Opinion letters database

Addresses how a plan cannot be excluded from coverage as an individual account plan.

Reaffirms PBGC’s prior review of its determination that a severance benefit provided by the plan is not a guaranteed benefit. This severance benefit was payable only as a lump sum and was not related to the plan's normal retirement benefit.

Provides that because guaranteed benefits are determined at time of plan termination, a clause in a plan that provides for the cessation of benefits in pay status of participants who violate prohibitions against certain competitive employment will be determined at such time that the clause becomes applicable to a participant.

Amendments to plan did not cause plan to terminate for purposes of Title IV. However plan amendment which ceased further accruals by plan participants is an event described in § 4043(b)(2), which, pursuant to § 4043(a), must be reported to PBGC by plan administrator within 30 days after its occurrence.

Discusses mechanics of converting defined benefit plan to an individual account plan. Each participant would need to complete an election form that must also be forwarded to PBGC.

Terminated, vested benefits are guaranteed when all conditions under the plan necessary to establish entitlement to the benefit at a specified age are satisfied even though participant has yet to attain retirement age on the date of plan termination.

Request for waiver of liability denied.

PBGC guarantees deferred benefit where age is not met as of plan termination date, but would not guarantee an immediate benefit based on a combination of age and service where the age requirement is not satisfied as of the plan termination date.

Request for hypothetical example of how employer liability is determined under § 4062(b) with discussion of 30% of net worth cap.

A plan is not prevented from processing and paying benefits for a participant who was eligible and receiving payments prior to the submission of the notice of intent to terminate and for participants who were eligible but for whom an application was not processed at the time the notice of intent to terminate was submitted.

ERISA precludes the complete reversion to the employer of excess plan assets where the excess is in part attributable to employee contributions.

Where a multiemployer plan isn't involved, PBGC lacks jurisdiction in deciding if there is an exception for clearly sufficient plans, to the rule that any use of an overfunded plan's assets to pay liabilities of an underfunded plan would be a transfer of assets subject to § § 208, 1015 and 1021 of ERISA. In the case of a pending termination, it is proper to make payments to participants who were entitled to a benefit prior to termination.

Unfunded plans are not tax qualified and are not covered plans.

PBGC doesn't object to the establishment of a termination date for the plans as of a day not later than April 30, 1976. Application of the net worth limitation on employer liability to PBGC contained in § 4062(b)(2) upon the termination of the two plans will result in the company being liable to PBGC for the lesser of the sum of the amounts of underfunding of each plan or an amount equal to 30 percent of the net worth of the company.

Physician-owned company is a professional service employer plan. The plan is exempt from coverage under Title IV because it is maintained by a professional service employer and at no time had more than 25 active participants.

Any amendment to a terminating or terminated plan to allow a return of excess plan assets to the employer conflicts with direct statutory provisions and legislative intent to benefit participants.

Since there was a substantial owner, as defined in § 4022(b)(6), under § 4043(b)(7), a distribution of $10,000 or more under a plan to a participant who was a substantial owner within 60 months of the date of the distribution is a reportable event if conditions satisfied. If such a distribution occurs, then pursuant to § 4043(a), the plan administrator must so notify the PBGC within 30 days after its occurrence with notice sent to PBGC.

Individual account plans are not covered plans.

Plan has not met conditions for coverage since ERISA enacted; Title IV doesn’t apply to the termination of the plan. IRS position that the plan is not tax qualified and it failed to vest participants in accrued benefits.

Plan must be communicated to eligible participants to be tax qualified and covered under Title IV.

Denial of request for waiver of termination procedure under § 4041.

Plans had terminated prior to the enactment of ERISA and therefore were not covered by Title IV.

Clarifies that individuals remain "participants" for premium purposes unless their relationship to the plan is fully severed, such as by a lump-sum payment or a by certain annuity purchases.

A plan integration that effects a curtailment in benefits does not constitute a plan termination, but it does constitute a plan amendment which would decrease the benefit payable to certain participants and, therefore, is a reportable event under § 4043(b)(2).

Employer's liability to PBGC pursuant to § 4062 would be limited to $4,500 based on submissions to PBGC.