply for Medicaid by contacting your state Medicaid ofce. Find out more at
Medicaid.gov.
To learn more about the CHIP program in your state, call
1-877-KIDS NOW (543-7669) or visit
InsureKidsNow.gov.
UNITED STATES DEPARTMENT OF LABOR.
10
Protecting Your Retirement Assets
ERISA protects the assets of millions of Americans so that funds placed in your retirement plan will be
there when you retire.
Dislocated workers face two important issues when they leave employment: access to retirement funds
and the continued safety of their retirement plan investments.
Q What happens to my retirement money if I lose my job?
A Money that you and your employer put toward your retirement doesn’t just disappear if you lose
your job. There are several things that could happen (depending on the type of benet plan and the
plan documents), including:
n Getting a lump sum distribution when you leave the company
n Your retirement money staying in the plan until you reach retirement age
n Rolling over your retirement money into a new plan
Q Can I get my retirement money if I am laid o?
A Generally, if you are enrolled in a 401(k), prot sharing, or other type of dened contribution
plan (a plan in which you have an individual account), your plan may provide a lump sum
distribution of your retirement money when you leave the company.
A lump sum distribution
means you get the money all at once.
However, if you are in a dened benet plan (a plan in which you receive a xed, pre-established
benet), your benets begin at retirement age. These types of plans generally distribute money
through an annuity, which comes in the form of multiple payments to you over time. They are less
likely to allow you to receive money early.
Your plan documents will state whether you have a dened contribution or a dened benet
plan, the form of your retirement plan distribution (lump sum, annuity, etc.), and the date your
benets will be available to you. Some plans do not permit distribution until you reach a specied
age. Other plans do not permit distribution until you have been separated from employment for
a certain period of time. Some plans process distributions throughout the year, and others only
process them once a year. You should contact your plan administrator to nd out more.
One of the most important documents dening your benets is the Summary Plan Description
(SPD). It outlines what your benets are and how they are calculated. Y
our employer or retirement
plan administrator can provide a copy.
RETIREMENT AND HEALTH CARE COVERAGE...QUESTIONS AND ANSWERS FOR DISLOCATED WORKERS
11
In addition, you may request an individual benet statement showing, among other things, the
value of your retirement benets, the amount you have actually earned to date, and your vesting
status. These documents contain important information, regardless of whether you receive your
money now or later.
Q Is my plan required to give me a lump sum distribution?
A ERISA does not require that retirement plans provide lump sum distributions. Lump sum
distributions are possible only if the plan documents specically provide for them.
Q If I withdraw money before I retire, are there any potential negative eects?
A Yes. It can affect your unemployment eligibility, the amount of taxes you have to pay, and the
amount of money you ultimately end up with.
First, receiving a lump sum or other distribution from your retirement plan may affect your ability
to receive unemployment compensation. You should check with your state unemployment ofce.
In addition, withdrawing money from your retirement plan may mean you have to pay income tax
on it. Generally, if the money is withdrawn before age 59 ½, you will also be charged an additional
10 percent tax penalty.
However, you can defer these taxes if you keep the money in your plan or if you “roll over”
the money into a qualied retirement plan or Individual Retirement Account (IRA).
Your plan
generally must withhold 20 percent of an eligible rollover distribution for tax purposes. However,
in the case of a “direct rollover,” where you elect to have the money sent directly to an eligible
retirement plan, including an IRA, there is no tax withholding. The full amount of your eligible
rollover distribution is paid into the new eligible retirement plan.
If you do not elect a direct rollover, you will have to make up the 20 percent withholding to avoid
tax consequences on the full rollover amount. If an eligible rollover distribution, when added to
other rollover distributions you received during the year, is less than $200, the Internal Revenue
Service does not require the 20 percent withholding.
Before you request retirement funds from the plan, you should talk to your employer, bank, union,
nancial adviser, or tax professional for practical advice about the long-term and tax consequences
for your particular situation.Withdrawing money from your plan before retirement age also affects
the amount of money you will accumulate over time. The graph below shows the consequences of
receiving money from your retirement plan and not depositing it in another qualied plan within
the required time limit.
UNITED STATES DEPARTMENT OF LABOR.
12
$6,800
$38,700
$30,200
$21,700
$10,000
The blue line in the graph above shows how your money grows tax-free if you leave it in the plan
for a period of 20 years. When the money is distributed to you, you pay taxes on it, so your account
balance decreases.
The red line shows where you start if you remove your money from the plan and do not roll it over
into an IRA or another plan. Your account balance decreases during that initial year because you
will pay taxes and incur a 10 percent penalty for withdrawing the money before age 59½. After
that, your money grows for the next 20 years but at a lower rate because you are paying taxes on
your investment earnings.
In this example, you have $10,000 in a retirement plan account or IRA. Y
our money is invested
in a mix of stocks and bonds that earns an average return on investment of 7 percent. In 20 years,
your account will grow, with compounding, to $38,700. If you withdraw this amount after you
reach age 59½ (the age at which you can receive money without a 10 percent penalty) and pay 22
percent income tax on that amount, you will keep nearly $30,200.
However, if you close your retirement plan account before age 59½, your account balance will
decrease from $10,000 to $6,800 after paying the 10 percent penalty and 22 percent income tax.
Your money grows for the next 20 years but at a lower rate of growth, because you are paying
taxes on your investment earnings. As a result, the value of your money after 20 years will be
approximately $21,700.
RETIREMENT AND HEALTH CARE COVERAGE...QUESTIONS AND ANSWERS FOR DISLOCATED WORKERS
13
This means the tax consequences of early withdrawal will cost you 28 percent of your account
balance—in this case, about $8,500—at retirement.
If you receive retirement funds, you may want to hire someone to manage your money. The
law generally requires money managers to be clear and open about their fees and charges and
to explain whether they are paid by commissions or for the sales of nancial products, such as
annuities and mutual funds. Ask questions, get references, and avoid anyone who guarantees good
investment performance.
Q How do I roll over my retirement funds?
A You have 60 days to roll over the distribution you received to another qualied plan or IRA,
under IRS rules. If you have a choice between leaving the money in your current retirement plan
or depositing it in an IRA, you should carefully evaluate the investments available through each
option.
You can ask your plan administrator to transfer your account balance directly to your new
employer’s plan (if it accepts such transfers) or to an individual retirement account (IRA).
Transferring your retirement plan account balance to another plan or an IRA will protect the tax
advantages of your account and preserve the benets for retirement.
Q If I am laid o, are my retirement funds safe?
A Generally, your retirement funds should not be at risk even if a plant or business closes.
Employers must comply with Federal laws regarding retirement plans, and the consequences of
not prudently managing plan assets are serious.
Your benets may be protected by the Federal government. The Pension Benet Guaranty
Corporation, a Federal government corporation, insures most private-sector traditional pension
plans (dened benet plans). If an employer cannot fund the plan and the plan does not have
enough money to pay the promised benets, the Pension Benet Guaranty Corporation will
assume responsibility as trustee of the plan or provide assistance to the plan. The benets paid will
be up to a certain maximum guaranteed amount.
The Pension Benet Guaranty Corporation does not insure dened contribution plans.
If your retirement benet remains with your former employer, stay informed about any changes
your former employer makes, including changes of address, mergers, and business name. If you
move, give the plan administrator your new contact information.
Our guide,
Ten Warning Signs That Your 401(k) Contributions Are Being Misused, can help you
monitor your retirement plan for potential nancial problems and ensure your retirement security.
If you suspect your retirement benets aren’t safe or aren’t prudently invested, contact us at
askebsa.dol.gov or call 1-866-444-3272 to be connected to the ofce nearest you.
UNITED STATES DEPARTMENT OF LABOR.
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Q What if my company goes out of business and the retirement plan
terminates?
A In a dened contribution plan, the plan administrator generally submits certain retirement plan
and tax-related information to the IRS. This process may delay plan termination and subsequent
payment of any benets. You should contact your plan administrator for information on status and
how long it will be before you receive your money.
In a dened benet plan, the plan administrator generally les certain documents with the IRS
and the Pension Benet Guaranty Corporation if the plan is insured. Once the Pension Benet
Guaranty Corporation approves the termination, benets are generally distributed in a lump sum
or as an annuity within 1 year of termination.
Regardless of the type of benet plan, you should know the name of the plan administrator.
This information is in the latest copy of your SPD. If you can’t nd the name of your plan
administrator, you can contact:
n Your company’s personnel department,
n Your union representative (if applicable), or
n The IRS or Pension Benet Guaranty Corporation (in the case of most dened benet
plans).
You may need to know your employer’s identication number, a 9-digit number that can be found
on last year’s wage tax form (Form W-2). The EBSA regional ofces may be able to help you
obtain this information.
Q What if the company declares bankruptcy?
A Employer-declared bankruptcy can take many forms. A Chapter 11 (reorganization) bankruptcy
may not have any effect on your retirement plan and the plan may continue to exist. A Chapter 7
(nal) bankruptcy, where the employer’s company ceases to exist, is a more complicated matter.
Because each bankruptcy is unique, you should contact your plan administrator, your union
representative, or the bankruptcy trustee and request an explanation of the status of your plan.
RETIREMENT AND HEALTH CARE COVERAGE...QUESTIONS AND ANSWERS FOR DISLOCATED WORKERS
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Key Documents to Know
You should know your plan’s rules regarding how your retirement plan assets and health care benets
are treated if you are laid off.
The following documents contain valuable information about your health care and retirement plans.
You should be able to get most of them from your plan administrator, union representative, or human
resource coordinator.
n Summary Plan Description (SPD): A brief description of your retirement or health plan
n Summary of Benets and Coverage: An easy-to-understand summary of your health
plan coverage that includes a glossary of common terms
n Summary Annual Report: A summary of the plan’s annual nances, which should
contain important names and addresses
n Enrollment forms listing you and/or your family members as participants in a plan
n Earnings and leave statements
n Notices or letters showing the date your health care coverage ended or will end
n Individual Benet Statements showing how much money is in your retirement plan
account or the value of your retirement benets
Save these documents, as well as any memos or letters from your company, union, or bank that relate
to your retirement or health plans. They may prove valuable in protecting your retirement and health
benet rights.
UNITED STATES DEPARTMENT OF LABOR.
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For More Information
The Employee Benets Security Administration offers more information on HIPAA, COBRA, ACA,
and ERISA, including:
n An Employee’s Guide to Health Benefits Under COBRA
n Work Changes Require Health Choices...Protect Your Rights
n What You Should Know About Your Retirement Plan
For copies of the above publications or if you have questions about your rights to retirement or
health benets under HIPAA, COBRA, ACA, or ERISA, contact us
electronically or call toll-free:
1-866-444-3272. If you are deaf, hard of hearing, or have a speech disability, please dial 7-1-1 to
access telecommunications relay services.
Your Guaranteed Pension guidebook and other information on terminated pension plans are available
on the Pension Benet Guaranty Corporation
website. Or call toll-free: 1-800-400-7242. If you are
deaf, hard of hearing, or have a speech disability, please dial
7-1-1 to access telecommunications relay
services.
EMPLOYEE BENEFITS SECURITY ADMINISTRATION
UNITED STATES DEPARTMENT OF LABOR
September 2022