[Federal Register: November 23, 2009 (Volume 74, Number 224)]
[Proposed Rules]
[Page 61247-61258]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23no09-28]
[[Page 61247]]
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Part IV
Pension Benefit Guaranty Corporation
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29 CFR Parts 4000, 4001, 4043, et al.
Pension Protection Act of 2006; Conforming Amendments; Reportable
Events and Certain Other Notification Requirements; Proposed Rule
[[Page 61248]]
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PENSION BENEFIT GUARANTY CORPORATION
29 CFR Parts 4000, 4001, 4043, 4204, 4206, 4211, and 4231
RIN 1212-AB06
Pension Protection Act of 2006; Conforming Amendments; Reportable
Events and Certain Other Notification Requirements
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Proposed rule.
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SUMMARY: This is a proposed rule to conform PBGC's reportable events
regulation under section 4043 of ERISA and a number of other PBGC
regulations to statutory changes made by the Pension Protection Act of
2006 (PPA 2006) and to revisions of other PBGC regulations that
implement the statutory changes. The rule would also eliminate most of
the automatic waivers and filing extensions currently provided under
the reportable events regulation and make other amendments to the
regulation. For example, the rule would create two new reportable
events based on provisions in PPA 2006 dealing with funding-based
benefit limits and with asset transfers to retiree health benefits
accounts.
DATES: Comments must be submitted on or before January 22, 2010.
ADDRESSES: Comments, identified by Regulation Identifier Number (RIN)
1212-AB06, may be submitted by any of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the web site instructions for submitting comments.
E-mail: reg.comments@pbgc.gov.
Fax: 202-326-4224.
Mail or Hand Delivery: Legislative and Regulatory
Department, Pension Benefit Guaranty Corporation, 1200 K Street, NW.,
Washington, DC 20005-4026.
All submissions must include the Regulation Identifier Number for
this rulemaking (RIN 1212-AB06). Comments received, including personal
information provided, will be posted to http://www.pbgc.gov. Copies of
comments may also be obtained by writing to Disclosure Division, Office
of the General Counsel, Pension Benefit Guaranty Corporation, 1200 K
Street, NW., Washington, DC 20005-4026, or calling 202-326-4040 during
normal business hours. (TTY and TDD users may call the Federal relay
service toll-free at 1-800-877-8339 and ask to be connected to 202-326-
4040.)
FOR FURTHER INFORMATION CONTACT: John H. Hanley, Director, Legislative
and Regulatory Department; or Catherine B. Klion, Manager, or Deborah
C. Murphy, Attorney, Regulatory and Policy Division, Legislative and
Regulatory Department, Pension Benefit Guaranty Corporation, 1200 K
Street, NW., Washington, DC 20005-4026; 202-326-4024. (TTY/TDD users
may call the Federal relay service toll-free at 1-800-877-8339 and ask
to be connected to 202-326-4024.)
SUPPLEMENTARY INFORMATION:
Background
Pension Benefit Guaranty Corporation (PBGC) administers the pension
plan termination insurance program under Title IV of the Employee
Retirement Income Security Act of 1974 (ERISA). Under section 4007 of
ERISA, pension plans covered by Title IV must pay premiums to PBGC.
Section 4006 of ERISA establishes the premium rates and includes
provisions for determining the variable-rate premium (VRP), which is
based on plan funding rules. PBGC has regulations on Premium Rates (29
CFR part 4006) and Payment of Premiums (29 CFR part 4007) that
implement the premium rules. A number of other provisions of ERISA, and
of PBGC's other regulations, refer to funding and premium rules. Thus,
changes in the funding and premium rules may require changes in some
other PBGC regulations, such as PBGC's regulation on Reportable Events
and Certain Other Notification Requirements (29 CFR part 4043), which
implements section 4043 of ERISA (requiring that PBGC be notified of
the occurrence of certain ``reportable events'').
On August 17, 2006, the Pension Protection Act of 2006 (PPA 2006),
Public Law 109-280, was signed into law. PPA 2006 makes changes to the
plan funding rules in Title I of ERISA and in the Internal Revenue Code
of 1986 (Code) and amends the VRP provisions of section 4006 of ERISA
to conform to the changes in the funding rules. On March 21, 2008, PBGC
published in the Federal Register (at 73 FR 15065) a final rule
amending its premium rates regulation and its premium payment
regulation to implement the changes to ERISA and the Code made by PPA
2006. The changes to the funding and premium rules are effective for
plan years beginning after 2007.
On November 28, 2007, PBGC issued Technical Update 07-2 (revised
December 7, 2007 (corrected December 15, 2007)) (http://www.pbgc.gov/
practitioners/law-regulations-informal-guidance/content/tu16267.html),
providing transitional guidance on the applicability of the changes
made by PPA 2006, and the corresponding changes proposed for PBGC
premium regulations, to the determination of funding-related amounts
for purposes of the reportable events regulation. On March 24, 2008,
PBGC issued Technical Update 08-2 (http://www.pbgc.gov/practitioners/
law-regulations-informal-guidance/content/tu16372.html), providing a
waiver for reporting of missed quarterly contributions by certain small
employers in 2008. On January 9, 2009, PBGC issued Technical Update 09-
1 (http://www.pbgc.gov/practitioners/law-regulations-informal-guidance/
content/tu16637.html), providing interim guidance on compliance with
reportable events requirements for plan years beginning in 2009. On
April 30, 2009, PBGC issued Technical Update 09-3 (http://www.pbgc.gov/
practitioners/law-regulations-informal-guidance/content/tu16725.html),
providing a waiver or alternative compliance method (depending on plan
size) for reporting of missed quarterly contributions by certain small
employers in 2009.
Overview of Proposed Regulatory Changes
This proposed rule would amend PBGC's reportable events regulation
to make the advance reporting threshold test consistent with the PPA
2006 funding rules and PBGC's new variable-rate premium rules;
eliminate most automatic waivers and filing extensions; create two new
reportable events based on provisions in PPA 2006 dealing with funding-
based benefit limits and with asset transfers to retiree health
benefits accounts; reduce reporting of active participant reductions;
clarify the provisions dealing with missed contributions and inability
to pay benefits when due; clarify the benefit liability transfer event;
remove from the regulation the lists of information items to be
submitted (which are listed in the filing instructions); require filers
to use PBGC forms to file reportable events notices; and eliminate the
special ``partial electronic filing'' provision.
The rule would also amend six other PBGC regulations to revise
statutory cross-references and otherwise accommodate the statutory and
regulatory changes in the premium rules: the regulations on Filing,
Issuance, Computation of Time, and Record Retention (29 CFR part 4000);
Terminology (29 CFR part 4001); Variances for Sale of Assets (29 CFR
part 4204); Adjustment of Liability for a Withdrawal Subsequent to a
Partial Withdrawal (29 CFR part 4206); Allocating Unfunded Vested
Benefits to Withdrawing Employers (29 CFR part
[[Page 61249]]
4211); and Mergers and Transfers Between Multiemployer Plans (29 CFR
part 4231).
Reportable Events
PBGC proposes to amend the reportable events regulation to
accommodate the changes to the funding and premium rules, to eliminate
most automatic waivers and filing extensions, to add two new reportable
events, and to make other modifications.
Advance Reporting Test
Under section 4043(a) of ERISA, plan administrators and
contributing sponsors must notify PBGC of certain ``reportable events''
within 30 days after they occur. Section 4043(b) of ERISA requires
advance reporting by a contributing sponsor for certain reportable
events if a ``threshold test'' is met, unless the contributing sponsor
or controlled group member to which an event relates is a public
company. The advance reporting threshold test is based on the aggregate
funding level of plans maintained by the contributing sponsor and
members of the contributing sponsor's controlled group. The funding
level criteria are expressed by reference to calculated values that are
used to determine VRPs under section 4006 of ERISA. The reportable
events regulation ties the statutory threshold test to the related
provisions of the premium rates regulation.
The advance reporting threshold test in ERISA section 4043(b)(1)
says: ``The [advance reporting] requirements of this subsection shall
be applicable to a contributing sponsor if, as of the close of the
preceding plan year--
The aggregate unfunded vested benefits [(UVBs)] (as
determined under [ERISA] section 4006(a)(3)(E)(iii)) of plans subject
to this title which are maintained by such sponsor and members of such
sponsor's controlled groups (disregarding plans with no unfunded vested
benefits) exceed $50,000,000, and
The funded vested benefit percentage for such plans is
less than 90 percent.
--For purposes of the second bullet above, the funded vested benefit
percentage means the percentage which the aggregate value of the assets
of such plans bears to the aggregate vested benefits of such plans
(determined in accordance with [ERISA] section 4006(a)(3)(E)(iii)).''
PPA 2006 revised ERISA section 4006(a)(3)(E)(iii) to say that
UVBs--``means, for a plan year, the excess (if any) of * * * the
funding target of the plan as determined under [ERISA] section 303(d)
for the plan year by only taking into account vested benefits and by
using the interest rate described in [ERISA section 4006(a)(3)(E)(iv)],
over * * * the fair market value of plan assets for the plan year which
are held by the plan on the valuation date.''
The section 303 of ERISA referred to here is a completely new
section added by PPA 2006. Under new ERISA section 303(g)(1), the value
of plan assets and the funding target of a plan for a plan year are
determined as of the valuation date of the plan for the plan year.
Under new ERISA section 303(g)(2), the valuation date for virtually all
plans subject to advance reporting under ERISA section 4043 will be the
first day of the plan year. Thus, while ERISA section 4043(b)(1) refers
to UVBs, assets, and vested benefits ``as of the close of the preceding
plan year,'' in nearly all cases these quantities must, with respect to
plan years beginning after 2007, be calculated as of the beginning of a
plan year. This creates an ambiguity with regard to the date as of
which the advance reporting threshold test is to be applied.
The proposed rule would resolve this ambiguity by requiring that
the advance reporting threshold test be applied as of the valuation
date for ``the preceding plan year.'' That is the same date as of which
UVBs, assets, and vested benefits must be determined for premium
purposes for the preceding plan year under the premium rates regulation
as amended by PBGC's final rule on VRPs under PPA 2006. Measuring these
quantities as of that date for purposes of the advanced reporting
threshold test will thus be less burdensome than requiring that
separate computations be made as of the close of that year. It will
also enable a plan to determine before a reportable event occurs (and
before an advance report is due) whether it is subject to the advance
reporting requirement.
The proposed rule would make a number of editorial changes to the
advance reporting threshold provisions with a view to improving clarity
and simplicity as well as accommodating the changes discussed above. It
would also provide that the plans whose funding status is taken into
account in applying the threshold test are determined as of the due
date for the report, and that the ``public company'' status of a
contributing sponsor or controlled group member to which the event
relates is also determined as of that date. Although the existing
regulation does not explicitly address this issue, PBGC believes it is
implicit that these determinations be current. Requiring that they be
made as of the due date for the report ensures currency.
Automatic Waivers and Extensions
Section 4043.4 of the reportable events regulation provides that
PBGC may grant waivers and extensions case by case. In addition, the
existing regulation provides automatic waivers and extensions for most
of the reportable events. For example, waivers are provided for small
plans, for well-funded plans, and for events affecting de minimis
segments of controlled groups or foreign entities. In many cases, where
it may be impossible to know by the filing due date whether criteria
for a particular waiver are met, an extension gives a potential filer
an opportunity to determine whether the waiver applies.
PBGC proposes to eliminate most of these automatic waivers and
extensions, as indicated in the following tables. The complete waivers
provided for certain statutory events in Sec. Sec. 4043.21
(disqualification or noncompliance), 4043.22 (amendment decreasing
benefits), 4043.24 (termination), and 4043.28 (merger, consolidation,
or transfer) would be retained.
Post-Event Notices
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Current Proposed
Event Current waivers Proposed waivers extensions extensions
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Active participant reduction Small Prior 30 days None.
(Sec. 4043.23). plan. event reported after current VRP
Well- within 1 year. due date.
funded plan..
30 days
after next 5500
due date.
Following
year flat-rate
premium due date.
[[Page 61250]]
Missed contribution (Sec. Payment None.............. None.............. None.
4043.25). within 30 days of
due date.
Inability to pay benefits when Large Large None.............. None.
due (Sec. 4043.26). plan. plan.
Distribution to substantial None.............. 30 days None.
owner (Sec. 4043.27). Distribution up after current VRP
to Sec. 415 due date.
limit.
Distribution up
to 1% of assets.
Well-
funded plan.
Change in contributing sponsor De De 30 days None.
or controlled group (Sec. minimis minimis after current VRP
4043.29). transaction. transaction. due date.
Foreign .................. 30 days
entity. after next 5500
due date.
Well- .................. 30 days
funded plan. after Form 10Q or
press release.
Liquidation (Sec. 4043.30).... De None.............. 30 days None.
minimis after current VRP
transaction. due date.
Foreign .................. 30 days
entity. after next 5500
due date.
Well- .................. 30 days
funded plan. after Form 10Q or
press release.
Extraordinary distribution or Statutory Statutory 30 days None.
stock redemption (Sec. event. event. after current VRP
4043.31). De due date.
minimis
transaction.
Foreign De 30 days
entity. minimis after next 5500
transaction. due date.
Well- .................. 30 days
funded plan. after Form 10Q or
press release.
Transfer of benefit liabilities Transfer None.............. None.............. None.
(Sec. 4043.32). of all assets and
liabilities.
De
minimis transfer.
Sec.
414(l) safe
harbor.
Plans
fully funded.
Funding waiver application (Sec. None.............. None.............. None.............. None.
4043.33).
Loan default (Sec. 4043.34)... Cure or Cure or 30 days 1 day
waiver. waiver. after current VRP after cure
due date. period,
acceleration, or
default notice.
Foreign .................. 30 days
entity. after next 5500
due date.
Well- .................. 1 day
funded plan. after cure
period,
acceleration, or
default notice.
Bankruptcy (Sec. 4043.35)..... Foreign None.............. 30 days None.
entity. after filer has
actual knowledge.
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Advance Notices
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Proposed
Event Current waivers Proposed waivers Current extensions extensions
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Change in contributing sponsor Change in De None.............. None.
or controlled group (Sec. sponsor of small minimis
4043.62). plan. transaction.
De
minimis
transaction..
Liquidation (Sec. 4043.63).... De None.............. None.............. None.
minimis
transaction.
Extraordinary distributions or De De None.............. None.
stock redemption (Sec. minimis minimis
4043.64). transaction. transaction.
Transfer of benefit liabilities Transfer None.............. None.............. None.
(Sec. 4043.65). of all assets and
liabilities.
De
minimis transfer.
Sec.
414(l) safe
harbor.
Plans
fully funded.
Funding waiver application (Sec. None.............. None.............. 10 days after Same day as event.
4043.66). event.
Loan default (Sec. 4043.67)... Cure or Cure or 10 days 10 days
waiver. waiver. after default. after default.
1 day 1 day
after cure after cure
period, period,
acceleration, or acceleration, or
default notice. default notice.
[[Page 61251]]
Bankruptcy (Sec. 4043.68)..... .................. .................. 10 days 10 days
after event. after event.
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Reportable events often signal financial distress and possible plan
termination. When PBGC has timely information about a reportable event,
it can take steps to encourage plan continuation--for example, by
exploring alternative funding options with the plan sponsor--or, if
plan termination is called for, to minimize the plan's potential
funding shortfall through involuntary termination and maximize recovery
of the shortfall from all possible sources. Without such timely
information, PBGC typically learns that a plan is in danger only when
most opportunities for protecting participants and the pension
insurance system may have been lost.
PBGC believes that many of the automatic waivers and extensions in
the existing reportable events regulation are depriving it of early
warnings that would enable it to mitigate distress situations. For
example, of the 88 small plans terminated in 2007, 21 involved
situations where, but for an automatic waiver, an active participant
reduction reportable event notice would have been required an average
of three years before termination. Had those notices been filed, the
need for some of those terminations might have been avoided, and PBGC
might have been able to reduce the impact of other terminations on the
pension insurance system.
PBGC believes that the increased reporting burden stemming from the
elimination of most of the automatic waivers and extensions is
justified by PBGC's need for timely information that may contribute to
plan continuation or the minimizing of funding shortfalls. However,
PBGC plans to monitor reportable events filings to determine whether
some automatic waivers and extensions can be restored (or newly crafted
waivers or extensions provided) without jeopardizing efforts to protect
the benefits of participants in troubled plans and the pension
insurance program. For each waiver and extension eliminated, PBGC
solicits public comment on whether it has struck the correct balance
between ensuring relevant information is received timely and increased
reporting burden on the regulated community.
Active Participant Reduction--Facility Closings
An active participant reduction may occur as the result of a
substantial cessation of operations under ERISA section 4062(e) or a
substantial employer withdrawal under ERISA section 4063(a). Events
covered by section 4062(e) or 4063(a) must be reported to PBGC under
section 4063(a). With a view to avoiding duplicative reporting, PBGC
proposes to limit the active participant reduction event by excluding
from consideration--in determining whether a reportable active-
participant-reduction event has occurred--active participant reductions
to the extent that they (1) fall within the provisions of section
4062(e) or 4063(a) and (2) are timely reported to PBGC as required
under ERISA section 4063(a).
Active Participant Reduction--Frequency of Reporting
The description of the active participant reduction event in the
statute and the existing regulation suggests that reporting could be
required multiple times in the course of a year if multiple reductions
occurred. In fact, any such report leads PBGC to monitor the situation
for an extended period of time; while that monitoring continues,
additional formal reports of active participant reductions are
unnecessary. Accordingly, the proposed rule would waive reporting for
this event if another active participant reduction was reported within
the past year.
Failure To Contribute--Clarification
PBGC proposes to clarify the language in Sec. 4043.25, dealing
with the reportable event of failure to make required contributions.
This reportable event does not apply only to contributions required by
statute (including quarterly contributions under ERISA section
303(j)(3) and Code section 430(j)(3), liquidity shortfall contributions
under ERISA section 303(j)(4) and Code section 430(j)(4), and
contributions to amortize funding waivers under ERISA section 303(e)
and Code section 430(e)). It also applies to contributions required as
a condition of a funding waiver that do not fall within the statutory
provisions on waiver amortization charges. The proposed revision would
make this point clearer. (Note that such ``non-statutory''
contributions are not considered under Sec. 4043.81, dealing with
missed contributions that give rise to liens under ERISA section 303(k)
and Code section 430(k).)
Inability To Pay Benefits When Due--Clarification
PBGC proposes to clarify the language in the provision dealing with
automatic waiver of the reporting requirement for inability to pay
benefits when due. This provision reflects PBGC's judgment that it need
not require reporting of this event by larger plans that are subject to
the ``liquidity shortfall'' rules imposing more stringent contribution
requirements where liquid assets are insufficient to cover anticipated
disbursement requirements. For these larger plans, (1) if the
contributions required by the liquidity shortfall rules are made, the
inability to pay benefits when due is resolved, and (2) if the required
contributions are not made, that fact is reportable to PBGC as a
failure to make required contributions. Accordingly, this provision
waives reporting unless the plan is a small plan that is exempt from
the liquidity shortfall provisions.
Transfer of Benefit Liabilities--Cashouts and Annuitizations
Section 4043(c)(12) of ERISA requires reporting to PBGC when, in
any 12-month period, three percent or more of a plan's benefit
liabilities are transferred to a person outside the transferor plan's
controlled group or to a plan or plans maintained by a person or
persons outside the transferor plan's controlled group. Transfers of
benefit liabilities are of concern to PBGC because they may reduce the
transferor plan's funded percentage and because the transferee may not
be as financially healthy as the transferor.
The existing text of the reportable events regulation does not make
clear whether the satisfaction of benefit liabilities through the
payment of a lump sum or the purchase of an irrevocable commitment to
provide an annuity constitutes a transfer of benefit liabilities for
purposes of this reporting requirement. PBGC has received inquiries
seeking clarification of this point. PBGC proposes to provide that such
cashouts and annuitizations do not constitute transfers of benefit
liabilities that must be reported under the regulation.
Section 436 of the Code and section 206(g) of ERISA (as added by
PPA 2006) prohibit or limit cashouts and annuitizations by
significantly
[[Page 61252]]
underfunded plans. These provisions thus tend to prevent cashouts and
annuitizations that would most seriously reduce a transferor plan's
funded percentage. And since cashouts and annuitizations satisfy
benefit liabilities (rather than transferring them to another plan),
there is no concern about a transferee plan's financial health.
Transfer of Benefit Liabilities--Plans of Other Controlled Group
Members
Section 4043.32(a) of the existing reportable events regulation
requires post-event reporting not only for the plan that transfers
benefit liabilities, but also for every other plan maintained by a
member of the transferor plan's controlled group. However, existing
Sec. 4043.32(d) provides a waiver that in effect limits the post-event
reporting obligation to the transferor plan. Existing Sec. 4043.65
(dealing with advance reporting of benefit liability transfers) does
not provide a similar waiver.
PBGC has concluded that it is unnecessary to extend the advance
reporting requirement for benefit liability transfers beyond the
transferor plan. Accordingly, PBGC proposes to revise Sec. 4043.32(a)
to narrow the reporting requirement to the transferor plan; to remove
Sec. 4043.32(d) (which would be redundant); and to revise Sec.
4043.65(a) to remove the provision requiring that Sec. 4043.32(d) be
disregarded. The effect of these changes would be to leave the post-
event notice requirement unchanged and to limit the advance notice
requirement to the transferor plan.
New Reportable Event--Low Adjusted Funding Target Attainment Percentage
Section 436 of the Code and section 206(g) of ERISA (as added by
PPA 2006) provide that if a plan's ``adjusted funding target attainment
percentage'' is less than 60 percent, the plan in general must cease
benefit accruals; may not be amended to increase benefits, establish
new benefits, or increase accrual or vesting rates; and may not pay
unpredictable contingent event benefits (such as shut-down benefits) or
lump sums, or annuitize benefits. ``Adjusted funding target attainment
percentage'' (a variant of the funding target attainment percentage) is
defined in Code section 436(j)(2) and ERISA section 206(g)(9)(B). Code
section 436(h) and ERISA section 206(g)(7) provide a number of rules
under which the adjusted funding target attainment percentage (AFTAP)
is presumed in specified circumstances to have specified values.
PBGC shares Congress's concern about the financial health of plans
with AFTAPs below 60 percent and believes that a funding percentage
that low may (depending on the financial condition of the contributing
sponsor and controlled group members) be indicative of a need to
terminate the plan. Accordingly, PBGC proposes to create a new
reportable event under ERISA section 4043(c)(13) that would occur when
an enrolled actuary certifies that a plan's AFTAP is less than 60
percent or when the AFTAP is presumed to be less than 60 percent under
one of the rules in Code section 436(h) and ERISA section 206(g)(7).
This would be both a post-event notice event and an advance notice
event (although the due date for the advance notice would be extended
until ten days after the event occurs).
New Reportable Event--Transfer to Retiree Health Account
Section 420(f) of the Internal Revenue Code (as added by PPA 2006)
permits a pension plan to transfer ``excess pension assets'' to a
health benefits account under the plan to fund health benefits for a
``transfer period'' of up to 10 years. The term ``excess pension
assets'' is defined for this purpose as the amount by which plan assets
exceed 120 percent of plan liabilities for benefits (including benefits
accruing during the year). If the ratio of assets to liabilities falls
below 120 percent at any valuation date during the transfer period,
additional contributions must be made to the pension plan, or assets
must be transferred back from the health benefits account to the
pension plan, to restore the funding ratio to 120 percent.
The 120-percent required funding ratio in this new provision is
less than the 125-percent ratio previously required under Code section
420, and the transfer period can be much longer, entailing potentially
the transfer of significantly greater amounts of plan assets.
Furthermore, because the actuarial assumptions used to apply the 120-
percent test under Code section 420 may differ significantly from the
assumptions that would be used to value plan liabilities if a plan
termination were to occur during the transfer period, a plan could be
underfunded for termination purposes even if it could pass the 120-
percent funding test in Code section 420. PBGC is accordingly concerned
that large transfers under Code section 420(f), especially if the
funded ratio falls below 120 percent during the transfer period, may
indicate a need to terminate the plan.
PBGC therefore proposes to create a new reportable event that would
occur if a section 420(f) transfer of $10 million or more is made or
if, following such a transfer, the funded ratio falls below 120 percent
during the transfer period. This would be a post-event notice event
only. (Even with advance notice, PBGC could not prevent such a transfer
if it complied with the law; post-event reporting would give PBGC an
opportunity to monitor the plan going forward.)
Requiring Use of Forms; Putting Data Submission Requirements in
Instructions
PBGC issues three reporting forms for use under the reportable
events regulation. Form 10 is for post-event reporting under subpart B
of the regulation; Form 10-Advance is for advance reporting under
subpart C of the regulation; and Form 200 is for reporting under
subpart D of the regulation.
Under the existing regulation, use of PBGC forms for reporting
events under subparts B and C of the regulation is optional. The data
items in the forms do not correspond exactly with those in the
regulation, and the regulation recognizes that filers that use the
forms may report different information from those that do not use the
forms. With a view to greater uniformity in the reporting process and
attendant administrative simplicity for PBGC, PBGC proposes to make use
of prescribed reportable events forms mandatory. PBGC also proposes to
revise the forms and instructions (see the discussion of Paperwork
Reduction Act requirements infra).
Consistent with this change, PBGC proposes to eliminate from the
regulation the lists of information items that must be reported, so
that the information to be reported would be described in the filing
instructions only (rather than in both the filing instructions and the
regulation). PBGC anticipates that as uncertainties about the operation
of new PPA 2006 provisions are resolved, it may be appropriate to make
changes in the information required to be submitted with reportable
events notices, particularly those for failures to make required
contributions timely.
``Partial Electronic Filing'' Rule
The existing regulation contains a ``partial electronic filing''
provision under which a filing is considered timely made if certain
basic information (specified in PBGC's reporting instructions) is
submitted on time electronically and followed up within one or two
business days (depending on the type of report) with the remaining
[[Page 61253]]
required information. This provision has facilitated last-minute filing
where some required information consisted of documents that could not
conveniently be sent electronically. But in the years since the
regulation was issued, it has become common for documents to be created
electronically and easy to create electronic images of documents that
do not exist in electronic form. Thus PBGC believes that the ``partial
electronic filing'' provision is no longer needed and that it is
reasonable to require that all the information required for a filing be
submitted on time, either electronically or on paper. Accordingly, PBGC
proposes to eliminate the ``partial electronic filing'' provision. In
the case of Form 200 filings, PBGC will accept an imaged signature, so
that Form 200 filers need not submit a paper filing with ink
signatures. (Forms 10 and 10-Advance do not require signatures.)
Other Changes
The proposed rule would make a number of editorial and clarifying
changes to part 4043 and would add definitional cross-references,
change statutory cross-references to track changes made by PPA 2006,
and update language to conform to usage in PPA 2006 and regulations and
reporting requirements thereunder. Some definitions of terms used in
only one section of the regulation would be moved to the sections where
they are used.
The proposed changes to the reportable events regulation make it
unnecessary to define a number of terms at the beginning of the
regulation. Accordingly, the definitions of ``de minimis 10-percent
segment,'' ``fair market value of the plan's assets,'' ``foreign
entity,'' ``foreign-linked entity,'' ``foreign parent,'' ``Form 5500
due date,'' ``public company,'' ``testing date,'' ``ultimate parent,''
``unfunded vested benefits,'' ``variable-rate premium,'' and ``vested
benefits amount'' would be removed from Sec. 4043.2. The definition of
``de minimis 5-percent segment'' (a term that in the existing
regulation is defined by reference to the definition of ``de minimis
10-percent segment'') would be made self-contained.
PBGC recognizes that the changes made by PPA 2006 in the statutory
provisions dealing with missed contributions--which are reportable
under Sec. Sec. 4043.25 and 4043.81--affect the computation of
interest on missed contributions, which in turn affects the reporting
requirements. This proposed rule includes no amendment to the
reportable events regulation dealing with such issues, but PBGC may
provide further guidance on this subject, taking into account as
appropriate any relevant guidance from the Internal Revenue Service.
Other Regulations
Several other PBGC regulations also refer to plan funding concepts:
The regulations on Filing, Issuance, Computation of Time, and Record
Retention (29 CFR part 4000); Terminology (29 CFR part 4001); Variances
for Sale of Assets (29 CFR part 4204); Adjustment of Liability for a
Withdrawal Subsequent to a Partial Withdrawal (29 CFR part 4206);
Allocating Unfunded Vested Benefits to Withdrawing Employers (29 CFR
part 4211); and Mergers and Transfers Between Multiemployer Plans (29
CFR part 4231). Thus, these regulations must also be revised to be
consistent with ERISA and the Code as amended by PPA 2006 and with the
revised premium regulations. This proposed rule would make the
necessary conforming revisions.
Applicability
In general, the changes to the reportable events regulation made by
this rule would apply to post-event reports for reportable events
occurring on or after the effective date of this rule and to advance
reports due on or after the effective date of this rule. Technical
Updates 07-2, 08-2, 09-1, and 09-3 would be superseded by this rule
with respect to any circumstances to which this rule would apply.
Compliance With Rulemaking Guidelines
E.O. 12866
The PBGC has determined, in consultation with the Office of
Management and Budget, that this rule is a ``significant regulatory
action'' under Executive Order 12866. The Office of Management and
Budget has therefore reviewed this notice under E.O. 12866.
Regulatory Flexibility Act
PBGC certifies under section 605(b) of the Regulatory Flexibility
Act (5 U.S.C. 601 et seq.) that the amendments in this rule will not
have a significant economic impact on a substantial number of small
entities. Accordingly, as provided in section 605 of the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.), sections 603 and 604 do not
apply. This certification is based on the fact that the reportable
events regulation requires only the filing of notices and that the
economic impact of filing is not significant.
Paperwork Reduction Act
PBGC is submitting the information requirements under this proposed
rule to the Office of Management and Budget for review and approval
under the Paperwork Reduction Act. There are two information
collections under the reportable events regulation, approved under OMB
control number 1212-0013 (covering subparts B and C) and OMB control
number 1212-0041 (covering subpart D), both of which expire March 31,
2012. Copies of PBGC's requests may be obtained free of charge by
contacting the Disclosure Division of the Office of the General Counsel
of PBGC, 1200 K Street, NW., Washington, DC 20005, 202-326-4040.
PBGC is proposing the following changes to these information
requirements:
PBGC's experience is that in order to assess the
significance of virtually every reportable events filing, it must
obtain from the filer the most recent month-end statement of the market
value of plan assets, the most recent adjusted funding target
attainment percentage (AFTAP) certification, and the most recent
actuarial valuation report that contains or is supplemented with all
the items of information described in Sec. 4010.8(a)(11) of PBGC's
regulation on Annual Financial and Actuarial Information Reporting (29
CFR part 4010). Accordingly, PBGC proposes to require that every
reportable events filing include these items.
To provide better identification of controlled group
members, PBGC proposes to require that lists of controlled group
members include addresses as well as names.
PBGC has found that some filers that should file Form 200
under Sec. 4043.81 of the reportable events regulation (missed
contributions totaling over $1 million) file only Form 10 under Sec.
4043.25 (missed contributions of any amount). This has led to delays in
enforcing liens under ERISA section 302(f) and Code section 412(n)
(corresponding to ERISA section 303(k) and Code section 430(k) as
amended by PPA 2006). To address this issue, PBGC proposes that the
information collections under the reportable events regulation include
a requirement to report the aggregate outstanding balance (with
interest) of all prior contributions not timely made.
In missed contribution cases, there is sometimes a credit
balance that is available for application to a contribution that is
due. PBGC needs to be able to determine whether all or a portion of the
credit balance has been properly applied toward payment of the
[[Page 61254]]
contribution. Accordingly, PBGC proposes to require filers of both Form
10 and Form 200 to indicate how much (if any) of the carryover balance
or prefunding balance was used for partial payment of the missed
contribution and submit copies of election letters relating to
application of the carryover balance and prefunding balance to the
contribution.
To assist PBGC in assessing the impact of a change in
contributing sponsor or controlled group, PBGC proposes to require
submission of ``before-and-after'' financial statements for post-event
as well as advance reporting. Where the event is the loss of one or
more controlled group members, financial statements would be required
for the controlled group before and after the loss of the departing
member(s). Where the event is a transfer of a plan to another
controlled group, financial statements would be required for the old
and new controlled groups. (Filers would not be penalized if they were
unable to obtain financial statements from controlled groups other than
their own.)
To help PBGC assess the significance of a loan default or
an extraordinary distribution or stock redemption, PBGC proposes to
require filings for these events to include financial statements for
all controlled group members to the extent not publicly available.
PBGC Form 10-Advance (used for advance reporting under
subpart C of the reportable events regulation) currently includes a
requirement for the benefit liability transfer event that both the
transferor and the transferee (and contributing sponsors) be
identified. Form 10 (used for post-event reporting under subpart B)
calls only for the identity of the transferee. PBGC proposes to change
the Form 10 requirement to correspond to the requirement of Form 10-
Advance.
To assist PBGC in assessing the impact of a transfer of
benefit liabilities, PBGC proposes to require submission of financial
statements for both the transferor controlled group and the transferee
controlled group. (Filers would not be penalized if they were unable to
obtain financial statements from controlled groups other than their
own.)
PBGC Form 10 currently requires for the bankruptcy event
that the bankruptcy petition and docket (or similar documents) be
submitted. Form 10-Advance requires that all documents filed in the
relevant proceeding be submitted. Both forms require that the last date
for filing claims be reported if known. PBGC proposes to replace these
requirements with a requirement that filers simply identify the
judicial district where the bankruptcy petition was filed and the
docket number of the filing.
When an advance report of an extraordinary dividend or
stock redemption is made, PBGC has a 30-day window in which to
determine whether there is a basis for taking action before the
dividend is paid and, if so, to act. In order to do so, PBGC needs
information about contributing sponsors' financial health. Accordingly,
PBGC proposes to add a requirement for contributing sponsor financial
statements to the information submission requirements for advance
reporting of extraordinary dividends and stock redemptions.
PBGC proposes to require that the notice of a low adjusted
funding target attainment percentage certified by an enrolled actuary
include a copy of the enrolled actuary's certification.
If a section 420(f) transfer of $10 million or more is
made, PBGC proposes to require that the notice to PBGC include a
calculation demonstrating that the transfer does not reduce pension
assets below 120 percent of liabilities for pension benefits.
If, following a section 420(f) transfer of $10 million or
more, the funded ratio falls below 120 percent during the transfer
period, PBGC proposes to require that the notice to PBGC include a
calculation demonstrating how (by making additional pension plan
contributions or by transferring assets back from the health benefits
account to the pension plan) pension assets were restored to an amount
not less than 120 percent of liabilities for pension benefits.
PBGC needs the information in reportable events filings under
subparts B and C of part 4043 (Forms 10 and 10-Advance) to determine
whether it should terminate plans that experience events that indicate
plan or contributing sponsor financial problems. PBGC estimates that it
will receive such filings from about 1,615 respondents each year and
that the total annual burden of the collection of information will be
about 6,890 hours and $2,411,500.
PBGC needs the information in missed contribution filings under
subpart D of part 4043 (Form 200) to determine the amounts of statutory
liens arising under ERISA section 303(k) and Code section 430(k) and to
evaluate the funding status of plans with respect to which such liens
arise and the financial condition of the persons responsible for their
funding. PBGC estimates that it will receive such filings from about
797 respondents each year and that the total annual burden of the
collection of information will be about 1,636 hours and $572,600.
Comments on the paperwork provisions under this proposed rule
should be sent to the Office of Information and Regulatory Affairs,
Office of Management and Budget, Attention: Desk Officer for Pension
Benefit Guaranty Corporation, via electronic mail at OIRA_
DOCKET@omb.eop.gov or by fax to (202) 395-6974. Although comments may
be submitted through January 22, 2010, the Office of Management and
Budget requests that comments be received on or before December 23,
2009 to ensure their consideration. Comments may address (among other
things)--
Whether each proposed collection of information is needed
for the proper performance of PBGC's functions and will have practical
utility;
The accuracy of PBGC's estimate of the burden of each
proposed collection of information, including the validity of the
methodology and assumptions used;
Enhancement of the quality, utility, and clarity of the
information to be collected; and
Minimizing the burden of each collection of information on
those who are to respond, including through the use of appropriate
automated, electronic, mechanical, or other technological collection
techniques or other forms of information technology, e.g., permitting
electronic submission of responses.
List of Subjects
29 CFR Part 4000
Employee benefit plans, Pension insurance, Reporting and
recordkeeping requirements.
29 CFR Part 4001
Employee benefit plans, Pension insurance.
29 CFR Part 4043
Employee benefit plans, Pension insurance, Reporting and
recordkeeping requirements.
29 CFR Part 4204
Employee benefit plans, Pension insurance, Reporting and
recordkeeping requirements.
29 CFR Part 4206
Employee benefit plans, Pension insurance.
29 CFR Part 4211
Employee benefit plans, Pension insurance, Reporting and
recordkeeping requirements.
[[Page 61255]]
29 CFR Part 4231
Employee benefit plans, Pension insurance, Reporting and
recordkeeping requirements.
For the reasons given above, PBGC proposes to amend 29 CFR parts
4000, 4001, 4043, 4204, 4206, 4211, and 4231 as follows.
PART 4000--FILING, ISSUANCE, COMPUTATION OF TIME, AND RECORD
RETENTION
1. The authority citation for part 4000 is revised to read as
follows:
Authority: 29 U.S.C. 1083(k), 1302(b)(3).
Sec. 4000.53 [Amended]
2. In Sec. 4000.53, paragraphs (c) and (d) are amended by removing
the words ``section 302(f)(4), section 307(e), and'' where they occur
in each paragraph and adding in their place the words ``section 101(f),
section 303(k)(4), and''.
PART 4001--TERMINOLOGY
3. The authority citation for part 4001 continues to read as
follows:
Authority: 29 U.S.C. 1301, 1302(b)(3).
Sec. 4001.2 [Amended]
4. In Sec. 4001.2:
a. The definition of ``controlled group'' is amended by removing
the words ``section 412(c)(11)(B) of the Code or section 302(c)(11)(B)
of ERISA'' and adding in their place the words ``section 412(b)(2) of
the Code or section 302(b)(2) of ERISA''.
b. The definition of ``funding standard account'' is amended by
removing the words ``section 302(b) of ERISA or section 412(b) of the
Code'' and adding in their place the words ``section 304(b) of ERISA or
section 431(b) of the Code''.
c. The definition of ``substantial owner'' is amended by removing
the words ``section 4022(b)(5)(A)'' and adding in their place the words
``section 4021(d)''.
PART 4043--REPORTABLE EVENTS AND CERTAIN OTHER NOTIFICATION
REQUIREMENTS
5. The authority citation for part 4043 is revised to read as
follows:
Authority: 29 U.S.C. 1083(k), 1302(b)(3), 1343.
Sec. 4043.1 [Amended]
6. Section 4043.1 is amended by removing the reference
``302(f)(4)'' and adding in its place the reference ``303(k)(4)''; and
by removing the reference ``412(n)(4)'' and adding in its place the
reference ``430(k)(4)''.
7. In Sec. 4043.2:
a. The introductory text is amended by removing the word ``Code''
and adding in its place the words ``benefit liabilities, Code''; and by
removing the words ``plan administrator, proposed termination date''
and adding in their place the words ``plan administrator, plan year,
proposed termination date''.
b. The definitions of de minimis 10-percent segment, fair market
value of the plan's assets, foreign entity, foreign-linked entity,
foreign parent, Form 5500 due date, public company, testing date,
ultimate parent, unfunded vested benefits, variable-rate premium, and
vested benefits are removed.
c. The definitions of event year and notice date are amended by
removing the words ``the reportable event'' and adding in their place
the words ``a reportable event'' in each of the two definitions.
d. The definition of de minimis 5-percent segment is revised to
read as follows:
Sec. 4043.2 Definitions.
* * * * *
De minimis 5-percent segment means, in connection with a plan's
controlled group, one or more entities that in the aggregate have for a
fiscal year--
(1) Revenue not exceeding 5 percent of the controlled group's
revenue;
(2) Annual operating income not exceeding the greatest of--
(i) 5 percent of the controlled group's annual operating income;
(ii) 5 percent of the controlled group's first $200 million in net
tangible assets at the end of the fiscal year(s); or
(iii) $5 million; and
(3) Net tangible assets at the end of the fiscal year(s) not
exceeding the greater of--
(i) 5 percent of the controlled group's net tangible assets at the
end of the fiscal year(s); or
(ii) $5 million.
* * * * *
8. In Sec. 4043.3:
a. Paragraph (a)(1) is amended by removing the words ``by this
part'' and adding in their place the words ``under this part''.
b. Paragraph (d) is amended by removing the words ``submission of
additional information'' and adding in their place the words
``submission of additional information not specified in its forms and
instructions''.
c. Paragraphs (b) and (c) are revised to read as follows:
Sec. 4043.3 Requirement of notice.
* * * * *
(b) Contents of reportable event notice. A person required to file
a reportable event notice under subpart B or C of this part shall file,
by the notice date, the form specified by PBGC for that purpose, with
the information specified in PBGC's reportable events instructions.
(c) Reportable event forms and instructions. The PBGC shall issue
reportable events forms and instructions and make them available on its
Web site.
* * * * *
9. In Sec. 4043.4:
a. Paragraphs (a), (b), (c), and (d) are redesignated as paragraphs
(b), (c), (d), and (a) respectively.
b. Newly redesignated paragraph (a) is amended by removing the
heading ``Other waivers and extensions.'' and adding in its place the
heading ``Waivers and extensions--in general.''.
c. Newly redesignated paragraph (b) is revised to read as follows:
Sec. 4043.4 Waivers and extensions.
* * * * *
(b) Waivers and extensions--specific events. For some reportable
events, automatic waivers from reporting and information requirements
and extensions of time are provided in subparts B and C of this part.
If an occurrence constitutes two or more reportable events, reporting
requirements for each event are determined independently. For example,
reporting is automatically waived for an occurrence that constitutes a
reportable event under more than one section only if the requirements
for an automatic waiver under each section are satisfied.
* * * * *
10. Section 4043.5 is amended by adding the following sentence at
the beginning of the text of the section:
Sec. 4043.5 How and where to file.
Reportable event notices required under this part must be filed
using the forms and in accordance with the instructions promulgated by
PBGC, which are posted on PBGC's Web site. * * *
Sec. 4043.6 [Amended]
11. In Sec. 4043.6:
a. Paragraph (a) is amended by removing the heading ``Post-Event
notice filings.'' and adding in its place the heading ``Post-event
notice filings.''.
b. Paragraph (b) is amended by removing the heading ``Advance
notice and Form 200 Filings.'' and adding in its place the heading
``Advance notice and Form 200 filings.''.
c. Paragraph (c) is removed.
12. In Sec. 4043.23:
a. The text of paragraph (a) is designated as paragraph (a)(1) and
a paragraph heading is added.
[[Page 61256]]
b. New paragraph (a)(2) is added.
c. Paragraphs (b) and (d) are removed.
d. Paragraph (e) is redesignated as paragraph (b).
e. And paragraph (c) is revised.
The addition and revision read as follows:
Sec. 4043.23 Active participant reduction.
(a) Reportable event--(1) In general. * * *.
(2) Certain participant reductions disregarded. For purposes of
paragraph (a)(1) of this section, a reduction in the number of active
participants is to be disregarded to the extent that the reduction--
(i) Is attributable to a substantial cessation of operations under
ERISA section 4062(e) or to the withdrawal of a substantial employer
under ERISA section 4063(a), and
(ii) Is timely reported to PBGC under ERISA section 4063(a).
* * * * *
(c) Waiver. Notice is waived for an event (the ``current event'')
if the notice date for another event (the ``prior event'') under
paragraph (a) of this section was not more than 12 months before the
notice date for the current event and the prior event was reported to
PBGC in accordance with the requirements of this part.
13. Section 4043.25 is revised to read as follows:
Sec. 4043.25 Failure to make required funding payment.
(a) Reportable event. A reportable event occurs when--
(1) A contribution required under sections 302 and 303 of ERISA or
sections 412 and 430 of the Code is not made by the due date for the
payment under ERISA section 303(j) or Code section 430(j), or
(2) Any other contribution required as a condition of a funding
waiver is not made when due.
(b) Alternative method of compliance--Form 200 filed. If, with
respect to the same failure, a filing is made in accordance with Sec.
4043.81, that filing satisfies the requirements of this section.
14. In Sec. 4043.26:
a. Paragraph (a)(2) is amended in the second sentence by removing
the words ``Liquid assets and disbursements from the plan'' and adding
in their place the words '' `Liquid assets' and `disbursements from the
plan' ''; by removing the reference ``302(e)(5)(E)'' and adding in its
place the reference ``303(j)(4)(E)''; and by removing the reference
``412(m)(5)(E)'' and adding in its place the reference
``430(j)(4)(E)''.
b. Paragraph (c) is removed.
c. Paragraph (b) is revised to read as follows:
Sec. 4043.26 Inability to pay benefits when due.
* * * * *
(b) Waiver. Notice is waived unless the reportable event occurs
during a plan year for which the plan is exempt from the liquidity
shortfall rules in section 303(j)(4) of ERISA and section 430(j)(4) of
the Code because it is described in section 303(g)(2)(B) of ERISA and
section 430(g)(2)(B) of the Code.
Sec. 4043.27 [Amended]
15. In Sec. 4043.27:
a. Paragraph (a)(4) is amended by removing the words ``as provided
in Sec. 4022.5'' and adding in their place the words ``as provided in
Sec. 4022.5 of this chapter''.
b. Paragraphs (b), (c), and (d) are removed, and paragraph (e) is
redesignated as paragraph (b).
16. In Sec. 4043.29:
a. Paragraphs (c) and (d) are removed, and paragraph (e) is
redesignated as paragraph (c).
b. The introductory text of newly redesignated paragraph (c) is
amended by removing the words ``waivers apply'' and adding in their
place the words ``waiver applies''.
c. Paragraph (b) is revised to read as follows:
Sec. 4043.29 Change in contributing sponsor or controlled group.
* * * * *
(b) Waiver; de minimis 10-percent segment. Notice is waived if the
person or persons that will cease to be members of the plan's
controlled group represent a de minimis 10-percent segment of the
plan's old controlled group for the most recent fiscal year(s) ending
on or before the date the reportable event occurs. For this purpose,
``de minimis 10-percent segment'' means, in connection with a plan's
controlled group, one or more entities that in the aggregate have for a
fiscal year--
(1) Revenue not exceeding 10 percent of the controlled group's
revenue;
(2) Annual operating income not exceeding the greatest of--
(i) 10 percent of the controlled group's annual operating income;
(ii) 5 percent of the controlled group's first $200 million in net
tangible assets at the end of the fiscal year(s); or
(iii) $5 million; and
(3) Net tangible assets at the end of the fiscal year(s) not
exceeding the greater of--
(i) 10 percent of the controlled group's net tangible assets at the
end of the fiscal year(s); or
(ii) $5 million.
* * * * *
Sec. 4043.30 [Amended]
17. In Sec. 4043.30:
a. The heading of paragraph (a) is removed, and the introductory
text of paragraph (a) is redesignated as the introductory text of Sec.
4043.30.
b. Paragraphs (b), (c), and (d) are removed.
c. Paragraphs (a)(1), (a)(2), and (a)(3) are redesignated as
paragraphs (a), (b), and (c).
Sec. 4043.31 [Amended]
18. In Sec. 4043.31:
a. Paragraphs (b), (c)(3), (c)(4), (c)(5), and (d) are removed.
b. Paragraph (c) is redesignated as paragraph (b).
c. Paragraph (e) is redesignated as paragraph (c).
d. The reference ``(e)'' is removed and the reference ``(c)'' is
added in its place once in paragraph (a) introductory text, once in
paragraph (a)(1)(i), once in paragraph (a)(1)(ii), twice in paragraph
(a)(2), twice in paragraph (a)(3), once in newly redesignated paragraph
(c)(2)(i), once in newly redesignated paragraph (c)(2)(ii), once in
newly redesignated paragraph (c)(5), and once in newly redesignated
paragraph (c)(6)(iii).
19. In Sec. 4043.32:
a. Paragraphs (b) and (d) are removed.
b. Paragraph (a)(2) is redesignated as paragraph (b).
c. The heading of paragraph (a)(1) is removed, and the introductory
text of paragraph (a)(1) is redesignated as the introductory text of
paragraph (a).
d. Paragraphs (a)(1)(i) and (a)(1)(ii) are redesignated as
paragraphs (a)(1) and (a)(2).
e. Redesignated paragraph (a)(1) is amended by removing the words
``or any other plan maintained by a person in the plan's controlled
group''.
f. Paragraph (c) is revised to read as follows:
Sec. 4043.32 Transfer of benefit liabilities.
* * * * *
(c) Distributions of lump sums and annuities. For purposes of
paragraph (a) of this section, the payment of a lump sum, or purchase
of an irrevocable commitment to provide an annuity, in satisfaction of
benefit liabilities is not a transfer of benefit liabilities.
Sec. 4043.33 [Amended]
20. In Sec. 4043.33:
a. Paragraph (b) is removed.
b. The heading of paragraph (a) is removed, and the text of
paragraph (a) is redesignated as the text of Sec. 4043.33.
c. The figures ``303'' are removed and the figures ``302(c)'' are
added in their
[[Page 61257]]
place; and the figures ``412(d)'' are removed and the figures
``412(c)'' are added in their place.
Sec. 4043.34 [Amended]
21. In Sec. 4043.34:
a. Paragraph (a) introductory text is amended by removing the words
``default by'' and adding in their place the words ``default under a
loan agreement by''.
b. Paragraph (a)(3) introductory text is amended by removing the
colon and adding in its place a dash.
c. Paragraphs (b), (c)(2), (c)(3), (d)(3), and (d)(4) are removed.
d. The heading of paragraph (c) introductory text is removed.
e. Paragraph (c)(1) is redesignated as paragraph (b).
f. Newly redesignated paragraph (b) is amended by removing the
heading ``Default cured.'' and adding in its place the heading ``Waiver
for cure of default.''.
g. Paragraph (d)(5) is redesignated as paragraph (d)(3), and
paragraph (d) is redesignated as paragraph (c).
h. Redesignated paragraph (c)(1) is amended by removing the words
``(d)(2) or (d)(3)'' and adding in their place the figures ``(c)(2)''.
i. Redesignated paragraph (c)(2) is amended by removing the heading
``Cure period extensions.'' and adding in its place the heading
``Extensions.''.
Sec. 4043.35 [Amended]
22. In Sec. 4043.35:
a. Paragraphs (b), (c), and (d) are removed.
b. The heading of paragraph (a) introductory text is removed, and
the introductory text of paragraph (a) is redesignated as the
introductory text of Sec. 4043.35.
c. Paragraphs (a)(1), (a)(2), (a)(3), (a)(4), and (a)(5) are
redesignated as paragraphs (a), (b), (c), (d), and (e).
23. New Sec. Sec. 4043.36 and 4043.37 are added to subpart B to
read as follows:
Sec. 4043.36 Adjusted funding target attainment percentage under 60
percent.
A reportable event occurs for a plan when the plan's adjusted
funding target attainment percentage under Code section 436(j)(2) and
ERISA section 206(g)(9)(B) either--
(a) Is certified by an enrolled actuary to be less than 60 percent,
or
(b) Is presumed under Code section 436(h) and ERISA section
206(g)(7) to be less than 60 percent.
Sec. 4043.37 Transfer of assets to retiree health account or
subsequent reduction in funding ratio.
A reportable event occurs for a plan when either--
(a) The plan makes a qualified future transfer or a collectively
bargained transfer under Code section 420(f) of $10 million dollars or
more, or
(b) On any valuation date of the plan during the transfer period
described in Code section 420(f)(5) following any transfer described in
paragraph (a) of this section, 120 percent of the sum of the funding
target and the target normal cost determined under Code section 430 for
the plan year exceeds the lesser of--
(1) The fair market value of the plan's assets (reduced by the
prefunding balance and funding standard account carryover balance
determined under Code section 430(f)), or
(2) The value of plan assets as determined under Code section
430(g)(3) after reduction under Code section 430(f).
24. In Sec. 4043.61, paragraphs (a), (b), and (c) are revised to
read as follows:
Sec. 4043.61 Advance reporting filing obligation.
(a) In general. Unless a waiver or extension applies with respect
to the plan, each contributing sponsor of a plan is required to notify
the PBGC no later than 30 days before the effective date of a
reportable event described in this subpart C if the contributing
sponsor is subject to advance reporting for the reportable event. If
there is a change in contributing sponsor, the reporting obligation
applies to the person who is the contributing sponsor of the plan on
the notice date.
(b) Persons subject to advance reporting. A contributing sponsor of
a plan is subject to the advance reporting requirement under paragraph
(a) of this section for a reportable event if--
(1) On the notice date, neither the contributing sponsor nor any
member of the plan's controlled group to which the event relates is a
person subject to the reporting requirements of section 13 or 15(d) of
the Securities Exchange Act of 1934 or a subsidiary (as defined for
purposes of the Securities Exchange Act of 1934) of a person subject to
such reporting requirements; and
(2) The aggregate unfunded vested benefits, determined in
accordance with paragraph (c) of this section, are more than $50
million; and
(3) The aggregate value of plan assets, determined in accordance
with paragraph (c) of this section, is less than 90 percent of the
aggregate premium funding target, determined in accordance with
paragraph (c) of this section.
(c) Funding determinations. For purposes of paragraph (b) of this
section, the aggregate unfunded vested benefits, aggregate value of
plan assets, and aggregate premium funding target are determined by
aggregating the unfunded vested benefits, values of plan assets, and
premium funding targets (respectively), as determined for premium
purposes in accordance with part 4006 of this chapter for the plan year
preceding the effective date of the event, of plans maintained (on the
notice date) by the contributing sponsor and any members of the
contributing sponsor's controlled group, disregarding plans with no
unfunded vested benefits (as so determined).
* * * * *
Sec. 4043.62 [Amended]
25. In Sec. 4043.62:
a. Paragraph (a) is amended by removing the words ``and information
required'' from the paragraph heading; and by removing the words
``Sec. 4043.29(a), and the notice shall include the information
described in Sec. 4043.29(b) and, if known, the expected effective
date of the reportable event'' and adding in their place the figures
``Sec. 4043.29(a)''.
b. Paragraph (b) is amended by removing the heading.
c. Paragraph (b)(1) is removed.
d. Paragraph (b)(2) is amended by removing the heading ``De minimis
5-percent segment.'' and adding in its place the heading ``Waiver; de
minimis 5-percent segment.''.
e. Paragraph (b)(2) is redesignated as paragraph (b).
Sec. 4043.63 [Amended]
26. In Sec. 4043.63:
a. Paragraph (a) is amended by removing the paragraph heading; and
by removing the words ``Sec. 4043.30(a), and the notice shall include
the information described in Sec. 4043.30(b) and, if known, the
expected effective date of the reportable event'' and adding in their
place the reference ``Sec. 4043.30''.
b. Paragraph (b) is removed.
c. The text of paragraph (a) is redesignated as the text of Sec.
4043.63.
Sec. 4043.64 [Amended]
27. In Sec. 4043.64:
a. Paragraph (a) is amended by removing the words ``and information
required'' from the paragraph heading; and by removing the last
sentence of the paragraph.
b. Paragraph (b) is amended by removing the word ``Waiver'' from
the paragraph heading and adding in its place the words ``Waiver; de
minimis 5-percent segment''.
Sec. 4043.65 [Amended]
28. In Sec. 4043.65:
a. Paragraph (a) is amended by removing the paragraph heading; and
by
[[Page 61258]]
removing the words ``Sec. 4043.32(a) (determined without regard to
Sec. 4043.32(d)), and the notice shall include the information
described in Sec. 4043.32(b)'' and adding in their place the reference
``4043.32(a)''.
b. Paragraph (b) is removed.
c. The text of paragraph (a) is redesignated as the text of Sec.
4043.65.
Sec. 4043.66 [Amended]
29. In 4043.66:
a. Paragraph (a) is amended by removing the words ``and information
required'' from the heading; and by removing the words ``Sec.
4043.33(a), and the notice shall include the information described in
Sec. 4043.33(b)'' and adding in their place the reference ``Sec.
4043.33''.
b. Paragraph (b) is amended by removing the words ``10 days after''
and adding in their place the words ``the day''; and by removing the
words ``has occurred'' and adding in their place the word ``occurs''.
Sec. 4043.67 [Amended]
30. In Sec. 4043.67, paragraph (a) is amended by removing the
words ``and information required'' from the heading; and by removing
the last sentence of the paragraph.
Sec. 4043.68 [Amended]
31. In Sec. 4043.68, paragraph (a) is amended by removing the
words ``and information required'' from the heading; and by removing
the words ``Sec. 4043.35(a), and the notice shall include the
information described in Sec. 4043.35(b)'' and adding in their place
the reference ``Sec. 4043.35''.
32. New Sec. Sec. 4043.69 and 4043.70 are added to subpart C to
read as follows:
Sec. 4043.69 Adjusted funding target attainment percentage under 60
percent.
(a) Reportable event. Advance notice is required when a plan's
adjusted funding target attainment percentage is certified or presumed
to be less than 60 percent, as described in Sec. 4043.36.
(b) Extension. The notice date is extended until 10 days after the
reportable event has occurred.
Sec. 4043.70 Transfer of assets to retiree health account or
subsequent reduction in funding ratio.
Advance notice is waived for a reportable event described in Sec.
4043.37.
33. In Sec. 4043.81:
a. Paragraph (a) introductory text is amended by removing the
reference ``302(f)(4)'' and adding in its place the reference
``303(k)(4)''; by removing the reference ``412(n)(4)'' and adding in
its place the reference ``430(k)(4)''; by removing the words ``required
installment or any other'' and adding in their place the word
``contribution''; by removing the words ``section 302 of ERISA and
section 412 of the Code'' and adding in their place the words
``sections 302 and 303 of ERISA and sections 412 and 430 of the Code'';
and by removing the words ``installments or other''.
b. Paragraph (a)(2) is amended by removing the reference
``302(f)(4)'' and adding in its place the reference ``303(k)(4)''; and
by removing the reference ``412(n)(4)'' and adding in its place the
reference ``430(k)(4)''.
c. Paragraph (b) is amended by removing the reference ``302(f)''
and adding in its place the reference ``303(k)''; and by removing the
reference ``412(n)'' and adding in its place the reference ``430(k)''.
d. Paragraph (c) is added to read as follows:
Sec. 4043.81 PBGC Form 200, notice of failure to make required
contributions; supplementary information.
* * * * *
(c) Ultimate parent. For purposes of this section, the term
``ultimate parent'' means the parent at the highest level in the chain
of corporations and/or other organizations constituting a parent-
subsidiary controlled group.
PART 4204--VARIANCES FOR SALE OF ASSETS
34. The authority citation for part 4204 continues to read as
follows:
Authority: 29 U.S.C. 1302(b)(3), 1384(c).
Sec. 4204.12 [Amended]
35. Section 4204.12 is amended by removing the reference
``412(b)(3)(A)'' and adding in its place the reference
``431(b)(3)(A)''.
PART 4206--ADJUSTMENT OF LIABILITY FOR A WITHDRAWAL SUBSEQUENT TO A
PARTIAL WITHDRAWAL
36. The authority citation for part 4206 continues to read as
follows:
Authority: 29 U.S.C. 1302(b)(3) and 1386(b).
Sec. 4206.7 [Amended]
37. Section 4206.7 is amended by removing the reference
``412(b)(4)'' and adding in its place the reference ``431(b)(5)''.
PART 4211--ALLOCATING UNFUNDED VESTED BENEFITS TO WITHDRAWING
EMPLOYERS
38. The authority citation for part 4211 continues to read as
follows:
Authority: 29 U.S.C. 1302(b)(3); 1391(c)(1), (c)(2)(D),
(c)(5)(A), (c)(5)(B), (c)(5)(D), and (f).
PART 4231--MERGERS AND TRANSFERS BETWEEN MULTIEMPLOYER PLANS
39. The authority citation for part 4231 continues to read as
follows:
Authority: 29 U.S.C. 1302(b)(3), 1411.
Sec. 4231.2 [Amended]
40. In Sec. 4231.2, the definitions of ``actuarial valuation'' and
``fair market value of assets'' are amended by removing the words
``section 302 of ERISA and section 412 of the Code'' wherever they
appear in each definition and adding in their place the words ``section
304 of ERISA and section 431 of the Code''.
Sec. 4231.6 [Amended]
41. In Sec. 4231.6:
a. Paragraph (b)(4)(ii) is amended by removing the reference
``412(b)(4)'' and adding in its place the reference ``431(b)(5)''.
b. Paragraph (c)(2) is amended by removing the words ``section 412
of the Code (which requires that such assumptions be reasonable in the
aggregate)'' and adding in their place the words ``section 431 of the
Code (which requires that each such assumption be reasonable)''.
c. Paragraph (c)(5) is amended by removing the figure ``412'' and
adding in their place the figure ``431''.
Issued in Washington, DC, this 18th day of November, 2009.
Vincent K. Snowbarger,
Acting Director, Pension Benefit Guaranty Corporation.
[FR Doc. E9-28056 Filed 11-20-09; 8:45 am]
BILLING CODE 7709-01-P