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PBGC Publishes Final Rule on 401(k) Rollovers to Traditional Pensions

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PBGC Publishes Final Rule on 401(k) Rollovers to Traditional Pensions
November 24, 2014

WASHINGTON—The Pension Benefit Guaranty Corporation is publishing a final rule that makes it easier for participants in 401(k) plans with rollover options to get lifetime income by moving their funds into traditional pensions.

The agency hopes to encourage people to get lifetime income by removing potential barriers to moving their benefits from defined contribution plans to defined benefit plans. The final rule, slated for publication in the Federal Register on Tuesday, removes the fear that the amounts rolled over would suffer under guarantee limits should PBGC step in and pay benefits.

When PBGC first proposed the rule in April it was well-received from various organizations in the pension and retirement community.

"AARP commends the Pension Benefit Guaranty Corporation for issuing this proposed regulation," the organization said in a June 2 letter. "(It) provides additional guarantees for the rollover of pension benefits, thus facilitating access to lifetime income streams and bolstering participants' retirement security."

And in its own June 2 letter, the AFL-CIO said, "The Proposed Rule addresses one significant shortcoming of retirement saving plans that contributes to retirement insecurity—the absence of any meaningful method for providing lifetime retirement income."

Under the final rule, benefits earned from a rollover generally would not be affected by PBGC's maximum guarantee limits.  For a plan terminating in 2015, the agency's maximum guaranteed benefit for a 65-year-old retiree will be just over $60,000 a year.

Also, rollover amounts generally would remain untouched by PBGC's five-year phase-in limits. Normally, benefit increases from changes to a plan in the five years before it ends are partially guaranteed. Under the new proposal, these restrictions generally would not apply.

Note: This press release was edited on Nov. 25, 2014 to include the link to the Federal Register posting of the final rule "Title IV Treatment of Rollovers from Defined Contribution Plans to Defined Benefit Plans."

About PBGC

PBGC protects the pension benefits of more than 41 million Americans in private-sector pension plans. The agency is directly responsible for paying the benefits of about 1.5 million people in failed pension plans. PBGC receives no taxpayer dollars and never has. Its operations are financed by insurance premiums, investment income, and with assets and recoveries from failed plans. For more information, visit


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