[Federal Register: July 1, 1996 (Volume 61, Number 127)]
[Rules and Regulations]
[Page 34001-34051]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01jy96-17]
[[Page 34001]]
_______________________________________________________________________
Part II
Pension Benefit Guaranty Corporation
_______________________________________________________________________
29 CFR Chapters XXVI and XL
Reorganization, Renumbering and Reinvention of Regulations; Final Rule
[[Page 34002]]
PENSION BENEFIT GUARANTY CORPORATION
29 CFR Chs. XXVI and XL
RIN 1212-AA75
Reorganization, Renumbering, and Reinvention of Regulations
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Final rule.
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SUMMARY: In accordance with the President's Regulatory Reinvention
Initiative, the Pension Benefit Guaranty Corporation is reorganizing,
renumbering, and reinventing its regulations. The amendments will
clarify and simplify the PBGC's regulations and make them easier to
use.
EFFECTIVE DATE: July 1, 1996.
FOR FURTHER INFORMATION CONTACT: Harold J. Ashner, Assistant General
Counsel, or Marc L. Jordan, Attorney, Office of the General Counsel,
Pension Benefit Guaranty Corporation, 1200 K Street, NW., Washington,
DC 20005-4026, 202-326-4024 (202-326-4179 for TTY and TDD).
SUPPLEMENTARY INFORMATION: The PBGC is renumbering and reorganizing its
regulations to make it easier for practitioners and the public to
research and use the rules under Title IV of the Employee Retirement
Income Security Act of 1974. Under the new approach, the regulations
will be numbered to track the statutory sections they implement.
On July 8, 1994 (at 59 FR 35067), the PBGC published a notice in
the Federal Register inviting public comment on a proposal to
reorganize and renumber its regulations to track Title IV. No comments
were received.
On March 4, 1995, the President issued his Regulatory Reinvention
Initiative, directing Federal agencies to eliminate or revise those
regulations that are outdated or otherwise in need of reform. The PBGC
is reorganizing, renumbering, and reinventing its regulations. The
reinvention is limited to nonsubstantive corrections and clarifications
and deletion of material that is unnecessary or that has been
substantially superseded (or is no longer applicable).
For example, the reinvented regulations omit existing provisions
dealing with the allocation of residual assets (part 2618, subpart C)
because these provisions were largely superseded by changes in section
4044(d) of ERISA made by the Pension Protection Act of 1987. Similarly,
the provision regarding interest rate assumptions for paying lump sums
(existing Sec. 2619.26(b)(2)) has been eliminated because of changes in
section 417(e)(3) of the Internal Revenue Code and section 205(g)(3) of
ERISA made by the Retirement Equity Act of 1984, the Tax Reform Act of
1986, and the Retirement Protection Act of 1994.
To clarify the rules on missing participants in terminating plans,
nonsubstantive language changes have been made in the missing
participants regulation (existing part 2629, new part 4050), related
sections in the termination regulations (existing parts 2616 and 2617,
new part 4041), and in the definition of ``distribution date'' in new
Sec. 4001.2.
The new regulation on premium rates (part 4006, which contains
portions of existing part 2610) omits the variable-rate premium cap
reduction rules (which have expired) and the cap rules themselves
(repealed by the Retirement Protection Act of 1994). The rule reflects
new provisions in the Retirement Protection Act of 1994 dealing with
regulated public utility plans.
In some cases, provisions that may have been partially superseded
by statutory changes have been retained pending revision--for example,
the regulation on allocation of assets in terminating single-employer
plans (renumbered part 4044). A note at the beginning of part 4044 and
reminders within the part alert readers that some regulatory material
republished in part 4044 must be read in the light of these other
changes in the law.
The PBGC welcomes public comment on this rule to correct any
editorial errors--e.g., in cross-references--that may have been
overlooked due to the magnitude of the revision project.
Under this final rule, the PBGC's regulations will be moved from
chapter XXVI to chapter XL of title 29 of the CFR. Sections will be
numbered in the 4000's. Part 4000 consists of finding aids--tables
correlating provisions of old chapter XXVI and new chapter XL. Part
4001 contains definitions of terms used throughout the PBGC's
regulations. A table of contents showing the rest of the new structure,
along with the full text of the revised regulations, is set forth
below.
Rulemaking Requirements and E.O. 12866
The PBGC has determined that this action is not a ``significant
regulatory action'' under the criteria set forth in Executive Order
12866.
The PBGC has determined that the notice and comment requirements of
the Administrative Procedure Act (5 U.S.C. 553(b)) do not apply to this
final rule. The PBGC previously notified the public of the primary
changes made by this rule and provided an opportunity for public
comment. None of the amendments in this rule (including those that
clarify the regulations or remove or replace provisions made obsolete
by the passage of time or by subsequent statutory or regulatory
changes) affects applicable substantive legal requirements. Therefore,
the PBGC has, for good cause, found that further notice and public
procedure thereon are unnecessary.
For the same reasons, the PBGC finds pursuant to section 553(d)(3)
of the Administrative Procedure Act (5 U.S.C. 553(d)(3)) that there is
good cause to make this rule effective less than 30 days from the date
of its publication.
The PBGC also certifies that the amendments in this regulation will
not have a significant economic impact on a substantial number of small
entities. Accordingly, as provided in section 605(b) of the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.), sections 603 and 604 of the
Regulatory Flexibility Act do not apply. None of the amendments in this
rule affects applicable substantive legal requirements.
Issued in Washington, DC, on the 24th day of June 1996.
Robert B. Reich,
Chairman, Board of Directors, Pension Benefit Guaranty Corporation.
Issued on the date set forth above pursuant to a resolution of
the Board of Directors authorizing its Chairman to issue this final
rule.
James J. Keightley,
Secretary, Board of Directors Pension Benefit Guaranty Corporation.
List of Subjects in 29 CFR Chapters XXVI and XL
Parts 2601 and 4002
Authority delegations (Government agencies), Organization and
functions (Government agencies).
Part 2602
Conflict of interests, Government employees, Penalties, Political
activities (Government employees), Production and disclosure of
information, Testimony.
Parts 2603 and 4901
Freedom of Information.
Parts 2604 and 4906
Administrative practice and procedure, Conflict of interests,
Penalties.
Parts 2606 and 4003
Administrative practice and procedure, Organization and functions
[[Page 34003]]
(Government agencies), Pension insurance, Pensions.
Parts 2607 and 4902
Privacy.
Parts 2608 and 4907
Blind, Civil rights, Deaf, Disabled, Discrimination against
handicapped, Equal employment opportunity, Federal buildings and
facilities, Handicapped, Nondiscrimination, Physically handicapped.
Parts 2609 and 4903
Administrative practice and procedure, Claims, Organization and
functions (Government agencies).
Part 2610 and 4007
Penalties, Pension insurance, Pensions, Reporting and recordkeeping
requirements.
Parts 2611, 2615, 2616, 2617, 2623, 2642, 2674, 4022, 4041, 4041A,
4065, 4211, and 4245
Pension insurance, Pensions, Reporting and recordkeeping
requirements.
Parts 2612 and 4068
Business and industry, Pension insurance, Pensions, Small
businesses.
Parts 2613, 2618, 2619, 2620, 2621, 2640, 2670, 4006, 4022, 4022B,
4044, and 4061
Pension insurance, Pensions.
Parts 2622, 2643, 4062, 4063, 4064, and 4204
Business and industry, Pension insurance, Pensions, Reporting and
recordkeeping requirements, Small businesses.
Parts 2641 and 4221
Business and industry, Pensions, Small businesses.
Parts 2644, 2645, 2647, 2649, 2676, 2677, 4203, 4206, 4207, and 4220
Pensions.
Parts 2627, 2628, 2629, 2646, 2648, 2672, 2675, 4001, 4010, 4050, 4208,
4219, 4231, 4261, and 4281
Pensions, Reporting and recordkeeping requirements.
Part 2673
Pension insurance.
Part 4000
Administrative practice and procedure, Authority delegations
(Government agencies), Blind, Business and industry, Civil rights,
Claims, Conflict of interests, Deaf, Disabled, Discrimination against
handicapped, Equal employment opportunity, Federal buildings and
facilities, Freedom of Information, Government employees, Handicapped,
Nondiscrimination, Organization and functions (Government agencies),
Penalties, Pension insurance, Pensions, Physically handicapped,
Political activities (Government employees), Privacy, Production and
disclosure of information, Reporting and recordkeeping requirements,
Small businesses, Testimony.
Part 4001
Business and industry, Organization and functions (Government
agencies), Pension insurance, Pensions, Small businesses.
Part 4903
Conflict of interests, Government employees, Penalties, Political
activities (Government employees).
Part 4904
Government employees, Penalties, Production and disclosure of
information, Testimony.
For the reasons set forth above, the PBGC is amending subtitle B of
title 29 of the Code of Federal Regulations as follows:
CHAPTER XXVI--[REMOVED]
1. Chapter XXVI is removed.
2. Chapter XL is added to read as follows:
CHAPTER XL--PENSION BENEFIT GUARANTY CORPORATION
SUBCHAPTER A--GENERAL
Part 4000--Finding Aids
Sec.
4000.1 Distribution table.
4000.2 Derivation table.
Authority: 29 U.S.C. 1302(b)(3).
Part 4001--Terminology
Sec.
4001.1 Purpose and scope.
4001.2 Definitions.
4001.3 Trades or businesses under common control; controlled
groups.
Authority: 29 U.S.C. 1301(a), 1301(b)(1), 1302(b)(3).
Part 4002--Bylaws of the Pension Benefit Guaranty Corporation
Sec.
4002.1 Name.
4002.2 Offices.
4002.3 Board of Directors.
4002.4 Chairman.
4002.5 Quorum.
4002.6 Meetings.
4002.7 Place of meetings; use of conference call communications
equipment.
4002.8 Alternate voting procedure.
4002.9 Amendments.
Authority: 29 U.S.C. 1302(f).
Part 4003--Rules for Administrative Review of Agency Decisions
Subpart A--General Provisions
Sec.
4003.1 Purpose and scope.
4003.2 Definitions.
4003.3 PBGC assistance in obtaining information.
4003.4 Extension of time.
4003.5 Non-timely request for review.
4003.6 Representation.
4003.7 Exhaustion of administrative remedies.
4003.8 Request for confidential treatment.
4003.9 Filing of documents.
4003.10 Computation of time.
Subpart B--Initial Determinations
4003.21 Form and contents of initial determinations.
4003.22 Effective date of determinations.
Subpart C--Reconsideration of Initial Determinations
4003.31 Who may request reconsideration.
4003.32 When to request reconsideration.
4003.33 Where to submit request for reconsideration.
4003.34 Form and contents of request for reconsideration.
4003.35 Final decision on request for reconsideration.
Subpart D--Administrative Appeals
4003.51 Who may appeal or participate in appeals.
4003.52 When to file.
4003.53 Where to file.
4003.54 Contents of appeal.
4003.55 Opportunity to appear and to present witnesses.
4003.56 Consolidation of appeals.
4003.57 Appeals affecting third parties.
4003.58 Powers of the Appeals Board.
4003.59 Decision by the Appeals Board.
4003.60 Referral of appeal to the Executive Director.
Authority: 29 U.S.C. 1302(b)(3).
SUBCHAPTER B--PREMIUMS
Part 4006--Premium Rates
Sec.
4006.1 Purpose and scope.
4006.2 Definitions.
4006.3 Premium rate.
4006.4 Determination of unfunded vested benefits.
4006.5 Exemptions and special rules.
Authority: 29 U.S.C. 1302(b)(3), 1306, 1307.
Part 4007--Payment of Premiums
Sec.
4007.1 Purpose and scope.
4007.2 Definitions.
4007.3 Filing requirement and forms.
4007.4 Filing address.
4007.5 Date of filing.
4007.6 Computation of time.
4007.7 Late payment interest charges.
4007.8 Late payment penalty charges.
4007.9 Coverage for guaranteed basic benefits.
[[Page 34004]]
4007.10 Recordkeeping requirements; PBGC audits.
4007.11 Due dates.
4007.12 Liability for single-employer premiums.
Authority: 29 U.S.C. 1302(b)(3), 1306, 1307.
SUBCHAPTER C--CERTAIN REPORTING AND DISCLOSURE REQUIREMENTS
Part 4010--Annual Financial and Actuarial Information Reporting
Sec.
4010.1 Purpose and scope.
4010.2 Definitions.
4010.3 Filing requirement.
4010.4 Filers.
4010.5 Information year.
4010.6 Information to be filed.
4010.7 Identifying information.
4010.8 Plan actuarial information.
4010.9 Financial information.
4010.10 Due date and filing with the PBGC.
4010.11 Waivers and extensions.
4010.12 Confidentiality of information submitted.
4010.13 Penalties.
4010.14 OMB control number.
Authority: 29 U.S.C. 1302(b)(3); 29 U.S.C. 1310.
Part 4011--Disclosure to Participants
Sec.
4011.1 Purpose and scope.
4011.2 Definitions.
4011.3 Notice requirement.
4011.4 Small plan rules.
4011.5 Exemption for new and newly-covered plans.
4011.6 Mergers, consolidations, and spinoffs.
4011.7 Persons entitled to receive notice.
4011.8 Time of notice.
4011.9 Manner of issuance of notice.
4011.10 Form of notice.
4011.11 OMB control number.
Appendix A to part 4011--Model participant notice.
Appendix B to part 4011--Table of maximum guaranteed benefits.
Authority: 29 U.S.C. 1302(b)(3), 1311.
SUBCHAPTER D--COVERAGE AND BENEFITS
Part 4022--Benefits Payable in Terminated Single-Employer Plans
Subpart A--General Provisions; Guaranteed Benefits
Sec.
4022.1 Purpose and scope.
4022.2 Definitions.
4022.3 Guaranteed benefits.
4022.4 Entitlement to a benefit.
4022.5 Determination of nonforfeitable benefits.
4022.6 Annuity payable for total disability.
4022.7 Benefits payable in a single installment.
Subpart B--Limitations on Guaranteed Benefits
4022.21 Limitations; in general.
4022.22 Maximum guaranteeable benefit.
4022.23 Computation of maximum guaranteeable benefit.
4022.24 Benefit increases.
4022.25 Five-year phase-in of benefit guarantee for participants
other than substantial owners.
4022.26 Phase-in of benefit guarantee for participants who are
substantial owners.
4022.27 Effect of tax disqualification.
Subpart C--Calculation and Payment of Unfunded Nonguaranteed Benefits
[Reserved]
Subpart D--Benefit Reductions in Terminating Plans
4022.61 Limitations on benefit payments by plan administrator.
4022.62 Estimated guaranteed benefit.
4022.63 Estimated title IV benefit.
Subpart E--PBGC Recoupment and Reimbursement of Benefit Overpayments
and Underpayments
4022.81 General rules.
4022.82 Method of recoupment.
4022.83 PBGC reimbursement of benefit underpayments.
Appendix to Part 4022--Maximum Guaranteeable Monthly Benefit
Authority: 29 U.S.C. 1302(b)(3), 1322, 1322b, 1341(c)(3)(D),
1344.
Part 4022B--Aggregate Limits on Guaranteed Benefits
Sec.
4022B.1 Aggregate payments limitation.
Authority: 29 U.S.C. 1302(b)(3).
SUBCHAPTER E--PLAN TERMINATIONS
Part 4041--Termination of Single-Employer Plans
Subpart A--General Provisions
Sec.
4041.1 Purpose and scope.
4041.2 Definitions.
4041.3 Requirements for a standard or a distress termination.
4041.4 Administration of plan during pendency of termination
proceedings.
4041.5 Challenges to plan termination under collective bargaining
agreement.
4041.6 Annuity requirements.
4041.7 Facilitating plan sufficiency in a standard termination.
4041.8 Disaster relief--distress termination.
4041.9 Filing with the PBGC.
4041.10 Computation of time.
4041.11 Maintenance of plan records.
4041.12 Information collection.
Subpart B--Standard Terminations
4041.21 Notice of intent to terminate.
4041.22 Issuance of notices of plan benefits.
4041.23 Form and contents of notices of plan benefits.
4041.24 Standard termination notice.
4041.25 PBGC action upon filing of standard termination notice.
4041.26 Notice of noncompliance.
4041.27 Closeout of plan.
Subpart C--Distress Terminations
4041.41 Notice of intent to terminate.
4041.42 PBGC review of notice of intent to terminate.
4041.43 Distress termination notice.
4041.44 PBGC determination of compliance with requirements for
distress termination.
4041.45 PBGC determination of plan sufficiency/insufficiency.
4041.46 Notices of benefit distribution.
4041.47 Verification of plan sufficiency prior to closeout.
4041.48 Closeout of plan.
Appendix to Part 4041--Agreement for Commitment to Make Plan
Sufficient for Benefit Liabilities
Authority: 29 U.S.C. 1302(b)(3), 1341, 1344.
Part 4041A--Termination of Multiemployer Plans
Subpart A--General Provisions
Sec.
4041A.1 Purpose and scope.
4041A.2 Definitions.
4041A.3 Submission of documents.
Subpart B--Notice of Termination
4041A.11 Requirement of notice.
4041A.12 Contents of notice.
Subpart C--Plan Sponsor Duties
4041A.21 General rule.
4041A.22 Payment of benefits.
4041A.23 Imposition and collection of withdrawal liability.
4041A.24 Annual plan valuations and monitoring.
4041A.25 Periodic determinations of plan solvency.
4041A.26 Financial assistance.
4041A.27 PBGC approval to pay benefits not otherwise permitted.
Subpart D--Closeout of Sufficient Plans
4041A.41 General rule.
4041A.42 Method of distribution.
4041A.43 Benefit forms.
4041A.44 Cessation of withdrawal liability.
Authority: 29 U.S.C. 1302(b)(3), 1341a, 1441.
Part 4043--Reportable Events and Certain Other Notification
Requirements
Subpart A--Reportable Events; In General
Sec.
4043.1 Purpose and scope.
4043.2 Definitions.
4043.3 Requirement of notice.
4043.4 Reporting of reportable events on annual report.
4043.5 Obligation of contributing sponsor.
4043.6 Date of filing.
4043.7 Computation of time.
4043.11 Tax disqualification.
4043.12 Title I non-compliance.
4043.13 Amendment decreasing benefits payable.
4043.14 Active participant reduction.
4043.15 Termination or partial termination.
4043.16 Failure to meet minimum funding standards and granting of
funding waiver.
4043.17 Inability to pay benefits when due.
4043.18 Distribution to a substantial owner.
4043.19 Plan merger, consolidation or transfer.
[[Page 34005]]
4043.20 Alternative compliance with reporting and disclosure
requirements of Title I.
4043.21 Bankruptcy, insolvency, or similar settlements.
4043.22 Liquidation or dissolution.
4043.23 Transactions involving a change in contributing sponsor or
controlled group.
Subpart B--Section 302(f); Notice of Failure to Make Required
Contributions
4043.31 PBGC Form 200, notice of failure to make required
contributions.
Authority: 29 U.S.C. 1302(b)(3), 1343, 1365.
Part 4044--Allocation of Assets in Single-Employer Plans
Subpart A--Allocation of Assets
General Provisions
Sec.
4044.1 Purpose and scope of subpart A.
4044.2 Definitions.
4044.3 General rule.
4044.4 Violations.
Allocation of Assets to Benefit Categories
4044.10 Manner of allocation.
4044.11 Priority category 1 benefits.
4044.12 Priority category 2 benefits.
4044.13 Priority category 3 benefits.
4044.14 Priority category 4 benefits.
4044.15 Priority category 5 benefits.
4044.16 Priority category 6 benefits.
4044.17 Subclasses.
Allocation of Residual Assets
4044.30 [Reserved.]
Subpart B--Valuation of Benefits and Assets
4044.41 General valuation rules.
Trusteed Plans
4044.51 Benefits to be valued.
4044.52 Valuation of benefits.
4044.53 Mortality assumptions--in general.
4044.54 Mortality assumptions--lump sums.
Expected Retirement Age
4044.55 XRA when a participant must retire to receive a benefit.
4044.56 XRA when a participant need not retire to receive a
benefit.
4044.57 Special rule for facility closing.
Non-Trusteed Plans
4044.71 Valuation of annuity benefits.
4044.72 Form of annuity to be valued.
4044.73 Lump sums and other alternative forms of distribution in
lieu of annuities.
4044.74 Withdrawal of employee contributions.
4044.75 Other lump sum benefits.
Appendix A to Part 4044--Mortality Rate Tables
Appendix B to Part 4044--Interest Rates Used to Value Annuities and
Lump Sums
Appendix C to Part 4044--Loading Assumptions
Appendix D to Part 4044--Tables Used To Determine Expected
Retirement Age
Authority: 29 U.S.C. 1301(a), 1302(b)(3), 1341, 1344, 1362.
Part 4047--Restoration of Terminating and Terminated Plans
Sec.
4047.1 Purpose and scope.
4047.2 Definitions.
4047.3 Funding of restored plan.
4047.4 Payment of premiums.
4047.5 Repayment of PBGC payments of guaranteed benefits.
Authority: 29 U.S.C. 1302(b)(3), 1347.
Part 4050--Missing Participants
Sec.
4050.1 Purpose and scope.
4050.2 Definitions.
4050.3 Method of distribution for missing participants.
4050.4 Diligent search.
4050.5 Designated benefit.
4050.6 Payment and required documentation.
4050.7 Benefits of missing participants--in general.
4050.8 Automatic lump sum.
4050.9 Annuity or elective lump sum--living missing participant.
4050.10 Annuity or elective lump sum--beneficiary of deceased
missing participant.
4050.11 Limitations.
4050.12 Special rules.
4050.13 OMB control number.
SUBCHAPTER F--LIABILITY
Part 4061--Amounts Payable by the Pension Benefit Guaranty Corporation
Sec.
4061.1 Cross-references.
Authority: 29 U.S.C. 1302(b)(3).
Part 4062--Liability for Termination of Single-Employer Plans
Sec.
4062.1 Purpose and scope.
4062.2 Definitions.
4062.3 Amount and payment of section 4062(b) liability.
4062.4 Determinations of net worth and collective net worth.
4062.5 Net worth record date.
4062.6 Net worth notification and information.
4062.7 Calculating interest on liability and refunds of
overpayments.
4062.8 Arrangements for satisfying liability.
4062.9 Notification of and demand for liability.
4062.10 Filing of documents.
4062.11 Computation of time.
Part 4063--Withdrawal Liability; Plans Under Multiple Controlled Groups
Sec.
4063.1 Cross-references.
Authority: 29 U.S.C. 1302(b)(3).
Part 4064--Liability on Termination of Single-Employer Plans Under
Multiple Controlled Groups
Sec.
4064.1 Cross-references.
Authority: 29 U.S.C. 1302(b)(3).
SUBCHAPTER G--ANNUAL REPORTING REQUIREMENTS
Part 4065--Annual Report
Sec.
4065.1 Purpose and scope.
4065.2 Definitions.
4065.3 Filing requirement.
Authority: 29 U.S.C. 1302, 1365.
SUBCHAPTER H--ENFORCEMENT PROVISIONS
Part 4067--Recovery of Liability for Plan Terminations
Sec.
4067.1 Cross-reference.
Authority: 29 U.S.C. 1302, 1367.
Part 4068--Lien for Liability
Sec.
4068.1 Purpose; cross-references.
4068.2 Definitions.
4068.3 Notification of and demand for liability.
4068.4 Lien.
Authority: 29 U.S.C. 1302(b)(3), 1368.
SUBCHAPTER I--WITHDRAWAL LIABILITY FOR MULTIEMPLOYER PLANS
Part 4203--Extension of Special Withdrawal Liability Rules
Sec.
4203.1 Purpose and scope.
4203.2 Plan adoption of special withdrawal rules.
4203.3 Requests for PBGC approval of plan amendments.
4203.4 PBGC action on requests.
4203.5 OMB control number.
Authority: 29 U.S.C. 1302(b)(3), 1383(f), 1388(e)(3).
Part 4204--Variances for Sale of Assets
Subpart A--General
Sec.
4204.1 Purpose and scope.
4204.2 Definitions.
Subpart B--Variance of the Statutory Requirements
4204.11 Variance of the bond/escrow and sale-contract requirements.
4204.12 De minimis transactions.
4204.13 Net income and net tangible assets tests.
Subpart C--Procedures for Individual and Class Variances or Exemptions
4204.21 Requests to PBGC for variances and exemptions.
4204.22 PBGC action on requests.
Authority: 29 U.S.C. 1302(b)(3), 1384(c).
Part 4206--Adjustment of Liability for a Withdrawal Subsequent to a
Partial Withdrawal
Sec.
4206.1 Purpose and scope.
4206.2 Definitions.
4206.3 Credit against liability for a subsequent withdrawal.
4206.4 Amount of credit in plans using the presumptive method.
4206.5 Amount of credit in plans using the modified presumptive
method.
[[Page 34006]]
4206.6 Amount of credit in plans using the rolling-5 method.
4206.7 Amount of credit in plans using the direct attribution
method.
4206.8 Reduction of credit for abatement or other reduction of
prior partial withdrawal liability.
4206.9 Amount of credit in plans using alternative allocation
methods.
4206.10 Special rule for 70-percent decline partial withdrawals.
Authority: 29 U.S.C. 1302(b)(3), 1386(b).
Part 4207--Reduction or Waiver of Complete Withdrawal Liability
Sec.
4207.1 Purpose and scope.
4207.2 Definitions.
4207.3 Abatement.
4207.4 Withdrawal liability payments during pendency of abatement
determination.
4207.5 Requirements for abatement.
4207.6 Partial withdrawals after reentry.
4207.7 Liability for subsequent complete withdrawals and related
adjustments for allocating unfunded vested benefits.
4207.8 Liability for subsequent partial withdrawals.
4207.9 Special rules.
4207.10 Plan rules for abatement.
Authority: 29 U.S.C. 1302(b)(3), 1387.
Part 4208--Reduction or Waiver of Partial Withdrawal Liability
Sec.
4208.1 Purpose and scope.
4208.2 Definitions.
4208.3 Abatement.
4208.4 Conditions for abatement.
4208.5 Withdrawal liability payments during pendency of abatement
determination.
4208.6 Computation of reduced annual partial withdrawal liability
payment.
4208.7 Adjustment of withdrawal liability for subsequent
withdrawals.
4208.8 Multiple partial withdrawals in one plan year.
4208.9 Plan adoption of additional abatement conditions.
Authority: 29 U.S.C. 1302(b)(3), 1388 (c) and (e).
Part 4211--Allocating Unfunded Vested Benefits
Subpart A--General
Sec.
4211.1 Purpose and scope.
4211.2 Definitions.
4211.3 Special rules for construction industry and IRC section
404(c) plans.
Subpart B--Changes Not Subject to PBGC Approval
4211.11 Changes not subject to PBGC approval.
4211.12 Modifications to the presumptive, modified presumptive and
rolling-5 methods.
4211.13 Modifications to the direct attribution method.
Subpart C--Changes Subject to PBGC Approval
4211.21 Changes subject to PBGC approval.
4211.22 Requests for PBGC approval.
4211.23 Approval of alternative method.
4211.24 Special rule for certain alternative methods previously
approved.
Subpart D--Allocation Methods for Merged Multiemployer Plans
4211.31 Allocation of unfunded vested benefits following the merger
of plans.
4211.32 Presumptive method for withdrawals after the initial plan
year.
4211.33 Modified presumptive method for withdrawals after the
initial plan year.
4211.34 Rolling-5 method for withdrawals after the initial plan
year.
4211.35 Direct attribution method for withdrawals after the initial
plan year.
4211.36 Modifications to the determination of initial liabilities,
the amortization of initial liabilities, and the allocation
fraction.
4211.37 Allocating unfunded vested benefits for withdrawals before
the end of the initial plan year.
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 4219--Notice, Collection, and Redetermination of Withdrawal
Liability
Subpart A--General
Sec.
4219.1 Purpose and scope.
4219.2 Definitions.
Subpart B--Redetermination of Withdrawal Liability Upon Mass Withdrawal
4219.11 Withdrawal liability upon mass withdrawal.
4219.12 Employers liable upon mass withdrawal.
4219.13 Amount of liability for de minimis amounts.
4219.14 Amount of liability for 20-year-limitation amounts.
4219.15 Determination of reallocation liability.
4219.16 Imposition of liability.
4219.17 Filings with PBGC.
4219.18 Withdrawal in a plan year in which substantially all
employers withdraw.
4219.19 Information collection.
Subpart C--Overdue, Defaulted, and Overpaid Withdrawal Liability
Sec.
4219.31 Overdue and defaulted withdrawal liability; overpayment.
4219.32 Interest on overdue, defaulted and overpaid withdrawal
liability.
4219.34 Plan rules concerning overdue and defaulted withdrawal
liability.
Authority: 29 U.S.C. 1302(b)(3), 1389 (c) and (d), 1399
(c)(1)(D) and (c)(6).
Part 4220--Procedures for PBGC Approval of Plan Amendments
Sec.
4220.1 Purpose and scope.
4220.2 Requests for PBGC approval.
4220.3 PBGC action on requests.
Authority: 29 U.S.C. 1302(b)(3), 1400.
Part 4221--Arbitration of Disputes in Multiemployer Plans
Sec.
4221.1 Purpose and scope.
4221.2 Definitions.
4221.3 Initiation of arbitration.
4221.4 Appointment of the arbitrator.
4221.5 Powers and duties of the arbitrator.
4221.6 Hearing.
4221.7 Reopening of proceedings.
4221.8 Award.
4221.9 Reconsideration of award.
4221.10 Costs.
4221.11 Waiver of rules.
4221.12 Calculation of periods of time.
4221.13 Filing or service of documents.
4221.14 PBGC-approved arbitration procedures.
Authority: 29 U.S.C. 1302(b)(3), 1401.
SUBCHAPTER J--INSOLVENCY, REORGANIZATION, TERMINATION, AND OTHER RULES
APPLICABLE TO MULTIEMPLOYER PLANS
Part 4231--Mergers and Transfers Between Multiemployer Plans
Sec.
4231.1 Purpose and scope.
4231.2 Definitions.
4231.3 Requirements for mergers and transfers.
4231.4 Preservation of accrued benefits.
4231.5 Valuation requirement.
4231.6 Plan solvency tests.
4231.7 De minimis mergers and transfers.
4231.8 Notice of merger or transfer.
4231.9 Request for compliance determination.
4231.10 Actuarial calculations and assumptions.
Authority: 29 U.S.C. 1302(b)(3), 1411.
Part 4245--Notice of Insolvency
Sec.
4245.1 Purpose and scope.
4245.2 Definitions.
4245.3 Notice of insolvency.
4245.4 Contents of notice of insolvency.
4245.5 Notice of insolvency benefit level.
4245.6 Contents of notice of insolvency benefit level.
4245.7 PBGC address.
Authority: 29 U.S.C. 1302(b)(3), 1426(e).
Part 4261--Financial Assistance to Multiemployer Plans
Sec.
4261.1 Cross-reference.
Authority: 29 U.S.C. 1302(b)(3).
Part 4281--Duties of Plan Sponsor Following Mass Withdrawal
Subpart A--General
Sec.
4281.1 Purpose and scope.
4281.2 Definitions.
4281.3 Submission of documents.
4281.4 Collection of information.
Subpart B--Valuation of Plan Benefits and Plan Assets
4281.11 Valuation dates.
4281.12 Benefits to be valued.
4281.13 Benefit valuation methods--in general.
[[Page 34007]]
4281.14 Mortality assumptions--in general.
4281.15 Mortality assumptions--lump sums under trusteed plans.
4281.16 Benefit valuation methods--plans closing out.
4281.17 Asset valuation methods--in general.
4281.18 Outstanding claims for withdrawal liability.
Subpart C--Benefit Reductions
4281.31 Plan amendment.
4281.32 Notices of benefit reductions.
4281.33 Restoration of benefits.
Subpart D--Benefit Suspensions
4281.41 Benefit suspensions.
4281.42 Retroactive payments.
4281.43 Notices of insolvency and annual updates.
4281.44 Contents of notices of insolvency and annual updates.
4281.45 Notices of insolvency benefit level.
4281.46 Contents of notices of insolvency benefit level.
4281.47 Application for financial assistance.
Appendix A to Part 4281--Interest Rates Used to Value Lump Sums and
Annuities
Appendix B to Part 4281--Loading Assumptions
Authority: 29 U.S.C. 1302(b)(3), 1341a, 1399(c)(1)(D), and 1441.
SUBCHAPTER K--INTERNAL AND ADMINISTRATIVE RULES AND PROCEDURES
Part 4901--Examination and Copying of Pension Benefit Guaranty
Corporation Records
Subpart A--General
Sec.
4901.1 Purpose and scope.
4901.2 Definitions.
4901.3 Disclosure facilities.
4901.4 Information maintained in public reference room.
4901.5 Disclosure of other information.
Subpart B--Procedure for Formal Requests
4901.11 Submittal of requests for access to records.
4901.12 Description of information requested.
4901.13 Receipt by agency of request.
4901.14 Action on request.
4901.15 Appeals from denial of requests.
4901.16 Extensions of time.
4901.17 Exhaustion of administrative remedies.
Subpart C--Restrictions on Disclosure
4901.21 Restrictions in general.
4901.22 Partial disclosure.
4901.23 Records of concern to more than one agency.
4901.24 Special rules for trade secrets and confidential commercial
or financial information submitted to the PBGC.
Subpart D--Fees
4901.31 Charges for services.
4901.32 Fee schedule.
4901.33 Payment of fees.
4901.34 Waiver or reduction of charges.
Authority: 5 U.S.C. 552; 29 U.S.C. 1302(b)(3); E.O. 12600, 52 FR
23781.
Part 4902--Disclosure and Amendment of Records Under the Privacy Act
Sec.
4902.1 Purpose and scope.
4902.2 Definitions.
4902.3 Procedures for determining existence of and requesting
access to records.
4902.4 Disclosure of record to an individual.
4902.5 Procedures for requesting amendment of a record.
4902.6 Action on request for amendment of a record.
4902.7 Appeal of a denial of a request for amendment of a record.
4902.8 Fees.
4902.9 Specific exemptions.
Authority: 5 U.S.C. 552a; 29 U.S.C. 1302(b)(3).
Part 4903--Debt Collection
Subpart A--General
Sec.
4903.1 Purpose and scope.
4903.2 General.
4903.3 Definitions.
Subpart B--Administrative Offset
4903.21 Application of Federal Claims Collection Standards.
4903.22 Administrative offset procedures.
4903.23 PBGC requests for offset to other agencies.
4903.24 Requests for offset from other agencies.
Subpart C--Tax Refund Offset
4903.31 Eligibility of debt for tax refund offset.
4903.32 Tax refund offset procedures.
4903.33 Referral of debt for tax refund offset.
Subpart D--Salary Offset [Reserved]
Authority: 29 U.S.C. 1302(b); 31 U.S.C. 3701, 3711(f), 3720A; 4
CFR part 102; 26 CFR 301.6402-6.
Part 4904--Ethical Conduct of Employees
Sec.
4904.1 Ethical conduct; standards and requirements.
Authority: 29 U.S.C. 1302(b)(3).
Part 4905--Appearances in Certain Proceedings
Sec.
4905.1 Purpose and scope.
4905.2 Definitions.
4905.3 General.
4905.4 Appearances by PBGC employees.
4905.5 Requests for authenticated copies of PBGC records.
4905.6 Penalty.
Authority: 29 U.S.C. 1302(b).
Part 4906--[Reserved]
Part 4907--Enforcement of Nondiscrimination on the Basis of Handicap in
Programs or Activities Conducted by the Pension Benefit Guaranty
Corporation
Sec.
4907.101 Purpose.
4907.102 Application.
4907.103 Definitions.
4907.110 Self-evaluation.
4907.111 Notice.
4907.130 General prohibitions against discrimination.
4907.140 Employment.
4907.149 Program accessibility: Discrimination prohibited.
4907.150 Program accessibility: Existing facilities.
4907.151 Program accessibility: New construction and alterations.
4907.160 Communications.
4907.170 Compliance procedures.
Authority: 29 U.S.C. 794, 1302(b)(3).
PART 4000--FINDING AIDS
Sec.
4000.1 Distribution table.
4000.2 Derivation table.
Authority: 29 U.S.C. 1302(b)(3).
Sec. 4000.1 Distribution table.
The following table shows where in chapter XL of 29 CFR to find
regulations previously codified in chapter XXVI.
------------------------------------------------------------------------
Ch. XL Part(s)/Subpart(s)
Ch. XXVI Part Subpart(s)/Section(s) Subpart(s)/Section(s)
------------------------------------------------------------------------
Subchapter A--Internal and Administrative Rules
------------------------------------------------------------------------
2601................................... 4002
2602:
Subpart A.......................... 4904
Subpart B.......................... 4905
2603................................... 4901
2604................................... Repealed
2606................................... 4003
2607................................... 4902
2608................................... 4907
[[Page 34008]]
2609................................... 4903
------------------------------------------------------------------------
Subchapter B--Rules Applicable to Single-Employer and Multiemployer
Plans
------------------------------------------------------------------------
2610................................... 4006 & 4007
Secs. 2610.1, 2610.21, 2610.31.... Secs. 4006.1 & 4007.1
Secs. 2610.2...................... Secs. 4006.2 & 4007.2
Secs. 2610.3-2610.9 & 2610.11..... 4007
Sec. 2610.10...................... 4006.5(e)
Secs. 2610.22-2610.24 & 2610.33... 4006
Secs. 2610.25, 2610.26 & 2610.34.. 4007
2611................................... 4065
2612................................... 4001, Subpart B
2613................................... 4022, Subpart A
------------------------------------------------------------------------
Subchapter C--Single-Employer Plans
------------------------------------------------------------------------
2615................................... 4043
2616................................... 4041
Subpart A.......................... Subpart A
Subpart B.......................... Subpart C
2617................................... 4041
Subpart A.......................... Subpart A
Subpart B.......................... Subpart B
2618................................... 4044, Subpart A
2619................................... 4044, Subpart B
2620................................... 4044, Subpart B
2621 (except Sec. 2621.23(b))......... 4022, Subpart B
2621.23(b)............................. 4022B
2622 (except 2622.9)................... 4062
Sec. 2622.9....................... 4068
2623................................... 4022, Subparts D & E
2625................................... 4047
2627................................... 4011
2628................................... 4010
2629................................... 4050
------------------------------------------------------------------------
Subchapter F--Withdrawal Liability in Multiemployer Plans
------------------------------------------------------------------------
2640:
Sec. 2640.2....................... Sec. 4001.2
Sec. 2640.3....................... Sec. 4221.2
Sec. 2640.4....................... Sec. 4211.2
Sec. 2640.5....................... Sec. 4204.2
Sec. 2640.6....................... Sec. 4207.2, 4208.2
Sec. 2640.7....................... Sec. 4219.2
Sec. 2640.8....................... Sec. 4206.2
2641................................... 4221
2642................................... 4211
2643................................... 4204
2644................................... 4219, Subpart C
2645................................... 4203
2646................................... 4208
2647................................... 4207
2648................................... 4219, Subpart B
2649................................... 4206
------------------------------------------------------------------------
Subchapter H--Other Rules Applicable to Multiemployer Plans
------------------------------------------------------------------------
2670:
Sec. 2670.2....................... Sec. 4001.2
Sec. 2670.3....................... Sec. 4231.2
Sec. 2670.4....................... Secs. 4041A.2, 4245.2, &
4281.2
2672................................... 4231
2673................................... 4041A, Subpart B, & 4041A.3(a)
2674................................... 4245
2675................................... 4041A, Subparts C & D, & 4281,
Subparts C & D
2676................................... 4281, Subpart B
2677................................... 4220
------------------------------------------------------------------------
Sec. 4000.2 Derivation table.
The following table shows where in previous chapter XXVI of 29 CFR
to find regulations now codified in chapter XL.
[[Page 34009]]
------------------------------------------------------------------------
Ch. XXVI Part(s) Subpart/
Ch. XL Part Subpart/Section(s) Section(s)
------------------------------------------------------------------------
Subchapter A--General
------------------------------------------------------------------------
4000................................... [tables]
4001:
Subpart A.......................... [various statutory and
regulatory definitions]
Subpart B.......................... 2612
4002................................... 2601
4003................................... 2606
------------------------------------------------------------------------
Subchapter B--Premiums
------------------------------------------------------------------------
4006................................... 2610
4007................................... 2610
------------------------------------------------------------------------
Subchapter C--Certain Reporting and Disclosure Requirements
------------------------------------------------------------------------
4010................................... 2628
4011................................... 2627
------------------------------------------------------------------------
Subchapter D--Coverage and Benefits
------------------------------------------------------------------------
4022:
Subpart A.......................... 2613
Subpart B.......................... 2621 (except Sec. 2621.23(b))
Subparts D & E..................... 2623
4022B.................................. Sec. 2621.23(b)
------------------------------------------------------------------------
Subchapter E--Plan Terminations
------------------------------------------------------------------------
4041:
Subpart A.......................... Secs. 2616 & 2617, Subparts A
Subpart B.......................... 2617, Subpart B
Subpart C.......................... 2616, Subpart B
4041A:
Subpart A.......................... Secs. 2670.4, 2673.1, 2673.4,
2675.1 & 2675.2
Subpart B.......................... Secs. 2673.2 & .3
Subparts C & D..................... 2675, Subparts B & E
4043................................... 2615
4044................................... 2618, 2619 & 2620
4047................................... 2625
4050................................... 2629
------------------------------------------------------------------------
Subchapter F--Liability
------------------------------------------------------------------------
4061................................... [cross-references]
4062................................... 2622 (except Sec. 2622.9)
4063................................... [cross-references]
4064................................... [cross-references]
------------------------------------------------------------------------
Subchapter G--Annual Reporting Requirements
------------------------------------------------------------------------
4065................................... 2611
------------------------------------------------------------------------
Subchapter H--Enforcement Provisions
------------------------------------------------------------------------
4067................................... [cross-reference]
4068................................... 2622.9
Subchapter I--Withdrawal Liability in Multiemployer Plans
------------------------------------------------------------------------
4203................................... 2645
4204................................... 2643 & Sec. 2640.5
4206................................... 2649 & Sec. 2640.8
4207................................... 2647 & 2640.6
4208................................... 2646 & 2640.6
4211................................... 2642 & 2640.4
4219:
Subpart A.......................... Sec. 2640.7
Subpart B.......................... 2648
Subpart C.......................... 2644
4220................................... 2677
4221................................... 2641 & Sec. 2640.3
------------------------------------------------------------------------
Subchapter J--Insolvency, Reorganization, Termination, and Other Rules
Applicable to Multiemployer Plans
------------------------------------------------------------------------
4231................................... 2672 & Sec. 2670.3
[[Page 34010]]
4245................................... 2674 & 2670.4
4261................................... [cross-reference]
4281:
Subpart A.......................... 2675, Subpart A, & 2670.4
Subpart B.......................... 2676
Subpart C.......................... 2675, Subpart C
Subpart D.......................... 2675, Subpart D
------------------------------------------------------------------------
Subchapter K--Internal Administrative Rules and Procedures
------------------------------------------------------------------------
4901................................... 2603
4902................................... 2607
4903................................... 2609
4904................................... 2602, Subpart A
4905................................... 2602, Subpart B
4907................................... 2608
------------------------------------------------------------------------
PART 4001--TERMINOLOGY
Sec.
4001.1 Purpose and scope.
4001.2 Definitions.
4001.3 Trades or businesses under common control; controlled
groups.
Authority: 29 U.S.C. 1301, 1302(b)(3).
Sec. 4001.1 Purpose and scope.
This part contains definitions of certain terms used in this
chapter and the regulations under which the PBGC makes various
controlled group determinations.
Sec. 4001.2 Definitions.
For purposes of this chapter (unless otherwise indicated or
required by the context):
Affected party means, with respect to a plan--
(1) Each participant in the plan;
(2) Each beneficiary of a deceased participant;
(3) Each alternate payee under an applicable qualified domestic
relations order, as defined in section 206(d)(3) of ERISA;
(4) Each employee organization that currently represents any group
of participants;
(5) For any group of participants not currently represented by an
employee organization, the employee organization, if any, that last
represented such group of participants within the 5-year period
preceding issuance of the notice of intent to terminate; and
(6) the PBGC. If an affected party has designated, in writing, a
person to receive a notice on behalf of the affected party, any
reference to the affected party (in connection with the notice) shall
be construed to refer to such person.
Annuity means a series of periodic payments to a participant or
surviving beneficiary for a fixed or contingent period.
Basic-type benefit means a benefit that is guaranteed under the
provisions of part 4022, subpart A, of this chapter, or would be
guaranteed if the guarantee limits in part 4022, subpart B, of this
chapter did not apply.
Benefit liabilities means the benefits of participants and their
beneficiaries under the plan (within the meaning of section 401(a)(2)
of the Code).
Code means the Internal Revenue Code of 1986, as amended.
Complete withdrawal means a complete withdrawal as described in
section 4203 of ERISA.
Contributing sponsor means a person who is a contributing sponsor
as defined in section 4001(a)(13) of ERISA.
Controlled group means, in connection with any person, a group
consisting of such person and all other persons under common control
with such person, determined under section 4001.3 of this part. For
purposes of determining the persons liable for contributions under
section 412(c)(11)(B) of the Code or section 302(c)(11)(B) of ERISA, or
for premiums under section 4007(e)(2) of ERISA, a controlled group also
includes any group treated as a single employer under section 414 (m)
or (o) of the Code.
Corporation means the Pension Benefit Guaranty Corporation, except
where the context demonstrates that a different meaning is intended.
Defined benefit plan means a plan described in section 3(35) of
ERISA.
Distress termination means the voluntary termination of a single-
employer plan in accordance with section 4041(c) of ERISA and part
4041, subpart C, of this chapter.
Distribution date means:
(1) Except as provided in paragraph (2)--
(i) For benefits provided through the purchase of irrevocable
commitments, the date on which the obligation to provide the benefits
passes from the plan to the insurer; and
(ii) For benefits provided other than through the purchase of
irrevocable commitments, the date on which the benefits are delivered
to the participant or beneficiary (or to another plan or benefit
arrangement or other recipient authorized by the participant or
beneficiary in accordance with applicable law and regulations)
personally or by deposit with a mail or courier service (as evidenced
by a postmark or written receipt); or
(2) Other than for purposes of determining the interest rate to be
used in calculating the value of a benefit to be paid as a lump sum to
a late-discovered participant, the deemed distribution date (as defined
in Sec. 4050.2) in the case of a designated benefit paid to the PBGC, a
benefit provided after the deemed distribution date to a late-
discovered participant, or an irrevocable commitment purchased from an
insurer after the deemed distribution date for a recently-missing
participant in accordance with part 4050 of this chapter (dealing with
missing participants).
Employer means all trades or businesses (whether or not
incorporated) that are under common
[[Page 34011]]
control, within the meaning of Sec. 4001.3 of this chapter.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended.
Fair market value means the price at which property would change
hands between a willing buyer and a willing seller, neither being under
any compulsion to buy or sell and both having reasonable knowledge of
relevant facts.
FOIA means the Freedom of Information Act, as amended (5 U.S.C.
552).
Funding standard account means an account established and
maintained under section 302(b) of ERISA or section 412(b) of the Code.
Guaranteed benefit means a benefit under a single-employer plan
that is guaranteed by the PBGC under section 4022(a) of ERISA and part
4022 of this chapter, or a benefit under a multiemployer plan that is
guaranteed by the PBGC under section 4022A of ERISA.
Insurer means a company authorized to do business as an insurance
carrier under the laws of a State or the District of Columbia.
Irrevocable commitment means an obligation by an insurer to pay
benefits to a named participant or surviving beneficiary, if the
obligation cannot be cancelled under the terms of the insurance
contract (except for fraud or mistake) without the consent of the
participant or beneficiary and is legally enforceable by the
participant or beneficiary.
IRS means the Internal Revenue Service.
Mandatory employee contributions means amounts contributed to the
plan by a participant that are required as a condition of employment,
as a condition of participation in such plan, or as a condition of
obtaining benefits under the plan attributable to employer
contributions.
Mass withdrawal means the withdrawal of every employer from the
plan, or the withdrawal of substantially all employers pursuant to an
agreement or arrangement to withdraw.
Multiemployer Act means the Multiemployer Pension Plan Amendments
Act of 1980.
Multiemployer plan means a plan that is described in section
4001(a)(3) of ERISA and that is covered by title IV of ERISA.
Multiple employer plan means a single-employer plan maintained by
two or more contributing sponsors that are not members of the same
controlled group, under which all plan assets are available to pay
benefits to all plan participants and beneficiaries.
Nonbasic-type benefit means any benefit provided by a plan other
than a basic-type benefit.
Nonforfeitable benefit means a benefit described in section
4001(a)(8) of ERISA. Benefits that become nonforfeitable solely as a
result of the termination of a plan will be considered forfeitable.
Normal retirement age means the age specified in the plan as the
normal retirement age. This age shall not exceed the later of age 65 or
the age attained after 5 years of participation in the plan. If no
normal retirement age is specified in the plan, it is age 65.
Notice of intent to terminate means the notice of a proposed
termination of a single-employer plan, as required by section
4041(a)(2) of ERISA and Sec. 4041.21 (in a standard termination) or
Sec. 4041.41 (in a distress termination) of this chapter.
PBGC means the Pension Benefit Guaranty Corporation.
Person means a person defined in section 3(9) of ERISA.
Plan means a defined benefit plan within the meaning of section
3(35) of ERISA that is covered by title IV of ERISA.
Plan administrator means an administrator, as defined in section
3(16)(A) of ERISA.
Plan sponsor means, with respect to a multiemployer plan, the
person described in section 4001(a)(10) of ERISA.
Plan year means the calendar, policy, or fiscal year on which the
records of the plan are kept.
Proposed termination date means the date specified as such by the
plan administrator of a single-employer plan in a notice of intent to
terminate or, if later, in the standard or distress termination notice,
in accordance with section 4041 of ERISA and part 4041 of this chapter.
Single-employer plan means any defined benefit plan (as defined in
section 3(35) of ERISA) that is not a multiemployer plan (as defined in
section 4001(a)(3) of ERISA) and that is covered by title IV of ERISA.
Standard termination means the voluntary termination, in accordance
with section 4041(b) of ERISA and part 4041, subpart B, of this
chapter, of a single-employer plan that is able to provide for all of
its benefit liabilities when plan assets are distributed.
Substantial owner means a substantial owner as defined in section
4022(b)(5)(A) of ERISA.
Sufficient for benefit liabilities means that there is no amount of
unfunded benefit liabilities, as defined in section 4001(a)(18) of
ERISA.
Sufficient for guaranteed benefits means that there is no amount of
unfunded guaranteed benefits, as defined in section 4001(a)(17) of
ERISA.
Termination date means the date established pursuant to section
4048(a) of ERISA.
Title IV benefit means the guaranteed benefit plus any additional
benefits to which plan assets are allocated pursuant to section 4044 of
ERISA and part 4044 of this chapter.
Voluntary employee contributions means amounts contributed by an
employee to a plan, pursuant to the provisions of the plan, that are
not mandatory employee contributions.
Sec. 4001.3 Trades or businesses under common control; controlled
groups.
For purposes of title IV of ERISA:
(a)(1) The PBGC will determine that trades and businesses (whether
or not incorporated) are under common control if they are ``two or more
trades or businesses under common control'', as defined in regulations
prescribed under section 414(c) of the Code.
(2) The PBGC will determine that all employees of trades or
businesses (whether or not incorporated) which are under common control
shall be treated as employed by a single employer, and all such trades
and businesses shall be treated as a single employer.
(3) An individual who owns the entire interest in an unincorporated
trade or business is treated as his own employer, and a partnership is
treated as the employer of each partner who is an employee within the
meaning of section 401(c)(1) of the Code.
(b) In the case of a single-employer plan:
(1) In connection with any person, a controlled group consists of
that person and all other persons under common control with such
person.
(2) Persons are under common control if they are members of a
``controlled group of corporations'', as defined in regulations
prescribed under section 414(b) of the Code, or if they are ``two or
more trades or businesses under common control'', as defined in
regulations prescribed under section 414(c) of the Code.
PART 4002--BYLAWS OF THE PENSION BENEFIT GUARANTY CORPORATION
Sec.
4002.1 Name.
4002.2 Offices.
4002.3 Board of Directors.
4002.4 Chairman.
4002.5 Quorum.
[[Page 34012]]
4002.6 Meetings.
4002.7 Place of meetings; use of conference call communications
equipment.
4002.8 Alternate voting procedure.
4002.9 Amendments.
Authority: 29 U.S.C. 1302(f).
Sec. 4002.1 Name.
The name of the Corporation is the Pension Benefit Guaranty
Corporation.
Sec. 4002.2 Offices.
The principal office of the Corporation shall be in the
Metropolitan area of the City of Washington, District of Columbia. The
Corporation may have additional offices at such other places as the
Board of Directors may deem necessary or desirable to the conduct of
its business.
Sec. 4002.3 Board of Directors.
(a) The Board of Directors shall establish the policies of the
Corporation and shall perform the other functions assigned to the Board
of Directors in title IV of the Employee Retirement Income Security Act
of 1974. The Board of Directors of the Corporation shall be composed of
the Secretary of Labor, the Secretary of the Treasury, and the
Secretary of Commerce. Members of the Board shall serve without
compensation, but shall be reimbursed by the Corporation for travel,
subsistence, and other necessary expenses incurred in the performance
of their duties as members of the Board. A person at the time of a
meeting of the Board of Directors who is serving as Secretary of Labor,
Secretary of the Treasury or Secretary of Commerce in an acting
capacity, shall serve as a member of the Board of Directors with the
same authority and effect as the designated Secretary.
(b) The following powers are expressly reserved to the Board of
Directors and shall not be delegated:
(1) Approval of all final substantive regulations prior to
publication in the Federal Register, except for amendments to the
regulations on Allocation of Assets in Single-employer Plans and Duties
of Plan Sponsor Following Mass Withdrawal (parts 4044 and 4281 of this
chapter) establishing new interest rates and factors, which may be
approved by the Executive Director of the PBGC.
(2) Approval of all reports or recommendations to the Congress that
are required by statute;
(3) Establishment from time to time of the Corporation's budget and
debt ceiling up to the statutory limit;
(4) Determination from time to time of limits on advances to the
revolving funds administered by the Corporation pursuant to section
4005(a) of ERISA;
(5) Final decision on any policy matter that would materially
affect the rights of a substantial number of employers or covered
participants and beneficiaries.
(c) Final non-substantive regulations and all proposed regulations
shall be approved by the Executive Director prior to publication in the
Federal Register; provided that all proposed substantive regulations
shall first be circulated for review to the Board of Directors or their
designees, and may thereafter be issued by the Executive Director after
responding to any comments made within 21 days after circulation of the
proposed regulation, or, if no comments are received, after expiration
of the 21-day period.
Sec. 4002.4 Chairman.
The Secretary of Labor shall be the Chairman of the Board of
Directors and he shall be the administrator of the Corporation with
responsibility for its management, including overall supervision of the
Corporation's personnel, organization, and budget practices, and shall
exercise such incidental powers as may be necessary to carry out his
administrative responsibilities. The Chairman may delegate his
administrative responsibilities.
Sec. 4002.5 Quorum.
A majority of the Directors shall constitute a quorum for the
transaction of business. Any act of a majority of the Directors present
at any meeting at which there is a quorum shall be the act of the
Board, except as may otherwise be provided in these bylaws.
Sec. 4002.6 Meetings.
Regular meetings of the Board of Directors shall be held at such
times as the Chairman shall select. Special meetings of the Board of
Directors shall be called by the Chairman on the request of any other
Director. Reasonable notice of any meetings shall be given to each
Director. The General Counsel of the Corporation shall serve as
Secretary to the Board of Directors and keep its minutes. As soon as
practicable after each meeting, a draft of the minutes of such meeting
shall be distributed to each member of the Board for correction or
approval.
Sec. 4002.7 Place of meetings; use of conference call communications
equipment.
Meetings of the Board of Directors shall be held at the principal
office of the Corporation unless otherwise determined by the Board of
Directors or the Chairman. Any Director may participate in a meeting of
the Board of Directors through the use of conference call telephone or
similar communications equipment, by means of which all persons
participating in the meeting can simultaneously speak to and hear each
other. Any Director so participating in a meeting shall be deemed
present for all purposes. Actions taken by the Board of Directors at
meetings conducted through the use of such equipment, including the
votes of each member, shall be recorded in the usual manner in the
minutes of the meetings of the Board of Directors. A resolution of the
Board of Directors signed by each of its three members shall have the
same force and effect as if agreed at a duly called meeting and shall
be recorded in the minutes of the Board of Directors.
Sec. 4002.8 Alternate voting procedure.
(a) A Director shall be deemed to have participated in a meeting of
the Board of Directors for all purposes if,
(1) That Director was represented at that meeting by an individual
who was designated to act on his behalf, and
(2) That Director ratified in writing the actions taken by his
designee at that meeting within a reasonable period of time after such
meeting.
(b) For purposes of this section, a Director, including an
individual serving as Acting Secretary, shall designate a
representative at a level not below that of Assistant Secretary within
his Department. Such designation shall be in writing and shall be
effective until withdrawn or until a date specified therein.
(c) For purposes of this section, a Director's approval of the
minutes of a meeting of the Board of Directors shall constitute
ratification of the actions of his designee at such meeting.
Sec. 4002.9 Amendments.
These bylaws may be amended or new bylaws adopted by unanimous vote
of the Board.
PART 4003--RULES FOR ADMINISTRATIVE REVIEW OF AGENCY DECISIONS
Subpart A--General Provisions
Sec.
4003.1 Purpose and scope.
4003.2 Definitions.
4003.3 PBGC assistance in obtaining information.
4003.4 Extension of time.
4003.5 Non-timely request for review.
4003.6 Representation.
4003.7 Exhaustion of administrative remedies.
4003.8 Request for confidential treatment.
4003.9 Filing of documents.
4003.10 Computation of time.
[[Page 34013]]
Subpart B--Initial Determinations
4003.21 Form and contents of initial determinations.
4003.22 Effective date of determinations.
Subpart C--Reconsideration of Initial Determinations
4003.31 Who may request reconsideration.
4003.32 When to request reconsideration.
4003.33 Where to submit request for reconsideration.
4003.34 Form and contents of request for reconsideration.
4003.35 Final decision on request for reconsideration.
Subpart D--Administrative Appeals
4003.51 Who may appeal or participate in appeals.
4003.52 When to file.
4003.53 Where to file.
4003.54 Contents of appeal.
4003.55 Opportunity to appear and to present witnesses.
4003.56 Consolidation of appeals.
4003.57 Appeals affecting third parties.
4003.58 Powers of the Appeals Board.
4003.59 Decision by the Appeals Board.
4003.60 Referral of appeal to the Executive Director.
Authority: 29 U.S.C. 1302(b)(3).
Subpart A--General Provisions
Sec. 4003.1 Purpose and scope.
(a) Purpose. This part sets forth the rules governing the issuance
of all initial determinations by the PBGC on cases pending before it
involving the matters set forth in paragraph (b) of this section and
the procedures for requesting and obtaining administrative review by
the PBGC of those determinations. Subpart A contains general
provisions. Subpart B sets forth rules governing the issuance of all
initial determinations of the PBGC on matters covered by this part.
Subpart C establishes procedures governing the reconsideration by the
PBGC of initial determinations relating to the matters set forth in
paragraphs (b)(1) through (b)(4). Subpart D establishes procedures
governing administrative appeals from initial determinations relating
to the matters set forth in paragraphs (b)(5) through (b)(10).
(b) Scope. This part applies to the following determinations made
by the PBGC in cases pending before it and to the review of those
determinations:
(1) Determinations that a plan is covered under section 4021 of
ERISA;
(2) Determinations with respect to premiums, interest and late
payment penalties pursuant to section 4007 of ERISA;
(3) Determinations with respect to voluntary terminations under
section 4041 of ERISA, including--
(i) A determination that a notice requirement or a certification
requirement under section 4041 of ERISA has not been met,
(ii) A determination that the requirements for demonstrating
distress under section 4041(c)(2)(B) of ERISA have not been met, and
(iii) A determination with respect to the sufficiency of plan
assets for benefit liabilities or for guaranteed benefits;
(4) Determinations with respect to allocation of assets under
section 4044 of ERISA, including distribution of excess assets under
section 4044(d);
(5) Determinations that a plan is not covered under section 4021 of
ERISA;
(6) Determinations under section 4022 (a) or (c) or section
4022A(a) of ERISA with respect to benefit entitlement of participants
and beneficiaries under covered plans and determinations that a
domestic relations order is or is not a qualified domestic relations
order under section 206(d)(3) of ERISA and section 414(p) of the Code;
(7) Determinations under section 4022 (b) or (c), section 4022A (b)
through (e), or section 4022B of ERISA of the amount of benefits
payable to participants and beneficiaries under covered plans;
(8) Determinations of the amount of money subject to recapture
pursuant to section 4045 of ERISA;
(9) Determinations of the amount of liability under section
4062(b)(1), section 4063, or section 4064 of ERISA;
(10) Determinations--
(i) That the amount of a participant's or beneficiary's benefit
under section 4050(a)(3) of ERISA has been correctly computed based on
the designated benefit paid to the PBGC under section 4050(b)(2) of
ERISA, or
(ii) That the designated benefit is correct, but only to the extent
that the benefit to be paid does not exceed the participant's or
beneficiary's guaranteed benefit.
(c) Matters not covered by this part. Nothing in this part limits--
(1) The authority of the PBGC to review, either upon request or on
its own initiative, a determination to which this part does not apply
when, in its discretion, the PBGC determines that it would be
appropriate to do so, or
(2) The procedure that the PBGC may utilize in reviewing any
determination to which this part does not apply.
Sec. 4003.2 Definitions.
The following terms are defined in Sec. 4001.2 of this chapter:
Code, contributing sponsor, controlled group, ERISA, multiemployer
plan, PBGC, person, plan administrator, and single-employer plan.
In addition, for purposes of this part:
Aggrieved person means any participant, beneficiary, plan
administrator, contributing sponsor of a single-employer plan or member
of such a contributing sponsor's controlled group, plan sponsor of a
multiemployer plan, or employer that is adversely affected by an
initial determination of the PBGC with respect to a pension plan in
which such person has an interest. The term ``beneficiary'' includes an
alternate payee (within the meaning of section 206(d)(3)(K) of ERISA)
under a qualified domestic relations order (within the meaning of
section 206(d)(3)(B) of ERISA).
Appeals Board means a board consisting of three PBGC officials. The
Executive Director shall appoint a senior PBGC official to serve as
Chairperson and three or more other PBGC officials to serve as regular
Appeals Board members. The Chairperson shall designate the three
officials who will constitute the Appeals Board with respect to a case,
provided that a person may not serve on the Appeals Board with respect
to a case in which he or she made a decision regarding the merits of
the determination being appealed. The Chairperson need not serve on the
Appeals Board with respect to all cases.
Appellant means any person filing an appeal under subpart D of this
part.
Director means the Director of any department of the PBGC and
includes the Executive Director of the PBGC, Deputy Executive
Directors, and the General Counsel.
Sec. 4003.3 PBGC assistance in obtaining information.
A person who lacks information or documents necessary to file a
request for review pursuant to subpart C or D of this part, or
necessary to a decision whether to seek review, or necessary to
participate in an appeal pursuant to Sec. 4003.57 of this part or
necessary to a decision whether to participate, may request the PBGC's
assistance in obtaining information or documents in the possession of a
party other than the PBGC. The request shall state or describe the
missing information or documents, the reason why the person needs the
information or documents, and the reason why the person needs the
assistance of the PBGC in obtaining the information or documents. The
request may also include a request for an extension of time to file
pursuant to Sec. 4003.4 of this part.
Sec. 4003.4 Extension of time.
(a) General rule. When a document is required under this part to be
filed within a prescribed period of time, an extension of time to file
will be granted only upon good cause shown and only
[[Page 34014]]
when the request for an extension is made before the expiration of the
time prescribed. The request for an extension shall be in writing and
state why additional time is needed and the amount of additional time
requested. The filing of a request for an extension shall stop the
running of the prescribed period of time. When a request for an
extension is granted, the PBGC shall notify the person requesting the
extension, in writing, of the amount of additional time granted. When a
request for an extension is denied, the PBGC shall so notify the
requestor in writing, and the prescribed period of time shall resume
running from the date of denial.
(b) Disaster relief. When the President of the United States
declares that, under the Disaster Relief Act of 1974, as amended (42
U.S.C. 5121, 5122(2), 5141(b)), a major disaster exists, the Executive
Director of the PBGC (or his or her designee) may, by issuing one or
more notices of disaster relief, extend the due date for filing a
request for reconsideration under Sec. 4003.32 or an appeal under
Sec. 4003.52 by up to 180 days.
(1) The due date extension or extensions shall be available only to
an aggrieved person who is residing in, or whose principal place of
business is within, a designated disaster area, or with respect to whom
the office of the service provider, bank, insurance company, or other
person maintaining the information necessary to file the request for
reconsideration or appeal is within a designated disaster area; and
(2) The request for reconsideration or appeal shall identify the
filing as one for which the due date extension is available.
Sec. 4003.5 Non-timely request for review.
The PBGC will process a request for review of an initial
determination that was not filed within the prescribed period of time
for requesting review (see Secs. 4003.32 and 4003.52) if--
(a) The person requesting review demonstrates in his or her request
that he or she did not file a timely request for review because he or
she neither knew nor, with due diligence, could have known of the
initial determination; and
(b) The request for review is filed within 30 days after the date
the aggrieved person, exercising due diligence at all relevant times,
first learned of the initial determination where the requested review
is reconsideration, or within 45 days after the date the aggrieved
person, exercising due diligence at all relevant times, first learned
of the initial determination where the request for review is an appeal.
Sec. 4003.6 Representation.
A person may file any document or make any appearance that is
required or permitted by this part on his or her own behalf or he or
she may designate a representative. When the representative is not an
attorney-at-law, a notarized power of attorney, signed by the person
making the designation, which authorizes the representation and
specifies the scope of representation shall be filed with the PBGC in
accordance with Sec. 4003.9(b) of this part.
Sec. 4003.7 Exhaustion of administrative remedies.
Except as provided in Sec. 4003.22(b), a person aggrieved by an
initial determination of the PBGC covered by this part, other than a
determination subject to reconsideration that is issued by a Department
Director, has not exhausted his or her administrative remedies until he
or she has filed a request for reconsideration under subpart C of this
part or an appeal under subpart D of this part, whichever is
applicable, and a decision granting or denying the relief requested has
been issued.
Sec. 4003.8 Request for confidential treatment.
If any person filing a document with the PBGC believes that some or
all of the information contained in the document is exempt from the
mandatory public disclosure requirements of the Freedom of Information
Act, 5 U.S.C. 552, he or she shall specify the information with respect
to which confidentiality is claimed and the grounds therefor.
Sec. 4003.9 Filing of documents.
(a) Date of filing. Any document required or permitted to be filed
under this part is considered filed on the date of the United States
postmark stamped on the cover in which the document is mailed, provided
that--
(1) The postmark was made by the United States Postal Service; and
(2) The document was mailed postage prepaid, properly packaged and
addressed to the PBGC.
If the conditions stated in both paragraphs (a)(1) and (a)(2) of
this section are not met, the document is considered filed on the date
it is received by the PBGC. Documents received after regular business
hours are considered filed on the next regular business day.
(b) Where to file. Any document required or permitted to be filed
under this part in connection with a request for reconsideration shall
be submitted to the Director of the department within the PBGC that
issued the initial determination. Any document required or permitted to
be filed under this part in connection with an appeal shall be
submitted to the Appeals Board, Pension Benefit Guaranty Corporation,
1200 K Street NW., Washington, DC 20005-4026.
Sec. 4003.10 Computation of time.
In computing any period of time prescribed or allowed by this part,
the day of the act, event, or default from which the designated period
of time begins to run is not counted. The last day of the period so
computed shall be included, unless it is a Saturday, Sunday, or Federal
holiday, in which event the period runs until the end of the next day
which is not a Saturday, Sunday, or a Federal holiday.
Subpart B--Initial Determinations
Sec. 4003.21 Form and contents of initial determinations.
All determinations to which this subpart applies shall be in
writing, shall state the reason for the determination, and, except when
effective on the date of issuance as provided in Sec. 4003.22(b), shall
contain notice of the right to request review of the determination
pursuant to subpart C or subpart D of this part, as applicable, and a
brief description of the procedures for requesting review.
Sec. 4003.22 Effective date of determinations.
(a) General Rule. Except as provided in paragraph (b) of this
section, an initial determination covered by this subpart will not
become effective until the prescribed period of time for filing a
request for reconsideration under subpart C of this part or an appeal
under subpart D of this part, whichever is applicable, has elapsed. The
filing of a request for review under subpart C or D of this part shall
automatically stay the effectiveness of a determination until a
decision on the request for review has been issued by the PBGC.
(b) Exception. The PBGC may, in its discretion, order that the
initial determination in a case is effective on the date it is issued.
When the PBGC makes such an order, the initial determination shall
state that the determination is effective on the date of issuance and
that there is no obligation to exhaust administrative remedies with
respect to that determination by seeking review of it by the PBGC.
[[Page 34015]]
Subpart C--Reconsideration of Initial Determinations
Sec. 4003.31 Who may request reconsideration.
Any person aggrieved by an initial determination of the PBGC to
which this subpart applies may request reconsideration of the
determination.
Sec. 4003.32 When to request reconsideration.
Except as provided in Secs. 4003.4 and 4003.5, a request for
reconsideration must be filed within 30 days after the date of the
initial determination of which reconsideration is sought or, when
administrative review includes a procedure in Sec. 4903.33 of this
chapter, by a date 60 days (or more) thereafter that is specified in
the PBGC's notice of the right to request review.
Sec. 4003.33 Where to submit request for reconsideration.
A request for reconsideration shall be submitted to the Director of
the department within the PBGC that issued the initial determination,
except that a request for reconsideration of a determination described
in Sec. 4003.1(b)(3)(ii) shall be submitted to the Executive Director.
Sec. 4003.34 Form and contents of request for reconsideration.
A request for reconsideration shall--
(a) Be in writing;
(b) Be clearly designated as a request for reconsideration;
(c) Contain a statement of the grounds for reconsideration and the
relief sought; and
(d) Reference all pertinent information already in the possession
of the PBGC and include any additional information believed to be
relevant.
Sec. 4003.35 Final decision on request for reconsideration.
(a) Except as provided in paragraphs (a)(1) or (a)(2), final
decisions on requests for reconsideration will be issued by the same
department of the PBGC that issued the initial determination, by an
official whose level of authority in that department is higher than
that of the person who issued the initial determination.
(1) When an initial determination is issued by a Department
Director, the Department Director (or an official designated by the
Department Director) will issue the final decision on request for
reconsideration of a determination other than one described in
Sec. 4003.1(b)(3)(ii).
(2) The Executive Director (or an official designated by the
Executive Director) will issue the final decision on a request for
reconsideration of a determination described in Sec. 4003.1(b)(3)(ii).
(b) The final decision on a request for reconsideration shall be in
writing, specify the relief granted, if any, state the reason(s) for
the decision, and state that the person has exhausted his or her
administrative remedies.
Subpart D--Administrative Appeals
Sec. 4003.51 Who may appeal or participate in appeals.
Any person aggrieved by an initial determination to which this
subpart applies may file an appeal. Any person who may be aggrieved by
a decision under this subpart granting the relief requested in whole or
in part may participate in the appeal in the manner provided in
Sec. 4003.57.
Sec. 4003.52 When to file.
Except as provided in Secs. 4003.4 and 4003.5, an appeal under this
subpart must be filed within 45 days after the date of the initial
determination being appealed or, when administrative review includes a
procedure in Sec. 4903.33 of this chapter, by a date 60 days (or more)
thereafter that is specified in the PBGC's notice of the right to
request review.
Sec. 4003.53 Where to file.
An appeal or a request for an extension of time to appeal shall be
submitted to the Appeals Board, Pension Benefit Guaranty Corporation,
1200 K Street NW., Washington, DC 20005-4026.
Sec. 4003.54 Contents of appeal.
(a) An appeal shall--
(1) Be in writing;
(2) Be clearly designated as an appeal;
(3) Contain a statement of the grounds upon which it is brought and
the relief sought;
(4) Reference all pertinent information already in the possession
of the PBGC and include any additional information believed to be
relevant;
(5) State whether the appellant desires to appear in person or
through a representative before the Appeals Board; and
(6) State whether the appellant desires to present witnesses to
testify before the Appeals Board, and if so, state why the presence of
witnesses will further the decision-making process.
(b) In any case where the appellant believes that another person
may be aggrieved if the PBGC grants the relief sought, the appeal shall
also include the name(s) and address(es) (if known) of such other
person(s).
Sec. 4003.55 Opportunity to appear and to present witnesses.
(a) At the discretion of the Appeals Board, any appearance
permitted under this subpart may be before a hearing officer designated
by the Appeals Board.
(b) An opportunity to appear before the Appeals Board (or a hearing
officer) and an opportunity to present witnesses will be permitted at
the discretion of the Appeals Board. In general, an opportunity to
appear will be permitted if the Appeals Board determines that there is
a dispute as to a material fact; an opportunity to present witnesses
will be permitted when the Appeals Board determines that witnesses will
contribute to the resolution of a factual dispute.
(c) Appearances permitted under this section will take place at the
main offices of the PBGC, 1200 K Street NW., Washington, DC 20005-4026,
unless the Appeals Board, in its discretion, designates a different
location, either on its own initiative or at the request of the
appellant or a third party participating in the appeal.
Sec. 4003.56 Consolidation of appeals.
(a) When consolidation may be required. Whenever multiple appeals
are filed that arise out of the same or similar facts and seek the same
or similar relief, the Appeals Board may, in its discretion, order the
consolidation of all or some of the appeals.
(b) Representation of parties. Whenever the Appeals Board orders
the consolidation of appeals, the appellants may designate one (or
more) of their number to represent all of them for all purposes
relating to their appeals.
(c) Decision by Appeals Board. The decision of the Appeals Board in
a consolidated appeal shall be binding on all appellants whose appeals
were subject to the consolidation.
Sec. 4003.57 Appeals affecting third parties.
(a) Before the Appeals Board issues a decision granting, in whole
or in part, the relief requested in an appeal, it shall make a
reasonable effort to notify third persons who will be aggrieved by the
decision of the following:
(1) The pendency of the appeal;
(2) The grounds upon which the appeal is based;
(3) The grounds upon which the Appeals Board is considering
reversing the initial determination;
(4) The right to submit written comments on the appeal;
(5) The right to request an opportunity to appear in person or
through a representative before the Appeals Board and to present
witnesses; and
(6) That no further opportunity to present information to the PBGC
with
[[Page 34016]]
respect to the determination under appeal will be provided.
(b) Written comments and a request to appear before the Appeals
Board must be filed within 45 days after the date of the notice from
the Appeals Board.
(c) If more than one third party is involved, their participation
in the appeal may be consolidated pursuant to the provisions of
Sec. 4003.56.
Sec. 4003.58 Powers of the Appeals Board.
In addition to the powers specifically described in this part, the
Appeals Board may request the submission of any information or the
appearance of any person it considers necessary to resolve a matter
before it and to enter any order it considers necessary for or
appropriate to the disposition of any matter before it.
Sec. 4003.59 Decision by the Appeals Board.
(a) In reaching its decision, the Appeals Board shall consider
those portions of the file relating to the initial determination, all
material submitted by the appellant and any third parties in connection
with the appeal, and any additional information submitted by PBGC
staff.
(b) The decision of the Appeals Board constitutes the final agency
action by the PBGC with respect to the determination which was the
subject of the appeal and is binding on all parties who participated in
the appeal and who were notified pursuant to Sec. 4003.57 of their
right to participate in the appeal.
(c) The decision of the Appeals Board shall be in writing, specify
the relief granted, if any, state the bases for the decision, including
a brief statement of the facts or legal conclusions supporting the
decision, and state that the appellant has exhausted his or her
administrative remedies.
Sec. 4003.60 Referral of appeal to the Executive Director.
The Appeals Board may, in its discretion, refer any appeal to the
Executive Director of the PBGC for decision. In such a case, the
Executive Director shall have all the powers vested in the Appeals
Board by this subpart and the decision of the Executive Director shall
meet the requirements of and have the effect of a decision issued under
Sec. 4003.59 of this part.
PART 4006--PREMIUM RATES
Sec.
4006.1 Purpose and scope.
4006.2 Definitions.
4006.3 Premium rate.
4006.4 Determination of unfunded vested benefits.
4006.5 Exemptions and special rules.
Authority: 29 U.S.C. 1302(b)(3), 1306, 1307.
Sec. 4006.1 Purpose and scope.
This part, which applies to all plans covered by title IV of ERISA,
provides rules for computing the premiums imposed by sections 4006 and
4007 of ERISA. (See part 4007 of this chapter for rules for the payment
of premiums, including due dates and late payment charges.)
Sec. 4006.2 Definitions.
The following terms are defined in Sec. 4001.2 of this chapter:
Code, contributing sponsor, ERISA, fair market value, insurer,
irrevocable commitment, multiemployer plan, notice of intent to
terminate, PBGC, plan administrator, plan, plan year, and single-
employer plan.
In addition, for purposes of this part:
New plan means a plan that became effective within the premium
payment year and includes a plan resulting from a consolidation or
spinoff. A plan that meets this definition is considered to be a new
plan even if the plan constitutes a successor plan within the meaning
of section 4021(a) of ERISA.
Newly-covered plan means a plan that is not a new plan and that was
not covered by title IV of ERISA immediately prior to the premium
payment year.
Participant means any individual who is included in one of the
categories below:
(a) Active. (1) Any individual who is currently in employment
covered by the plan and who is earning or retaining credited service
under the plan. This category includes any individual who is considered
covered under the plan for purposes of meeting the minimum coverage
requirements, but because of offset or other provisions (including
integration with Social Security benefits), the individual does not
have any accrued benefits.
(2) Any non-vested individual who is not currently in employment
covered by the plan but who is earning or retaining credited service
under the plan. This category does not include a non-vested former
employee who has incurred a break in service the greater of one year or
the break in service period specified in the plan.
(b) Inactive--(1) Inactive receiving benefits. Any individual who
is retired or separated from employment covered by the plan and who is
receiving benefits under the plan. This category does not include an
individual to whom an insurer has made an irrevocable commitment to pay
all the benefits to which the individual is entitled under the plan.
(2) Inactive entitled to future benefits. Any individual who is
retired or separated from employment covered by the plan and who is
entitled to begin receiving benefits under the plan in the future. This
category does not include an individual to whom an insurer has made an
irrevocable commitment to pay all the benefits to which the individual
is entitled under the plan.
(c) Deceased. Any deceased individual who has one or more
beneficiaries who are receiving or entitled to receive benefits under
the plan. This category does not include an individual if an insurer
has made an irrevocable commitment to pay all the benefits to which the
beneficiaries of that individual are entitled under the plan.
Premium payment year means the plan year for which the premium is
being paid.
Short plan year means a plan year that is less than twelve full
months.
Sec. 4006.3 Premium rate.
Subject to the provisions of Sec. 4006.5 (dealing with exemptions
and special rules), the premium paid for basic benefits guaranteed
under section 4022(a) of ERISA shall equal the flat-rate premium under
paragraph (a) of this section plus, in the case of a single-employer
plan, the variable-rate premium under paragraph (b) of this section.
(a) Flat-rate premium. The flat-rate premium is equal to the number
of participants in the plan on the last day of the plan year preceding
the premium payment year, multiplied by--
(1) $19 for a single-employer plan, or
(2) $2.60 for a multiemployer plan.
(b) Variable-rate premium. The variable-rate premium is $9 for each
$1,000 of a single-employer plan's unfunded vested benefits, as
determined under Sec. 4006.4.
Sec. 4006.4 Determination of unfunded vested benefits.
(a) General rule. Except as permitted by paragraph (c) of this
section or as provided in the exemptions and special rules under
Sec. 4006.5, the amount of a plan's unfunded vested benefits (as
defined in paragraph (b) of this section) shall be determined as of the
last day of the plan year preceding the premium payment year, based on
the plan provisions and the plan's population as of that date. The
determination shall be made in accordance with paragraph (a)(1) or
(a)(2), and shall be certified to in accordance with paragraph (a)(4).
(1) The unfunded vested benefits shall be determined using the
actuarial assumptions and methods described in
[[Page 34017]]
paragraph (a)(3) for the plan year preceding the premium payment year
(or, in the case of a new or newly-covered plan, for the premium
payment year), except to the extent that other actuarial assumptions or
methods are specifically prescribed by this section or are necessary to
reflect the occurrence of a significant event described in paragraph
(d) of this section between the date of the funding valuation and the
last day of the plan year preceding the premium payment year. (If the
plan does a valuation as of the last day of the plan year preceding the
premium payment year, no separate adjustment for significant events is
needed.)
(2) Under this rule, the determination of the unfunded vested
benefits may be based on a plan valuation done as of the first day of
the premium payment year, provided that--
(i) The actuarial assumptions and methods used are those described
in paragraph (a)(3) for the premium payment year, except to the extent
that other actuarial assumptions or methods are specifically prescribed
by this section or are required to make the adjustment described in
paragraph (a)(2)(ii) of this section; and
(ii) If an enrolled actuary determines that there is a material
difference between the values determined under the valuation and the
values that would have been determined as of the last day of the
preceding plan year, the valuation results are adjusted to reflect
appropriately the values as of the last day of the preceding plan year.
(This adjustment need not be made if the unadjusted valuation would
result in greater unfunded vested benefits.)
(3) For purposes of paragraphs (a)(1) and (a)(2), the actuarial
assumptions and methods for a plan year are those used by the plan for
purposes of determining the additional funding requirement under
section 302(d) of ERISA and section 412(1) of the Code (or, in the case
of a plan that is not required to determine such additional funding
requirement, any assumptions and methods that would be permitted for
such purpose if the plan were so required).
(4) In the case of any plan that determines the amount of its
unfunded vested benefits under the general rule described in this
paragraph, an enrolled actuary must certify, in accordance with the
PBGC annual Premium Payment Package provided for in Sec. 4007.3 of this
part, that the determination was made in a manner consistent with
generally accepted actuarial principles and practices.
(b) Unfunded vested benefits. The amount of a plan's unfunded
vested benefits under this section shall be the excess of the plan's
vested benefits amount (determined under paragraph (b)(1) of this
section) over the value of the plan's assets (determined under
paragraph (b)(2) of this section).
(1) Vested benefits amount. A plan's vested benefits amount under
this section shall be the plan's current liability (within the meaning
of section 302(d)(7) of ERISA and section 412(1)(7) of the Code)
determined by taking into account only vested benefits and by using an
interest rate equal to the applicable percentage of the annual yield
for 30-year Treasury constant maturities, as reported in Federal
Reserve Statistical Release G.13 and H.15, for the calendar month
preceding the calendar month in which the premium payment year begins.
If the interest rate (or rates) used by the plan to determine current
liability was (or were all) not greater than the required interest
rate, the vested benefits need not be revalued if an enrolled actuary
certifies that the interest rate (or interest rates) used was (or were
all) not greater than the required interest rate. For purposes of this
paragraph (b)(1) (subject to the provisions of Sec. 4006.5(g), dealing
with plans of regulated public utilities), the applicable percentage
is--
(i) For a premium payment year that begins before July 1997, 80
percent;
(ii) For a premium payment year that begins after June 1997 and
before the first premium payment year to which the first tables
prescribed under section 302(d)(7)(C)(ii)(II) of ERISA and section
412(1)(7)(C)(ii)(II) of the Code apply, 85 percent; and
(iii) For the first premium payment year to which the first tables
prescribed under section 302(d)(7)(C)(ii)(II) of ERISA and section
412(1)(7)(C)(ii)(II) of the Code apply and any subsequent plan year,
100 percent.
(2) Value of assets. (i) Actuarial value. For a premium payment
year that is described in paragraph (b)(1)(i) or (b)(1)(ii) of this
section, the value of the plan's assets shall be their actuarial value
determined in accordance with section 302(c)(2) of ERISA and section
412(c)(2) of the Code.
(ii) Fair market value. For a premium payment year that is
described in paragraph (b)(1)(iii) of this section, the value of the
plan's assets shall be their fair market value.
(iii) Use of credit balance. The value of the plan's assets shall
not be reduced by a credit balance in the funding standard account.
(iv) Contributions. Contributions owed for any plan year preceding
the premium payment year shall be included for plans with 500 or more
participants and may be included for any other plan. Contributions may
be included only to the extent such contributions have been paid into
the plan on or before the earlier of the due date for payment of the
variable-rate portion of the premium under Sec. 4007.11 or the date
that portion is paid. Contributions included that are paid after the
last day of the plan year preceding the premium payment year shall be
discounted at the plan asset valuation rate (on a simple or compound
basis in accordance with the plan's discounting rules) to such last day
to reflect the date(s) of payment. Contributions for the premium
payment year may not be included for any plan.
(c) Alternative method for calculating unfunded vested benefits. In
lieu of determining the amount of the plan's unfunded vested benefits
pursuant to paragraph (a) of this section, a plan administrator may
calculate the amount of a plan's unfunded vested benefits under this
paragraph (c) using the plan's Form 5500, Schedule B, for the plan year
preceding the premium payment year. Pursuant to this paragraph (c),
unfunded vested benefits shall be determined, in accordance with the
Premium Payment Package, from values for the plan's vested benefits and
assets that are required to be reported on the plan's Schedule B. The
value of the vested benefits shall be adjusted in accordance with
paragraph (c)(1) of this section to reflect accruals during the plan
year preceding the premium payment year and with paragraph (c)(2) of
this section to reflect the interest rate prescribed in paragraph
(b)(1) of this section, and the value of the assets shall be adjusted
in accordance with paragraph (c)(4) of this section. (If the plan
administrator certifies that the interest rate (or rates) used to
determine the vested benefit values taken from the Schedule B was (or
were all) not greater than the interest rate prescribed in paragraph
(b)(1) of this section, the interest rate adjustment prescribed in
paragraph (c)(2) of this section is not required.) The resulting
unfunded vested benefits amount shall be adjusted in accordance with
paragraph (c)(5) of this section to reflect the passage of time from
the date of the Schedule B data to the last day of the plan year
preceding the premium payment year.
(1) Vested benefits adjustment for accruals. The total value of the
plan's current liability as of the first day of the plan year preceding
the premium payment year for vested benefits of active and terminated
vested participants not in pay status, computed in accordance with
section 302(d)(7) of ERISA and section 412(l)(7) of the Code,
[[Page 34018]]
shall be adjusted to reflect the increase in vested benefits
attributable to accruals during the plan year preceding the premium
payment year by multiplying that value by 1.07.
(2) Vested benefits interest rate adjustment. The value of vested
benefits as entered on the Schedule B shall be adjusted in accordance
with the following formula (except as provided in paragraph (c)(3) of
this section) to reflect the interest rate prescribed in paragraph
(b)(1) of this section:
VBadj=VBPAY x .94(RIR-BIR)+VB NON-PAY
x .94(RIR-BIR) x ((100+BIA)/(100+RIR))(ARA-50) ;
where--
(i) VBadj is the adjusted vested benefits amount (as of the
first day of the plan year preceding the premium payment year) under
the alternative calculation method;
(ii) VBPAY is the plan's current liability as of the first day
of the plan year preceding the premium payment year for vested benefits
of participants and beneficiaries in pay status, computed in accordance
with section 302(d)(7) of ERISA and section 412(l)(7) of the Code;
(iii) VBNON-PAY is the total of the plan's current liability
as of the first day of the plan year preceding the premium payment year
for vested benefits of active and terminated vested participants not in
pay status, computed in accordance with section 302(d)(7) of ERISA and
section 412(l)(7) of the Code, multiplied by 1.07 in accordance with
paragraph (c)(1) of this section;
(iv) RIR is the required interest rate prescribed in paragraph
(b)(1) of this section;
(v) BIR is the post-retirement current liability interest rate used
to determine the pay-status current liability figure referred to in
paragraph (c)(2)(ii) of this section;
(vi) BIA is the pre-retirement current liability interest rate used
to determine the pre-pay-status current liability figures referred to
in paragraph (c)(2)(iii) of this section; and
(vii) ARA is the plan's assumed weighted average retirement age.
(3) Optional use of substitution factors in interest rate
adjustment formula. In lieu of the term, .94 (RIR-BIR), in the
formula prescribed by paragraph (c)(2) of this section, a plan
administrator may use the optional substitution factor provided in the
Premium Payment Package.
(4) Adjusted value of plan assets. The value of plan assets shall
be the actuarial value of plan assets as of the first day of the plan
year preceding the premium payment year, determined in accordance with
section 302(c)(2) of ERISA and section 412(c)(2) of the Code without
reduction for any credit balance in the plan's funding standard
account, unless that amount was determined as of a date other than the
first day of the plan year preceding the premium payment year or the
premium payment year is described in Sec. 4006.4(b)(1)(iii). In either
of those events, the value of plan assets shall be the current value of
assets (as reported on Form 5500) as of that first day or (if Form
5500-EZ is filed) as of the last day of the plan year preceding the
Schedule B year. The value of assets from the Schedule B shall be
adjusted in accordance with paragraph (b)(2) of this section, except
that the amount of all contributions that are included in the value of
assets and that were made after the first day of the plan year
preceding the premium payment year shall be discounted to such first
day at the interest rate prescribed in paragraph (b)(1) of this section
for the premium payment year, compounded annually except that simple
interest may be used for any partial years.
(5) Adjustment for passage of time. The amount of the plan's
unfunded vested benefits shall be adjusted to reflect the passage of
time between the date of the Schedule B data (the first day of the plan
year preceding the premium payment year) and the last day of the plan
year preceding the premium payment year in accordance with the
following formula:
UVBadj=(VBadj-Aadj) x (1+RIR/100)Y;
where--
(i) UVBadj is the amount of the plan's adjusted unfunded
vested benefits;
(ii) VBadj is the value of the adjusted vested benefits
calculated in accordance with paragraphs (c)(1) and (c)(2) of this
section;
(iii) Aadj is the adjusted asset amount calculated in
accordance with paragraph (c)(3) of this section; (iv) RIR is the
required interest rate prescribed in paragraph (b)(1) of this section;
and
(v) Y is deemed to be equal to 1 (unless the plan year preceding
the premium payment year is a short plan year, in which case Y is the
number of years between the first day and the last day of the short
plan year, expressed as a decimal fraction of 1.0 with two digits to
the right of the decimal point).
(d) Restrictions on alternative calculation method for large plans.
(1) The alternative calculation method described in paragraph (c)
of this section may be used for a plan with 500 or more participants as
of the last day of the plan year preceding the premium payment year
only if--
(i) No significant event, as described in paragraph (d)(2) of this
section, has occurred between the first day and the last day of the
plan year preceding the premium payment year, and an enrolled actuary
so certifies in accordance with the Premium Payment Package; or
(ii) An enrolled actuary makes an appropriate adjustment to the
value of unfunded vested benefits to reflect the occurrence of
significant events that have occurred between those dates and certifies
to that fact in accordance with the Premium Payment Package.
(2) The significant events described in this paragraph are--
(i) An increase in the plan's actuarial costs (consisting of the
plan's normal cost under section 302(b)(2)(A) of ERISA and section
412(b)(2)(A) of the Code, amortization charges under section
302(b)(2)(B) of ERISA and section 412(b)(2)(B) of the Code, and
amortization credits under section 302(b)(3)(B) of ERISA and section
412(b)(3)(B) of the Code) attributable to a plan amendment, unless the
cost increase attributable to the amendment is less than 5 percent of
the actuarial costs determined without regard to the amendment;
(ii) The extension of coverage under the plan to a new group of
employees resulting in an increase of 5 percent or more in the plan's
liability for accrued benefits;
(iii) A plan merger, consolidation or spinoff that is not de
minimis pursuant to the regulations under section 414(l) of the Code;
(iv) The shutdown of any facility, plant, store, etc., that creates
immediate eligibility for benefits that would not otherwise be
immediately payable for participants separating from service;
(v) The offer by the plan for a temporary period to permit
participants to retire at benefit levels greater than that to which
they would otherwise be entitled;
(vi) A cost-of-living increase for retirees resulting in an
increase of 5 percent or more in the plan's liability for accrued
benefits; and
(vii) Any other event or trend that results in a material increase
in the value of unfunded vested benefits.
Sec. 4006.5 Exemptions and special rules.
(a) Variable-rate premium exemptions. A plan described in any of
paragraphs (a)(1)-(a)(5) of this section is not required to determine
its unfunded vested benefits under Sec. 4006.4 and does not owe a
variable-rate premium under Sec. 4006.3(b).
(1) Certain fully funded plans. A plan is described in this
paragraph if the plan had fewer than 500 participants on the
[[Page 34019]]
last day of the plan year preceding the premium payment year, and an
enrolled actuary certifies in accordance with the Premium Payment
Package that, as of that date, the plan had no unfunded vested benefits
(valued at the interest rate prescribed in Sec. 4006.4(b)(1)).
(2) Plans without vested benefit liabilities. A plan is described
in this paragraph if it did not have any participants with vested
benefits as of the last day of the plan year preceding the premium
payment year, and the plan administrator so certifies in accordance
with the Premium Payment Package.
(3) Section 412(i) plans. A plan is described in this paragraph if
the plan was a plan described in section 412(i) of the Code and the
regulations thereunder at all times during the plan year preceding the
premium payment year and the plan administrator so certifies, in
accordance with the Premium Payment Package. If the plan is a new plan
or a newly-covered plan, the certification under this paragraph shall
be made as of the due date for the premium under Sec. 4007.11(c) and
shall certify to the plan's status at all times during the premium
payment year through such due date.
(4) Plans terminating in standard terminations. The exemption for a
plan described in this paragraph is conditioned upon the plan's making
a final distribution of assets in a standard termination. If a plan is
ultimately unable to do so, the exemption is revoked and all variable-
rate amounts not paid pursuant to this exemption are due retroactive to
the applicable due date(s). A plan is described in this paragraph if--
(i) The plan administrator has issued notices of intent to
terminate the plan in a standard termination in accordance with section
4041(a)(2) of ERISA; and
(ii) The proposed termination date set forth in the notice of
intent to terminate is on or before the last day of the plan year
preceding the premium payment year.
(5) Plans at full funding limit. A plan is described in this
paragraph if, on or before the earlier of the due date for payment of
the variable-rate portion of the premium under Sec. 4007.11 or the date
that portion is paid, the plan's contributing sponsor or contributing
sponsors made contributions to the plan for the plan year preceding the
premium payment year in an amount not less than the full funding
limitation for such preceding plan year under section 302(c)(7) of
ERISA and section 412(c)(7) of the Code (determined in accordance with
paragraphs (a)(5)(i) and (a)(5)(ii) of this section). In order for a
plan to qualify for this exemption, an enrolled actuary must certify
that the plan has met the requirements of this paragraph.
(i) Determination of full funding limitation. The determination of
whether contributions for the preceding plan year were in an amount not
less than the full funding limitation under section 302(c)(7) of ERISA
and section 412(c)(7) of the Code for such preceding plan year shall be
based on the methods of computing the full funding limitation,
including actuarial assumptions and funding methods, used by the plan
(provided such assumptions and methods met all requirements, including
the requirements for reasonableness, under section 302 of ERISA and
section 412 of the Code) with respect to such preceding plan year. Plan
assets shall not be reduced by the amount of any credit balance in the
plan's funding standard account.
(ii) Rounding of de minimis amounts. Any contribution that is
rounded down to no less than the next lower multiple of one hundred
dollars (in the case of full funding limitations up to one hundred
thousand dollars) or to no less than the next lower multiple of one
thousand dollars (in the case of full funding limitations above one
hundred thousand dollars) shall be deemed for purposes of this
paragraph to be in an amount equal to the full funding limitation.
(b) Special rule for determining vested benefits for certain large
plans. With respect to a plan that had 500 or more participants on the
last day of the plan year preceding the premium payment year, if an
enrolled actuary determines pursuant to Sec. 4006.4(a) that the
actuarial value of plan assets equals or exceeds the value of all
benefits accrued under the plan (valued at the interest rate prescribed
in Sec. 4006.4(b)(1)), the enrolled actuary need not determine the
value of the plan's vested benefits, and may instead report in the
Premium Payment Package the value of the accrued benefits.
(c) Special rule for determining unfunded vested benefits for plans
terminating in distress or involuntary terminations. A plan described
in this paragraph may determine its unfunded vested benefits by using
the special alternative calculation method set forth in this paragraph.
A plan is described in this paragraph if it has issued notices of
intent to terminate in a distress termination in accordance with
section 4041(a)(2) of ERISA with a proposed termination date on or
before the last day of the plan year preceding the premium payment
year, or if the PBGC has instituted proceedings to terminate the plan
in accordance with section 4042 of ERISA and has sought a termination
date on or before the last day of the plan year preceding the premium
payment year. Pursuant to this paragraph, a plan shall determine its
unfunded vested benefits in accordance with the alternative calculation
method in Sec. 4006.4(c), except that--
(1) The calculation shall be based on the Form 5500, Schedule B,
for the plan year which includes (in the case of a distress
termination) the proposed termination date or (in the case of an
involuntary termination) the termination date sought by the PBGC, or,
if no Schedule B is filed for that plan year, on the Schedule B for the
immediately preceding plan year;
(2) All references in Sec. 4006.4(c) and Sec. 4006.4(d) to the
first day of the plan year preceding the premium payment year shall be
deemed to refer to the first day of the plan year for which the
Schedule B was filed;
(3) The value of the sum of the plan's current liability as of the
first day of the plan year preceding the premium payment year for
vested benefits of active and terminated vested participants not in pay
status, computed in accordance with section 302(d)(7) of ERISA and
section 412(l)(7) of the Code, shall be adjusted (in lieu of the
adjustment required by Sec. 4006.4(c)(1)) by multiplying that value by
the sum of 1 plus the product of .07 and the number of years (rounded
to the nearest hundredth of a year) between the date of the Schedule B
data and (in the case of a distress termination) the proposed
termination date or (in the case of an involuntary termination) the
termination date sought by the PBGC; and
(4) The exponent, ``Y,'' in the time adjustment formula of
Sec. 4006.4(c)(5) shall be deemed to equal the number of years (rounded
to the nearest hundredth of a year) between the date of the Schedule B
data and the last day of the plan year preceding the premium payment
year.
(d) Special determination date rule for new and newly-covered
plans. In the case of a new plan or a newly-covered plan, all
references in Secs. 4006.3, 4006.4, and paragraphs (a) and (b) of this
section to the last day of the plan year preceding the premium payment
year shall be deemed to refer to the first day of the premium payment
year or, if later, the date on which the plan became effective for
benefit accruals for future service, and for purposes of determining
the plan's premium, the number of plan participants, and (for a single-
employer plan) the amount of the plan's unfunded vested benefits and
the applicability of any exemption or special rule under
[[Page 34020]]
paragraph (a) or (b) of this section, shall be determined as of such
first day or later date.
(e) Special determination date rule for certain mergers and
spinoffs. (1) With respect to a plan described in paragraph (e)(2) of
this section, all references in Secs. 4006.3, 4006.4, and this section,
as applicable, to the last day of the plan year preceding the premium
payment year shall be deemed to refer to the first day of the premium
payment year.
(2) A plan is described in this paragraph (e)(2) if--
(i) The plan engages in a merger or spinoff that is not de minimis
pursuant to the regulations under section 414(l) of the Code (in the
case of single-employer plans) or pursuant to part 4231 of this chapter
(in the case of multiemployer plans), as applicable;
(ii) The merger or spinoff is effective on the first day of the
plan's premium payment year; and
(iii) The plan is the transferee plan in the case of a merger or
the transferor plan in the case of a spinoff.
(f) Special refund rule for certain short plan years. A plan
described in this paragraph (f) is entitled to a refund for a short
plan year. The amount of the refund will be determined by prorating the
premium for the short plan year by the number of months (treating a
part of a month as a month) in the short plan year. A plan is described
in this paragraph if--
(1) The plan is a new or newly-covered plan that becomes effective
for premium purposes on a date other than the first day of its first
plan year;
(2) The plan adopts an amendment changing its plan year, resulting
in a short plan year;
(3) The plan's assets are distributed pursuant to the plan's
termination, in which case the short plan year for purposes of
computing the amount of the refund under this paragraph shall be deemed
to end on the asset distribution date or, if later (in the case of a
single-employer plan), the date 30 days prior to the date the PBGC
receives the plan's post-distribution certification; or
(4) The plan is a single-employer plan and a trustee of the plan is
appointed pursuant to section 4042 of ERISA, in which case the short
plan year for purposes of computing the amount of the refund under this
paragraph shall be deemed to end on the date of appointment.
(g) Special rules for plans of regulated public utilities. (1) This
paragraph (g) applies to a premium payment year beginning before 1998
of a plan maintained by one or more contributing sponsors at least one
of which is a regulated public utility. For this purpose, a regulated
public utility is one that, as of the beginning of the premium payment
year, is described in section 7701(a)(33)(A)(i) of the Code and has not
begun to collect from utility customers rates that reflect the costs
incurred or projected to be incurred for additional premiums under
section 4006(a)(3)(E) of ERISA pursuant to final and nonappealable
determinations by all public utility commissions (or other authorities
having jurisdiction over the rates and terms of service by the
regulated public utility) that the costs are just and reasonable and
recoverable from customers of the regulated public utility.
(2) Limitation on variable-rate premium and required interest rate.
If every contributing sponsor of a plan described in paragraph (a) of
this section is a regulated public utility, then, notwithstanding the
provisions of Secs. 4006.3(b) and 4006.4(b)(1),--
(i) The variable-rate premium shall not be greater than $53
multiplied by the number of participants in the plan on the last day of
the plan year preceding the premium payment year; and
(ii) If the premium payment year begins after June 1997,
Sec. 4006.4(b)(1) shall be applied as if the applicable percentage
referred to therein were 80 percent.
(3) Proportional application of limitation rules. If a plan is
described in paragraph (g)(1) of this section but also has a
contributing sponsor that is not a regulated public utility and
participants who are not regulated public utility participants
(determined under any reasonable method consistently applied among
participants and from year to year), the limitations in paragraph
(g)(2) of this section shall be applied in proportion to the number of
regulated public utility participants in accordance with the Premium
Payment Package.
(4) Special variable-rate premium rule for certain small regulated
public utility plans paying maximum variable-rate premium. A plan whose
variable-rate premium is subject to the limitation described in
paragraph (g)(2)(i) of this section is not required to determine its
unfunded vested benefits under Sec. 4006.4 if--
(i) The number of participants required to be taken into account in
computing the plan's premium for the premium payment year is fewer than
500; and
(ii) The plan pays a variable-rate premium equal to $53 multiplied
by the number of participants in the plan on the last day of the plan
year preceding the premium payment year.
(5) Effect of omitted or inadequate information. The variable-rate
premium of a plan described in paragraph (g)(2) of this section may be
deemed to be $53 multiplied by the number of participants in the plan
on the last day of the plan year preceding the premium payment year
if--
(i) Any item or items necessary to establish the correct variable-
rate premium for the plan are omitted from the plan's premium filing;
or
(ii) In connection with an audit, the plan's records fail, in the
PBGC's judgment, to establish that the plan's unfunded vested benefits
were of the amount reported by the plan for the premium payment year.
PART 4007--PAYMENT OF PREMIUMS
Sec.
4007.1 Purpose and scope.
4007.2 Definitions.
4007.3 Filing requirement and forms.
4007.4 Filing address.
4007.5 Date of filing.
4007.6 Computation of time.
4007.7 Late payment interest charges.
4007.8 Late payment penalty charges.
4007.9 Coverage for guaranteed basic benefits.
4007.10 Recordkeeping requirements; PBGC audits.
4007.11 Due dates.
4007.12 Liability for single-employer premiums.
Authority: 29 U.S.C. 1302(b)(3), 1306, 1307.
Sec. 4007.1 Purpose and scope.
This part, which applies to all plans that are covered by title IV
of ERISA, provides procedures for paying the premiums imposed by
sections 4006 and 4007 of ERISA. (See part 4006 of this chapter for
premium rates and computational rules.)
Sec. 4007.2 Definitions.
(a) The following terms are defined in Sec. 4001.2 of this chapter:
Code, contributing sponsor, ERISA, insurer, IRS, multiemployer plan,
notice of intent to terminate, PBGC, plan, plan administrator, plan
year, and single-employer plan.
(b) For purposes of this part, the following terms are defined in
Sec. 4006.2 of this chapter: new plan, newly covered plan, participant,
premium payment year, and short plan year.
Sec. 4007.3 Filing requirement and forms.
The estimation, declaration, reconciliation and payment of premiums
shall be made using the forms prescribed by and in accordance with the
instructions in the PBGC annual Premium Payment Package. The plan
administrator of each covered plan shall
[[Page 34021]]
file the prescribed form or forms, and any premium payments due, no
later than the applicable due date specified in Sec. 4007.11.
Sec. 4007.4 Filing address.
Plan administrators shall file all forms required to be filed under
this part and all payments for premiums, interest, and penalties
required to be made under this part at the address specified in the
Premium Payment Package.
Sec. 4007.5 Date of filing.
(a) Any form required to be filed under this part and any payment
required to be made under this part shall be deemed to have been filed
or made on the date on which it is mailed.
(b) A form or payment shall be presumed to have been mailed on the
date on which it is postmarked by the United States Postal Service, or
three days prior to the date on which it is received by the PBGC if it
does not contain a legible United States Postal Service postmark.
Sec. 4007.6 Computation of time.
In computing any period of time prescribed by this part, the day of
the act, event, or default from which the designated period of time
begins to run is not counted. The last day of the period so computed
shall be included, unless it is a Saturday, Sunday, or federal holiday,
in which event the period runs until the end of the next day that is
not a Saturday, Sunday, or federal holiday. For purposes of computing
late payment interest charges under Sec. 4007.7 and late payment
penalty charges under Sec. 4007.8, a Saturday, Sunday or federal
holiday referred to in the previous sentence shall be included.
Sec. 4007.7 Late payment interest charges.
(a) If any premium payment due under this part is not paid by the
due date prescribed for such payment by Sec. 4007.11, an interest
charge will accrue on the unpaid amount at the rate imposed under
section 6601(a) of the Code for the period from the date payment is due
to the date payment is made. Late payment interest charges are
compounded daily.
(b) When PBGC issues a bill for premium payments necessary to
reconcile the premiums paid with the actual premium due, interest will
be accrued on the unpaid premium until the date of the bill if paid no
later than 30 days after the date of such bill. If the bill is not paid
within the 30-day period following the date of such bill, interest will
continue to accrue throughout such 30-day period and thereafter, until
the date paid.
(c) PBGC bills for interest assessed under this section will be
deemed paid when due if paid no later than 30 days after the date of
such bills. Otherwise, interest will accrue in accordance with
paragraph (a) of this section on the amount of the bill from the date
of the bill until the date of payment.
Sec. 4007.8 Late payment penalty charges.
(a) Penalty charge. If any premium payment due under this part is
not paid by the due date prescribed for such payment by Sec. 4007.11,
the PBGC will, unless a waiver is granted pursuant to paragraph (b) of
this section, assess a late payment charge (not to exceed 100% of the
unpaid premium) equal to the greater of--
(i) 5% per month (or fraction thereof) of the unpaid premiums; or
(ii) $25.
(b) Waiver of penalty charge. The late payment penalty charge will
be waived, in whole or in part--
(1) With respect to any premium payment made within 60 days after
the due date prescribed for such payment in Sec. 4007.11, if, before
such due date, the PBGC grants a waiver upon a showing of substantial
hardship arising from the timely payment of the premium and a showing
that the premium will be paid within such 60-day period;
(2) If the PBGC grants a waiver based on any other demonstration of
good cause;
(3) If the PBGC, on its own motion, waives the application of
paragraph (a) of this section;
(4) With respect to any premium payment (excluding any variable-
rate premium under Sec. 4006.3(b)), if a plan that is required to make
a reconciliation filing described in Sec. 4007.11(b)(2)(iii)--
(i) Paid at least 90 percent of the flat-rate premium due for the
premium payment year by the due date specified in
Sec. 4007.11(b)(2)(i); or
(ii) Paid by the due date specified in Sec. 4007.11(b)(2)(i) an
amount equal to the premium that would be due for the premium payment
year, computed using the flat per capita premium rate for the premium
payment year and the participant count upon which the prior year's
premium was based; and
(iii) Pays 100 percent of the flat-rate premium due for the premium
payment year under Sec. 4006.3 on or before the due date for the
reconciliation filing under Sec. 4007.11(b)(2)(iii); or
(5) With respect to any PBGC bills for the premium payment
necessary to reconcile the premium paid with the actual premium due, if
such bills are paid no later than 30 days after the date of such bills.
Sec. 4007.9 Coverage for guaranteed basic benefits.
(a) The failure by a plan administrator to pay the premiums due
under this part will not result in that plan's loss of coverage for
basic benefits guaranteed under sections 4022(a) or 4022A(a) of ERISA.
(b) The payment of the premiums imposed by this part will not
result in coverage for basic benefits guaranteed under sections 4022(a)
or 4022A(a) of ERISA for plans not covered under title IV of ERISA.
Sec. 4007.10 Recordkeeping requirements; PBGC audits.
(a) Retention of records to support premium payments. All plan
records, including calculations and other data prepared by an enrolled
actuary or, for a plan described in section 412(i) of the Code, by the
insurer from which the insurance contracts are purchased, that are
necessary to support or to validate premium payments under this part
shall be retained by the plan administrator for a period of six years
after the premium due date. Records that must be retained pursuant to
this paragraph include, but are not limited to, records that establish
the number of plan participants and that reconcile the calculation of
the plan's unfunded vested benefits with the actuarial valuation upon
which the calculation was based. Records retained pursuant to this
paragraph shall be made available to the PBGC upon request for
inspection and photocopying.
(b) PBGC audit. Premium payments under this part are subject to
audit by the PBGC. If, upon audit, the PBGC determines that a premium
due under this part was underpaid, the late payment interest charges
under Sec. 4007.7 and the late payment penalty charges under
Sec. 4007.8 shall apply to the unpaid balance from the premium due date
to the date of payment. In determining the premium due, if, in the
judgment of the PBGC, the plan's records fail to establish the number
of plan participants with respect to whom premiums were required for
any premium payment year, the PBGC may rely on data it obtains from
other sources (including the IRS and the Department of Labor) for
presumptively establishing the number of plan participants for premium
computation purposes.
Sec. 4007.11 Due dates.
(a) In general. The premium filing due date for small plans is
prescribed in paragraph (a)(1) of this section and the premium filing
due dates for large plans are prescribed in paragraph (a)(2) of this
section.
[[Page 34022]]
(1) Plans with fewer than 500 participants. If the plan has fewer
than 500 participants, as determined under paragraph (b) of this
section, the due date is the fifteenth day of the eighth full calendar
month following the month in which the plan year began.
(2) Plans with 500 or more participants. If the plan has 500 or
more participants, as determined under paragraph (b) of this section--
(i) The due date for the flat-rate premium required by
Sec. 4006.3(a) is the last day of the second full calendar month
following the close of the plan year preceding the premium payment
year; and
(ii) The due date for the variable-rate premium required by
Sec. 4006.3(b) for single-employer plans is the fifteenth day of the
eighth full calendar month following the month in which the premium
payment year begins.
(iii) If the number of plan participants on the last day of the
plan year preceding the premium payment year is not known by the date
specified in paragraph (a)(2)(i) of this section, a reconciliation
filing (on the form prescribed by this part) and any required premium
payment or request for refund shall be made by the date specified in
paragraph (a)(2)(ii) of this section.
(3) Plans that change plan years. For any plan that changes its
plan year, the premium form or forms and payment or payments for the
short plan year shall be filed by the applicable due date or dates
specified in paragraphs (a)(1), (a)(2), or (c) of this section. For the
plan year that follows a short plan year, the due date or dates for the
premium forms and payments shall be, with respect to each such due
date, the later of--
(i) The applicable due date or dates specified in paragraph (a)(1)
or (a)(2) of this section; or
(ii) 30 days after the date on which the amendment changing the
plan year was adopted.
(b) Participant count rule for purposes of determining filing due
dates. For purposes of determining under paragraph (a) of this section
whether a plan has fewer than 500 participants, or 500 or more
participants, the plan administrator shall use--
(1) For a single-employer plan, the number of participants for whom
premiums were payable for the plan year preceding the premium payment
year, or
(2) For a multiemployer plan,--
(i) If the premium payment year is the plan's second plan year, the
first day of the first plan year; or
(ii) If the premium payment year is the plan's third or a
subsequent plan year, the last day of the second preceding plan year.
(c) Due dates for new and newly covered plans. Notwithstanding
paragraph (a) of this section, the premium form and all premium
payments due for the first plan year of coverage of any new plan or
newly covered plan shall be filed on or before the latest of--
(1) The fifteenth day of the eighth full calendar month following
the month in which the plan year began or, if later, in which the plan
became effective for benefit accruals for future service;
(2) 90 days after the date of the plan's adoption; or
(3) 90 days after the date on which the plan became covered by
title IV of ERISA.
(d) Continuing obligation to file. The obligation to file the form
or forms prescribed by this part and to pay any premiums due continues
through the plan year in which all plan assets are distributed pursuant
to a plan's termination or in which a trustee is appointed under
section 4042 of ERISA, whichever occurs earlier. The entire premium
computed under this part is due, irrespective of whether the plan is
entitled to a refund for a short plan year pursuant to Sec. 4006.5(f).
(e) Improper filings. Any form not filed in accordance with this
part, not filed in accordance with the instructions in the Premium
Payment Package, not accompanied by the required premium payment, or
otherwise incomplete, may, in the discretion of the PBGC, be returned
with any payment accompanying the form to the plan administrator, and
such payment shall be treated as not having been made.
Sec. 4007.12 Liability for single-employer premiums.
(a) The designation under this part of the plan administrator as
the person required to file the applicable forms and to submit the
premium payment for a single-employer plan is a procedural requirement
only and does not alter the liability for premium payments imposed by
section 4007 of ERISA. Pursuant to section 4007(e) of ERISA, both the
plan administrator and the contributing sponsor of a single-employer
plan are liable for premium payments, and, if the contributing sponsor
is a member of a controlled group, each member of the controlled group
is jointly and severally liable for the required premiums. Any entity
that is liable for required premiums is also liable for any interest
and penalties assessed with respect to such premiums.
(b) For any plan year in which a plan administrator issues
(pursuant to section 4041(a)(2) of ERISA) notices of intent to
terminate in a distress termination under section 4041(c) of ERISA or
the PBGC initiates a termination proceeding under section 4042 of
ERISA, and for each plan year thereafter, the obligation to pay the
premiums (and any interest or penalties thereon) imposed by ERISA and
this part for a single-employer plan shall be an obligation solely of
the contributing sponsor and the members of its controlled group, if
any.
(Approved by the Office of Management and Budget under control
number 1212-0009)
PART 4010--ANNUAL FINANCIAL AND ACTUARIAL INFORMATION REPORTING
Sec.
4010.1 Purpose and scope.
4010.2 Definitions.
4010.3 Filing requirement.
4010.4 Filers.
4010.5 Information year.
4010.6 Information to be filed.
4010.7 Identifying information.
4010.8 Plan actuarial information.
4010.9 Financial information.
4010.10 Due date and filing with the PBGC.
4010.11 Waivers and extensions.
4010.12 Confidentiality of information submitted.
4010.13 Penalties.
4010.14 OMB control number.
Authority: 29 U.S.C. 1302(b)(3); 29 U.S.C. 1310.
Sec. 4010.1 Purpose and scope.
This part prescribes the requirements for annual filings with the
PBGC under section 4010 of ERISA. This part applies to filers for any
information year ending on or after December 31, 1995.
Sec. 4010.2 Definitions.
The following terms are defined in Sec. 4001.2 of this chapter:
benefit liabilities, Code, contributing sponsor, controlled group,
ERISA, fair market value, IRS, PBGC, person, plan, and plan year.
In addition, for purposes of this part:
Exempt entity means a person who does not have to file information
and about whom information does not have to be filed, as described in
Sec. 4010.4(d) of this part.
Exempt plan means a plan about which actuarial information does not
have to be filed, as described in Sec. 4010.8(c) of this part.
Fair market value of the plan's assets means the fair market value
of the plan's assets at the end of the plan year ending within the
filer's information year (determined without regard to any
contributions receivable).
[[Page 34023]]
Filer means a person who is required to file reports, as described
in Sec. 4010.4 of this part.
Fiscal year means, with respect to a person, the person's annual
accounting period or, if the person has not adopted a closing date, the
calendar year.
Information year means the year determined under Sec. 4010.5 of
this part.
Sec. 4010.3 Filing requirement.
(a) In general. Except as provided in Sec. 4010.8(c) (relating to
exempt plans) and except where waivers have been granted under
Sec. 4010.11 of this part, each filer shall submit to the PBGC
annually, on or before the due date specified in Sec. 4010.10, all
information specified in Sec. 4010.6(a) with respect to all members of
a controlled group and all plans maintained by members of a controlled
group.
(b) Single controlled group submission. Any filer or other person
may submit the information specified in Sec. 4010.6(a) on behalf of one
or more members of a filer's controlled group. If a person other than a
filer submits the information, the submission must also include a
written power of attorney signed by a filer authorizing the person to
act on behalf of one or more filers.
Sec. 4010.4 Filers.
(a) General. A contributing sponsor of a plan and each member of
the contributing sponsor's controlled group is a filer with respect to
an information year (unless exempted under paragraph (d) of this
section) if--
(1) the aggregate unfunded vested benefits of all plans (including
any exempt plans) maintained by the members of the contributing
sponsor's controlled group exceed $50 million (disregarding those plans
with no unfunded vested benefits);
(2) any member of a controlled group fails to make a required
installment or other required payment to a plan and, as a result, the
conditions for imposition of a lien described in section 302(f)(1) (A)
and (B) of ERISA or section 412(n)(1) (A) and (B) of the Code have been
met during the information year, and the required installment or other
required payment is not made within ten days after its due date; or
(3) any plan maintained by a member of a controlled group has been
granted one or more minimum funding waivers under section 303 of ERISA
or section 412(d) of the Code totaling in excess of $1 million that, as
of the end of the plan year ending within the information year, are
still outstanding (determined in accordance with paragraph (c) of this
section).
(b) Unfunded vested benefits--(1) General. Except as provided in
paragraph (b)(2) of this section, for purposes of the $50 million test
in paragraph (a)(1) of this section, the value of a plan's unfunded
vested benefits is determined at the end of the plan year ending within
the filer's information year in accordance with section
4006(a)(3)(E)(iii) of ERISA and Sec. 4006.4 of this chapter (without
reference to the exemptions and special rules under Sec. 4006.5).
(2) Optional assumptions. Prior to the first information year in
which the mortality assumptions prescribed under section
302(d)(7)(C)(ii)(II) of ERISA apply to all of the plans maintained by a
controlled group, the value of unfunded vested benefits for a plan may
be determined by substituting for the respective assumptions used under
paragraph (b)(1) of this section (but not using the alternative
calculation method under Sec. 4006.4(c) of this chapter) all of the
following assumptions:
(i) an interest rate equal to 100% of the annual yield for 30-year
Treasury constant maturities (as reported in Federal Reserve
Statistical Release G.13 and H.15) for the last full calendar month in
the plan year;
(ii) the fair market value of the plan's assets; and
(iii) the mortality tables described in section 302(d)(7)(C)(ii)(I)
of ERISA or section 412(l)(7)(C)(ii)(I) of the Code; provided that for
any plan year ending on or after the effective date of an amendment
changing the mortality assumptions used to value benefits to be paid as
annuities in trusteed plans under part 4044 of this chapter, those
amended mortality assumptions shall be used.
(c) Outstanding waiver. Before the end of the statutory
amortization period, a minimum funding waiver for a plan is considered
outstanding unless--
(1) a credit balance exists in the funding standard account
(described in section 302(b) of ERISA and section 412(b) of the Code)
that is no less than the outstanding balance of all waivers for the
plan;
(2) a waiver condition or contractual obligation requires that a
credit balance as described in paragraph (c)(1) continue to be
maintained as of the end of each plan year during the remainder of the
statutory amortization period for the waiver; and
(3) no portion of any credit balance described in paragraph (c)(1)
is used to make any required installment under section 302(e) of ERISA
or section 412(m) of the Code for any plan year during the remainder of
the statutory amortization period.
(d) Exempt entities. A person is an exempt entity if the person--
(1) is not a contributing sponsor of a plan (other than an exempt
plan);
(2) has revenue for its fiscal year ending within the controlled
group's nformation year that is five percent or less of the controlled
group's revenue for the fiscal year(s) ending within the information
year;
(3) has annual operating income for the fiscal year ending within
the controlled group's information year that is no more than the
greater of--
(i) five percent of the controlled group's annual operating income
for the fiscal year(s) ending within the information year, or
(ii) $5 million; and
(4) has net assets at the end of the fiscal year ending within the
controlled group's information year that is no more than the greater
of--
(i) five percent of the controlled group's net assets at the end of
the fiscal year(s) ending within the information year, or
(ii) $5 million.
Sec. 4010.5 Information year.
(a) Determinations based on information year. An information year
is used under this part to determine which persons are filers
(Sec. 4010.4), what information a filer must submit (Secs. 4010.6-
4010.9), whether a plan is an exempt plan (Sec. 4010.8(c)), and the due
date for submitting the information (Sec. 4010.10(a)).
(b) General. Except as provided in paragraph (c) of this section, a
person's information year shall be the fiscal year of the person. A
filer is not required to change its fiscal year or the plan year of a
plan, to report financial information for any accounting period other
than an existing fiscal year, or to report actuarial information for
any plan year other than an existing plan year.
(c) Controlled group members with different fiscal years-- (1) Use
of calendar year. If members of a controlled group (disregarding any
exempt entity) report financial information on the basis of different
fiscal years, the information year shall be the calendar year.
(2) Example. Filers A and B are members of the same controlled
group. Filer A has a July 1 fiscal year, and filer B has an October 1
fiscal year. The information year is the calendar year. Filer A's
financial information with respect to its fiscal year ending June 30,
1996, and filer B's financial information with respect to its fiscal
year ending September 30, 1996, must be submitted to the PBGC following
the end of the 1996 calendar year (the calendar year in
[[Page 34024]]
which those fiscal years end). If filer B were an exempt entity, the
information year would be filer A's July 1 fiscal year.
Sec. 4010.6 Information to be filed.
(a) General. A filer must submit the information specified in
Sec. 4010.7 (identifying information), Sec. 4010.8 (plan actuarial
information) and Sec. 4010.9 (financial information) of this part with
respect to each member of the filer's controlled group and each plan
maintained by any member of the controlled group.
(b) Additional information. By written notification, the PBGC may
require any filer to submit additional actuarial or financial
information that is necessary to determine plan assets and liabilities
for any period through the end of the filer's information year, or the
financial status of a filer for any period through the end of the
filer's information year. The information must be submitted within ten
days after the date of the written notification or by a different time
specified therein.
(c) Previous submissions. If any required information has been
previously submitted to the PBGC, a filer may incorporate this
information into the required submission by referring to the previous
submission.
Sec. 4010.7 Identifying information.
(a) Filers. Each filer is required to provide the following
identifying information with respect to each member of the controlled
group (excluding exempt entities)--
(1) the name, address, and telephone number of each member of the
controlled group and the legal relationships of each (for example,
parent, subsidiary); and
(2) the nine-digit Employer Identification Number (EIN) assigned by
the IRS to each member (or if there is no EIN for a member, an
explanation).
(b) Plans. Each filer is required to provide the following
identifying information with respect to each plan (including exempt
plans) maintained by any member of the controlled group (including
exempt entities)--
(1) the name of each plan;
(2) the EIN and the three-digit Plan Number (PN) assigned by the
contributing sponsor to each plan (or if there is no EIN or PN for a
plan, an explanation); and
(3) if the EIN or PN of a plan has changed since the beginning of
the filer's information year, the previous EIN or PN and an
explanation.
Sec. 4010.8 Plan actuarial information.
(a) Required information. For each plan (other than an exempt plan)
maintained by any member of the filer's controlled group, each filer is
required to provide the following actuarial information--
(1) the fair market value of the plan's assets;
(2) the value of the plan's benefit liabilities (determined in
accordance with paragraph (d) of this section) at the end of the plan
year ending within the filer's information year;
(3) a copy of the actuarial valuation report for the plan year
ending within the filer's information year that contains or is
supplemented by the following information--
(i) each amortization base and related amortization charge or
credit to the funding standard account (as defined in section 302 (b)
of ERISA or section 412 (b) of the Code) for that plan year (excluding
the amount considered contributed to the plan as described in section
302(b)(3)(A) of ERISA or section 412(b)(3)(A) of the Code),
(ii) the itemized development of the additional funding charge
payable for that plan year pursuant to section 412(l) of the Code,
(iii) the minimum funding contribution and the maximum deductible
contribution for that plan year,
(iv) the actuarial assumptions and methods used for that plan year
for purposes of section 302(b) and (d) of ERISA or section 412(b) and
(l) of the Code (and any change in those assumptions and methods since
the previous valuation and justifications for any change), and
(v) a summary of the principal eligibility and benefit provisions
on which the valuation of the plan was based (and any changes to those
provisions since the previous valuation), along with descriptions of
any benefits not included in the valuation, any significant events that
occurred during that plan year, and the plan's early retirement
factors; and
(4) a written certification by an enrolled actuary that, to the
best of his or her knowledge and belief, the actuarial information
submitted is true, correct, and complete and conforms to all applicable
laws and regulations, provided that this certification may be qualified
in writing, but only to the extent the qualification(s) are permitted
under 26 CFR Sec. 301.6059-1(d).
(b) Alternative compliance for plan actuarial information. If any
of the information specified in paragraph (a)(3) of this section is not
available by the date specified in Sec. 4010.10(a), a filer may satisfy
the requirement to provide such information by--
(1) including a statement, with the material that is submitted to
the PBGC, that the filer will file the unavailable information by the
alternative due date specified in Sec. 4010.10(b) of this part, and
(2) filing such information (along with a certification by an
enrolled actuary under paragraph (a)(4) of this section) with the PBGC
by that alternative due date.
(c) Exempt plan. The actuarial information specified in this
section is not required with respect to a plan that, as of the end of
the plan year ending within the filer's information year, has fewer
than 500 participants or has benefit liabilities (determined in
accordance with paragraph (d) of this section) equal to or less than
the fair market value of the plan's assets, provided that the plan--
(1) has received, on or within ten days after their due dates, all
required installments or other payments required to be made during the
information year under section 302 of ERISA or section 412 of the Code;
and
(2) has no minimum funding waivers outstanding (as described in
Sec. 4010.4(c) of this part) as of the end of the plan year ending
within the information year.
(d) Value of benefit liabilities. The value of a plan's benefit
liabilities at the end of a plan year shall be determined using the
plan census data described in paragraph (d)(1) of this section and the
actuarial assumptions and methods described in paragraph (d)(2) or,
where applicable, (d)(3) of this section.
(1) Census data.
(i) Census data period. Plan census data shall be determined (for
all plans for any information year) either as of the end of the plan
year or as of the beginning of the next plan year.
(ii) Projected census data. If actual plan census data is not
available, a plan may use a projection of plan census data from a date
within the plan year. The projection must be consistent with
projections used to measure pension obligations of the plan for
financial statement purposes and must give a result appropriate for the
end of the plan year for these obligations. For example, adjustments to
the projection process will be required where there has been a
significant event (such as a plan amendment or a plant shutdown) that
has not been reflected in the projection data.
(2) Actuarial assumptions and methods. The value of benefit
liabilities shall be determined using the assumptions and methods
applicable to the valuation of benefits to be paid as annuities in
trusteed plans terminating at the end of the plan year (as prescribed
[[Page 34025]]
in Secs. 4044.51 through 4044.57 of this chapter).
(3) Special actuarial assumptions for exempt plan determination.
Solely for purposes of determining whether a plan is an exempt plan,
the value of benefit liabilities may be determined by substituting for
the retirement age assumptions in paragraph (d)(2) the retirement age
assumptions used by the plan for that plan year for purposes of section
302(d) of ERISA or section 412(l) of the Code.
Sec. 4010.9 Financial information.
(a) General. Except as provided in this section, each filer is
required to provide the following financial information for each
controlled group member (other than an exempt entity)--
(1) audited financial statements for the fiscal year ending within
the information year (including balance sheets, income statements, cash
flow statements, and notes to the financial statements);
(2) if audited financial statements are not available by the date
specified in Sec. 4010.10(a), unaudited financial statements for the
fiscal year ending within the information year; or
(3) if neither audited nor unaudited financial statements are
available by the date specified in Sec. 4010.10(a), copies of federal
tax returns for the tax year ending within the information year.
(b) Consolidated financial statements. If the financial information
of a controlled group member is combined with the information of other
group members in consolidated financial statements, a filer may provide
the following financial information in lieu of the information required
in paragraph (a) of this section--
(1) the audited consolidated financial statements for the filer's
information year or, if the audited consolidated financial statements
are not available by the date specified in Sec. 4010.10(a), unaudited
consolidated financial statements for the fiscal year ending within the
information year; and
(2) for each controlled group member included in the consolidated
financial statements that is a contributing sponsor of a plan (other
than an exempt plan), the contributing sponsor's revenues and operating
income for the information year, and net assets at the end of the
information year.
(c) Subsequent submissions. If unaudited financial statements are
submitted as provided in paragraph (a)(2) or (b)(1) of this section,
audited financial statements must thereafter be filed within 15 days
after they are prepared. If federal tax returns are submitted as
provided in paragraph (a)(3) of this section, audited and unaudited
financial statements must thereafter be filed within 15 days after they
are prepared.
(d) Submission of public information. If any of the financial
information required by paragraphs (a) through (c) of this section is
publicly available, the filer, in lieu of submitting such information
to the PBGC, may include a statement with the other information that is
submitted to the PBGC indicating when such financial information was
made available to the public and where the PBGC may obtain it. For
example, if the controlled group member has filed audited financial
statements with the Securities and Exchange Commission, it need not
file the financial statements with PBGC but instead can identify the
SEC filing as part of its submission under this part.
(e) Inclusion of information about non-filers and exempt entities.
Consolidated financial statements provided pursuant to paragraph (b)(1)
of this section may include financial information of persons who are
not controlled group members (e.g., joint ventures) or are exempt
entities.
Sec. 4010.10 Due date and filing with the PBGC.
(a) Due date. Except as permitted under paragraph (b) of this
section, a filer shall file the information required under this part
with the PBGC on or before the 105th day after the close of the filer's
information year.
(b) Alternative due date. A filer that includes the statement
specified in Sec. 4010.8(b)(1) with its submission to the PBGC by the
date specified in paragraph (a) of this section must submit the
actuarial information specified in Sec. 4010.8(b)(2) within 15 days
after the deadline for filing the plan's annual report (Form 5500
series) for the plan year ending within the filer's information year
(see Sec. 2520.104a-5(a)(2) of this title).
(c) How to file. Requests and information may be delivered by mail,
by delivery service, by hand, or by any other method acceptable to the
PBGC, to: Corporate Finance and Negotiations Department, Pension
Benefit Guaranty Corporation, 1200 K Street, N.W., Washington, DC
20005-4026.
(d) Date when information filed. Information filed under this part
is considered filed--
(1) on the date of the United States postmark stamped on the cover
in which the information is mailed, if--
(i) the postmark was made by the United States Postal Service; and
(ii) the document was mailed postage prepaid, properly addressed to
the PBGC; or
(2) if the conditions stated in paragraph (d)(1) of this section
are not met, on the date it is received by the PBGC. Information
received on a weekend or Federal holiday or after 5:00 p.m. on a
weekday is considered filed on the next regular business day.
(e) Computation of time. In computing any period of time under this
part, the day of the act or event from which the designated period of
time begins to run shall not be included. The last day of the period so
computed shall be included, unless it is a weekend or Federal holiday,
in which event the period runs until the end of the next day that is
not a weekend or Federal holiday.
Sec. 4010.11 Waivers and extensions.
The PBGC may waive the requirement to submit information with
respect to one or more filers or plans or may extend the applicable due
date or dates specified in Sec. 4010.10 of this part. The PBGC will
exercise this discretion in appropriate cases where it finds convincing
evidence supporting a waiver or extension; any waiver or extension may
be subject to conditions. A request for a waiver or extension must be
filed in writing with the PBGC at the address provided in
Sec. 4010.10(c) no later than 15 days before the applicable date
specified in Sec. 4010.10 of this part, and must state the facts and
circumstances on which the request is based.
Sec. 4010.12 Confidentiality of information submitted.
In accordance with Sec. 4901.21(a)(3) of this chapter and section
4010(c) of ERISA, any information or documentary material that is not
publicly available and is submitted to the PBGC pursuant to this part
shall not be made public, except as may be relevant to any
administrative or judicial action or proceeding or for disclosures to
either body of Congress or to any duly authorized committee or
subcommittee of the Congress.
Sec. 4010.13 Penalties.
If all of the information required under this part is not provided
within the specified time limit, the PBGC may assess a separate penalty
under section 4071 of ERISA against the filer and each member of the
filer's controlled group (other than an exempt entity) of up to $1,000
a day for each day that the failure continues. The PBGC may also pursue
other equitable or legal remedies available to it under the law.
[[Page 34026]]
Sec. 4010.14 OMB control number.
The collection of information requirements contained in this part
have been approved by the Office of Management and Budget under OMB
Control Number 1212-0049.
PART 4011--DISCLOSURE TO PARTICIPANTS
Sec.
4011.1 Purpose and scope.
4011.2 Definitions.
4011.3 Notice requirement.
4011.4 Small plan rules.
4011.5 Exemption for new and newly-covered plans.
4011.6 Mergers, consolidations, and spinoffs.
4011.7 Persons entitled to receive notice.
4011.8 Time of notice.
4011.9 Manner of issuance of notice.
4011.10 Form of notice.
4011.11 OMB control number.
Appendix A to Part 4011--Model Participant Notice. Appendix B to Part
4011--Table of maximum Guaranteed Benefits.
Authority: 29 U.S.C. 1302(b)(3), 1311.
Sec. 4011.1 Purpose and scope.
This part prescribes rules and procedures for complying with the
requirements of section 4011 of ERISA. This part applies for any plan
year beginning on or after January 1, 1995, with respect to any single-
employer plan that is covered by section 4021 of ERISA.
Sec. 4011.2 Definitions.
The following terms are defined in Sec. 4001.2 of this chapter:
contributing sponsor, employer, ERISA, normal retirement age, PBGC,
person, plan, plan administrator, plan year, and single-employer plan.
In addition, for purposes of this part:
Participant has the meaning in Sec. 4041.2 of this chapter.
Participant Notice means the notice required pursuant to section
4011 of ERISA and this part.
Sec. 4011.3 Notice requirement.
(a) General. Except as otherwise provided in this part, the plan
administrator of a plan must provide a Participant Notice for a plan
year if a variable rate premium is payable for the plan under section
4006(a)(3)(E) of ERISA and part 4006 of this chapter for that plan
year, unless, for that plan year or for the prior plan year, the plan
meets the Deficit Reduction Contribution (``DRC'') Exception Test in
paragraph (b) of this section. The DRC Exception Test may be applied
using the Small Plan DRC Exception Test rules in Sec. 4011.4(b), where
applicable.
(b) DRC Exception Test--(1) Basic rule. A plan meets the DRC
Exception Test for a plan year if it is exempt from the requirements of
section 302(d) of ERISA for that plan year by reason of section
302(d)(9), without regard to the small plan exemption in section
302(d)(6)(A).
(2) 1994 plan year. A plan satisfies the DRC Exception Test for the
1994 plan year if, for any two of the plan years beginning in 1992,
1993, and 1994 (whether or not consecutive), the plan satisfies any
requirement of section 302(d)(9)(D)(i) of ERISA.
(c) Penalties for non-compliance. If a plan administrator fails to
provide a Participant Notice within the specified time limit or omits
material information from a Participant Notice, the PBGC may assess a
penalty under section 4071 of ERISA of up to $1,000 a day for each day
that the failure continues.
Sec. 4011.4 Small plan rules.
(a) 1995 plan year exemption. A plan that is exempt from the
requirements of section 302(d) of ERISA for the 1994 or 1995 plan year
by reason of section 302(d)(6)(A) is exempt from the Participant Notice
requirement for the 1995 plan year.
(b) Small Plan DRC Exception Test. In determining whether the
Participant Notice requirement applies for a plan year beginning after
1995, the plan administrator of a plan that is exempt from the
requirements of section 302(d) of ERISA by reason of section
302(d)(6)(A) for the plan year being tested may use any one or more of
the following rules in determining whether the plan meets the DRC
Exception Test for that plan year:
(1) Use of Schedule B data. For any plan year for which the plan is
exempt from the requirements of section 302(d) of ERISA by reason of
section 302(d)(6)(A), provided both of the following adjustments are
made--
(i) The market value of the plan's assets as of the beginning of
the plan year (as required to be reported on Form 5500, Schedule B) may
be substituted for the actuarial value of the plan's assets as of the
valuation date; and
(ii) The plan's current liability for all participants' total
benefits as of the beginning of the plan year (as required to be
reported on Form 5500, Schedule B) may be substituted for the plan's
current liability as of the valuation date.
(2) Pre-1995 plan year 90 percent test. A plan that is exempt from
the requirements of section 302(d) of ERISA for a pre-1995 plan year by
reason of section 302(d)(6)(A) satisfies the requirements of section
302(d)(9)(D)(i) for that pre-1995 plan year if the ratio of its assets
to its current liability for that plan year is at least 90 percent. For
this purpose, the plan's assets are valued without subtracting any
credit balance under section 302(b) of ERISA, and its current liability
is determined using the highest interest rate allowable for the plan
year under section 302(d)(7)(C).
(3) Interest rate adjustment. If the interest rate used to
calculate current liability for a plan year is less than the highest
rate allowable for the plan year under section 302(d)(7)(C) of ERISA,
the current liability may be reduced by one percent for each tenth of a
percentage point by which the highest rate exceeds the rate so used.
Sec. 4011.5 Exemption for new and newly-covered plans.
A plan (other than a plan resulting from a consolidation or
spinoff) is exempt from the Participant Notice requirement for the
first plan year for which the plan must pay premiums under parts 4006
and 4007 of this chapter.
Sec. 4011.6 Mergers, consolidations, and spinoffs.
In the case of a plan involved in a merger, consolidation, or
spinoff transaction that becomes effective during a plan year, the plan
administrator shall apply the requirements of section 4011 of ERISA and
of this part for that plan year in a reasonable manner to ensure that
the Participant Notice serves its statutory purpose.
Sec. 4011.7 Persons entitled to receive notice.
The plan administrator must provide the Participant Notice to each
person who is a participant, a beneficiary of a deceased participant,
an alternate payee under an applicable qualified domestic relations
order (as defined in section 206(d)(3) of ERISA), or an employee
organization that represents any group of participants for purposes of
collective bargaining. To determine who is a person that must receive
the Participant Notice for a plan year, the plan administrator may
select any date during the period beginning with the last day of the
previous plan year and ending with the day on which the Participant
Notice for the plan year is due, provided that a change in the date
from one plan year to the next does not exclude a substantial number of
participants and beneficiaries.
Sec. 4011.8 Time of notice.
The plan administrator must issue the Participant Notice for a plan
year no later than two months after the deadline (including extensions)
for filing the annual report for the previous plan year (see
Sec. 2520.104a-5(a)(2) of this title).
[[Page 34027]]
The plan administrator may change the date of issuance from one plan
year to the next, provided that the effect of any change is not to
avoid disclosing a minimum funding waiver under Sec. 4011.10(b)(5) or a
missed contribution under Sec. 4011.10(b)(6). When the President of the
United States declares that, under the Disaster Relief Act of 1974, as
amended (42 U.S.C. 5121, 5122(2), 5141(b)), a major disaster exists,
the PBGC may extend the due date for providing the Participant Notice
by up to 180 days.
Sec. 4011.9 Manner of issuance of notice.
The Participant Notice shall be issued by using measures reasonably
calculated to ensure actual receipt by the persons entitled to receive
it. It may be issued together with another document, such as the
summary annual report required under section 104(b)(3) of ERISA for the
prior plan year, but must be in a separate document.
Sec. 4011.10 Form of notice.
(a) General. The Participant Notice (and any additional information
under paragraph (d) of this section) shall be readable and written in a
manner calculated to be understood by the average plan participant and
not to mislead recipients. The Model Participant Notice in Appendix A
to this part (when properly completed) is an example of a Participant
Notice meeting the requirements of this section.
(b) Content. The Participant Notice for a plan year shall include--
(1) Identifying information (the name of the plan and the
contributing sponsor, the employer identification number of the
contributing sponsor, the plan number, the date (at least the month and
year) on which the Participant Notice is issued, and the name, title,
address and telephone number of the person(s) who can provide
information about the plan's funding);
(2) A statement to the effect that the Participant Notice is
required by law;
(3) The Notice Funding Percentage for the plan year, determined in
accordance with paragraph (c) of this section, and the date as of which
the Notice Funding Percentage is determined;
(4) A statement to the effect that--
(i) To pay pension benefits, the employer is required to contribute
money to the plan over a period of years;
(ii) A plan's funding percentage does not take into consideration
the financial strength of the employer; and
(iii) The employer, by law, must pay for all pension benefits, but
benefits may be at risk if the employer faces a severe financial crisis
or is in bankruptcy;
(5) If, for any of the five plan years immediately preceding the
plan year, the plan has been granted a minimum funding waiver under
section 303 of ERISA that has not (as of the end of the prior plan
year) been fully repaid, a statement identifying each such plan year
and an explanation of a minimum funding waiver;
(6) For any payment subject to the requirements of this paragraph,
a statement identifying the due date for the payment and noting that
the payment has or has not been made and (if made) the date of the
payment. Once participants have been notified (under this part or Title
I of ERISA) of a missed contribution that is subject to the
requirements of this paragraph, the delinquency need not be reported in
a Participant Notice for a subsequent plan year if the missed
contribution has been paid in full by the time the subsequent
Participant Notice is issued. The payments subject to the requirements
of this paragraph are--
(i) Any minimum funding payment necessary to satisfy the minimum
funding standard under section 302(a) of ERISA for any plan year
beginning on or after January 1, 1994, if not paid by the earlier of
the due date for that payment (the latest date allowed under section
302(c)(10)) or the date of issuance of the Participant Notice; and
(ii) An installment or other payment required by section 302 of
ERISA for a plan year beginning on or after January 1, 1995, that was
not paid by the 60th day after the due date for that payment;
(7) A statement to the effect that if a plan terminates before all
pension benefits are fully funded, the PBGC pays most persons all
pension benefits, but some persons may lose certain benefits that are
not guaranteed;
(8) A summary of plan benefits guaranteed by the PBGC, with an
explanation of the limitations on such guarantee; and
(9) A statement that further information about the PBGC's guarantee
may be obtained by requesting a free copy of the booklet ``Your
Guaranteed Pension'' from Consumer Information Center, Dept. YGP,
Pueblo, Colorado 81009. The Participant Notice may include a statement
that the booklet may be obtained through electronic access via the
World Wide Web from the PBGC Homepage at http://www.pbgc.gov/ygp.htm.
(c) Notice Funding Percentage--
(1) General Rule. The Notice Funding Percentage that must be
included in the Participant Notice for a plan year is the ``funded
current liability percentage'' (as that term is defined in section
302(d)(9)(C) of ERISA) for that plan year or the prior plan year.
(2) Small plans. A plan that is exempt from the requirements of
section 302(d) of ERISA for a plan year by reason of section
302(d)(6)(A) may determine its funded current liability percentage for
that plan year using the Small Plan DRC Exception Test rules in
Sec. 4011.4(b).
(d) Additional information. The plan administrator may include with
the Participant Notice any information not described in paragraph (b)
of this section only if it is in a separate document.
(e) Foreign languages. In the case of a plan that (as of the date
selected under Sec. 4011.7) covers the numbers or percentages specified
in Sec. 2520.104b-10(e) of this title of participants literate only in
the same non-English language, the plan administrator shall provide
those participants either--
(1) An English-language Participant Notice that prominently
displays a legend, in their common non-English language, offering them
assistance in that language, and clearly setting forth any procedures
participants must follow to obtain such assistance, or
(2) A Participant Notice in that language.
Sec. 4011.11 OMB control number.
The collections of information contained in this part have been
approved by the Office of Management and Budget under OMB control
number 1212-0050.
Appendix A to Part 4011--Model Participant Notice
The following is an example of a Participant Notice that
satisfies the requirements of Sec. 4011.10 when the required
information is filled in (subject to Secs. 4011.10(d)-(e), where
applicable).
Notice to Participants of [Plan Name]
The law requires that you receive information on the funding
level of your defined benefit pension plan and the benefits
guaranteed by the Pension Benefit Guaranty Corporation (PBGC), a
federal insurance agency. YOUR PLAN'S FUNDING
As of [DATE], your plan had [INSERT NOTICE FUNDING PERCENTAGE
(DETERMINED IN ACCORDANCE WITH Sec. 4011.10(c))] percent of the
money needed to pay benefits promised to employees and retirees.
To pay pension benefits, your employer is required to contribute
money to the pension plan over a period of years. A plan's funding
percentage does not take into consideration the financial strength
of the employer. Your employer, by law, must pay for all pension
benefits, but your benefits may be at risk if your employer faces a
severe financial crisis or is in bankruptcy.
[[Page 34028]]
[INCLUDE THE FOLLOWING PARAGRAPH ONLY IF, FOR ANY OF THE
PREVIOUS FIVE PLAN YEARS, THE PLAN HAS BEEN GRANTED AND HAS NOT
FULLY REPAID A FUNDING WAIVER.]
Your plan received a funding waiver for [LIST ANY OF THE FIVE
PREVIOUS PLAN YEARS FOR WHICH A FUNDING WAIVER WAS GRANTED AND HAS
NOT BEEN FULLY REPAID]. If a company is experiencing temporary
financial hardship, the Internal Revenue Service may grant a funding
waiver that permits the company to delay contributions that fund the
pension plan.
[INCLUDE THE FOLLOWING WITH RESPECT TO ANY UNPAID OR LATE
PAYMENT THAT MUST BE DISCLOSED UNDER Sec. 4011.10(b)(6):]
Your plan was required to receive a payment from the employer on
[LIST APPLICABLE DUE DATE(S)]. That payment [has not been made] [was
made on [LIST APPLICABLE PAYMENT DATE(S)]].
PBGC GUARANTEES
When a pension plan ends without enough money to pay all
benefits, the PBGC steps in to pay pension benefits. The PBGC pays
most people all pension benefits, but some people may lose certain
benefits that are not guaranteed.
The PBGC pays pension benefits up to certain maximum limits.
The maximum guaranteed benefit is [INSERT FROM TABLE IN
APPENDIX B] per month or [INSERT FROM TABLE IN APPENDIX B] per year
for a 65-year-old person in a plan that terminates in [INSERT
APPLICABLE YEAR].
The maximum benefit may be reduced for an individual
who is younger than age 65. For example, it is [INSERT FROM TABLE IN
APPENDIX B] per month or [INSERT FROM TABLE IN APPENDIX B] per year
for an individual who starts receiving benefits at age 55. [IN LIEU
OF AGE 55, YOU MAY ADD OR SUBSTITUTE ANY AGE(S) RELEVANT UNDER THE
PLAN. FOR EXAMPLE, YOU MAY ADD OR SUBSTITUTE THE MAXIMUM BENEFIT FOR
AGES 62 OR 60 FROM THE TABLE IN APPENDIX B. IF THE PLAN PROVIDES FOR
NORMAL RETIREMENT BEFORE AGE 65, YOU MUST INCLUDE THE NORMAL
RETIREMENT AGE.]
[IF THE PLAN DOES NOT PROVIDE FOR COMMENCEMENT OF BENEFITS BEFORE
AGE 65, YOU MAY OMIT THIS PARAGRAPH.]
The maximum benefit will also be reduced when a benefit
is provided for a survivor.
The PBGC does not guarantee certain types of benefits.
[INCLUDE THE FOLLOWING GUARANTEE LIMITS THAT APPLY TO THE
BENEFITS AVAILABLE UNDER YOUR PLAN.]
The PBGC does not guarantee benefits for which you do
not have a vested right when a plan ends, usually because you have
not worked enough years for the company.
The PBGC does not guarantee benefits for which you have
not met all age, service, or other requirements at the time the plan
ends.
Benefit increases and new benefits that have been in
place for less than a year are not guaranteed. Those that have been
in place for less than 5 years are only partly guaranteed.
Early retirement payments that are greater than
payments at normal retirement age may not be guaranteed. For
example, a supplemental benefit that stops when you become eligible
for Social Security may not be guaranteed.
Benefits other than pension benefits, such as health
insurance, life insurance, death benefits, vacation pay, or
severance pay, are not guaranteed.
The PBGC does not pay lump sums exceeding $3,500.
WHERE TO GET MORE INFORMATION
Your plan, [EIN-PN], is sponsored by [CONTRIBUTING SPONSOR(S)].
If you would like more information about the funding of your plan,
contact [INSERT NAME, TITLE, BUSINESS ADDRESS AND PHONE NUMBER OF
INDIVIDUAL OR ENTITY].
For more information about the PBGC and the benefits it
guarantees, you may request a free copy of ``Your Guaranteed
Pension'' by writing to Consumer Information Center, Dept. YGP,
Pueblo, Colorado 81009.
[THE FOLLOWING SENTENCE MAY BE INCLUDED:] ``Your Guaranteed
Pension'' is also available from the PBGC Homepage on the World Wide
Web at http://www.pbgc.gov/ygp.htm.
Issued: [INSERT AT LEAST MONTH AND YEAR]
Appendix B to Part 4011--Table of Maximum Guaranteed Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
The maximum guaranteed benefit for an individual starting to receive benefits at the age listed below
is the amount (monthly or annual) listed below:
-------------------------------------------------------------------------------------------------------
If a plan terminates in-- Age 65 Age 62 Age 60 Age 55
-------------------------------------------------------------------------------------------------------
Monthly Annual Monthly Annual Monthly Annual Monthly Annual
--------------------------------------------------------------------------------------------------------------------------------------------------------
1995............................................ $2,573.86 $30,886.32 $2,033.35 $24,400.20 $1,673.01 $20,076.12 $1,158.24 $13,898.88
1996............................................ $2,642.05 $31,704.60 $2,087.22 $25,046.64 $1,717.33 $20,607.96 $1,188.92 $14,267.04
--------------------------------------------------------------------------------------------------------------------------------------------------------
The maximum guaranteed benefit for an individual starting to
receive benefits at ages other than those listed above can be
determined by applying the PBGC's regulation on computation of
maximum guaranteeable benefits (29 CFR 4022.22).
PART 4022--BENEFITS PAYABLE IN TERMINATED SINGLE-EMPLOYER PLANS
Subpart A--General Provisions; Guaranteed Benefits
Sec.
4022.1 Purpose and scope.
4022.2 Definitions.
4022.3 Guaranteed benefits.
4022.4 Entitlement to a benefit.
4022.5 Determination of nonforfeitable benefits.
4022.6 Annuity payable for total disability.
4022.7 Benefits payable in a single installment.
Subpart B--Limitations on Guaranteed Benefits
4022.21 Limitations; in general.
4022.22 Maximum guaranteeable benefit.
4022.23 Computation of maximum guaranteeable benefits.
4022.24 Benefit increases.
4022.25 Five-year phase-in of benefit guarantee for participants
other than substantial owners.
4022.26 Phase-in of benefit guarantee for participants who are
substantial owners.
4022.27 Effect of tax disqualification.
Subpart C--Calculation and Payment of Unfunded Nonguaranteed Benefits
[Reserved]
Subpart D--Benefit Reductions in Terminating Plans
4022.61 Limitations on benefit payments by plan administrator.
4022.62 Estimated guaranteed benefit.
4022.63 Estimated title IV benefit.
Subpart E--PBGC Recoupment and Reimbursement of Benefit Overpayments
and Underpayments
4022.81 General rules.
4022.82 Method of recoupment.
4022.83 PBGC reimbursement of benefit underpayments.
Appendix A to Part 4022--Maximum Guaranteeable Monthly Benefit
Authority: 29 U.S.C. 1302, 1322, 1322b, 1341(c)(3)(D), and 1344.
Subpart A--General Provisions; Guaranteed Benefits
Sec. 4022.1 Purpose and scope.
The purpose of this part is to prescribe rules governing the
calculation and payment of benefits payable in terminated single-
employer plans under section 4022 of ERISA. Subpart A, which applies to
each plan
[[Page 34029]]
providing benefits guaranteed under title IV of ERISA, contains
definitions applicable to all subparts, and describes basic-type
benefits that are guaranteed by the PBGC subject to the limitations set
forth in Subpart B. Subpart C is reserved for rules relating to the
calculation and payment of unfunded nonguaranteed benefits under
section 4022(c) of ERISA. Subpart D prescribes procedures that minimize
the overpayment of benefits by plan administrators after initiating
distress terminations of single-employer plans that are not expected to
be sufficient for guaranteed benefits. Subpart E sets forth the method
of recoupment of benefit payments in excess of the amounts permitted
under sections 4022, 4022B, and 4044 of ERISA from participants and
beneficiaries in PBGC-trusteed plans, and provides for reimbursement of
benefit underpayments. (The provisions of this part have not been
amended to take account of changes made in section 4022 of ERISA by
sections 766 and 777 of the Retirement Protection Act of 1994.)
Sec. 4022.2 Definitions.
The following terms are defined in Sec. 4001.2 of this chapter:
annuity, Code, employer, ERISA, guaranteed benefit, mandatory employee
contributions, nonforfeitable benefit, normal retirement age, notice of
intent to terminate, PBGC, person, plan, plan administrator, plan year,
proposed termination date, substantial owner, and title IV benefit.
In addition, for purposes of this part (unless otherwise required
by the context):
Accumulated mandatory employee contributions means mandatory
employee contributions plus interest credited on those contributions
under the plan, or, if greater, interest required by section 204(c) of
ERISA.
Benefit in pay status means that one or more benefit payments have
been made or would have been made except for administrative delay.
Benefit increase means any benefit arising from the adoption of a
new plan or an increase in the value of benefits payable arising from
an amendment to an existing plan. Such increases include, but are not
limited to, a scheduled increase in benefits under a plan or plan
amendment, such as a cost-of-living increase, and any change in plan
provisions which advances a participant's or beneficiary's entitlement
to a benefit, such as liberalized participation requirements or vesting
schedules, reductions in the normal or early retirement age under a
plan, and changes in the form of benefit payments. In the case of a
plan under which the amount of benefits depends on the participant's
salary and the participant receives a salary increase the resulting
increase in benefits to which the participant becomes entitled will
not, for the purpose of this part, be treated as a benefit increase.
Similarly, in the case of a plan under which the amount of benefits
depends on the participant's age or service, and the participant
becomes entitled to increased benefits solely because of advancement in
age or service, the increased benefits to which the participant becomes
entitled will not, for the purpose of this part, be treated as a
benefit increase.
Covered employment means employment with respect to which benefits
accrue under a plan.
Pension benefit means a benefit payable as an annuity, or one or
more payments related thereto, to a participant who permanently leaves
or has permanently left covered employment, or to a surviving
beneficiary, which payments by themselves or in combination with Social
Security, Railroad Retirement, or workmen's compensation benefits
provide a substantially level income to the recipient.
Straight life annuity means a series of level periodic payments
payable for the life of the recipient, but does not include any
combined annuity form, including an annuity payable for a term certain
and life.
Sec. 4022.3 Guaranteed benefits.
Except as otherwise provided in this part, the PBGC will guarantee
the amount, as of the termination date, of a benefit provided under a
plan to the extent that the benefit does not exceed the limitations in
ERISA and in subpart B, if--
(a) The benefit is a nonforfeitable benefit;
(b) The benefit qualifies as a pension benefit as defined in
Sec. 4022.2; and
(c) The participant is entitled to the benefit under Sec. 4022.4.
Sec. 4022.4 Entitlement to a benefit.
(a) A participant or his surviving beneficiary is entitled to a
benefit if under the provisions of a plan:
(1) The benefit was in pay status on the date of the termination of
the plan.
(2) A benefit payable at normal retirement age is an optional form
of payment to the benefit otherwise payable at such age and the
participant elected the benefit before the termination date of the
plan.
(3) Except for a benefit described in paragraph (a)(2) of this
section, before the termination date the participant had satisfied the
conditions of the plan necessary to establish the right to receive the
benefit prior to such date other than application for the benefit,
satisfaction of a waiting period described in the plan, or retirement;
or
(4) Absent an election by the participant, the benefit would be
payable upon retirement.
(5) In the case of a benefit that returns all or a portion of a
participant's accumulated mandatory employee contributions upon death,
the participant (or beneficiary) had satisfied the conditions of the
plan necessary to establish the right to the benefit other than death
or designation of a beneficiary.
(b) If none of the conditions set forth in paragraph (a) of this
section is met, the PBGC will determine whether the participant is
entitled to a benefit on the basis of the provisions of the plan and
the circumstances of the case.
Sec. 4022.5 Determination of nonforfeitable benefits.
(a) A guaranteed benefit payable to a surviving beneficiary is not
considered to be forfeitable solely because the plan provides that the
benefit will cease upon the remarriage of such beneficiary or his
attaining a specified age. However, the PBGC will observe the
provisions of the plan relating to the effect of such remarriage or
attainment of such specified age on the surviving beneficiary's
eligibility to continue to receive benefit payments.
(b) Any other provision in a plan that the right to a benefit in
pay status will cease or be suspended upon the occurrence of any
specified condition does not automatically make that benefit
forfeitable. In each such case the PBGC will determine whether the
benefit is forfeitable.
(c) A benefit guaranteed under Sec. 4022.6 shall not be considered
forfeitable solely because the plan provides that upon recovery of the
participant the benefit will cease.
Sec. 4022.6 Annuity payable for total disability.
(a) Except as provided in paragraph (b) of this section, an annuity
which is payable (or would be payable after a waiting period described
in the plan, whether or not the participant is in receipt of other
benefits during such waiting period), under the terms of a plan on
account of the total and permanent disability of a participant which is
expected to last for the life of the participant and which began before
the termination date is considered to be a pension benefit.
(b) In any case in which the PBGC determines that the standards for
[[Page 34030]]
determining such total and permanent disability under a plan were
unreasonable, or were modified in anticipation of termination of the
plan, the disability benefits payable to a participant under such
standard shall not be guaranteed unless the participant meets the
standards of the Social Security Act and the regulations promulgated
thereunder for determining total disability.
(c) For the purpose of this section, a participant may be required,
upon the request of the PBGC, to submit to an examination or to submit
proof of continued total and permanent disability. If the PBGC finds
that a participant is no longer so disabled, it may suspend, modify, or
discontinue the payment of the disability benefit.
Sec. 4022.7 Benefits payable in a single installment.
(a) Alternative benefit. If a benefit that is guaranteed under this
part is payable in a single installment or substantially so under the
terms of the plan, or an option elected under the plan by the
participant, the benefit will not be guaranteed or paid as such, but
the PBGC will guarantee the alternative benefit, if any, in the plan
which provides for the payment of equal periodic installments for the
life of the recipient. If the plan provides more than one such annuity,
the recipient may within 30 days after notification of the proposed
termination of the plan elect to receive one of those annuities. If the
plan does not provide such an annuity, the PBGC will guarantee an
actuarially equivalent life annuity.
(b)(1) Payment in single installments. Notwithstanding paragraph
(a) of this section, in any case in which the value of a guaranteed
benefit payable by the PBGC is $3,500 or less, the total value of the
guaranteed benefit may be paid in a single payment. For purposes of
determining the value of the guaranteed benefit, subtract from the
value of the guaranteed benefit, any amounts that are returned under
paragraph (b)(2) of this section, but only to the extent such amounts
do not exceed the value of the portion of an individual's benefit
derived from mandatory employee contributions that is guaranteed.
(2) Return of employee contributions--
(i) General. Notwithstanding any other provision of this part, the
PBGC may pay in a single installment (or a series of installments)
instead of as an annuity, the value of the portion of an individual's
basic-type benefit derived from mandatory employee contributions, if:
(A) The individual elects payment in a single installment (or a
series of installments) before the sixty-first (61st) day after the
date he or she receives notice that such an election is available; and
(B) Payment in a single installment (or a series of installments)
is consistent with the plan's provisions. For purposes of this part,
the portion of an individual's basic-type benefit derived from
mandatory employee contributions is determined under Sec. 4044.12
(priority category 2 benefits) of this chapter, and the value of that
portion is computed under the applicable rules contained in part 4044,
subpart B, of this chapter.
(ii) Set-off for distributions after termination. The amount to be
returned under paragraph (b)(2)(i) of this section is reduced by the
set-off amount. The set-off amount is the amount by which distributions
made to the individual after the termination date exceed the amount
that would have been distributed, exclusive of mandatory employee
contributions, if the individual had withdrawn the mandatory employee
contributions on the termination date.
Example: Participant A is receiving a benefit of $600 per month
when the plan terminates, $200 of which is derived from mandatory
employee contributions. If the participant had withdrawn his
contributions on the termination date, his benefit would have been
reduced to $400 per month. The participant receives two monthly
payments after the termination date. The set-off amount is $400. (The
$600 actual payment minus the $400 the participant would have received
if he had withdrawn his contributions multiplied by the two months for
which he received the extra payment.)
(c) Death benefits--
(1) General. Notwithstanding paragraph (a) of this section, a
benefit that would otherwise be guaranteed under the provisions of this
subpart, except for the fact that it is payable solely in a single
installment (or substantially so) upon the death of a participant,
shall be paid by the PBGC as an annuity that has the same value as the
single installment. The PBGC will in each case determine the amount and
duration of the annuity based on all the facts and circumstances.
(2) Exception. Upon the death of a participant the PBGC may pay in
a single installment (or a series of installments) that portion of the
participant's accumulated mandatory employee contributions that is
payable under the plan in a single installment (or a series of
installments) upon the participant's death.
Subpart B--Limitations on Guaranteed Benefits
Sec. 4022.21 Limitations; in general.
(a)(1) Subject to paragraphs (b), (c) and (d) of this section, the
PBGC will not guarantee that part of an installment payment that
exceeds the dollar amount payable as a straight life annuity commencing
at normal retirement age, or thereafter, to which a participant would
have been entitled under the provisions of the plan in effect on the
termination date, on the basis of his credited service to such date. If
the plan does not provide a straight life annuity either as its normal
form of retirement benefit or as an option to the normal form, the PBGC
will for purposes of this paragraph convert the plan's normal form
benefit to a straight life annuity of equal actuarial value as
determined by the PBGC.
(2) The limitation of paragraph (a)(1) of this section shall not
apply to:
(i) A survivor's benefit payable as an annuity on account of the
death of a participant that occurred before the plan terminates and
before the participant retired;
(ii) A disability pension described in section 4022.6 of this part;
or
(iii) A benefit payable in non-level installments that in
combination with Social Security, Railroad Retirement, or workman's
compensation benefits yields a substantially level income if the
projected income from the plan benefit over the expected life of the
recipient does not exceed the value of the straight life annuity
described in paragraph (a)(1) of this section.
(b) The PBGC will not guarantee the payment of that part of any
benefit that exceeds the limitations in section 4022(b) of ERISA and
this subpart B.
(c)(1) Except as provided in paragraph (c)(2) of this section, the
PBGC does not guarantee a benefit payable in a single installment (or
substantially so) upon the death of a participant or his surviving
beneficiary unless that benefit is substantially derived from a
reduction in the pension benefit payable to the participant or
surviving beneficiary.
(2) Paragraphs (a) and (c)(1) of this section do not apply to that
portion of accumulated mandatory employee contributions payable under a
plan upon the death of a participant, and such a benefit is a pension
benefit for purposes of this part.
(d) The PBGC will not guarantee a benefit payable to other than
natural persons, or a trust or estate for the benefit of one or more
natural persons.
[[Page 34031]]
Sec. 4022.22 Maximum guaranteeable benefit.
Subject to section 4022B of ERISA and part 4022B of this chapter,
benefits payable with respect to a participant under a plan shall be
guaranteed only to the extent that such benefits do not exceed the
actuarial value of a benefit in the form of a life annuity payable in
monthly installments, commencing at age 65 equal to the lesser of the
amounts computed in paragraphs (a) and (b) of this section.
(a) One-twelfth of the participant's average annual gross income
from his employer during either his highest-paid five consecutive
calendar years in which he was an active participant under the plan, or
if he was not an active participant throughout the entire such period,
the lesser number of calendar years within that period in which he was
an active participant under the plan.
(1) As used in this paragraph, ``gross income'' means ``earned
income'' as defined in section 911(b) of the Code, determined without
regard to any community property laws.
(2) For the purposes of this paragraph, if the plan is one to which
more than one employer contributes, and during any calendar year the
participant received gross income from more than one such contributing
employer, then the amounts so received shall be aggregated in
determining the participant's gross income for the calendar year.
(b) $750 multiplied by the fraction x/$13,200 where ``x'' is the
Social Security contribution and benefit base determined under section
230 of the Social Security Act in effect at the termination date of the
plan.
Sec. 4022.23 Computation of maximum guaranteeable benefits.
(a) General. Where a benefit is payable in any manner other than as
a monthly benefit payable for life commencing at age 65, the maximum
guaranteeable monthly amount of such benefit shall be computed by
applying the applicable factor or factors set forth in paragraphs (c)-
(e) of this section to the monthly amount computed under Sec. 4022.22.
In the case of a step-down life annuity, the maximum guaranteeable
monthly amount of such benefit shall be computed in accordance with
paragraph (f) of this section.
(b) Application of adjustment factors to monthly amount computed
under Sec. 4022.22. (1) Each percentage increase or decrease computed
under paragraphs (c), (d), and (e) of this section shall be added to or
subtracted from a base of 1.00, and the resulting amounts shall be
multiplied.
(2) The monthly amount computed under Sec. 4022.22 shall be
multiplied by the product computed pursuant to paragraph (b)(1) of this
section in order to determine the participant's and/or beneficiary's
maximum benefit guaranteeable.
(c) Annuitant's age factor. If a participant or the beneficiary of
a deceased participant is entitled to and chooses to receive his
benefit at an age younger than 65, the monthly amount computed under
Sec. 4022.22 shall be reduced by the following amounts for each month
up to the number of whole months below age 65 that corresponds to the
later of the participant's age at the termination date or his age at
the time he begins to receive the benefit: For each of the 60 months
immediately preceding the 65th birthday, the reduction shall be \7/12\
of 1%; For each of the 60 months immediately preceding the 60th
birthday, the reduction shall be \4/12\ of 1%; For each of the 120
months immediately preceding the 55th birthday, the reduction shall be
\2/12\ of 1%; and For each succeeding 120 months period, the monthly
percentage reduction shall be \1/2\ of that used for the preceding 120
month period.
(d) Factor for benefit payable in a form other than as a life
annuity. When a benefit is in a form other than a life annuity payable
in monthly installments, the monthly amount computed under Sec. 4022.22
shall be adjusted by the appropriate factors on a case-by-case basis by
PBGC. This paragraph sets forth the adjustment factors to be used for
several common benefit forms payable in monthly installments.
(1) Period certain and continuous annuity. A period certain and
continuous annuity means an annuity which is payable in periodic
installments for the participant's life, but for not less than a
specified period of time whether or not the participant dies during
that period. The monthly amount of a period certain and continuous
annuity computed under Sec. 4022.22 shall be reduced by the following
amounts for each month of the period certain subsequent to the
termination date:
For each month up to 60 months deduct \1/24\ of 1%;
For each month beyond 60 months deduct \1/12\ of 1%.
(i) A cash refund annuity means an annuity under which if the
participant dies prior to the time when he has received pension
payments equal to a fixed sum specified in the plan, then the balance
is paid as a lump-sum death benefit. A cash refund annuity shall be
treated as a benefit payable for a period certain and continuous. The
period of certainty shall be computed by dividing the amount of the
lump-sum refund by the monthly amount to which the participant is
entitled under the terms of the plan.
(ii) An installment refund annuity means an annuity under which if
the participant dies prior to the time he has received pension payments
equal to a fixed sum specified in the plan, then the balance is paid as
a death benefit in periodic installments equal in amount to the
participant's periodic benefit. An installment refund annuity shall be
treated as a benefit payable for a period certain and continuous. The
period of certainty shall be computed by dividing the amount of the
remaining refund by the monthly amount to which the participant is
entitled under the terms of the plan.
(2) Joint and survivor annuity (contingent basis). A joint and
survivor annuity (contingent basis) means an annuity which is payable
in periodic installments to a participant for his life and upon his
death is payable to his beneficiary for the beneficiary's life in the
same or in a reduced amount. The monthly amount of a joint and survivor
annuity (contingent basis) computed under Sec. 4022.22 shall be reduced
by an amount equal to 10% plus \2/10\ of 1% for each percentage point
in excess of 50% of the participant's benefit that will continue to be
paid to the beneficiary. If the benefit payable to the beneficiary is
less than 50 percent of the participant's benefit, PBGC shall provide
the adjustment factors to be used.
(3) Joint and survivor annuity (joint basis). A joint and survivor
annuity (joint basis) means an annuity which is payable in periodic
installments to a participant and upon his death or the death of his
beneficiary is payable to the survivor for the survivor's life in the
same or in a reduced amount. The monthly amount of a joint and survivor
annuity (joint basis) computed under Sec. 4022.22 shall be reduced by
an amount equal to \4/10\ of 1% for each percentage point in excess of
50% of the participant's original benefit that will continue to be paid
to the survivor. If the benefit payable to the survivor is less than 50
percent of the participant's original benefit, PBGC shall provide the
adjustment factors to be used.
(e) When a benefit is payable in a form described in paragraph (d)
(2) or (3) of this section, and the beneficiary's age is different from
the participant's age, by 15 years or less, the monthly amount computed
under Sec. 4022.22 shall be adjusted by the following amounts: If the
beneficiary is younger than the
[[Page 34032]]
participant, deduct 1% for each year of the age difference; If the
beneficiary is older than the participant, add \1/2\ of 1% for each
year of the age difference. In computing the difference in ages, years
over 65 years of age shall not be counted. If the difference in age
between the beneficiary and the participant is greater than 15 years,
PBGC shall provide the adjustment factors to be used.
(f) Step-down life annuity. A step-down life annuity means an
annuity payable in a certain amount for the life of the participant
plus a temporary additional amount payable until the participant
attains an age specified in the plan.
(1) The temporary additional amount payable under a step-down life
annuity shall be converted to a life annuity payable in monthly
installments by multiplying the appropriate factor based on the
participant's age and the number of remaining years of the temporary
additional benefit by the amount of the temporary additional benefit.
The factors to be used are set forth in the table below. The amount of
the monthly benefit so calculated shall be added to the level amount of
the monthly benefit payable for life to determine the level-life
annuity that is equivalent to the step-down life annuity.
Factors for Converting Temporary Additional Benefit Under Step-Down Life Annuity
----------------------------------------------------------------------------------------------------------------
Age of participant \1\ at the Number of years temporary additional benefit is payable under the plan as of
later of the date the temporary the date of plan termination \2\
additional benefit commences or -------------------------------------------------------------------------------
the date of plan termination 1 2 3 4 5 6 7 8 9 10
----------------------------------------------------------------------------------------------------------------
45.............................. 0.060 0.117 0.170 0.220 0.268 0.315 0.355 0.395 0.435 0.475
46.............................. .061 .119 .173 .224 .273 .321 .362 .403 .444 .485
47.............................. .062 .121 .176 .228 .278 .327 .369 .411 .453 .495
48.............................. .063 .123 .179 .232 .283 .333 .376 .419 .462 .505
49.............................. .064 .125 .182 .236 .288 .339 .383 .427 .471 .515
50.............................. .065 .127 .185 .240 .293 .345 .390 .435 .480 .525
51.............................. .066 .129 .188 .244 .298 .351 .397 .443 .489 .535
52.............................. .068 .133 .194 .252 .308 .363 .411 .459 .507 .555
53.............................. .067 .131 .191 .248 .303 .357 .404 .451 .498 .545
54.............................. .069 .135 .197 .256 .313 .369 .418 .467 .516 .565
55.............................. .070 .137 .200 .260 .318 .375 .425 .475 .525 .575
56.............................. .072 .141 .206 .268 .328 .387 .439 .491 .543 ......
57.............................. .074 .145 .212 .276 .338 .399 .453 .507 ...... ......
58.............................. .076 .149 .218 .284 .348 .411 .467 ...... ...... ......
59.............................. .078 153 .224 .292 .358 .423 ...... ...... ...... ......
60.............................. .080 .157 .230 .300 .368 ...... ...... ...... ...... ......
61.............................. .082 .161 .236 .308 ...... ...... ...... ...... ...... ......
62.............................. .084 .165 .242 ...... ...... ...... ...... ...... ...... ......
63.............................. .086 .169 ...... ...... ...... ...... ...... ...... ...... ......
64.............................. .088 ...... ...... ...... ...... ...... ...... ...... ...... ......
----------------------------------------------------------------------------------------------------------------
\1\ Age of participant is his age at his last birthday.
\2\ If the benefit is payable for less than 1 yr, the appropriate factor is obtained by multiplying the factor
for 1 yr by a fraction, the numerator of which is the number of months the benefit is payable, and the
denominator of which is 12. If the benefit is payable for 1 or more whole years, plus an additional number of
months less than 12, the appropriate factor is obtained by linear interpolation between the factor for the
number of whole years the benefit is payable and the factor for the next year.
(2) If a participant is entitled to and chooses to receive a step-
down life annuity at an age younger than 65, the monthly amount
computed under Sec. 4022.22 shall be adjusted by applying the factors
set forth in paragraph (c) of this section in the manner described in
paragraph (b) of this section.
(3) If the level-life monthly benefit calculated pursuant to
paragraph (f)(1) of this section exceeds the monthly amount calculated
pursuant to paragraph (f)(2) of this section, then the monthly maximum
benefit guaranteeable shall be a step-down life annuity under which the
monthly amount of the temporary additional benefit and the amount of
the monthly benefit payable for life, respectively, shall bear the same
ratio to the monthly amount of the temporary additional benefit and the
monthly benefit payable for life provided under the plan, respectively,
as the monthly benefit calculated pursuant to paragraph (f)(2) of this
section bears to the monthly benefit calculated pursuant to paragraph
(f)(1) of this section.
Sec. 4022.24 Benefit increases.
(a) Scope. This section applies:
(1) To all benefit increases, as defined in Sec. 4022.2, payable
with respect to a participant other than a substantial owner, which
have been in effect for less than five years preceding the termination
date; and
(2) To all benefit increases payable with respect to a substantial
owner, which have been in effect for less than 30 years preceding the
termination date.
(b) General rule. Benefit increases described in paragraph (a) of
this section shall be guaranteed only to the extent provided in
Sec. 4022.25 with respect to a participant other than a substantial
owner and in Sec. 4022.26 with respect to a participant who is a
substantial owner.
(c) Computation of guaranteeable benefit increases. Except as
provided in paragraph (d) of this section pertaining to multiple
benefit increases, the amount of a guaranteeable benefit increase shall
be the amount, if any, by which the monthly benefit calculated pursuant
to paragraph (c)(1) of this section (the monthly benefit provided under
the terms of the plan as of the termination date, as limited by
Sec. 4022.22) exceeds the monthly benefit calculated pursuant to
paragraph (c)(4) of this section (the monthly benefit which would have
been payable on the termination date if the benefit provided subsequent
to the increase were equivalent, as of the date of the increase, to the
benefit provided prior to the increase).
(1) Determine the amount of the monthly benefit payable on the
termination date (or, in the case of a deferred benefit, the monthly
benefit which will become payable thereafter)
[[Page 34033]]
under the terms of the plan subsequent to the increase, using service
credited to the participant as of the termination date, that is
guaranteeable pursuant to Sec. 4022.22;
(2) Determine, as of the date of the benefit increase, in
accordance with the provisions of Sec. 4022.23, the factors which would
be used to calculate the monthly maximum benefit guaranteeable (i)
under the terms of the plan prior to the increase and (ii) under the
terms of the plan subsequent to the increase. However, when the benefit
referred to in paragraph (c)(2)(ii) of this section is a joint and
survivor benefit deferred as of the termination date and there is no
beneficiary on that date, the factors computed in paragraph (c)(2)(ii)
of this section shall be determined as if the benefit were payable only
to the participant. Each set of factors determined under this paragraph
shall be stated in the manner set forth in Sec. 4022.23(b)(1);
(3) Multiply the monthly benefit which would have been payable (or,
in the case of a deferred benefit, would have become payable) under the
terms of the plan prior to the increase based on service credited to
the participant as of the termination date by a fraction, the numerator
of which is the product of the factors computed pursuant to paragraph
(c)(2)(ii) of this section and the denominator of which is the product
of the factors computed pursuant to paragraph (c)(2)(i) of this
section.
(4) Calculate the amount of the monthly benefit which would be
payable on the termination date if the monthly benefit computed in
paragraph (c)(3) of this section had been payable commencing on the
date of the benefit increase (or, in the case of a deferred benefit,
would have become payable thereafter.) In the case of a benefit which
does not become payable until subsequent to the termination date, the
amount of the monthly benefit determined pursuant to this paragraph is
the same as the amount of the monthly benefit calculated pursuant to
paragraph (c)(3) of this section.
(d) Multiple benefit increases. (1) Where there has been more than
one benefit increase described in paragraph (a) of this section, the
amounts of guaranteeable benefit increases shall be calculated
beginning with the earliest increase, and each such amount (except for
the amount resulting from the final benefit increase) shall be
multiplied by a fraction, the numerator of which is the product of the
factors, stated in the manner set forth in Sec. 4022.23(b)(1), used to
calculate the monthly maximum guaranteeable benefit under Sec. 4022.22
and the denominator of which is the product of the factors used in the
calculation under paragraph (c)(2)(i) of this section.
(2) Each benefit increase shall be treated separately for the
purposes of Sec. 4022.25, except as otherwise provided in paragraph (d)
of that section, and for the purposes of Sec. 4022.26, as appropriate.
(e) For the purposes of this subpart, a benefit increase is deemed
to be in effect commencing on the later of its adoption date or its
effective date.
Sec. 4022.25 Five-year phase-in of benefit guarantee for participants
other than substantial owners.
(a) Scope. This section applies to the guarantee of benefit
increases which have been in effect for less than five years with
respect to participants other than substantial owners.
(b) Phase-in formula. The amount of a benefit increase computed
pursuant to Sec. 4022.24 shall be guaranteed to the extent provided in
the following formula: the number of years the benefit increase has
been in effect, not to exceed five, multiplied by the greater of (1) 20
percent of the amount computed pursuant to Sec. 4022.24; or (2) $20 per
month.
(c) Computation of years. In computing the number of years a
benefit increase has been in effect, each complete 12-month period
prior to the termination date during which such benefit increase was in
effect shall constitute one year.
(d) Multiple benefit increases. In applying the formula contained
in paragraph (b) of this section, multiple benefit increases within any
12-month period prior to the termination date and calculated from that
date shall be aggregated and treated as one benefit increase.
(e) Notwithstanding the provisions of paragraph (b) of this
section, a benefit increase described in paragraph (a) of this section
shall be guaranteed only if PBGC determines that the plan was
terminated for a reasonable business purpose and not for the purpose of
obtaining the payment of benefits by PBGC.
Sec. 4022.26 Phase-in of benefit guarantee for participants who are
substantial owners.
(a) Scope. This section shall apply to the guarantee of all
benefits described in subpart A with respect to participants who are
substantial owners at the termination date or who were substantial
owners at any time within the 5-year period preceding that date.
(b) Phase-in formula when there have been no benefit increases.
Benefits provided by a plan under which there has been no benefit
increase, other than the adoption of the plan, shall be guaranteed to
the extent provided in the following formula: The monthly amount
computed under Sec. 4022.22 multiplied by a fraction not to exceed 1,
the numerator of which is the number of full years prior to the
termination date that the substantial owner was an active participant
under the plan, and the denominator of which is 30. Active
participation under a plan commences at the later of the date on which
the plan is adopted or becomes effective.
(c) Phase-in formula when there have been benefit increases. If
there has been a benefit increase under the plan, other than the
adoption of the plan, benefits provided by each such increase shall be
guaranteed to the extent provided in the following formula: The amount
of the guaranteeable benefit increase computed under Sec. 4022.24
multiplied by a fraction not to exceed 1, the numerator of which is the
number of full years prior to the termination date that the benefit
increase was in effect and during which the substantial owner was an
active participant under the plan, and the denominator of which is 30.
However, in no event shall the total benefits guaranteed under all such
benefit increases exceed the benefits which are guaranteed under
paragraph (b) of this section with respect to a plan described therein.
(d) For the purpose of computing the benefits guaranteed under this
section, in the case of a substantial owner who becomes an active
participant under a plan after a benefit increase (other than the
adoption of the plan) has been put into effect, the plan as it exists
at the time he commences his participation shall be deemed to be the
original plan with respect to him.
Sec. 4022.27 Effect of tax disqualification.
(a) General rule. Except as provided in paragraph (b) of this
section, benefits accrued under a plan after the date on which the
Secretary of the Treasury or his delegate issues a notice that any
trust which is part of the plan no longer meets the requirements of
section 401(a) of the Code or that the plan no longer meets the
requirements of section 404(a) of the Code or after the date of
adoption of a plan amendment that causes the issuance of such a notice
shall not be guaranteed under this part.
(b) Exceptions. The restriction on the guarantee of benefits set
forth in paragraph (a) of this section shall not apply if:
(1) The Secretary of the Treasury or his delegate issues a notice
stating that the original notice referred to in
[[Page 34034]]
paragraph (a) of this section was erroneous;
(2) The Secretary of the Treasury or his delegate finds that,
subsequent to the issuance of the notice referred to in paragraph (a)
of this section, appropriate action has been taken with respect to the
trust or plan to cause it to meet the requirements of sections 401(a)
or 404(a)(2) of the Code, respectively, and issues a subsequent notice
stating that the trust or plan meets such requirements; or
(3) The plan amendment is revoked retroactively to its original
effective date.
Subpart C--Calculation and Payment of Unfunded Nonguaranteed
Benefits [Reserved]
Subpart D--Benefit Reductions in Terminating Plans
Sec. 4022.61 Limitations on benefit payments by plan administrator.
(a) General. When section 4041.4 of this chapter requires a plan
administrator to reduce benefits, the plan administrator shall limit
benefit payments in accordance with this section.
(b) Accrued benefit at normal retirement. Except to the extent
permitted by paragraph (d) of this section, a plan administrator may
not pay that portion of a monthly benefit payable with respect to any
participant that exceeds the participant's accrued benefit payable at
normal retirement age under the plan. For the purpose of applying this
limitation, post-retirement benefit increases, such as cost-of-living
adjustments, are not considered to increase a participant's benefit
beyond his or her accrued benefit payable at normal retirement age.
(c) Maximum guaranteeable benefit. Except to the extent permitted
by paragraph (d) of this section, a plan administrator may not pay that
portion of a monthly benefit payable with respect to any participant,
as limited by paragraph (b) of this section, that exceeds the maximum
guaranteeable benefit under section 4022(b)(3)(B) of ERISA and
Sec. 4022.22(b) of this part, adjusted for age and benefit form, for
the year of the proposed termination date.
(d) Estimated benefit payments. A plan administrator shall pay the
monthly benefit payable with respect to each participant as determined
under Sec. 4022.62 or Sec. 4022.63, whichever produces the higher
benefit.
(e) PBGC authority to modify procedures. In order to avoid abuse of
the plan termination insurance system, inequitable treatment of
participants and beneficiaries, or the imposition of unreasonable
burdens on terminating plans, the PBGC may authorize or direct the use
of alternative procedures for determining benefit reductions.
(f) Examples. This section is illustrated by the following
examples:
Example 1--Facts. On October 10, 1992, a plan administrator
files with the PBGC a notice of intent to terminate in a distress
termination that includes December 31, 1992, as the proposed
termination date. A participant who is in pay status on December 31,
1992, has been receiving his accrued benefit of $2,500 per month
under the plan. The benefit is in the form of a joint and survivor
annuity (contingent basis) that will pay 50 percent of the
participant's benefit amount (i.e., $1,250 per month) to his
surviving spouse following the death of the participant. On December
31, 1992, the participant is age 66, and his wife is age 56.
Benefit reductions. Paragraph (b) of this section requires the
plan administrator to cease paying benefits in excess of the accrued
benefit payable at normal retirement age. Because the participant is
receiving only his accrued benefit, no reduction is required under
paragraph (b).
Paragraph (c) of this section requires the plan administrator to
cease paying benefits in excess of the maximum guaranteeable
benefit, adjusted for age and benefit form in accordance with the
provisions of subpart B. The maximum guaranteeable benefit for plans
terminating in 1992, the year of the proposed termination date, is
$2,352.27 per month, payable in the form of a single life annuity at
age 65. Because the participant is older than age 65, no adjustment
is required under Sec. 4022.23(c) based on the annuitant's age
factor. The benefit form is a joint and survivor annuity (contingent
basis), as defined in Sec. 4022.23(d)(2). The required benefit
reduction for this benefit form under Sec. 4022.23(d) is 10 percent.
The corresponding adjustment factor is 0.90 (1.00-0.10). The benefit
reduction factor to adjust for the age difference between the
participant and the beneficiary is computed under Sec. 4022.23(e).
In computing the difference in ages, years over 65 years of age are
not taken into account. Therefore, the age difference is 9 years
(65-56). The required percentage reduction when the beneficiary is 9
years younger than the participant is 9 percent. The corresponding
adjustment factor is 0.91 (1.00-0.09).
The maximum guaranteeable benefit adjusted for age and benefit
form is $1,926.51 ($2,352.27 x 0.90 x 0.91) per month. Therefore,
the plan administrator must reduce the participant's benefit payment
from $2,500 to $1,926.51. If the participant dies after December 31,
1992, the plan administrator will pay his spouse $963.26
(0.50 x $1,926.51) per month.
Example 2--Facts. The benefit of a participant who retired under
a plan at age 60 is a reduced single life annuity of $400 per month
plus a temporary supplement of $400 per month payable until age 62
(i.e., a step-down benefit). The participant's accrued benefit under
the plan is $450 per month, payable from the plan's normal
retirement age. On the proposed termination date, June 30, 1992, the
participant is 61 years old.
The maximum guaranteeable benefit adjusted for age under
Sec. 4022.23(c) of this chapter is $1,693.63 ($2,352.27 x 0.72)
per month. Since the benefit is payable as a single life annuity, no
adjustment is required under Sec. 4022.23(d) for benefit form.
Benefit reductions. The plan benefit of $800 per month payable
until age 62 exceeds the participant's accrued benefit at normal
requirement age of $450 per month. Paragraph (b) of this section
requires that, except to the extent permitted by paragraph (d), the
plan benefit must be reduced to $450 per month. Since the levelized
benefit of $404.10 ((0.082 x 50) + $400) per month, determined
under Sec. 4022.23(f), is less than the adjusted maximum
guaranteeable benefit of $1,693.63 per month, no further reduction
in the $450 per month benefit payment is required under paragraph
(c) of this section. The plan administrator next would determine the
amount of the participant's estimated benefit under paragraph (d).
Example 3--Facts. A retired participant is receiving a reduced
early retirement benefit of $1,100 per month plus a temporary
supplement of $700 per month payable until age 62. The benefit is in
the form of a single life annuity. On the proposed termination date,
November 30, 1992, the participant is 56 years old.
The participant's accrued benefit at normal retirement age under
the plan is $1,200 per month. The maximum guaranteeable benefit
adjusted for age is $1,152.61 ($2,352.27 x 0.49) per month. A form
adjustment is not required.
Benefit reductions. The plan benefit of $1,800 per month payable
from age 56 to age 62 exceeds the participant's accrued benefit at
normal retirement age of $1,200 per month. Therefore, under
paragraph (b) of this section, the plan administrator must reduce
the temporary supplement to $100 per month.
For the purpose of determining whether the reduced benefit,
i.e., a level-life annuity of $1,100 per month and a temporary
annuity supplement of $100 per month to age 62, exceeds the maximum
guaranteeable benefit adjusted for age, the temporary annuity
supplement of $100 per month is converted to a level-life annuity
equivalent in accordance with Sec. 4022.23(f) of this chapter. The
level-life annuity equivalent is $38.70 ($100 x 0.387). This,
added to the life annuity of $1,100 per month, equals $1,138.70.
Since the maximum guaranteeable benefit of $1,152.61 per month
exceeds $1,138.70 per month, no further reduction is required under
paragraph (c) of this section.
The plan administrator next would determine the participant's
estimated benefit under paragraph (d). Assume that the estimated
benefit under paragraph (d) is $780 per month until age 62 and $715
per month thereafter. The plan administrator would pay the
participant $780 per month, reduced to $715 per month at age 62,
subject to the final benefit determination made under title IV.
Example 4--Facts. A retired participant is receiving a reduced
early retirement benefit of $2,650 per month plus a temporary
supplement of $800 per month payable until
[[Page 34035]]
age 62. The benefit is in the form of a joint and survivor annuity
(contingent basis) that will pay 50 percent of the participant's
benefit amount to his surviving spouse following the death of the
participant. On the proposed termination date, December 20, 1992,
the participant and his spouse are each 56 years old.
The participant's accrued benefit at normal retirement age under
the plan is $3,000 per month. The maximum guaranteeable benefit
adjusted for age and the joint and survivor annuity (contingent
basis) annuity form is $1,037.35 per month. An adjustment for age
difference is not required because the participant and his spouse
are the same age.
Benefit reductions. The plan benefit of $3,450 per month payable
from age 56 to age 62 exceeds the participant's accrued benefit at
normal retirement age, which is $3,000 per month. Therefore, under
paragraph (b) of this section, the plan administrator must reduce
the participant's benefit so that it does not exceed $3,000 per
month.
The level-life equivalent of the participant's reduced benefit,
determined using the Sec. 4022.23(f) adjustment factor, is $2,785.45
(($350 x 0.387) + $2,650) per month. Since this benefit exceeds
the participant's maximum guaranteeable benefit of $1,037.35 per
month, the plan administrator must reduce the participant's benefit
payment so that it does not exceed the maximum guaranteeable
benefit.
The ratio of (i) the participant's maximum guaranteeable benefit
to (ii) the level-life equivalent of the participant's reduced
benefit (computed under the ``accrued for normal retirement age''
limitation) is used in converting the level-life maximum
guaranteeable benefit to the step-down benefit form. The level-life
equivalent of the reduced benefit computed under the ``accrued for
normal retirement age'' limitation is 37.24 percent ($1,037.35/
$2,785.45). Thus, the plan administrator must reduce the
participant's level-life benefit of $2,650 per month to $986.86
($2,650 x 0.3724) and must further reduce the reduced temporary
benefit of $350 per month to $130.34 ($350 x 0.3724). Under
paragraph (c) of this section, therefore, the participant's maximum
guaranteeable benefit is $1,117.20 ($986.86 + $130.34) per month to
age 62 and $986.86 per month thereafter, subject to any adjustment
under paragraph (d) of this section.
Assume that the estimated benefit under paragraph (d) is
$1,005.48 per month to age 62 and $888.17 per month thereafter. The
plan administrator would reduce the participant's benefit from
$3,450 per month to $1,005.48 per month and pay this amount until
age 62, at which time the benefit payment would be reduced to
$888.17 per month, subject to the final benefit determination made
under title IV.
Sec. 4022.62 Estimated guaranteed benefit.
(a) General. The estimated guaranteed benefit payable with respect
to each participant who is not a substantial owner is computed under
paragraph (c) of this section. The estimated guaranteed benefit payable
with respect to each participant who is a substantial owner is computed
under paragraph (d) of this section.
(b) Rules for determining benefits. For the purposes of determining
entitlement to a benefit and the amount of the estimated benefit under
this section, the following rules apply:
(1) Participants in pay status on the proposed termination date.
For benefits payable with respect to a participant who is in pay status
on or before the proposed termination date, the plan administrator
shall use the participant's age and benefit payable under the plan as
of the proposed termination date.
(2) Participants who enter pay status after the proposed
termination date. For benefits payable with respect to a participant
who enters pay status after the proposed termination date, the plan
administrator shall use the participant's age as of the benefit
commencement date and his or her service and compensation as of the
proposed termination date.
(3) Participants with new benefits or benefit improvements. For the
purpose of determining the estimated guaranteed benefit under paragraph
(c) of this section, only new benefits and benefit improvements that
affect the benefit of the participant or beneficiary for whom the
determination is made are taken into account.
(4) Limitations on estimated guaranteed benefits. For the purpose
of determining the estimated guaranteed benefit under paragraph (c) or
(d) of this section, the benefit determined under paragraph (b)(1) or
(b)(2) of this section is subject to the limitations set forth in
Sec. 4022.61 (b) and (c).
(c) Estimated guaranteed benefit payable with respect to a
participant who is not a substantial owner. For benefits payable with
respect to a participant who is not a substantial owner, the estimated
guaranteed benefit is determined under paragraph (c)(1) of this
section, if no portion of the benefit is subject to the phase-in of
plan termination insurance guarantees set forth in section 4022(b)(1)
of ERISA. In any other case, the estimated guaranteed benefit is
determined under paragraph (c)(2). ``Benefit subject to phase-in''
means a benefit that is subject to the phase-in of plan termination
insurance guarantees set forth in section 4022(b)(1) of ERISA,
determined without regard to section 4022(b)(7) of ERISA.
(1) Participants with no benefits subject to phase-in. In the case
of a participant or beneficiary with no benefit improvement (as defined
in paragraph (c)(2)(ii)) or new benefit (as defined in paragraph
(c)(2)(i)) in the five years preceding the proposed termination date,
the estimated guaranteed benefit is the benefit to which he or she is
entitled under the rules in paragraph (b) of this section.
(2) Participants with benefits subject to phase-in. In the case of
a participant or beneficiary with a benefit improvement or new benefit
in the five years preceding the proposed termination date, the
estimated guaranteed benefit is the benefit to which he or she is
entitled under the rules in paragraph (b) of this section, multiplied
by the multiplier determined according to paragraphs (i), (ii), and
(iii), but not less than the benefit to which he or she would have been
entitled if the benefit improvement or new benefit had not been
adopted.
(i) From column (a) of Table I, select the line that applies
according to the number of full years before the proposed termination
date since the plan was last amended to provide for a new benefit (or
the number of full years since the plan was established, if it has
never been amended to provide for a new benefit). ``New benefit'' means
a change in the terms of the plan that results in (a) a participant's
or a beneficiary's eligibility for a benefit that was not previously
available or to which he or she was not entitled (excluding a benefit
that is actuarially equivalent to the normal retirement benefit to
which the participant was previously entitled) or (b) an increase of
more than twenty percent in the benefit to which a participant is
entitled upon entering pay status before his or her normal retirement
age under the plan. ``New benefits'' result from liberalized
participation or vesting requirements, reductions in the age or service
requirements for receiving unreduced benefits, additions of actuarially
subsidized benefits, and increases in actuarial subsidies. The
establishment of a plan creates a new benefit as of the effective date
of the plan. A change in the amount of a benefit is not deemed to be a
``new benefit'' if it results solely from a benefit improvement. ``New
benefit'' and ``benefit improvement'' are mutually exclusive terms.
(ii) If there was no benefit improvement under the plan during the
one-year period ending on the proposed termination date, use the
multiplier set forth in column (b) of Table I on the line selected from
column (a). ``Benefit improvement'' means a change in the terms of the
plan that results in (a) an increase in the benefit to which a
participant is entitled at his or her normal retirement age under the
plan or (b) an increase in the benefit to which a participant or
beneficiary in pay status is entitled.
[[Page 34036]]
(iii) If there was any benefit improvement during the one-year
period ending on the proposed termination date, use the multiplier set
forth in column (c) of Table I on the line selected from column (a).
Table I.--Applicable Multiplier If--
No benefit Benefit
improvement improvement
Full years since last new benefit during last during last
year year
(a) (b) (c)
------------------------------------------------------------------------
Five or more.................................. .90 .80
Four.......................................... .80 .70
Three......................................... .65 .55
Two........................................... .50 .45
Fewer than two................................ .35 .30
Note: The foregoing method of estimating guaranteed benefits is based
upon the PBGC's experience with a wide range of plans and may not
provide accurate estimates in certain circumstances. In accordance
with Sec. 4022.61(e), a plan administrator may use a different method
of estimation if he or she demonstrates to the PBGC that his proposed
method will be more equitable to participants and beneficiaries. The
PBGC may require the use of a different method in certain cases.
(d) Estimated guaranteed benefit payable with respect to a
substantial owner. For benefits payable with respect to each
participant who is a substantial owner and who commenced participation
under the plan fewer than five full years before the proposed
termination date, the estimated guaranteed benefit is determined under
paragraph (d)(1). With respect to any other substantial owner, the
estimated guaranteed benefit is determined under paragraph (d)(2).
(1) Fewer than five years of participation. The estimated
guaranteed benefit under this paragraph is the benefit to which the
substantial owner is entitled, as determined under paragraph (b) of
this section, multiplied by a fraction, not to exceed one, the
numerator of which is the number of full years prior to the proposed
termination date that the substantial owner was an active participant
under the plan and the denominator of which is thirty.
(2) Five or more years of participation. The estimated guaranteed
benefit under this paragraph is the lesser of--
(i) the estimated guaranteed benefit calculated under paragraph
(d)(1) of this section; or
(ii) the benefit to which the substantial owner would have been
entitled as of the proposed termination date (or benefit commencement
date in the case of a substantial owner whose benefit commences after
the proposed termination date) under the terms of the plan in effect
when he or she first began participation, as limited by Sec. 4022.61
(b) and (c), multiplied by a fraction, not to exceed one, the numerator
of which is two times the number of full years of his or her active
participation under the plan prior to the proposed termination date and
the denominator of which is thirty.
(e) Examples. This section is illustrated by the following
examples:
Example 1--Facts. A participant who is not a substantial owner
retired on December 31, 1991, at age 60 and began receiving a
benefit of $600 per month. On January 1, 1989, the plan had been
amended to allow participants to retire with unreduced benefits at
age 60. Previously, a participant who retired before age 65 was
subject to a reduction of \1/15\ for each year by which his or her
actual retirement age preceded age 65. On January 1, 1992, the
plan's benefit formula was amended to increase benefits for
participants who retired before January 1, 1992. As a result, the
participant's benefit was increased to $750 per month. There have
been no other pertinent amendments. The proposed termination date is
December 15, 1992.
Estimated guaranteed benefit. No reduction is required under
Sec. 4022.61 (b) or (c) because the participant's benefit does not
exceed either the participant's accrued benefit at normal retirement
age or the maximum guaranteeable benefit. (Post-retirement benefit
increases are not considered as increasing accrued benefits payable
at normal retirement age.)
The amendment as of January 1, 1989, resulted in a ``new
benefit'' because the reduction in the age at which the participant
could receive unreduced benefits increased the participant's benefit
entitlement at actual retirement age by \5/15\, which is more than a
20 percent increase. The amendment of January 1, 1992, which
increased the participant's benefit to $750 per month, is a
``benefit improvement'' because it is an increase in the amount of
benefit for persons in pay status. (No percentage test applies in
determining whether such an increase is a benefit improvement.)
The multiplier for computing the amount of the estimated
guaranteed benefit is taken from the third row of Table I (because
the last new benefit had been in effect for 3 full years as of the
proposed termination date) and column (c) (because there was a
benefit improvement within the 1-year period preceding the proposed
termination date). This multiplier is 0.55. Therefore, the amount of
the participant's estimated guaranteed benefit is $412.50
(0.55 x $750) per month.
Example 2--Facts. A participant who is not a substantial owner
terminated employment on December 31, 1990. On January 1, 1992, she
reached age 65 and began receiving a benefit or $250 per month. She
had completed 3 years of service at her termination of employment
and was fully vested in her accrued benefit. The plan's vesting
schedule had been amended on July 1, 1988. Under the schedule in
effect before the amendment, a participant with 5 years of service
was 100 percent vested. There have been no other pertinent
amendments. The proposed termination date is December 31, 1992.
Estimated guaranteed benefit. No reduction is required under
Sec. 4022.61 (b) or (c) because the participant's benefit does not
exceed either her accrued benefit at normal retirement age or the
maximum guaranteeable benefit. The plan's change of vesting schedule
created a new benefit for the participant. Because the amendment was
in effect for 4 full years before the proposed termination date, the
second row of Table I is used to determine the applicable multiplier
for estimating the amount of the participant's guaranteed benefit.
Because the participant did not receive any benefit improvement
during the 12-month period ending on the proposed termination date,
column (b) of the table is used. Therefore, the multiplier is 0.80,
and the amount of the participant's estimated guaranteed benefit is
$200 (0.80 x $250) per month.
Example 3--Facts. A participant who is a substantial owner
retired prior to the proposed termination date after 5\1/2\ years of
active participation in the plan. The benefit under the terms of the
plan when he first began active participation was $800 per month. On
the proposed termination date of April 30, 1992, he was entitled to
receive a benefit of $2000 per month. No reduction of this benefit
is required under Sec. 4022.61 (b) or (c).
Estimated guaranteed benefit. Paragraph (d)(2) of this section
is used to compute the amount of the estimated guaranteed benefit of
substantial owners with 5 or more years of active participation
prior to the proposed termination date. Consequently, the amount of
this participant's estimated guaranteed benefit is the lesser of--
(i) the amount calculated as if he had been an active
participant in the plan for fewer than 5 full years on the proposed
termination date, or $333.33 ($2000 x \5/30\) per month, or
(ii) the amount to which he would have been entitled as of the
proposed termination date under the terms of the plan when he first
began participation, as limited by Sec. 4022.61 (b) and (c),
multiplied by 2 times the number of years of active participation
and divided by 30, or $266.67 ($800 x 2 x \5/30\) per month.
Therefore, the amount of the participant's estimated guaranteed
benefit is $266.67 per month.
Sec. 4022.63 Estimated title IV benefit.
(a) General. If the conditions specified in paragraph (b) exist,
the plan administrator shall determine each participant's estimated
title IV benefit. The estimated title IV benefit payable with respect
to each participant who is not a substantial owner is computed under
paragraph (c) of this section. The estimated title IV benefit payable
with respect to each participant who is a substantial owner is computed
under paragraph (d) of this section.
(b) Conditions for use of this section. The conditions set forth in
this
[[Page 34037]]
paragraph must be satisfied in order to make use of the procedures set
forth in this section. If the specified conditions exist, estimated
title IV benefits must be determined in accordance with these
procedures (or in accordance with alternative procedures authorized by
the PBGC under Sec. 4022.61(f)) for each participant and beneficiary
whose benefit under the plan exceeds the limitations contained in
Sec. 4022.61(b) or (c) or who is a substantial owner or the beneficiary
of a substantial owner. If the specified conditions do not exist, title
IV benefits may be estimated by the plan administrator in accordance
with procedures authorized by the PBGC, but no such estimate is
required. The conditions are as follows:
(1) An actuarial valuation of the plan has been performed for a
plan year beginning not more than eighteen months before the proposed
termination date. If the interest rate used to value plan liabilities
in this valuation exceeded the applicable valuation interest rates and
factors under appendix B to part 4044 of this chapter in effect on the
proposed termination date, the value of benefits in pay status and the
value of vested benefits not in pay status on the valuation date must
be converted to the PBGC's valuation rates and factors.
(2) The plan has been in effect for at least five full years before
the proposed termination date, and the most recent actuarial valuation
demonstrates that the value of plan assets, reduced by employee
contributions remaining in the plan and interest credited thereon under
the terms of the plan, exceeds the present value, adjusted as required
under paragraph (b)(1), of all plan benefits in pay status on the
valuation date.
(c) Estimated title IV benefit payable with respect to a
participant who is not a substantial owner. For benefits payable with
respect to a participant who is not a substantial owner, the estimated
title IV benefit is the estimated priority category 3 benefit computed
under this paragraph. Priority category 3 benefits are payable with
respect to participants who were, or could have been, in pay status
three full years prior to the proposed termination date. The estimated
priority category 3 benefit is computed by multiplying the benefit
payable with respect to the participant under Sec. 4022.62 (b)(1) and
(b)(2) by a fraction, not to exceed one--
(1) The numerator of which is the benefit that would be payable
with respect to the participant at normal retirement age under the
provisions of the plan in effect on the date five full years before the
proposed termination date, based on the participant's age, service, and
compensation as of the earlier of the participant's benefit
commencement date or the proposed termination date, and
(2) The denominator of which is the benefit that would be payable
with respect to the participant at normal retirement age under the
provisions of the plan in effect on the proposed termination date,
based on the participant's age, service, and compensation as of the
earlier of the participant's benefit commencement date or the proposed
termination date.
(d) Estimated title IV benefit payable with respect to a
substantial owner. For benefits payable with respect to a participant
who is a substantial owner, the estimated title IV benefit is the
higher of the benefit computed under paragraph (c) of this section or
the benefit computed under this paragraph.
(1) The plan administrator shall first calculate the estimated
guaranteed benefit payable with respect to the substantial owner as if
he or she were not a substantial owner, using the method set forth in
Sec. 4022.62(c).
(2) The benefit computed under paragraph (d)(1) shall be multiplied
by the priority category 4 funding ratio. The category 4 funding ratio
is the ratio of x to y, not to exceed one, where--
(i) in a plan with priority category 3 benefits, x equals plan
assets minus employee contributions remaining in the plan on the
valuation date, with interest credited thereon under the terms of the
plan, and the present value of benefits in pay status, and y equals the
present value of all vested benefits not in pay status minus such
employee contributions and interest; or
(ii) in a plan with no priority category 3 benefits, x equals plan
assets minus employee contributions remaining in the plan on the
valuation date, with interest credited thereon under the terms of the
plan, and y equals the present value of all vested benefits minus such
employee contributions and interest.
(e) Examples. This section is illustrated by the following
examples:
Example 1--Facts. A participant who is not a substantial owner
was eligible to retire 3\1/2\ years before the proposed termination
date. The participant retired 2 years before the proposed
termination date with 20 years of service. Her final 5 years'
average salary was $45,000, and she was entitled to an unreduced
early retirement benefit of $1,500 per month payable as a single
life annuity. This retirement benefit does not exceed the limitation
in Sec. 4022.61 (b) or (c).
On the participant's benefit commencement date, the plan
provided for a normal retirement benefit of 2 percent of the final 5
years' salary times the number of years of service. Five years
before the proposed termination date, the percentage was 1\1/2\
percent. The amendments improving benefits were put into effect 3\1/
2\ years prior to the proposed termination date. There were no other
amendments during the 5-year period.
The participant's estimated guaranteed benefit computed under
Sec. 4022.62(c) is $1,500 per month times 0.90 (the factor from
column (b) of Table I in Sec. 4022.62(c)(2)), or $1,350 per month.
It is assumed that the plan meets the conditions set forth in
paragraph (b) of this section, and the plan administrator is
therefore required to estimate the title IV benefit.
Estimated title IV benefit. For a participant who is not a
substantial owner, the amount of the estimated title IV benefit is
the estimated priority category 3 benefit computed under paragraph
(c) of this section. This amount is computed by multiplying the
participant's benefit under the plan as of the later of the proposed
termination date or the benefit commencement date by the ratio of
(i) the normal retirement benefit under the provisions of the plan
in effect 5 years before the proposed termination date and (ii) the
normal retirement benefit under the plan provisions in effect on the
proposed termination date.
Thus, the numerator of the ratio is the benefit that would be
payable to the participant under the normal retirement provisions of
the plan 5 years before the proposed termination date, based on her
age, service, and compensation on her benefit commencement date. The
denominator of the ratio is the benefit that would be payable to the
participant under the normal retirement provisions of the plan in
effect on the proposed termination date, based on her age, service,
and compensation as of the earlier of her benefit commencement date
or the proposed termination date. Since the only different factor in
the numerator and denominator is the salary percentage, the amount
of the estimated title IV benefit is $1,125 (0.015/0.020 x $1,500)
per month. This amount is less than the estimated guaranteed benefit
of $1,350 per month. Therefore, in accordance with Sec. 4022.61(d),
the benefit payable to the participant is $1,350 per month.
Example 2--Facts. A participant who is a substantial owner
retires at the plan's normal retirement age, having completed 5
years of active participation in the plan, on October 31, 1992,
which is the proposed termination date. Under provisions of the plan
in effect 5 years prior to the proposed termination date, the
participant is entitled to a single life annuity of $500 per month.
Under the most recent plan amendments, which were put into effect
1\1/2\ years prior to the proposed termination date, the participant
is entitled to a single life annuity of $1,000 per month. The
participant's estimated guaranteed benefit computed under
Sec. 4022.62(d)(2) is $166.67 per month.
It is assumed that all of the conditions in paragraph (b) of
this section have been met. Plan assets equal $2 million. The
present value of all benefits in pay status is $1.5 million based on
applicable PBGC interest rates. There are no employee contributions
[[Page 34038]]
and the present value of all vested benefits that are not in pay
status is $0.75 million based on applicable PBGC interest rates.
Estimated title IV benefit. Paragraph (d) of this section
provides that the amount of the estimated title IV benefit payable
with respect to a participant who is a substantial owner is the
higher of the estimated priority category 3 benefit computed under
paragraph (c) of this section or the estimated priority category 4
benefit computed under paragraph (d) of this section.
Under paragraph (c), the participant's estimated priority
category 3 benefit is $500 ($1,000 x $500/$1000) per month.
Under paragraph (d), the participant's estimated priority
category 4 benefit is the estimated guaranteed benefit computed
under Sec. 4022.62(c) (i.e., as if the participant were not a
substantial owner) multiplied by the priority category 4 funding
ratio. Since the plan has priority category 3 benefits, the ratio is
determined under paragraph (d)(2)(i). The numerator of the ratio is
plan assets minus the present value of benefits in pay status. The
denominator of the ratio is the present value of all vested benefits
that are not in pay status. The participant's estimated guaranteed
benefit under Sec. 4022.62(c) is $1,000 per month times 0.90 (the
factor from column (b) of Table I in Sec. 4022.62(c)(2)), or $900
per month. Multiplying $900 by the category 4 funding ratio of \2/3\
(($2 million--$1.5 million)/$0.75 million) produces an estimated
category 4 benefit of $600 per month.
Because the estimated category 4 benefit so computed is greater
than the estimated category 3 benefit so computed, the estimated
category 4 benefit is the estimated title IV benefit. Because the
estimated category 4 benefit so computed is greater than the
estimated guaranteed benefit of $166.67 per month, in accordance
with Sec. 4022.61(d), the benefit payable to the participant is the
estimated category 4 benefit of $600 per month.
Subpart E--PBGC Recoupment and Reimbursement of Benefit
Overpayments and Underpayments
Sec. 4022.81 General rules.
(a) Recoupment of benefit overpayments. If at any time the PBGC
determines that net benefits paid with respect to any participant in a
PBGC-trusteed plan exceed the total amount to which the participant or
his or her beneficiary is entitled up to that time under title IV of
ERISA, and the participant or beneficiary is entitled to receive future
benefit payments, the PBGC shall recoup the overpayment in accordance
with paragraph (c) of this section and Sec. 4022.82. Notwithstanding
the previous sentence, the PBGC may, in its discretion, recover
overpayments by methods other than recouping in accordance with the
rules in this subpart. The PBGC will not normally exercise this right
unless net benefits paid after the termination date exceed those to
which a participant or beneficiary is entitled under the terms of the
plan before any reductions under subpart D.
(b) Reimbursement of benefit underpayments. If at any time the PBGC
determines that net benefits paid with respect to a participant in a
PBGC-trusteed plan are less than the amount to which the participant or
his or her beneficiary is entitled up to that time under title IV of
ERISA, the PBGC shall reimburse the participant or beneficiary for the
net underpayment in accordance with paragraphs (c) and (d) of this
section and Sec. 4022.83.
(c) Payments subject to recoupment or reimbursement. The PBGC shall
recoup net overpayments and reimburse net underpayments made on or
after the latest of the proposed termination date, the termination
date, or, if no notice of intent to terminate was issued, the date on
which proceedings to terminate the plan are instituted pursuant to
section 4042 of ERISA.
(d) Interest. The PBGC will compute interest on overpayments and
underpayments using the interest rate established for valuing immediate
annuities as set forth in part 4044, appendix B, of this chapter
according to the following rules:
(1) Overpayments before recoupment begins. Except as provided in
paragraph (d)(2), no interest is charged on overpayments from the date
of the payment to the date on which recoupment begins.
(2) Receipt of both overpayments and underpayments. If both benefit
overpayments and benefit underpayments are made with respect to a
participant, the PBGC will determine the amount of the net overpayment
or underpayment by charging or crediting interest on each payment from
the first day of the month after the date of payment to the first day
of the month in which recoupment begins. If the net overpayment thus
computed is greater than the sum of the actual overpayments (unadjusted
for interest to the date on which recoupment begins), computations
under Sec. 4022.82 will be based upon the sum of the actual
overpayments.
Sec. 4022.82 Method of recoupment.
(a) Future benefit reductions. Unless a participant or beneficiary
elects otherwise under paragraph (b) of this section, the PBGC shall
recoup overpayments of benefits in accordance with this paragraph. The
benefit reduction under this paragraph shall be an amount equal to the
fraction determined under paragraphs (a)(1) and (a)(2) of this section,
multiplied by each future benefit payment to which the participant or
beneficiary is entitled.
(1) Computation. The PBGC shall determine the fractional multiplier
by dividing the amount of the benefit overpayment by the present value
of the benefit payable with respect to the participant under title IV
of ERISA. The PBGC shall determine the present value of the benefit to
which a participant or beneficiary is entitled under title IV of ERISA
as of the termination date, using the PBGC interest rates and factors
in effect on that date. The PBGC may, however, utilize a different date
of determination if warranted by the facts and circumstances of a
particular case.
(2) Limitation on benefit reduction. Except as provided in
paragraph (a)(1) of this section, the PBGC shall reduce benefits with
respect to a participant or beneficiary by no more than the greater of
(i) ten percent per month or (ii) the amount of benefit per month in
excess of the maximum guaranteeable benefit payable under section
4022(b)(3)(B) of ERISA, determined without adjustment for age and
benefit form.
(3) PBGC notice to participant or beneficiary. Before effecting a
benefit reduction pursuant to this paragraph, the PBGC shall notify the
participant or beneficiary in writing of the amount of the benefit
overpayment and of the amount of the reduced benefit computed under
this section. The notice will advise the participant or beneficiary of
the repayment option set forth in paragraph (b) of this section and
inform him or her that the PBGC will proceed to recover the benefit
overpayment in accordance with this paragraph unless an election to
repay in a lump sum is made in accordance with paragraph (b).
(b) Lump sum repayment. A participant or beneficiary who has
received a net benefit overpayment may elect to repay the excess in a
single payment on or before a date agreed to by the participant or
beneficiary and the PBGC. If the full payment is not made by the agreed
upon date or a date is not agreed upon, the PBGC may proceed to recover
the overpayment in accordance with paragraph (a) of this section.
Sec. 4022.83 PBGC reimbursement of benefit underpayments.
When the PBGC determines that there has been a net benefit
underpayment made with respect to a participant, it shall pay the
participant or beneficiary the amount of the net underpayment,
determined in accordance with Sec. 4022.81(d), in a single payment.
[[Page 34039]]
Appendix to Part 4022--Maximum Guaranteeable Monthly Benefit
The following table lists by year the maximum guaranteeable
monthly benefit payable in the form of a life annuity commencing at
age 65 as described by Sec. 4022.22(b) to a participant in a plan
that terminated in that year:
------------------------------------------------------------------------
Maximum
guaranteeable
Year monthly
benefit
------------------------------------------------------------------------
1974.................................................... $750.00
1975.................................................... 801.14
1976.................................................... 869.32
1977.................................................... 937.50
1978.................................................... 1,005.68
1979.................................................... 1,073.86
1980.................................................... 1,159.09
1981.................................................... 1,261.36
1982.................................................... 1,380.68
1983.................................................... 1,517.05
1984.................................................... 1,602.27
1985.................................................... 1,687.50
1986.................................................... 1,789.77
1987.................................................... 1,857.95
1988.................................................... 1,909.09
1989.................................................... 2,028.41
1990.................................................... 2,164.77
1991.................................................... 2,250.00
1992.................................................... 2,352.27
1993.................................................... 2,437.50
1994.................................................... 2,556.82
1995.................................................... 2,573.86
1996.................................................... 2,642.05
------------------------------------------------------------------------
PART 4022B--AGGREGATE LIMITS ON GUARANTEED BENEFITS
Sec. 4022B.1 Aggregate payments limitation.
If a person is entitled to benefits under two or more plans or with
respect to two or more participants, or if more than one person is
entitled to benefits payable with respect to one participant, the
aggregate benefits payable by PBGC from its funds shall be limited to
the extent set forth in Sec. 4022.22 computed without regard to the
provisions of Sec. 4022.22(a). The limitation contained in Sec. 4022.22
shall be applied separately to each plan at the date of its
termination, and the amounts payable by PBGC under each plan shall be
aggregated up to the limitation contained in this section.
PART 4041--TERMINATION OF SINGLE-EMPLOYER PLANS
Subpart A--General Provisions
Sec.
4041.1 Purpose and scope.
4041.2 Definitions.
4041.3 Requirements for a standard termination or a distress
termination.
4041.4 Administration of plan during pendency of termination
proceedings.
4041.5 Challenges to plan termination under collective bargaining
agreement.
4041.6 Annuity requirements.
4041.7 Facilitating plan sufficiency in a standard termination.
4041.8 Disaster relief.
4041.9 Filing with the PBGC.
4041.10 Computation of time.
4041.11 Maintenance of plan records.
4041.12 Information collection.
Subpart B--Standard Termination Process
4041.21 Notice of intent to terminate.
4041.22 Issuance of notices of plan benefits.
4041.23 Form and contents of notices of plan benefits.
4041.24 Standard termination notice.
4041.25 PBGC action upon filing of standard termination notice.
4041.26 Notice of noncompliance.
4041.27 Closeout of plan.
Subpart C--Distress Termination Process
4041.41 Notice of intent to terminate.
4041.42 PBGC review of notice of intent to terminate.
4041.43 Distress termination notice.
4041.44 PBGC determination of compliance with requirements for
distress termination.
4041.45 PBGC determination of plan sufficiency/insufficiency.
4041.46 Notices of benefit distribution.
4041.47 Verification of plan sufficiency prior to closeout.
4041.48 Closeout of plan.
Appendix to Part 4041--Agreement for Commitment to Make Plan Sufficient
for Benefit Liabilities
Authority: 29 U.S.C. 1302(b)(3), 1341, 1344, 1350.
Subpart A--General Provisions
Sec. 4041.1 Purpose and scope.
This part sets forth the rules and procedures for terminating a
single-employer pension plan in a standard termination or in a distress
termination under ERISA. Subpart A contains various general rules that
apply to both standard terminations and distress terminations. Subpart
B sets forth the specific steps that a plan administrator must follow
in order to terminate a plan in a standard termination. Subpart C sets
forth the specific steps that a plan administrator must follow in order
to terminate a plan in a distress termination. This part applies to the
termination of any single-employer plan covered under section 4021(a)
of ERISA and not excluded by section 4021(b). This part does not
reflect the amendments to sections 4041(b)(2)(C)(i) (relating to the
PBGC's authority not to nullify a termination if nullification would be
inconsistent with the interests of participants and beneficiaries) or
4041(c)(2)(B)(i)(I) (relating to the liquidation criteria for a
distress termination) that were contained in the Retirement Protection
Act of 1994 (Pub. L. 103-465, section 778 (a) and (b)).
Sec. 4041.2 Definitions.
The following terms are defined in Sec. 4001.2 of this chapter:
affected party, annuity, benefit liabilities, Code, contributing
sponsor, controlled group, distress termination, distribution date,
employer, ERISA, guaranteed benefit, insurer, irrevocable commitment,
IRS, mandatory employee contributions, normal retirement age, notice of
intent to terminate, PBGC, person, plan, plan administrator, plan year,
single-employer plan, standard termination, termination date, and title
IV benefit.
In addition, for purposes of this part:
Distress termination notice means the notice filed with the PBGC
pursuant to section 4041(c)(2)(A) of ERISA and Sec. 4041.43. PBGC Form
601 (including Schedule EA-D) is the distress termination notice.
Distribution notice means the notice issued to the plan
administrator by the PBGC pursuant to Sec. 4041.45(c) of this part upon
the PBGC's determination that the plan has sufficient assets to pay at
least guaranteed benefits.
Existing collective bargaining agreement means a collective
bargaining agreement that--
(1) By its terms, either has not expired or is extended beyond its
stated expiration date because neither of the collective bargaining
parties took the required action to terminate it, and
(2) Has not been made inoperative by a judicial ruling. When a
collective bargaining agreement no longer meets these conditions, it
ceases to be an ``existing collective bargaining agreement,'' whether
or not any or all of its terms may continue to apply by operation of
law.
Majority owner means, with respect to a contributing sponsor of a
single-employer plan, an individual who owns, directly or indirectly,
50 percent or more of--
(1) An unincorporated trade or business,
(2) The capital interest or the profits interest in a partnership,
or
(3) Either the voting stock of a corporation or the value of all of
the stock of a corporation. For this purpose, the constructive
ownership rules of section 414 (b) and (c) of the Code shall apply.
Notice of benefit distribution means the notice to each participant
and beneficiary required by Sec. 4041.46 of this part describing the
benefit to be distributed to him or her.
Notice of noncompliance means a notice issued to a plan
administrator by the PBGC pursuant to section 4041(b)(2)(C) of ERISA
and Sec. 4041.26 of this part advising the plan administrator that the
requirements for a standard
[[Page 34040]]
termination have not been satisfied and that the plan is an ongoing
plan.
Notice of plan benefits means the notice to each participant and
beneficiary required by section 4041(b)(2)(B) of ERISA and
Secs. 4041.22 and 4041.23 of this part describing his or her plan
benefits.
Participant means--
(1) Any individual who is currently in employment covered by the
plan and who is earning or retaining credited service under the plan,
including any individual who is considered covered under the plan for
purposes of meeting the minimum participation requirements but who,
because of offset or similar provisions, does not have any accrued
benefits;
(2) Any nonvested individual who is not currently in employment
covered by the plan but who is earning or retaining credited service
under the plan; and
(3) Any individual who is retired or separated from employment
covered by the plan and who is receiving benefits under the plan or is
entitled to begin receiving benefits under the plan in the future,
excluding any such individual to whom an insurer has made an
irrevocable commitment to pay all the benefits to which the individual
is entitled under the plan.
Plan benefits means the benefits to which a participant is, or may
become, entitled under the plan's provisions in effect as of the
termination date, based on the participant's accrued benefit under the
plan as of that date. Each participant's ``plan benefits'' equals that
participant's ``benefit liabilities,'' and the sum of all ``plan
benefits'' equals the plan's ``benefit liabilities.''
Proposed distribution date means the date chosen by the plan
administrator as the tentative date for the distribution of plan assets
pursuant to a standard termination. A proposed distribution date may
not be earlier than the 61st day, nor later than the 240th day,
following the day on which the plan administrator files a standard
termination notice with the PBGC.
Proposed termination date means the date specified as such by the
plan administrator in the notice of intent to terminate or, if later,
in the standard termination notice or the distress termination notice.
A proposed termination date specified in the notice of intent to
terminate may not be earlier than the 60th day, nor later than the 90th
day, after the issuance of the notice of intent to terminate. A
proposed termination date becomes the 'termination date' if a plan
terminates in a standard termination. A proposed termination date
specified in the distress termination notice may not be earlier than
the proposed termination date specified in the notice of intent to
terminate, or (except with PBGC approval) later than the 90th day after
the issuance of the notice of intent to terminate.
Residual assets means the plan assets remaining after all benefit
liabilities and other liabilities of the plan have been satisfied.
Standard termination notice means the notice filed with the PBGC
pursuant to section 4041(b)(2)(A) of ERISA and Sec. 4041.24 of this
part advising the PBGC of a proposed standard termination. PBGC Form
500 (including Schedule EA-S) is the standard termination notice.
Sec. 4041.3 Requirements for a standard termination or a distress
termination.
(a) Exclusive means of voluntary plan termination. A plan may be
voluntarily terminated by the plan administrator only if all of the
requirements for a standard termination set forth in paragraph (b) of
this section are satisfied or all of the requirements for a distress
termination set forth in paragraph (c) of this section are satisfied.
(b) Requirements for a standard termination. A plan may be
terminated in a standard termination only if--
(1) The plan administrator issues a notice of intent to terminate
to each affected party in accordance with Sec. 4041.21 at least 60 days
and not more than 90 days before the proposed termination date;
(2) The plan administrator files a standard termination notice with
the PBGC in accordance with Sec. 4041.24 no later than 120 days after
the proposed termination date or, if applicable, no later than the due
date established in an extension notice issued under Sec. 4041.8;
(3) The plan administrator issues notices of plan benefits to plan
participants and beneficiaries in accordance with Secs. 4041.22 and
4041.23 no later than the date that the standard termination notice is
filed with the PBGC;
(4) The PBGC does not issue a notice of noncompliance to the plan
administrator pursuant to Sec. 4041.26; and
(5) The plan administrator distributes plan assets in accordance
with Sec. 4041.27(c) within the 180-day (or extended) distribution
period under Sec. 4041.27(a), (e), and (f) (or, where applicable,
within the time prescribed in part 4050 of this chapter), in
satisfaction of all benefit liabilities under the plan.
(c) Requirements for a distress termination. A plan may be
terminated in a distress termination only if--
(1) The plan administrator issues a notice of intent to terminate
to each affected party in accordance with Sec. 4041.41 at least 60 days
and not more than 90 days before the proposed termination date;
(2) The plan administrator files a distress termination notice with
the PBGC in accordance with Sec. 4041.43 no later than 120 days after
the proposed termination date or, if applicable, no later than the due
date established in an extension notice issued under Sec. 4041.8; and
(3) The PBGC determines that each contributing sponsor and each
member of its controlled group satisfy one of the distress criteria set
forth in paragraph (e) of this section.
(d) Effect of failure to satisfy requirements. (1) If the plan
administrator does not satisfy all of the requirements of paragraph (b)
of this section for a standard termination or, except as provided in
paragraph (d)(2)(i) of this section, all of the requirements of
paragraph (c) of this section for a distress termination, any action
taken to effect the plan termination shall be null and void, and the
plan shall be an ongoing plan. A plan administrator who still desires
to terminate the plan shall initiate the termination process again,
starting with the issuance of a new notice of intent to terminate.
(2)(i) The PBGC may, upon its own motion, waive any requirement
with respect to notices to be filed with the PBGC under paragraph
(c)(1) or (c)(2) of this section if the PBGC believes that it will be
less costly or administratively burdensome to the PBGC to do so. The
PBGC will not entertain requests for waivers under this paragraph.
(ii) Notwithstanding any other provision of this part, the PBGC
retains the authority in any case to initiate a plan termination in
accordance with the provisions of section 4042 of ERISA.
(e) Distress criteria. In a distress termination, each contributing
sponsor and each member of its controlled group shall satisfy at least
one (but not necessarily the same one) of the following criteria in
order for a distress termination to occur:
(1) Liquidation. This criterion is met if, as of the proposed
termination date--
(i) A person has filed or had filed against it a petition seeking
liquidation in a case under title 11, United States Code, or under a
similar federal law or law of a State or political subdivision of a
State, or a case described in paragraph (e)(2) of this section has been
converted to such a case; and
(ii) The case has not been dismissed.
(2) Reorganization. This criterion is met if--
[[Page 34041]]
(i) As of the proposed termination date, a person has filed or had
filed against it a petition seeking reorganization in a case under
title 11, United States Code, or under a similar law of a state or a
political subdivision of a state, or a case described in paragraph
(e)(1) of this section has been converted to such a case;
(ii) As of the proposed termination date, the case has not been
dismissed;
(iii) The person notifies the PBGC of any request to the bankruptcy
court (or other appropriate court in a case under such similar law of a
state or a political subdivision of a state) for approval of the plan
termination by concurrently filing with the PBGC a copy of the motion
requesting court approval, including any documents submitted in support
of the request; and
(iv) The bankruptcy court or other appropriate court determines
that, unless the plan is terminated, such person will be unable to pay
all its debts pursuant to a plan of reorganization and will be unable
to continue in business outside the reorganization process and approves
the plan termination.
(3) Inability to continue in business. This criterion is met if a
person demonstrates to the satisfaction of the PBGC that, unless a
distress termination occurs, the person will be unable to pay its debts
when due and to continue in business.
(4) Unreasonably burdensome pension costs. This criterion is met if
a person demonstrates to the satisfaction of the PBGC that the person's
costs of providing pension coverage have become unreasonably burdensome
solely as a result of declining covered employment under all single-
employer plans for which that person is a contributing sponsor.
(f) Non-duplicative efforts. (1) If a person requests approval of
the plan termination by a court, as described in paragraph (e)(2) of
this section, the PBGC--
(i) Will normally enter an appearance to request that the court
make specific findings as to whether the contributing sponsor or
controlled group member meets the distress test in paragraph (e)(3) of
this section, or state that it is unable to make such findings;
(ii) Will provide the court with any information it has that may be
germane to the court's ruling;
(iii) Will, if the person has requested, or later requests, a
determination by the PBGC under paragraph (e)(3) of this section, defer
action on the request until the court makes its determination; and
(iv) Will be bound by a final and non-appealable order of the
court.
(2) If a person requests a determination by the PBGC under
paragraph (e)(3) of this section, the PBGC determines that the distress
criterion is not met, and the person thereafter requests approval of
the plan termination by a court, as described in paragraph (e)(2) of
this section, the PBGC will advise the court of its determination and
make its administrative record available to the court.
(g) Non-recognition of certain actions. If the PBGC finds that a
person undertook any action or failed to act for the principal purpose
of satisfying any of the distress criteria contained in paragraph (e)
of this section, rather than for a reasonable business purpose, the
PBGC shall disregard such act or failure to act in determining whether
the person has satisfied any of those criteria.
Sec. 4041.4 Administration of plan during pendency of termination
proceedings.
(a) General rule. Except to the extent specifically prohibited by
this section, during the pendency of termination proceedings the plan
administrator shall continue to carry out the normal operations of the
plan, such as putting participants into pay status, collecting
contributions due the plan, investing plan assets, and, during the
pendency of a standard termination, making loans to participants, in
accordance with plan provisions and applicable law and regulations.
(b) Prohibitions after issuance of notice of intent to terminate in
a standard termination. Except as provided in paragraph (d) of this
section, during the period beginning on the first day the plan
administrator issues a notice of intent to terminate and ending on the
last day of the PBGC's 60-day (or extended) review period, as described
in Sec. 4041.25(a), the plan administrator shall not--
(1) Distribute plan assets pursuant to or in furtherance of the
termination of the plan;
(2) Pay benefits attributable to employer contributions, other than
death benefits, in any form other than as an annuity; or
(3) Purchase irrevocable commitments to provide benefits from an
insurer.
(c) Prohibitions after issuing notice of intent to terminate in a
distress termination. The plan administrator shall not make loans to
plan participants beginning on the first day he or she issues a notice
of intent to terminate, and from that date until a distribution is
permitted pursuant to Sec. 4041.48, the plan administrator shall not--
(1) Distribute plan assets pursuant to, or (except as required by
this part) take any other actions to implement, the termination of the
plan;
(2) Pay benefits attributable to employer contributions, other than
death benefits, in any form other than as an annuity; or
(3) Purchase irrevocable commitments to provide benefits from an
insurer.
(d) Exceptions in a standard termination. During the period set
forth in paragraph (b) of this section, the plan administrator may pay
benefits attributable to employer contributions either through the
purchase of irrevocable commitments from an insurer or in a form other
than an annuity if--
(1) The participant has separated from active employment;
(2) The distribution is consistent with prior plan practice; and
(3) The distribution is not reasonably expected to jeopardize the
plan's sufficiency for benefit liabilities.
(e) Effect of notice of noncompliance in a standard termination. If
the PBGC issues a notice of noncompliance pursuant to Sec. 4041.26, the
prohibitions described in paragraphs (b)(2) and (b)(3) of this section
shall cease to apply--
(1) Upon expiration of the period during which reconsideration may
be requested under Sec. 4041.26(c) or, if earlier, at the time the plan
administrator decides not to request reconsideration; or
(2) If reconsideration is requested, upon PBGC issuance of its
decision on reconsideration.
(f) Limitation on benefit payments on or after proposed termination
date in a distress termination. Beginning on the proposed termination
date, the plan administrator shall reduce benefits to the level
determined under part 4022, subpart D, of this chapter.
(g) Failure to qualify for distress termination. In any case where
the PBGC determines, pursuant to Sec. 4041.42(c) or Sec. 4041.44(c)(1),
that the requirements for a distress termination are not satisfied--
(1) The prohibitions in paragraph (c) of this section, other than
those in paragraph (c)(1), shall cease to apply--
(i) Upon expiration of the period during which reconsideration may
be requested under Secs. 4041.42(e) and 4041.44(d) or, if earlier, at
the time the plan administrator decides not to request reconsideration;
or
(ii) If reconsideration is requested, upon PBGC issuance of its
decision on reconsideration.
(2) Any benefits that were not paid pursuant to paragraph (f) of
this section shall be due and payable as of the
[[Page 34042]]
effective date of the PBGC's determination, together with interest from
the date (or dates) on which the unpaid amounts were originally due
until the date on which they are paid in full at the rate or rates
prescribed under Sec. 4022.81(d) of this chapter.
(h) Effect of subsequent insufficiency. If the plan administrator
makes a finding of subsequent insufficiency for guaranteed benefits
pursuant to Sec. 4041.47(b), or the PBGC notifies the plan
administrator that it has made a finding of subsequent insufficiency
for guaranteed benefits pursuant to Sec. 4041.47(d), the prohibitions
in paragraph (c) of this section shall apply in accordance with
Sec. 4041.47(e).
Sec. 4041.5 Challenges to plan termination under collective bargaining
agreement.
(a) Suspension upon formal challenge to termination. (1)(i) If the
PBGC is advised, before the 60-day (or extended) period specified in
Sec. 4041.25 ends (in a standard termination) or before issuance of a
notice of inability to determine sufficiency or a distribution notice
pursuant to Sec. 4041.45(b) or (c) (in a distress termination), that a
formal challenge to the termination (as described in paragraph (b) of
this section) has been initiated, the PBGC shall suspend the
termination proceeding and shall so advise the plan administrator in
writing.
(ii) If the PBGC is advised of a challenge described in paragraph
(a)(1)(i) of this section after the 60-day (or extended) period
specified in Sec. 4041.25 ends (in a standard termination) or after
issuance of a notice of inability to determine sufficiency or a
distribution notice pursuant to Sec. 4041.45(b) or (c) (in a distress
termination) but before the termination procedure is concluded pursuant
to this part, the PBGC may suspend the termination proceeding and, if
it does, shall so advise the plan administrator in writing.
(2) The rules in paragraphs (a)(3) or (a)(4) (as appropriate) shall
apply during a period of suspension beginning on the date of the PBGC's
written notification to the plan administrator and ending with the
final resolution of the challenge to the termination:
(3) In a standard termination--
(i) The running of all time periods specified in ERISA or this part
relevant to the termination shall be suspended; and
(ii) The plan administrator shall comply with the prohibitions in
Sec. 4041.4.
(4) In a distress termination--
(i) The suspension shall stay the issuance by the PBGC of any
notice of inability to determine sufficiency or distribution notice or,
if any such notice was previously issued, shall stay its effectiveness;
(ii) The plan administrator shall comply with the prohibitions in
Sec. 4041.4; and
(iii) The plan administrator shall file a distress termination
notice with the PBGC in the manner and within the time specified in
Sec. 4041.43.
(b) Formal challenge to termination. For purposes of this section,
a formal challenge to a plan termination is initiated when any of the
following actions is taken, asserting that the termination would
violate the terms and conditions of an existing collective bargaining
agreement:
(1) The commencement of any procedure specified in the collective
bargaining agreement for resolving disputes under the agreement; or
(2) The commencement of any action before an arbitrator,
administrative agency or board, or court under applicable labor-
management relations law.
(c) Resolution of challenge. Immediately upon the final resolution
(as described in paragraph (d) of this section) of the formal challenge
to the termination, the plan administrator shall notify the PBGC in
writing of the outcome of the challenge, and shall provide the PBGC
with a copy of the award or order, if any. If the validity of the
proposed termination has been upheld, the plan administrator also shall
advise the PBGC whether the plan administrator wishes to continue the
proposed termination.
(1) Challenge sustained. If the arbitrator, agency, board, or court
has determined (or the parties have agreed) that the proposed
termination violates an existing collective bargaining agreement, the
PBGC shall dismiss the termination proceeding, all actions taken to
effect the plan termination shall be null and void, and the plan shall
be an ongoing plan. In this event, in a distress termination,
Sec. 4041.4(g) shall apply as of the date of the dismissal by the PBGC.
(2) Termination sustained. If the arbitrator, agency, board, or
court has determined (or the parties have agreed) that the proposed
termination does not violate an existing collective bargaining
agreement and the plan administrator wishes to proceed with the
termination, the PBGC shall reactivate the termination proceeding by
sending a written notice thereof to the plan administrator, and the
following rules shall apply:
(i) The termination proceeding shall continue from the point where
it was suspended;
(ii) All actions taken to effect the termination before the
suspension shall be effective;
(iii) Any time periods that were suspended shall resume running
from the date of the PBGC's notice of the reactivation of the
proceeding;
(iv) Any time periods that had fewer than 15 days remaining shall
be extended to the 15th day after the date of the PBGC's notice, or
such later date as the PBGC may specify, and
(v) In a distress termination, the PBGC shall proceed to issue a
notice of inability to determine sufficiency or a distribution notice
(or reactivate any such notice stayed under paragraph (a)(3) of this
section), either with or without first requesting updated information
from the plan administrator pursuant to Sec. 4041.43(c).
(d) Final resolution of challenge. For purposes of this section, a
formal challenge to a proposed termination is finally resolved when--
(1) The parties involved in the challenge enter into a settlement
that resolves the challenge;
(2) A final award, administrative decision, or court order is
issued that is not subject to review or appeal; or
(3) A final award, administrative decision, or court order is
issued that is not appealed, or review or enforcement of which is not
sought, within the time for filing an appeal or requesting review or
enforcement.
(e) Involuntary termination by the PBGC. Notwithstanding any other
provision of this section, the PBGC retains the authority in any case
to initiate a plan termination in accordance with the provisions of
section 4042 of ERISA.
Sec. 4041.6 Annuity requirements.
(a) General rule. Except as provided in paragraphs (b) and (d) of
this section (or, where applicable, in part 4050 of this chapter), when
a plan is closed out under Sec. 4041.27 (in a standard termination) or
Sec. 4041.48 (in a distress termination), any benefit that is payable
as an annuity under the provisions of the plan must be provided in
annuity form through the purchase from an insurer of a single premium,
nonparticipating, nonsurrenderable annuity contract that constitutes an
irrevocable commitment by the insurer to provide the benefits
purchased.
(b) Exceptions to annuity requirement. A benefit that is payable as
an annuity under the provisions of a plan need not be provided in
annuity form if the plan provides for an alternative form of
[[Page 34043]]
distribution and either paragraph (b)(1) or (b)(2) of this section
applies:
(1) The participant is not in pay status as of the distribution
date, and the present value of the participant's total benefit under
the plan, including amounts previously distributed to the participant,
is $3,500 or less, determined in accordance with sections 411(a)(11)
and 417(e)(3) of the Code and the regulations thereunder. The present
value of such benefits shall be determined using the interest rate or
rates as of--
(i) The date set forth in the plan for such purpose, provided that
the plan provision is in accord with section 417(e)(3) of the Code and
the regulations thereunder (substituting ``distribution date'' for
``annuity starting date'' wherever used in the plan); or
(ii) If the plan does not provide for such a date, the distribution
date.
(2) The participant elected the alternative form of distribution in
writing, with the written consent of his or her spouse, in accordance
with the requirements of sections 401(a)(11), 411(a)(11), and 417 of
the Code and the regulations thereunder.
(c) Optional benefit forms. Except as permitted by sections
401(a)(11), 411(d)(6), and 417 of the Code and the regulations
thereunder, an annuity contract purchased to satisfy the annuity
requirement shall preserve all applicable benefit options provided
under the plan as of the termination date.
(d) Participating annuities. (1) General rule. Notwithstanding the
requirement of paragraph (a) of this section that an annuity contract
be nonparticipating, a participating annuity contract may be purchased
to satisfy the annuity requirement if the plan can provide for all
benefit liabilities and--
(i) All benefit liabilities will be guaranteed under the annuity
contract as the unconditional, irrevocable, and noncancellable
obligation of the insurer;
(ii) In no event, including unfavorable investment or actuarial
experience, can the amounts payable to participants under the annuity
contract decrease except to correct mistakes; and
(iii) As provided in paragraph (d)(2) of this section, no amount of
residual assets to which participants are entitled will be used to pay
for the participation feature.
(2) Plans with residual assets. If all or a portion of the residual
assets of a plan will be distributed to participants--
(i) The additional premium for the participation feature must be
paid from the contributing sponsor's share, if any, of the residual
assets or from assets of the contributing sponsor; and
(ii) If the plan provided for mandatory employee contributions, the
amount of residual assets must be determined using the price of the
annuities for all benefit liabilities without the participation
feature.
Sec. 4041.7 Facilitating plan sufficiency in a standard termination.
(a) Commitment to make plan sufficient--(1) General rule. At any
time before a standard termination notice is filed with the PBGC, in
order to enable the plan to terminate in that standard termination, a
contributing sponsor or a member of a controlled group of a
contributing sponsor may make a commitment to contribute any additional
sums necessary to make the plan sufficient for all benefit liabilities.
Any such commitment shall be treated as a plan asset for all purposes
under this part. A sample commitment is included in the appendix to
this part.
(2) Requirements for valid commitment. A commitment to make a plan
sufficient for all benefit liabilities shall be valid for purposes of
this part only if the commitment--
(i) Is made to the plan;
(ii) Is in writing, signed by the contributing sponsor and/or
controlled group member(s); and
(iii) If the contributing sponsor or controlled group member is the
subject of a bankruptcy liquidation or reorganization proceeding, as
described in Sec. 4041.3(e)(1) or (e)(2) of this part, is approved by
the court before which the liquidation or reorganization proceeding is
pending or is unconditionally guaranteed, by a person not in
bankruptcy, to be met at or before the time distribution of assets is
required in the standard termination.
(b) Alternative treatment of majority owner's benefit--(1) General
rule. In order to facilitate the termination of the plan and
distribution of assets in a standard termination, a majority owner may
agree to forego receipt of all or part of his or her benefit until the
benefit liabilities of all other plan participants have been satisfied.
(2) Requirements for valid agreement. Any agreement by a majority
owner to an alternative treatment of his or her benefit is valid only
if--
(i) The agreement is in writing;
(ii) In any case in which the total value of the benefit
(determined in accordance with Sec. 4041.6(b) of this part) is greater
than $3,500, the spouse, if any, of the majority owner consents, in
writing, to the alternative treatment of the benefit; and
(iii) The agreement is not inconsistent with a qualified domestic
relations order (as defined in section 206(d)(3) of ERISA).
Sec. 4041.8 Disaster relief.
(a) Notwithstanding any other provision in this part, when the
President of the United States declares that, under the Disaster Relief
Act of 1974, as amended (42 U.S.C. 5121, 5122(2), 5141(b)), a major
disaster exists, the Executive Director of the PBGC (or his or her
designee) may, by issuing one or more notices of disaster relief,
extend by up to 180 days the due date for--
(1) Filing the standard termination notice under Sec. 4041.24;
(2) Completing the distribution of plan assets in a standard
termination under Sec. 4041.27;
(3) Filing the distress termination notice pursuant to
Sec. 4041.43;
(4) Issuing the notices of benefit distribution in a distress
termination pursuant to Sec. 4041.46(a)(1); or
(5) Completing the distribution of plan assets in a distress
termination pursuant to Sec. 4041.48.
(b) The due date extension or extensions described in paragraph (a)
of this section shall apply only to plan terminations with respect to
which the principal place of business of the contributing sponsor or
the plan administrator, or the office of the service provider, bank,
insurance company, or other person maintaining the information
necessary to file the standard or distress termination notice, issue
notices of plan benefits or benefit distribution, or complete the
distribution of plan assets (as applicable), is within a designated
disaster area.
(c) The standard or distress termination notice or the post-
distribution certification shall identify the termination as being
qualified for the due date extension.
Sec. 4041.9 Filing with the PBGC.
(a) Date of filing. Any document required or permitted to be filed
with the PBGC under this part shall be deemed filed on the date that it
is received at the PBGC, providing it is received no later than 4:00
p.m. on a day other than Saturday, Sunday, or a Federal holiday.
Documents received after 4:00 p.m. or on Saturday, Sunday, or a Federal
holiday shall be deemed filed on the next regular business day.
(b) How to file. Except as may otherwise be provided in applicable
forms and instructions, any document to be filed under this part may be
delivered by mail or by hand to: Reports
[[Page 34044]]
Processing, Insurance Operations Department, Pension Benefit Guaranty
Corporation, 1200 K Street NW., Washington, DC 20005-4026
Sec. 4041.10 Computation of time.
In computing any period of time prescribed or allowed by this part,
the day of the act or event from which the designated period of time
begins to run is not counted. The last day of the period so computed
shall be included, unless it is a Saturday, Sunday, or Federal holiday,
in which event the period runs until the end of the next day that is
not a Saturday, Sunday, or Federal holiday. Notwithstanding the
preceding sentence, a proposed termination date may be any day,
including a Saturday, Sunday, or Federal holiday.
Sec. 4041.11 Maintenance of plan records.
Either the contributing sponsor or the plan administrator of a plan
terminating in a standard termination or a plan terminating in a
distress termination that closes out in accordance with Sec. 4041.48
pursuant to a distribution notice issued under Sec. 4041.45(c) shall
maintain and preserve all records used to compute benefits with respect
to each individual who is a plan participant or a beneficiary of a
deceased participant as of the termination date in accordance with the
following rules:
(a) The records to be maintained and preserved are those used to
compute the benefit for purposes of distribution to each individual in
accordance with Sec. 4041.27(c) (in a standard termination) or
Sec. 4041.48 (in a distress termination) and include, but are not
limited to, the plan documents and all underlying data, including
worksheets prepared by or at the direction of the enrolled actuary,
used in determining the amount, form, and value of benefits.
(b) All records subject to this section shall be preserved for six
years after the date the post-distribution certification required under
Sec. 4041.27(h) (in a standard termination) or Sec. 4041.48(b) (in a
distress termination) is filed with the PBGC.
(c) The contributing sponsor or plan administrator, as appropriate,
shall make records subject to this section available to the PBGC upon
request for inspection and photocopying, and shall submit such records
to the PBGC within 30 days after receipt of the PBGC's written request
therefor (or such other period as may be specified in such written
request).
Sec. 4041.12 Information collection.
The information collection requirements contained in this part have
been approved by the Office of Management and Budget under control
number 1212-0036.
Subpart B--Standard Termination Process
Sec. 4041.21 Notice of intent to terminate.
(a) General rule. At least 60 days and no more than 90 days before
the proposed termination date, the plan administrator shall issue to
each person who is (as of the proposed termination date) an affected
party (other than the PBGC) a written notice of intent to terminate
containing all of the information specified in paragraph (d) of this
section. Failure to comply with the requirements of this section shall
nullify the proposed termination.
(b) Discovery of other affected parties. Notwithstanding the
provisions of paragraph (a) of this section, if the plan administrator
discovers additional affected parties after the expiration of the time
period specified in paragraph (a) of this section, the failure to issue
the notice of intent to terminate to such parties within the specified
time period will not cause the notice to be untimely under paragraph
(a) of this section if the plan administrator could not reasonably have
been expected to know of the additional affected parties and if he or
she promptly issues the notice to each additional affected party.
(c) Issuance--(1) Method. The plan administrator shall issue the
notice of intent to terminate to each affected party (other than the
PBGC) individually either by hand delivery or by first-class mail or
courier service directed to the affected party's last known address.
(2) When issued. The notice of intent to terminate is deemed issued
to each affected party on the date on which it is handed to the
affected party or deposited with a mail or courier service (as
evidenced by a postmark or written receipt).
(d) Contents of notice. The plan administrator shall include in the
notice of intent to terminate all of the following information:
(1) The name of the plan and of the contributing sponsor;
(2) The employer identification number (``EIN'') of the
contributing sponsor and the plan number (``PN''); if there is no EIN
or PN, the notice shall so state;
(3) The name, address, and telephone number of the person who may
be contacted by an affected party with questions concerning the plan's
termination;
(4) A statement that the plan administrator expects to terminate
the plan in a standard termination on a proposed termination date that
is either--
(i) A specific date set forth in the notice, or
(ii) A date to be determined that is dependent on the occurrence of
some future event;
(5) If the proposed termination date is dependent on the occurrence
of a future event, the nature of the event (such as the merger of the
contributing sponsor with another entity), generally when the event is
expected to occur, and when the termination will occur in relation to
the other event;
(6) A statement that benefit and service accruals will continue
until the termination date or, if applicable, that benefit accruals
were or will be frozen as of a specific date in accordance with section
204(h) of ERISA;
(7) A statement that, in order to terminate in a standard
termination, plan assets must be sufficient to provide all benefit
liabilities under the plan with respect to each participant and each
beneficiary of a deceased participant;
(8) A statement that, after plan assets have been distributed to
provide all benefit liabilities with respect to a participant or a
beneficiary of a deceased participant, either by the purchase of an
irrevocable commitment or commitments from an insurer to provide
benefits or by an alternative form of distribution provided for under
the plan, the PBGC's guarantee with respect to that participant's or
beneficiary's benefit ends;
(9) If distribution of benefits under the plan may be wholly or
partially by the purchase of irrevocable commitments from an insurer--
(i) The name and address of the insurer or insurers from whom, or
(if not then known) the insurers from among whom, the plan
administrator intends to purchase the irrevocable commitments; or
(ii) If the plan administrator has not identified an insurer or
insurers at the time the notice of intent to terminate is issued, a
statement that--
(A) Irrevocable commitments may be purchased from an insurer to
provide some or all of the benefits under the plan,
(B) The insurer or insurers have not yet been identified, and
(C) Affected parties (other than the PBGC) will be notified at a
later date (but no later than 45 days before the distribution date) of
the name and address of the insurer or insurers from whom, or (if not
then known) the insurers from among whom, the plan administrator
intends to purchase the irrevocable commitments;
[[Page 34045]]
(10) A statement that if the termination does not occur, the plan
administrator will notify the affected parties (other than the PBGC) in
writing of that fact;
(11) A statement that each affected party, other than the PBGC or
any employee organization, will receive a written notification of the
benefits that the person will receive; and
(12) For retirees only, a statement that their monthly (or other
periodic) benefit amounts will not be affected by the plan's
termination.
(e) Supplemental notice requirements. (1) The plan administrator
shall issue a supplemental notice (or notices) of intent to terminate
to each affected party (other than the PBGC) in accordance with the
rules in paragraph (e)(2) of this section if--
(i) The plan administrator has not yet identified an insurer or
insurers at the time the notice of intent to terminate is issued; or
(ii) The plan administrator notifies affected parties (other than
the PBGC) of the insurer or insurers from whom (or from among whom) he
or she intends to purchase the irrevocable commitments, either in the
notice of intent to terminate or in a later notice, but subsequently
decides to select a different insurer.
(2) The plan administrator shall issue each supplemental notice in
the manner provided in paragraph (c) of this section no later than 45
days before the distribution date and shall include the name and
address of the insurer or insurers from whom, or (if not then known)
the insurers from among whom, the plan administrator intends to
purchase the irrevocable commitments.
(3) Any supplemental notice or notices meeting the requirements of
paragraph (e)(2) of this section shall be deemed a part of the notice
of intent to terminate.
(f) Spin-off/termination transactions. In the case of a spin-off/
termination transaction, the plan administrator shall provide all
participants in the original plan who are covered by the ongoing plan
(as of the proposed termination date) with a notice describing the
transaction no later than the date on which the plan administrator
completes the issuance of notices of intent to terminate under this
section. A spin-off/termination is a transaction in which a single
defined benefit plan is split into two or more plans, in conjunction
with the termination of one or more of the plans, resulting in a
reversion of residual assets to the employer.
Sec. 4041.22 Issuance of notices of plan benefits.
(a) General rule. No later than the date on which the plan
administrator files the standard termination notice with the PBGC, as
required by Sec. 4041.24, the plan administrator shall issue to each
person described in paragraph (b) of this section a notice of that
individual's plan benefits. The notice shall be in the form and contain
the information specified in Sec. 4041.23. Failure to comply with the
requirements of this section shall nullify the proposed termination.
(b) Persons entitled to notice. The plan administrator shall issue
a notice of plan benefits to each person (other than the PBGC or any
employee organization) who is an affected party as of the proposed
termination date (and, in the case of a spin-off/termination
transaction as described in Sec. 4043.21(f), each person who is, as of
the proposed termination date, a participant in the original plan who
is covered by the ongoing plan).
(c) Discovery of other affected parties. Notwithstanding the
provisions of paragraph (a) of this section, if the plan administrator
discovers additional persons entitled to a notice of plan benefits
after the expiration of the time period specified in paragraph (a) of
this section, the failure to issue a notice of plan benefits to such
persons within the specified time period will not cause such notices to
be untimely under paragraph (a) of this section if the plan
administrator could not reasonably have been expected to know of the
additional persons and if he or she promptly issues, to each such
additional person, a notice of plan benefits in the form and containing
the information specified in Sec. 4041.23.
(d) Issuance--(1) Method. The plan administrator shall issue a
notice of plan benefits individually to each person described in
paragraph (b) of this section, either by hand-delivery or by first-
class mail or courier service directed to the person's last known
address.
(2) When issued. A notice of plan benefits is deemed issued to each
person on the date it is handed to the person or deposited with a mail
or courier service (as evidenced by a postmark or written receipt).
Sec. 4041.23 Form and contents of notices of plan benefits.
(a) Form of notices. The plan administrator shall provide notices
of plan benefits written in plain, non-technical English that is likely
to be understood by the average participant or beneficiary. If
technical terms must be used, their meaning shall be explained in non-
technical language.
(b) Foreign languages. The plan administrator of a plan described
in this paragraph shall comply with paragraph (a) of this section and
also shall include in the notices a statement, prominently displayed,
in the foreign language (or languages) common to the non-English
speaking plan participants advising them of how they may obtain
assistance in understanding the notice. The assistance need not involve
written materials, but shall be adequate to reasonably ensure that the
participants and beneficiaries understand the information contained in
their notices and shall be provided through media and at times and
places that are reasonably accessible to the participants and
beneficiaries. A plan is described in this paragraph if, as of the
proposed termination date, the plan either--
(1) Covers fewer than 100 participants and at least 25 percent of
those participants speak only the same non-English language or
(2) Covers 100 or more participants and at least the lesser of 500
or 10 percent of those participants speak the same non-English
language.
(c) Contents of notice. In addition to the information described in
paragraph (d), (e), or (f) of this section, as applicable, the plan
administrator shall include in each notice of plan benefits the
following information:
(1) The name of the plan, the employer identification number
(``EIN'') of the contributing sponsor, and the plan number (``PN''); if
there is no EIN or PN, the notice shall so state;
(2) The name, address, and telephone number of the person who may
be contacted to answer questions concerning a participant's or
beneficiary's benefit;
(3) The proposed termination date and, if applicable, a statement
that this date is later than the proposed termination date given in the
notice of intent to terminate; and
(4) If the amount of the plan benefits set forth in a notice is an
estimate, a statement that the amount is an estimate and that benefits
paid may be greater than or less than the estimate.
(d) Benefits of persons in pay status. The plan administrator shall
include in the notice of plan benefits for a participant or beneficiary
in pay status as of the proposed termination date the following
information:
(1) The amount and form of the participant's plan benefits payable
as of the proposed termination date;
(2) The amount and form of benefit, if any, payable to a
beneficiary upon the
[[Page 34046]]
participant's death and the name of the beneficiary;
(3) The amount and date of any increase or decrease in the benefit
scheduled to occur after the proposed termination date (or that has
already occurred) and an explanation of the increase or decrease,
including, where applicable, a reference to the pertinent plan
provision; and
(4) For benefits of participants or beneficiaries in pay status for
one year or less as of the proposed termination date, the specific
personal data used to calculate the plan benefits described in
paragraphs (d)(1) and (d)(2) of this section, e.g., participant's age
at retirement, spouse's age, participant's length of service, and
including, for Social Security offset benefits, the participant's
actual or, if unknown, estimated Social Security benefit and, for an
estimated benefit, the assumptions used for the participant's earnings
history.
(e) Benefits of participants not in pay status but form and
starting date known. The plan administrator shall include in the notice
of plan benefits for a participant who is not in pay status as of the
proposed termination date, but who has, as of that date, elected to
retire and has elected a form and starting date, or with respect to
whom the plan administrator has determined a lump sum distribution will
be made, the following information:
(1) The amount and form of the participant's plan benefits payable
as of the projected benefit starting date, and what that date is;
(2) The amount and form of benefit, if any, payable to a
beneficiary upon the participant's death and the name of the
beneficiary;
(3) The amount and date of any increase or decrease in the benefit
scheduled to occur after the proposed termination date (or that has
already occurred) and an explanation of the increase or decrease,
including, where applicable, a reference to the pertinent plan
provision; and
(4) If the age at which, or form in which, the plan benefits will
be paid differs from the age or form in which the participant's accrued
benefit at normal retirement age is stated in the plan, the age or form
stated in the plan and the age or form adjustment factors, including,
in the case of a lump sum benefit, the interest rate used to convert to
the lump sum benefit described in paragraph (e)(1) of this section and
a reference to the pertinent plan provision;
(5) The specific personal data, as described in paragraph (d)(4) of
this section, used to calculate the plan benefits (other than a lump
sum benefit) described in paragraphs (e)(1) and (e)(2) of this section
and, with respect to a benefit payable as a lump sum, the personal data
used to calculate the underlying annuity; and
(6) If the plan benefits will be paid in a lump sum, an explanation
of how the interest rate is used to calculate the lump sum; a statement
that the higher the interest rate used, the smaller the lump sum
amount; and, if applicable, a statement that the lump sum amount given
is an estimate because the applicable interest rate may change before
the distribution date.
(f) Benefits of all other participants not in pay status. The plan
administrator shall include in the notice of plan benefits for any
participant not described in paragraph (d) or (e) of this section, the
following information:
(1) The amount and form of the participant's plan benefits payable
at normal retirement age in any form permitted under the plan;
(2) The availability of any alternative benefit forms, including
those payable to a beneficiary upon the participant's death either
before or after retirement, and, for any benefits to which the
participant is or may become entitled that would be payable before
normal retirement age, the earliest benefit commencement date, the
amount payable on and after such date, and whether the benefit would be
subject to future reduction;
(3) The specific personal data, as described in paragraph (d)(4) of
this section, used to calculate the plan benefits described in
paragraph (f)(1) of this section and, with respect to a benefit that
may be paid in a lump sum, the personal data used to calculate the
underlying annuity; and
(4) If the plan benefits may be paid in a lump sum, an explanation
of when a lump sum may be paid without a participant's consent; an
explanation of how the interest rate is used to calculate the lump sum;
and a statement that the higher the interest rate used, the smaller the
lump sum amount.
Sec. 4041.24 Standard termination notice.
(a) Form. The plan administrator shall file with the PBGC a PBGC
Form 500, Standard Termination Notice, Single-Employer Plan
Termination, with Schedule EA-S, Standard Termination Certification of
Sufficiency, that has been completed in accordance with the
instructions thereto. Except as provided in Sec. 4041.8, the plan
administrator shall file the standard termination notice on or before
the 120th day after the proposed termination date.
(b) Supplemental notice requirement. If any of the benefits of the
terminating plan may be provided in annuity form through the purchase
of irrevocable commitments from an insurer and either of the conditions
in paragraph (b)(1) of this section is met, the plan administrator
shall file a supplemental notice (or notices) with the PBGC in
accordance with the provisions in paragraph (b)(2) of this section.
(1) The plan administrator shall file with the PBGC a supplemental
notice (or notices) if--
(i) The insurer or insurers from whom the plan administrator
intends to purchase irrevocable commitments is not identified in the
standard termination notice filed with the PBGC, or
(ii) The plan administrator has notified the PBGC of the insurer or
insurers from whom he or she intends to purchase irrevocable
commitments, either in the standard termination notice or in a later
notice pursuant to paragraph (b)(2) of this section, and subsequently
decides to select a different insurer.
(2) The supplemental notice (or notices) may be filed at any time
after the filing of the standard termination notice, but no later than
45 days before the distribution date, and shall--
(i) Be in writing addressed to: Reports Processing, Insurance
Operations Department, Pension Benefit Guaranty Corporation, 1200 K
Street NW., Washington, DC 20005-4026.
(ii) Give information identifying the contributing sponsor and the
plan by name, address, employer identification and plan numbers (``EIN/
PN''), and PBGC case number (if applicable); and
(iii) Give the name and address of the insurer or insurers from
whom, or (if not then known) the insurers from among whom, the plan
administrator intends to purchase the irrevocable commitments.
Sec. 4041.25 PBGC action upon filing of standard termination notice.
(a) Review period upon filing of standard termination notice--(1)
General rule. After a complete standard termination notice has been
filed in accordance with Sec. 4041.9, the PBGC has 60 days to review
the notice, determine whether to issue a notice of noncompliance
pursuant to Sec. 4041.26, and issue any such notice. The 60-day review
period begins on the day following the filing of a complete standard
termination notice and includes the 60th day. If the PBGC does not
issue a notice of noncompliance by the last day of this 60-day period,
the plan administrator shall proceed to
[[Page 34047]]
close out the plan in accordance with Sec. 4041.27.
(2) Extension of review period. The 60-day review period may be
extended according to the following rules:
(i) The PBGC and the plan administrator may agree in writing,
before the expiration of the 60-day review period, to extend the period
for up to an additional 60 days;
(ii) More than one such extension may be made; and
(iii) Any extension may be made upon whatever terms and conditions
are agreed to by the PBGC and the plan administrator.
(3) Suspension of review period. The 60-day review period shall be
suspended in accordance with paragraph (d) of this section if the PBGC
requests supplemental information.
(b) Acknowledgment of complete standard termination notice. The
PBGC shall notify the plan administrator in writing of the date on
which a complete standard termination notice was filed, so that the
plan administrator may determine when the 60-day review period will
expire.
(c) Return of incomplete standard termination notice. The PBGC
shall return an incomplete standard termination notice and advise the
plan administrator in writing of the missing item(s) of information and
that the complete standard termination notice must be filed no later
than the 120th day after the proposed termination date or the 20th day
after the date of the PBGC notice, whichever is later.
(d) Authority to request supplemental information. Whenever the
PBGC has reason to believe that any of the requirements of
Secs. 4041.21 through 4041.24 of this part were not complied with, or
in any proposed termination that will result in a reversion of residual
assets to the contributing sponsor, the PBGC may require the submission
of information supplementing that furnished pursuant to Sec. 4041.24. A
request for additional information under this paragraph shall be in
writing and shall suspend the running of the 60-day (or extended)
review period described in paragraph (a) of this section. That period
shall begin running again on the day following the filing of the
required information. If a plan administrator or contributing sponsor
fails to submit information required under this paragraph within the
period specified in the PBGC's request, the PBGC may issue a notice of
noncompliance in accordance with Sec. 4041.26 or take other appropriate
action to enforce the requirements of Title IV of ERISA.
(e) Authority to suspend or nullify proposed termination.
Notwithstanding any other provision of this part, the PBGC may, by
written notice to the plan administrator, suspend or nullify a proposed
termination after expiration of the 60-day (or extended) review period
in any case in which it determines that such action is necessary to
carry out the purposes of Title IV of ERISA.
Sec. 4041.26 Notice of noncompliance.
(a) General. (1) The PBGC shall issue to the plan administrator a
written notice of noncompliance, within the period prescribed by
Sec. 4041.25, whenever it makes one of the following determinations:
(i) A determination that the plan administrator failed to issue the
notice of intent to terminate in accordance with Sec. 4041.21.
(ii) A determination that the plan administrator failed to issue
notices of plan benefits in accordance with Secs. 4041.22 and 4041.23.
(iii) A determination that the standard termination notice, or any
supplemental notice, was not filed in accordance with Sec. 4041.24.
(iv) A determination that, as of the proposed distribution date,
plan assets will not be sufficient to satisfy all benefit liabilities
under the plan.
(2) The PBGC shall base any determination described in paragraph
(a)(1) of this section on the information contained in the standard
termination notice, including any supplemental submission under
Sec. 4041.25(d) and any supplemental notice under Sec. 4041.24(b), or
on information provided by any affected party or otherwise obtained by
the PBGC.
(b) Effect of notice of noncompliance. A notice of noncompliance
ends the standard termination proceeding, nullifies all actions taken
to terminate the plan, and renders the plan an ongoing plan. The notice
of noncompliance is effective upon the expiration of the period within
which the plan administrator may request reconsideration pursuant to
paragraph (c) of this section but, once a notice is issued, the plan
administrator shall take no further action to terminate the plan
(except by initiation of a new termination) unless and until the notice
is revoked pursuant to a decision by the PBGC on reconsideration.
(c) Reconsideration of notice of noncompliance. A plan
administrator may request reconsideration of a notice of noncompliance
in accordance with the rules prescribed in part 4003, subpart C, of
this chapter. Any request for reconsideration automatically stays the
effectiveness of the notice of noncompliance until the PBGC issues its
decision on reconsideration.
(d) Notice to affected parties--(1) General rule. Upon a decision
by the PBGC on reconsideration affirming the issuance of a notice of
noncompliance (or, if earlier, upon the plan administrator's decision
not to request reconsideration), the plan administrator shall notify
the affected parties (other than the PBGC), and any persons who were
provided notice under Sec. 4041.21(f)), in writing that the plan is not
going to terminate or, if applicable, that the termination was invalid
but that a new notice of intent to terminate is being issued.
(2) Method of issuance. The notices shall be delivered by first-
class mail or by hand to each person described in paragraph (d)(1) who
is an employee organization or a participant or beneficiary who is then
in pay status. The notices to other participants and beneficiaries
shall be provided in any manner reasonably calculated to reach those
participants and beneficiaries. Reasonable methods of notification
include, but are not limited to, posting the notice at participants'
worksites or publishing the notice in an employee organization
newsletter or newspaper of general circulation in the area or areas
where participants and beneficiaries reside.
Sec. 4041.27 Closeout of plan.
(a) General rules--(1) Distribution. Except as provided in
paragraphs (b), (e), and (f) of this section and Sec. 4041.8 of this
part, if the PBGC does not issue a notice of noncompliance within the
period specified in Sec. 4041.25 or, if a notice of noncompliance is
issued and later revoked after reconsideration under Sec. 4041.26(c),
the plan administrator shall complete the distribution of plan assets
in accordance with paragraph (c) of this section within 180 days after
the expiration of the review period specified in Sec. 4041.25 (or, if
applicable, the date on which the PBGC revokes the notice of
noncompliance) or, if applicable, within the time prescribed in part
4050 of this chapter.
(2) Post-distribution requirements. The plan administrator shall
file with the PBGC a post-distribution certification in accordance with
paragraph (h) of this section and, if any of the plan's benefit
liabilities payable to a participant or beneficiary have been
distributed through the purchase of irrevocable commitments, the plan
administrator also shall provide such participant or beneficiary with a
notice, contract, or certificate in accordance with paragraph (g) of
this section.
(b) Assets insufficient to satisfy benefit liabilities. Before
distributing
[[Page 34048]]
plan assets to close out the plan, the plan administrator shall
determine that plan assets are, in fact, sufficient to satisfy all
benefit liabilities. In determining if plan assets are sufficient, the
plan administrator shall subtract all liabilities (other than the
future benefit liabilities that will be provided when assets are
distributed), e.g., benefit payments due before the distribution date;
PBGC premiums for all plan years through and including the plan year in
which assets are distributed; expenses, fees, and other administrative
costs. If plan assets are not sufficient to satisfy all benefit
liabilities, the plan administrator shall not make any distribution of
assets to effect the plan's termination. In the event of an
insufficiency, the plan administrator shall promptly notify the PBGC.
(c) Method of distribution. The plan administrator shall distribute
plan assets in accordance with Sec. 4041.6 by purchasing irrevocable
commitments from an insurer in satisfaction of all benefit liabilities
that must be provided in annuity form, and by otherwise providing all
benefit liabilities that need not be provided in annuity form. The plan
administrator shall comply with part 4050 of this chapter (dealing with
missing participants), if applicable.
(d) Failure to distribute within 180-day period. Except as provided
in paragraphs (e) and (f) of this section, failure to distribute assets
in accordance with paragraph (c) of this section within the 180-day
distribution period set forth in paragraph (a)(1) of this section,
because of an insufficiency of plan assets as described in paragraph
(b) of this section or for any other reason, shall nullify the
termination. All actions taken to effect the plan's termination shall
be null and void, and the plan shall be an ongoing plan. In this event,
the plan administrator shall notify affected parties (other than the
PBGC) in writing, in accordance with Sec. 4041.26(d), that the plan is
not going to terminate or, if applicable, that the termination was
invalid but that a new notice of intent to terminate is being issued.
(e) Automatic extension of time for distribution. (1) Requirements
for automatic extension. The plan administrator shall be entitled to an
automatic extension of the 180-day period in which to complete the
distribution of plan assets if the plan administrator--
(i) Submits to the IRS a complete request for a determination with
respect to the plan's tax-qualification status upon termination
(``determination letter'') on or before the date that the plan
administrator files the standard termination notice with the PBGC;
(ii) Does not receive a determination letter at least 60 days
before the expiration of the 180-day period; and
(iii) On or before the expiration of the 180-day period, notifies
the PBGC in writing that an extension of the distribution deadline is
required and certifies that the conditions in this paragraph have been
met.
(2) Extension period. If the requirements in paragraph (e)(1) of
this section are met, the time within which the plan administrator
shall complete the distribution of plan assets is automatically
extended until the 60th day after receipt of a favorable determination
letter from the IRS.
(f) Discretionary extension of time for distribution. If the plan
administrator will be unable to complete the distribution of plan
assets within the 180-day (or extended) period for any reason other
than an insufficiency described in paragraph (b) of this section, the
plan administrator may request, and the PBGC shall grant or deny, in
its discretion, an extension of time within which to complete the
distribution according to the following rules:
(1) The plan administrator shall file a written request for a
discretionary extension with the PBGC at least 30 days before the
expiration of the 180-day (or extended) distribution period, explain
the reason(s) for the request, and provide a date certain by which the
distribution will be made if the extension is granted.
(2) The PBGC will not grant a discretionary extension based on
failure to meet the requirements for an automatic extension under
paragraph (e) of this section or failure to locate all participants or
beneficiaries.
(3) The PBGC will grant a discretionary extension, in whole or in
part, only if it is satisfied that the delay in making the distribution
is not due to the action or inaction of the plan administrator or the
contributing sponsor and that the distribution can in fact be completed
by the date requested.
(g) Notice of annuity contract. In the case of the distribution of
benefit liabilities through the purchase of irrevocable commitments--
(1) Either the plan administrator or the insurer shall, as soon as
practicable, provide each participant and beneficiary with a copy of
the annuity contract or certificate showing the insurer's name and
address and clearly reflecting the insurer's obligation to provide the
participant's or beneficiary's benefit; (2) If such a contract or
certificate is not available on or before the date on which the post-
distribution certificate is required to be filed pursuant to paragraph
(h) of this section, the plan administrator shall, no later than such
date, provide each participant and beneficiary with a written notice
stating--
(i) That the obligation for providing the participant's or
beneficiary's plan benefits has transferred to the insurer;
(ii) The name and address of the insurer;
(iii) The name, address, and telephone number of the person
designated by the insurer to answer questions concerning the annuity;
and
(iv) That the participant or beneficiary will receive from the plan
administrator or insurer a copy of the annuity contract or a
certificate showing the insurer's name and address and clearly
reflecting the insurer's obligation to provide the participant's or
beneficiary's benefit; and
(3) The plan administrator shall certify to the PBGC, as part of
the post-distribution certification required under paragraph (h) of
this section, that the requirements in paragraph (g)(1) or (g)(2) of
this section have been satisfied.
(h) Post-distribution certification. Within 30 days after the last
distribution date, the plan administrator shall file with the PBGC a
PBGC Form 501, Post-Distribution Certification for Standard
Termination, that has been completed in accordance with the
instructions thereto. This requirement shall be considered satisfied
if, in accordance with Sec. 4050.6(a)(2) and (a)(3) of this chapter,
the plan administrator files a preliminary post-distribution
certification within 30 days after the last distribution date and, in
addition, timely files an amended post-distribution certification that
otherwise satisfies all applicable requirements.
Subpart C--Distress Termination Process
Sec. 4041.41 Notice of intent to terminate.
(a) General rules. (1) At least 60 days and no more than 90 days
before the proposed termination date, the plan administrator shall
issue to each person who is (as of the proposed termination date) an
affected party a written notice of intent to terminate.
(2) The plan administrator shall issue the notice of intent to
terminate to all affected parties other than the PBGC at or before the
time he or she files the notice with the PBGC.
(3) The notice to affected parties other than the PBGC shall
contain all of the information specified in paragraph (d) of this
section.
[[Page 34049]]
(4) The notice to the PBGC shall be filed on PBGC Form 600,
Distress Termination, Notice of Intent to Terminate, completed in
accordance with the instructions thereto.
(b) Discovery of other affected parties. Notwithstanding the
provisions of paragraphs (a)(1) and (a)(2) of this section, if the plan
administrator discovers additional affected parties after the
expiration of the time period specified in paragraphs (a)(1) or (a)(2)
of this section, the failure to issue the notice of intent to terminate
to such parties within the specified time periods will not cause the
notice to be untimely under paragraph (a) of this section if the plan
administrator could not reasonably have been expected to know of the
additional affected parties and if he or she promptly issues the notice
to each additional affected party.
(c) Issuance--(1) Method. The plan administrator shall issue the
notice of intent to terminate individually to each affected party. The
notice to the PBGC shall be filed in accordance with Sec. 4041.9. The
notice to each of the other affected parties shall be either hand
delivered or delivered by first-class mail or courier service directed
to the affected party's last known address.
(2) When issued. The notice of intent to terminate is deemed issued
to the PBGC on the date on which it is filed and to any other affected
party on the date on which it is handed to the affected party or
deposited with a mail or courier service (as evidenced by a postmark or
written receipt).
(d) Contents of notice to affected parties other than the PBGC. The
plan administrator shall include in the notice of intent to terminate
to each affected party other than the PBGC all of the following
information:
(1) The name of the plan and of the contributing sponsor;
(2) The employer identification number (``EIN'') of the
contributing sponsor and the plan number (``PN''); if there is no EIN
or PN, the notice shall so state;
(3) The name, address, and telephone number of the person who may
be contacted by an affected party with questions concerning the plan's
termination;
(4) A statement that the plan administrator expects to terminate
the plan in a distress termination on a specified proposed termination
date.
(5) A statement that benefit and service accruals will continue
until the termination date or, if applicable, that benefit accruals
were or will be frozen as of a specific date in accordance with section
204(h) of ERISA;
(6) A statement of whether plan assets are sufficient to pay all
guaranteed benefits or all benefit liabilities;
(7) A brief description of what benefits are guaranteed by the PBGC
(e.g., if only a portion of the benefits are guaranteed because of the
phase-in rule, this should be explained), and a statement that
participants and beneficiaries also may receive a portion of the
benefits to which each is entitled under the terms of the plan in
excess of guaranteed benefits; and
(8) A statement, if applicable, that benefits may be subject to
reduction because of the limitations on the amounts guaranteed by the
PBGC or because plan assets are insufficient to pay for full benefits
(pursuant to part 4022, subparts B and D, of this chapter) and that
payments in excess of the amount guaranteed by the PBGC may be recouped
by the PBGC (pursuant to part 4022, subpart E, of this chapter).
(e) Spin-off/termination transactions. In the case of a spin-off/
termination transaction (as described in Sec. 4041.21(f)), the plan
administrator shall provide all participants and beneficiaries in the
original plan who are also participants or beneficiaries in the ongoing
plan (as of the proposed termination date) with a notice describing the
transaction no later than the date on which the plan administrator
completes the issuance of notices of intent to terminate under this
section.
Sec. 4041.42 PBGC review of notice of intent to terminate.
(a) General. When a notice of intent to terminate is filed with it,
the PBGC--
(1) Shall determine whether the notice was issued in compliance
with Sec. 4041.41; and
(2) Shall advise the plan administrator of its determination, in
accordance with paragraph (b) or (c) of this section, no later than the
proposed termination date specified in the notice.
(b) Tentative finding of compliance. If the PBGC determines that
the issuance of the notice of intent to terminate appears to be in
compliance with Sec. 4041.41, it shall notify the plan administrator in
writing that--
(1) The PBGC has made a tentative determination of compliance;
(2) The distress termination proceeding may continue; and
(3) After reviewing the distress termination notice filed pursuant
to Sec. 4041.43, the PBGC will make final, or reverse, this tentative
determination.
(c) Finding of noncompliance. If the PBGC determines that the
issuance of the notice of intent to terminate was not in compliance
with Sec. 4041.41 (except for requirements that the PBGC elects to
waive under Sec. 4041.3(d)(2)(i) with respect to the notice filed with
the PBGC), the PBGC shall notify the plan administrator in writing--
(1) That the PBGC has determined that the notice of intent to
terminate was not properly issued; and
(2) That the proposed distress termination is null and void and the
plan is an ongoing plan.
(d) Information on need to institute section 4042 proceedings. The
PBGC may require the plan administrator to submit, within 20 days after
the plan administrator's receipt of the PBGC's written request (or such
other period as may be specified in such written request), any
information that the PBGC determines it needs in order to decide
whether to institute termination or trusteeship proceedings pursuant to
section 4042 of ERISA, whenever--
(1) A notice of intent to terminate indicates that benefits
currently in pay status (or that should be in pay status) are not being
paid or that this is likely to occur within the 180-day period
following the issuance of the notice of intent to terminate;
(2) The PBGC issues a determination under paragraph (c) of this
section; or
(3) The PBGC has any reason to believe that it may be necessary or
appropriate to institute proceedings under section 4042 of ERISA.
(e) Reconsideration of finding of noncompliance. A plan
administrator may request reconsideration of the PBGC's determination
of noncompliance under paragraph (c) of this section in accordance with
the rules prescribed in part 4003, subpart C, of this chapter. Any
request for reconsideration automatically stays the effectiveness of
the determination until the PBGC issues its decision on
reconsideration, but does not stay the time period within which
information must be submitted to the PBGC in response to a request
under paragraph (d) of this section.
(f) Notice to affected parties. Upon a decision by the PBGC
affirming a finding of noncompliance or upon the expiration of the
period within which the plan administrator may request reconsideration
of a finding of noncompliance (or, if earlier, upon the plan
administrator's decision not to request reconsideration), the plan
administrator shall notify the affected parties (and any persons who
were provided notice under Sec. 4041.41(e)) in writing that the plan is
not going to terminate or, if applicable, that the termination is
invalid but that a new notice of intent to terminate is being issued.
The notice required by this
[[Page 34050]]
paragraph shall be provided in the manner described in
Sec. 4041.26(d)(2).
Sec. 4041.43 Distress termination notice.
(a) General rule. The plan administrator shall file with the PBGC a
PBGC Form 601, Distress Termination Notice, Single-Employer Plan
Termination, with Schedule EA-D, Distress Termination Enrolled Actuary
Certification, that has been completed in accordance with the
instructions thereto, on or before the 120th day after the proposed
termination date or, if applicable, no later than the due date
established in an extension notice issued under Sec. 4041.8.
(b) Participant and benefit information. (1) Plan insufficient for
guaranteed benefits. Unless the enrolled actuary certifies, in the
Schedule EA-D filed in accordance with paragraph (a) of this section,
that the plan is sufficient either for guaranteed benefits or for
benefit liabilities, the plan administrator shall file with the PBGC
the participant and benefit information described in PBGC Form 601 and
the instructions thereto by the later of--
(i) 120 days after the proposed termination date, or
(ii) 30 days after receipt of the PBGC's determination, pursuant to
Sec. 4041.44(b), that the requirements for a distress termination have
been satisfied.
(2) Plan sufficient for guaranteed benefits or benefit liabilities.
If the enrolled actuary certifies that the plan is sufficient either
for guaranteed benefits or for benefit liabilities, the plan
administrator need not submit the participant and benefit information
described in PBGC Form 601 and the instructions thereto unless
requested to do so pursuant to paragraph (c) of this section.
(3) Effect of failure to provide information. The PBGC may void the
distress termination if the plan administrator fails to provide
complete participant and benefit information in accordance with this
section.
(c) Additional information. The PBGC may in any case require the
submission of any additional information that it needs to make the
determinations that it is required to make under this part or to pay
benefits pursuant to section 4061 or 4022(c) of ERISA. The plan
administrator shall submit any information requested under this
paragraph within 30 days after receiving the PBGC's written request (or
such other period as may be specified in such written request).
(d) Due date extension. Notwithstanding the provisions of
paragraphs (a), (b), and (c) of this section, the due date for filing
PBGC Form 601 or other information required under this section may be
extended by a notice issued under Sec. 4041.8.
Sec. 4041.44 PBGC determination of compliance with requirements for
distress termination.
(a) General. Based on the information contained in and submitted
with the PBGC Form 600 and the PBGC Form 601, with Schedule EA-D, and
on any information submitted by an affected party or otherwise obtained
by the PBGC, the PBGC shall determine whether the requirements for a
distress termination set forth in Sec. 4041.3(c) have been met and
shall notify the plan administrator in writing of its determination, in
accordance with paragraph (b) or (c) of this section.
(b) Qualifying termination. If the PBGC determines that all of the
requirements of Sec. 4041.3(c) have been satisfied, it shall so advise
the plan administrator and shall also advise the plan administrator of
whether participant and benefit information must be submitted in
accordance with Sec. 4041.43(b).
(c) Non-qualifying termination. (1) Except as provided in paragraph
(c)(2) of this section, if the PBGC determines that any of the
requirements of Sec. 4041.3(c) has not been met, it shall notify the
plan administrator of its determination, the basis therefor, and the
effect thereof (as provided in Sec. 4041.3(d)).
(2) If the only basis for the PBGC's determination described in
paragraph (c)(1) of this section is that the distress termination
notice is incomplete, the PBGC shall advise the plan administrator of
the missing item(s) of information and that the information must be
filed with the PBGC no later than the 120th day after the proposed
termination date or the 30th day after the date of the PBGC's notice of
its determination, whichever is later, or, if applicable, no later than
the due date established in an extension notice issued under
Sec. 4041.8.
(d) Reconsideration of determination of non-qualification. A plan
administrator may request reconsideration of the PBGC's determination
under paragraph (c)(1) of this section in accordance with the rules
prescribed in part 4003, subpart C, of this chapter. The filing of a
request for reconsideration automatically stays the effectiveness of
the determination until the PBGC issues its decision on
reconsideration.
(e) Notice to affected parties. Upon a decision by the PBGC
affirming a determination of non-qualification or upon the expiration
of the period within which the plan administrator may request
reconsideration of a determination of non-qualification (or, if
earlier, upon the plan administrator's decision not to request
reconsideration), the plan administrator shall notify the affected
parties (and any persons who were provided notice under
Sec. 4041.41(e)) in writing that the plan is not going to terminate or,
if applicable, that the termination is invalid but that a new notice of
intent to terminate is being issued. The notice required by this
paragraph shall be provided in the manner described in
Sec. 4041.26(d)(2).
Sec. 4041.45 PBGC determination of plan sufficiency/insufficiency.
(a) General. Upon receipt of participant and benefit information
filed pursuant to Sec. 4041.43 (b)(1) or (c), the PBGC shall determine
the degree to which the plan is sufficient and notify the plan
administrator in writing of its determination in accordance with
paragraph (b) or (c) of this section.
(b) Insufficiency for guaranteed benefits. If the PBGC finds that
it is unable to determine that a plan is sufficient for guaranteed
benefits, it shall issue a ``notice of inability to determine
sufficiency'' notifying the plan administrator of this finding and
advising the plan administrator that--
(1) The plan administrator shall continue to administer the plan
under the restrictions imposed by Sec. 4041.4; and
(2) The termination shall be completed under section 4042 of ERISA.
(c) Sufficiency for guaranteed benefits or benefit liabilities. If
the PBGC determines that a plan is sufficient for guaranteed benefits
but not for benefit liabilities or is sufficient for benefit
liabilities, the PBGC shall issue to the plan administrator a
distribution notice advising the plan administrator--
(1) To issue notices of benefit distribution in accordance with
Sec. 4041.46;
(2) To close out the plan in accordance with Sec. 4041.48;
(3) To file a timely post-distribution certification with the PBGC
in accordance with Sec. 4041.48(b); and
(4) That either the plan administrator or the contributing sponsor
must preserve and maintain plan records in accordance with
Sec. 4041.11.
Sec. 4041.46 Notices of benefit distribution.
(a) General rules. When a distribution notice is issued by the PBGC
pursuant to Sec. 4041.45(c), the plan administrator shall--
(1) No later than 60 days after receiving the distribution notice
or, if applicable, no later than the due date
[[Page 34051]]
established in an extension notice issued under Sec. 4041.8, issue a
notice of benefit distribution in accordance with the rules described
in paragraphs (c) and (d) of this section to each person (other than
any employee organization or the PBGC) who is an affected party as of
the termination date (and, in the case of a spin-off/termination
transaction as described in Sec. 4041.21(f), each person who is, as of
the termination date, a participant in the original plan and covered by
the ongoing plan); and
(2) No later than 15 days after the date on which the plan
administrator completes the issuance of the notices of benefit
distribution, file with the PBGC a certification that the notices were
so issued in accordance with the requirements of this section.
(b) Discovery of other affected parties. Notwithstanding the
provisions of paragraph (a) of this section, if the plan administrator
discovers additional persons entitled to a notice of benefit
distribution after the expiration of the time period specified in
paragraph (a)(1) of this section, the failure to issue the notices of
benefit distribution to such persons within the specified time period
will not cause such notices to be untimely under paragraph (a) of this
section if the plan administrator could not reasonably have been
expected to know of the additional persons and if he or she promptly
issues, to each such additional person, a notice of benefit
distribution in the form and containing the information specified in
paragraph (d) of this section.
(c) Issuance--(1) Method. The plan administrator shall issue a
notice of benefit distribution individually to each person, either by
hand-delivery or by first-class mail or courier service directed to the
person's last known address.
(2) When issued. A notice of benefit distribution is deemed issued
to each person on the date it is handed to the person or deposited with
a mail or courier service (as evidenced by a postmark or written
receipt).
(d) Form and content of notices. The plan administrator shall
provide notices of benefit distribution in the form described in
Sec. 4041.23 (a) and (b) of this part and shall include in each--
(1) The information described in Sec. 4041.23(c) of this part;
(2) The information described in Sec. 4041.23 (d), (e), or (f) of
this part, as applicable (replacing the term ``plan benefits'' with
``Title IV benefits'' and ``proposed termination date'' with
``termination date''.
(3) A statement that, after plan assets have been distributed to
provide all of the Title IV benefits payable with respect to a
participant or a beneficiary of a deceased participant, either by the
purchase of an irrevocable commitment or commitments from an insurer to
provide benefits or by an alternative form of distribution provided for
under the plan, the PBGC's guarantee with respect to that participant's
or beneficiary's benefit ends; and
(4) If distribution of benefits under the plan may be wholly or
partially by the purchase of irrevocable commitments from an insurer--
(i) The name and address of the insurer or insurers from whom, or
(if not then known) the insurers from among whom, the plan
administrator intends to purchase the irrevocable commitments; or
(ii) If the plan administrator has not identified an insurer or
insurers at the time the notice of distribution is issued, a statement
that the affected party to whom the notice is directed will be notified
at a later date (but no later than 45 days before the distribution
date) of the name and address of the insurer or insurers from whom, or
(if not then known) the insurers from among whom, irrevocable
commitments may be purchased.
(e) Supplemental notice requirements. (1) The plan administrator
shall issue a supplemental notice (or notices) of distribution to each
person in accordance with the rules in paragraph (e)(2) of this section
if--
(i) The plan administrator has not yet identified an insurer or
insurers at the time the notice of distribution is issued; or
(ii) The plan administrator included in the notice of distribution
the name or names of the insurer or insurers from whom (or from among
whom) he or she intends to purchase the irrevocable commitments, but
subsequently decides to select a different insurer.
(2) The plan administrator shall issue each supplemental notice in
the manner provided in paragraph (c) of this section no later than 45
days before the distribution date and shall include the name and
address of the insurer or insurers from whom, or (if not then known)
the insurers from among whom, the plan administrator intends to
purchase the irrevocable commitments.
Sec. 4041.47 Verification of plan sufficiency prior to closeout.
(a) General rule. Before distributing plan assets pursuant to a
closeout under Sec. 4041.48, the plan administrator shall verify
whether the plan's assets are still sufficient to provide for benefits
at the level determined by the PBGC, i.e., guaranteed benefits or
benefit liabilities. If the plan administrator finds that the plan is
no longer able to provide for benefits at the level determined by the
PBGC, then paragraph (b) or (c) of this section, as appropriate, shall
apply.
(b) Subsequent insufficiency for guaranteed benefits. When a plan
administrator finds that a plan is no longer sufficient for guaranteed
benefits, the plan administrator shall promptly notify the PBGC in
writing of that fact and shall take no further action to implement the
plan termination, pending the PBGC's determination and notice pursuant
to paragraph (b)(1) or (b)(2) of this section.
(1) PBGC concurrence with finding. If the PBGC concurs with the
plan administrator's finding, the distribution notice shall be void,
and the PBGC shall--
(i) Issue the plan administrator a notice of inability to determine
sufficiency in accordance with Sec. 4041.45(b); and
(ii) Require the plan administrator to submit a new valuation,
certified to by an enrolled actuary, of the benefit liabilities and
guaranteed benefits under the plan, valued in accordance with
Secs. 4044.41 through 4044.57 of this chapter as of the date of the
plan administrator's notice to the PBGC.
(2) PBGC non-concurrence with finding. If the PBGC does not concur
with the plan administrator's finding, it shall so notify the plan
administrator in writing, and the distribution notice shall remain in
effect.
(c) Subsequent insufficiency for benefit liabilities. When a plan
administrator finds that a plan is sufficient for guaranteed benefits
but is no longer sufficient for benefit liabilities, the plan
administrator shall immediately notify the PBGC in writing of this
fact, but shall continue with the distribution of assets in accordance
with Sec. 4041.48.
(d) Finding by PBGC of subsequent insufficiency. In any case in
which the PBGC finds on its own initiative that a subsequent
insufficiency for guaranteed benefits has occurred, paragraph (b)(1) of
this section shall apply, except that the guaranteed benefits shall be
revalued as of the date of the PBGC's finding.
(e) Restrictions upon finding of subsequent insufficiency. When the
plan administrator makes the finding described in paragraph (b) of this
section or receives notice that the PBGC has made the finding described
in paragraph (d) of this section, the plan administrator shall (except
to the extent the PBGC otherwise directs) be subject to the
prohibitions in Sec. 4041.4(c).
[[Continued on page 34052]]