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Standard terminations


See Standard termination FAQs for answers to frequently asked questions about issues such as spousal consent, distributing benefits, and missing participants.



A standard termination is a process under which the plan sponsor ends the plan by settling obligations with respect to all benefits accrued under the plans.  This is typically accomplished by purchasing a group annuity contract from an insurer who agrees to take on the responsibility of providing benefits to the plan participants and beneficiaries.  If the plan permits, and subject to the plan provisions and ERISA rules, obligations for some (or all) participants and beneficiaries may also be settled by providing lump sums to participants.

Section 4041(b) of ERISA and subpart B of PBGC's standard termination regulations (29 CFR Part 4041) provide the rules related to standard terminations.

The process for initiating and completing a standard termination includes a requirement to provide specified notices to plan participants and beneficiaries and to submit required forms and schedules to PBGC at specified times during the process.

Required notices to participants

The notices listed below must be provided to affected parties at specified times during the process.  Detailed information about what these notices (e.g., content, timing, who gets which notices) are provided in standard termination filing instructions.  

Type of notice Timing Applicable regulatory site
Notice of Intent to Terminate (NOIT) At least 60 days and not more than 90 days before the proposed termination date. 29 CFR § 4041.23
Notice of Plan Benefits  No later than the time the plan administrator files the Standard Termination Notice. 29 CFR § 4041.24
Notice of Annuity Information  No later than 45 days before the distribution date. 29 CFR § 4041.23(b)(5) and § 4041.27
Notice of Annuity Contract  No later than 30 days after the contract is available. 29 CFR § 4041.28(d)

Filing instructions

The forms and schedules listed below must be completed and submitted to PBGC at specified times during the process.   Instructions about how to complete the required forms and scheduled are provided in PBGCs’ standard termination filing instructions.  

Standard termination audits

ERISA section 4003 provides that PBGC must audit a statistically significant sample of standard terminations each year. To meet that requirement, PBGC audits all plans with more than 1,050 participants and a random sampling of smaller plans.

PBGC also audits plans where there is reason to believe there may be a problem (for example, when we receive a complaint by plan participants or a plan practitioner) or if the plan distributed plan assets in satisfaction of plan liabilities before or without filing a Standard Termination Notice (Form 500).

If errors are discovered upon audit, PBGC will not nullify the termination, but will require that any affected participants be made whole. For example, if participants did not receive all benefits to which they were entitled, the plan administrator must distribute additional benefits; or if participants were not given all options available to them under the plan, the plan administrator must provide those options and honor any changes requested. If the plan administrator does not cooperate in correcting errors, PBGC has the authority to nullify the termination or may ask a court to direct the additional payments to be made.

Although PBGC makes the determination whether additional amounts are owed to participants, the income tax consequences for the plan sponsor, plan, and plan participants would be determined by Internal Revenue Code rules and regulations. You may wish to ask the IRS or your tax advisor(s) for specific guidance.

The most common errors PBGC finds upon audit include, but are not limited to:

Benefit calculation errors

  • Reflecting incorrect service or compensation.
  • Not fully vesting terminated vested participants.
  • Lump sum calculations
    • Using wrong interest rate(s), mortality table, annuity starting date, or age.
    • Using IRC 417(e) assumptions even if plan’s lump sum assumptions result in a larger lump sum.
    • Using assumptions stated in post-termination amendments even if pre-termination plan assumptions result in a lower benefit.
  • Cash balance plans
    • Not crediting interest from Date of Plan Termination to date of distribution or not using 5-year average interest crediting rate.
    • Not paying the top-heavy minimum if greater than the accrued benefit or the account balance.

Other errors

  • Failure to obtain appropriate elections and spousal consents.
  • Failure to include in election forms all forms of benefit provided by the plan.
  • Alternative treatment (waiver) of benefits by non-majority owners.
  • Failure to include all benefit options in annuity contracts and mirror plan provisions.
  • Deduction of processing fees from participants’ benefits.
  • Incomplete information on missing participants.
  • Rolling over lump sums over $1,000 and below the mandatory cash out threshold into an auto-IRA.

Filing assistance and contact information

For assistance with a standard termination, contact PBGC’s Standard Termination Compliance Division.

By email: 

By phone: (800) 736-2444. Select option 3. If you are deaf or hard of hearing, or have a speech disability, dial 7-1-1 to access telecommunications relay services.

You may also contact us by U.S. mail or overnight delivery service at:

Pension Benefit Guaranty Corporation
Standard Termination Compliance Division
Processing and Technical Assistance Branch
445 12th Street SW, Washington, DC 20024-2101



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