[Federal Register: July 1, 1996 (Rules and Regulations)]
[Page 34052-34102]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01jy96-18]

[[pp. 34052-34102]] Reorganization, Renumbering, and Reinvention of Regulations

[[Continued from page 34051]]

[[Page 34052]]

Sec. 4041.48  Closeout of plan.

    (a) General rules--(1) Distribution. If a plan administrator
receives a distribution notice from the PBGC pursuant to
Sec. 4041.45(c) and neither the plan administrator nor the PBGC makes
the finding described in Sec. 4041.47 (b) or (d), the plan
administrator shall distribute plan assets in accordance with
Secs. 4041.6 and 4041.27(c) of this part no earlier than the 61st day
and (except as provided in Sec. 4041.8 or 4041.27 (e) or (f)) no later
than the 180th day following the day on which the plan administrator
completes the issuance of the notices of benefit distribution pursuant
to Sec. 4041.46(a), or, where applicable, within the time prescribed in
part 4050 of this chapter. For purposes of applying
Sec. 4041.27(e)(1)(i), the phrase ``the date that the plan
administrator files the standard termination notice with the PBGC''
shall be replaced by ``the date that the plan administrator completes
issuance of the notices of benefit distribution.''
    (2) Notice of annuity contract. 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 shall provide such participant or beneficiary with a
notice, contract, or certificate in accordance with Sec. 4041.27(g).
    (b) Post-distribution certification. Within 30 days after the last
distribution date, the plan administrator shall file with the PBGC a
PBGC Form 602, Post-Distribution Certification for Distress
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.

Appendix to Part 4041--Agreement for Commitment To Make Plan Sufficient
for Benefit Liabilities

    This agreement, by and between [name of company] XXXXXXXXXX (the
``Company'') and [name of plan] XXXXXXXXXX (the ``Plan'') shall be
effective as of the last date executed.
    Whereas, the Plan is an employee pension benefit plan as
described in section 3(2)(A) of the Employee Retirement Income
Security Act of 1974 (``ERISA''), 29 U.S.C. 1001-1461; and
    Whereas the Company is [describe entity, e.g., corporation,
partnership] XXXXXXXXXX; and
    Whereas, the Company is a contributing sponsor of the Plan, or a
member of the contributing sponsor's controlled group, as described
in section 4001(a) (13) and (14) of ERISA, 29 U.S.C. 1301(2) (13)
and (14); and
    Whereas, the Plan is covered by the termination insurance
provisions of Title IV of ERISA, 29 U.S.C. 1301-1461; and
    Whereas, the Plan administrator has issued or intends to issue
to each affected party a notice of intent to terminate the Plan,
pursuant to section 4041(a)(2) of ERISA, 29 U.S.C. 1341(a)(2); and
    Whereas, the Company wishes the Plan to be sufficient for
benefit liabilities, as described in section 4001(a)(16) of ERISA,
29 U.S.C. 1301(a)(16); and
    Whereas, the parties understand that if the Plan is not able to
satisfy all its obligations for benefit liabilities, it will not be
able to terminate in a standard termination under section 4041(b) of
ERISA, 29 U.S.C. 1341(b); and
    Whereas, the Company is not a debtor in a bankruptcy or other
insolvency proceeding.

[Alternative Paragraph]

    Whereas, the Company is a debtor in a bankruptcy or other
insolvency proceeding and the court before which the proceeding is
pending approves this commitment.
    Whereas, the Company is a debtor in a bankruptcy or other
insolvency proceeding and this commitment is unconditionally
guaranteed, by an entity or person not in bankruptcy, to be met at
or before the time distribution is required in this standard
termination.
    Now Therefore, the parties hereto agree as follows:
    1. The Company promises to pay to the Plan, on or before the
date prescribed for distribution of Plan assets by the plan
administrator, the amount necessary, if any, to ensure that, on the
date the plan administrator distributes the assets of the Plan, the
Plan is able to provide all benefit liabilities.
    2. For the sole purpose of determining whether the Plan is
sufficient to provide all benefit liabilities, an amount equal to
the amount described in paragraph 1 shall be deemed a Plan asset
available for allocation among the participants and beneficiaries of
the Plan, in accordance with section 4044 of ERISA, 29 U.S.C. 1344.
    3. This Agreement shall in no way relieve the Company of its
obligations to pay contributions under the Plan.

Date:
By:
Company:
By:
Plan:

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.

Subpart A--General Provisions

Sec. 4041A.1  Purpose and scope.

    The purpose of this part is to establish rules for notifying the
PBGC of the termination of a multiemployer plan and rules for the
administration of multiemployer plans that have terminated by mass
withdrawal. Subpart B prescribes the contents of and procedures for
filing a Notice of Termination for a multiemployer plan. Subpart C
prescribes basic duties of plan sponsors of mass-withdrawal-terminated
plans. (Other duties are prescribed in part 4281 of this chapter.)
Subpart D contains procedures for closing out sufficient plans. This
part applies to terminated multiemployer plans covered by title IV of
ERISA but, in the case of subparts C and D, only to plans terminated by
mass withdrawal under section 4041A(a)(2) of ERISA (including plans
created by partition pursuant to section 4233 of ERISA).

Sec. 4041A.2  Definitions.

    The following terms are defined in Sec. 4001.l of this chapter:
annuity, ERISA, insurer, IRS, mass withdrawal, multiemployer plan,
nonforfeitable benefit, PBGC, plan, and plan year.
    In addition, for purposes of this part:
    Available resources means, for a plan year, available resources as
described in section 4245(b)(3) of ERISA.
    Benefits subject to reduction means those benefits accrued under
plan amendments (or plans) adopted after March 26, 1980, or under
collective bargaining agreements entered into after March 26, 1980,
that are not eligible for the PBGC's guarantee under section 4022A(b)
of ERISA.
    Financial assistance means financial assistance from the PBGC under
section 4261 of ERISA.
    Insolvency benefit level means the greater of the resource benefit
level or the benefit level guaranteed by the

[[Page 34053]]

PBGC for each participant and beneficiary in pay status.
    Insolvency year means insolvency year as described in section
4245(b)(4) of ERISA.
    Insolvent means that a plan is unable to pay benefits when due
during the plan year. A plan terminated by mass withdrawal is not
insolvent unless it has been amended to eliminate all benefits that are
subject to reduction under section 4281(c) of ERISA, or, in the absence
of an amendment, no benefits under the plan are subject to reduction
under section 4281(c) of ERISA.
    Nonguaranteed benefits means those benefits that are eligible for
the PBGC's guarantee under section 4022A(b) of ERISA, but exceed the
guarantee limits under section 4022A(c).
    Resource benefit level means resource benefit level as described in
section 4245(b)(2) of ERISA.

Sec. 4041A.3  Submission of documents.

    (a) Filing date. Any notice, document, or information required to
be filed with the PBGC under this part shall be deemed filed on the
date of the postmark stamped on the cover in which the notice,
document, or information is mailed, provided that the postmark was made
by the United States Postal Service and the document was mailed postage
prepaid, properly packaged and addressed to the PBGC. If these
conditions 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) Address. Any notice, document, or information required to be
filed with the PBGC under this part shall be sent by mail or submitted
by hand during normal working hours to Reports Processing, Insurance
Operations Department, Pension Benefit Guaranty Corporation, 1200 K
Street NW., Washington, DC 20005-4026.

Subpart B--Notice of Termination

Sec. 4041A.11  Requirement of notice.

    (a) General. A Notice of Termination shall be filed with the PBGC
by a multiemployer plan when the plan has terminated as described in
section 4041A(a) of ERISA.
    (b) Who shall file. The plan sponsor or a duly authorized
representative acting on behalf of the plan sponsor shall sign and file
the Notice.
    (c) When to file. (1) For a termination pursuant to a plan
amendment, the Notice shall be filed with the PBGC within thirty days
after the amendment is adopted or effective, whichever is later.
    (2) For a termination that results from a mass withdrawal, the
Notice shall be filed with the PBGC within thirty days after the last
employer withdrew from the plan or thirty days after the first day of
the first plan year for which no employer contributions were required
under the plan, whichever is earlier.

(Approved by the Office of Management and Budget under control
number 1212-0020)

Sec. 4041A.12  Contents of notice.

    (a) Information to be contained in notice. Except to the extent
provided in paragraph (d), each Notice shall contain:
    (1) The name of the plan;
    (2) The name, address and telephone number of the plan sponsor and
of the plan sponsor's duly authorized representative, if any;
    (3) The name, address, and telephone number of the person that will
administer the plan after the date of termination, if other than the
plan sponsor;
    (4) A copy of the plan's most recent Form 5500 (Annual Report
Form), including schedules; and
    (5) The date of termination of the plan.
    (b) Information to be contained in a notice involving a mass
withdrawal. In addition to the information contained in paragraph (a)
and except as provided in paragraph (d), the following information
shall be contained in a Notice filed by a plan that has terminated by
mass withdrawal:
    (1) A copy of the plan document in effect 5 years prior to the date
of termination and copies of any amendments adopted after that date.
    (2) A copy (or copies) of the trust agreement (or agreements), if
any, authorizing the plan sponsor to control and manage the operation
and administration of the plan.
    (3) A copy of the most recent actuarial statement and opinion (if
any) relating to the plan.
    (4) A statement of any material change in the assets or liabilities
of the plan occurring after either the date of the actuarial statement
referred to in item (5) or the date of the plan's Form 5500 submitted
as part of the Notice.
    (5) Complete copies of any letters of determination issued by the
IRS relating to the establishment of the plan, any letters of
determination relating to the disqualification of the plan and any
subsequent requalification, and any letters of determination relating
to the termination of the plan.
    (6) A statement whether the plan assets will be sufficient to pay
all benefits in pay status during the 12-month period following the
date of termination.
    (7) If plan assets on hand are sufficient to satisfy all
nonforfeitable benefits under the plan, and if the plan sponsor intends
to distribute such assets, a brief description of the proposed method
of distributing the plan assets.
    (8) If plan assets on hand are not sufficient to satisfy all
nonforfeitable benefits under the plan, the name and address of any
employer who contributed to the plan within 3 plan years prior to the
date of termination.
    (c) Certification. As part of the Notice, the plan sponsor or duly
authorized representatives shall certify that all information and
documents submitted pursuant to this section are true and correct to
the best of the plan sponsor's or representative's knowledge and
belief.
    (d) Avoiding duplication. Information described in paragraphs (a)
and (b) of this section need not be supplied if it duplicates
information contained in Form 5500, or a schedule thereof, that a plan
submits as part of the Notice.
    (e) Additional information. In addition to the information
described in paragraphs (a) and (b) of this section, the PBGC may
require the submission of any other information which the PBGC
determines is necessary for review of a Notice of Termination.

Subpart C--Plan Sponsor Duties

Sec. 4041A.21  General rule.

    The plan sponsor of a multiemployer plan that terminates by mass
withdrawal shall continue to administer the plan in accordance with
applicable statutory provisions, regulations, and plan provisions until
a trustee is appointed under section 4042 of ERISA or until plan assets
are distributed in accordance with subpart D of this part. In addition,
the plan sponsor shall be responsible for the specific duties described
in this subpart.

Sec. 4041A.22  Payment of benefits.

    (a) Except as provided in paragraph (b), the plan sponsor shall pay
any benefit attributable to employer contributions, other than a death
benefit, only in the form of an annuity.
    (b) The plan sponsor may pay a benefit in a form other than an
annuity if--
    (1) The plan distributes plan assets in accordance with subpart D
of this part;
    (2) The PBGC approves the payment of the benefit in an alternative
form pursuant to Sec. 4041A.27; or
    (3) The value of the entire nonforfeitable benefit does not exceed
$1,750.
    (c) Except to the extent provided in the next sentence, the plan
sponsor

[[Page 34054]]

shall not pay benefits in excess of the amount that is nonforfeitable
under the plan as of the date of termination, unless authorized to do
so by the PBGC pursuant to Sec. 4041A.27. Subject to the restriction
stated in paragraph (d) of this section, however, the plan sponsor may
pay a qualified preretirement survivor annuity with respect to a
participant who died after the date of termination.
    (d) The payment of benefits subject to reduction shall be
discontinued to the extent provided in Sec. 4281.31 if the plan sponsor
determines, in accordance with Sec. 4041A.24, that the plan's assets
are insufficient to provide all nonforfeitable benefits.
    (e) The plan sponsor shall, to the extent provided in Sec. 4281.41,
suspend the payment of nonguaranteed benefits if the plan sponsor
determines, in accordance with Sec. 4041A.25, that the plan is
insolvent.
    (f) The plan sponsor shall, to the extent required by Sec. 4281.42,
make retroactive payments of suspended benefits if it determines under
that section that the level of the plan's available resources requires
such payments.

Sec. 4041A.23  Imposition and collection of withdrawal liability.

    Until plan assets are distributed in accordance with subpart D of
this part, or until the end of the plan year as of which the PBGC
determines that plan assets (exclusive of claims for withdrawal
liability) are sufficient to satisfy all nonforfeitable benefits under
the plan, the plan sponsor shall be responsible for determining,
imposing and collecting withdrawal liability (including the liability
arising as a result of the mass withdrawal), in accordance with part
4219, subpart C, of this chapter and sections 4201 through 4225 of
ERISA.

Sec. 4041A.24  Annual plan valuations and monitoring.

    (a) Annual valuation. Not later than 150 days after the end of the
plan year, the plan sponsor shall determine or cause to be determined
in writing the value of nonforfeitable benefits under the plan and the
value of the plan's assets, in accordance with part 4281, subpart B.
This valuation shall be done as of the end of the plan year in which
the plan terminates and each plan year thereafter (exclusive of a plan
year for which the plan receives financial assistance from the PBGC
under section 4261 of ERISA) up to but not including the plan year in
which the plan is closed out in accordance with subpart D of this part.
    (b) Plan monitoring. Upon receipt of the annual valuation described
in paragraph (a) of this section, the plan sponsor shall determine
whether the value of nonforfeitable benefits exceeds the value of the
plan's assets, including claims for withdrawal liability owed to the
plan. When benefits do exceed assets, the plan sponsor shall--
    (1) If the plan provides benefits subject to reduction, amend the
plan to reduce those benefits in accordance with the procedures in part
4281, subpart C, of this chapter to the extent necessary to ensure that
the plan's assets are sufficient to discharge when due all of the
plan's obligations with respect to nonforfeitable benefits; or
    (2) If the plan provides no benefits subject to reduction, make
periodic determinations of plan solvency in accordance with
Sec. 4041A.25.
    (c) Notices of benefit reductions. The plan sponsor of a plan that
has been amended to reduce benefits shall provide participants and
beneficiaries and the PBGC notice of the benefit reduction in
accordance with Sec. 4281.32.

Sec. 4041A.25  Periodic determinations of plan solvency.

    (a) Annual insolvency determination. The plan sponsor of a plan
that has been amended to eliminate all benefits that are subject to
reduction under section 4281(c) of ERISA shall determine in writing
whether the plan is expected to be insolvent for the first plan year
beginning after the effective date of the amendment and for each plan
year thereafter. In the event that a plan adopts more than one
amendment reducing benefits under section 4281(c) of ERISA, the initial
determination shall be made for the first plan year beginning after the
effective date of the amendment that effects the elimination of all
such benefits, and a determination shall be made for each plan year
thereafter. The plan sponsor of a plan under which no benefits are
subject to reduction under section 4281(c) of ERISA as of the date the
plan terminated shall determine in writing whether the plan is expected
to be insolvent. The initial determination shall be made for the second
plan year beginning after the first plan year for which it is
determined under section 4281(b) of ERISA that the value of
nonforfeitable benefits under the plan exceeds the value of the plan's
assets. The plan sponsor shall also make a solvency determination for
each plan year thereafter. A determination required under this
paragraph shall be made no later than six months before the beginning
of the plan year to which it applies.
    (b) Other determination of insolvency. Whether or not a prior
determination of plan solvency has been made under paragraph (a) of
this section (or under section 4245 of ERISA), a plan sponsor that has
reason to believe, taking into account the plan's recent and
anticipated financial experience, that the plan is or may be insolvent
for the current or next plan year shall determine in writing whether
the plan is expected to be insolvent for that plan year.
    (c) Benefit suspensions. If the plan sponsor determines that the
plan is, or is expected to be, insolvent for a plan year, it shall
suspend benefits in accordance with Sec. 4281.41.
    (d) Insolvency notices. If the plan sponsor determines that the
plan is, or is expected to be, insolvent for a plan year, it shall
issue notices of insolvency or annual updates and notices of insolvency
benefit level of the PBGC and to plan participants and beneficiaries in
accordance with part 4281, subpart D.

Sec. 4041A.26  Financial assistance.

    A plan sponsor that determines a resource benefit level under
section 4245(b)(2) of ERISA that is below the level of guaranteed
benefits or that determines that the plan will be unable to pay
guaranteed benefits for any month during an insolvency year shall apply
for financial assistance from the PBGC in accordance with Sec. 4281.47.

Sec. 4041A.27  PBGC approval to pay benefits not otherwise permitted.

    Upon written application by the plan sponsor, the PBGC may
authorize the plan to pay benefits other than nonforfeitable benefits
or to pay benefits valued at more than $1,750 in a form other than an
annuity. The PBGC will approve such payments if it determines that the
plan sponsor has demonstrated that the payments are not adverse to the
interests of the plan's participants and beneficiaries generally and do
not unreasonably increase the PBGC's risk of loss with respect to the
plan.

Subpart D--Closeout of Sufficient Plans

Sec. 4041A.41  General rule.

    If a plan's assets, excluding any claim of the plan for unpaid
withdrawal liability, are sufficient to satisfy all obligations for
nonforfeitable benefits provided under the plan, the plan sponsor may
close out the plan in accordance with this subpart by distributing plan
assets in full satisfaction of all nonforfeitable benefits under the
plan.

[[Page 34055]]

Sec. 4041A.42  Method of distribution.

    The plan sponsor shall distribute plan assets by purchasing from an
insurer contracts to provide all benefits required by Sec. 4041A.43 to
be provided in annuity form and by paying in a lump sum (or other
alternative elected by the participant) all other benefits.

Sec. 4041A.43  Benefit forms.

    (a) General rule. Except as provided in paragraph (b) of this
section, the sponsor of a plan that is closed out shall provide for the
payment of any benefit attributable to employer contributions only in
the form of an annuity.
    (b) Exceptions. The plan sponsor may pay a benefit attributable to
employer contributions in a form other than an annuity if:
    (1) The present value of the participant's entire nonforfeitable
benefit, determined using the interest assumption under Secs. 4044.41
through 4044.57, does not exceed $3,500.
    (2) The payment is for death benefits provided under the plan.
    (3) The participant elects an alternative form of distribution
under paragraph (c) of this section.
    (c) Alternative forms of distribution. The plan sponsor may allow
participants to elect alternative forms of distribution in accordance
with this paragraph. When a form of distribution is offered as an
alternative to the normal form, the plan sponsor shall notify each
participant, in writing, of the form and estimated amount of the
participant's normal form of distribution. The notification shall also
describe any risks attendant to the alternative form. Participants'
elections of alternative forms shall be in writing.

Sec. 4041A.44  Cessation of withdrawal liability.

    The obligation of an employer to make payments of initial
withdrawal liability and mass withdrawal liability shall cease on the
date on which the plan's assets are distributed in full satisfaction of
all nonforfeitable benefits provided by the plan.

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 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.
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  Transaction 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; supplementary information.

    Authority: 29 U.S.C. 1082(f), 1302(b)(3), 1343, 1365.

Subpart A--Reportable Events; In General

Sec. 4043.1  Purpose and scope.

    (a) Subpart A of this part contains definitions applicable to this
part and prescribes specific requirements for notification of the
reportable events in section 4043 of ERISA, including the reportable
events specified in section 4043 (c)(1) through (c)(8) and other events
that the PBGC has determined, under section 4043(c)(13) (formerly
section 4043(b)(9)), may be indicative of a need to terminate the plan.
It also implements the PBGC's authority to waive the requirement that
plan administrators notify the PBGC with respect to certain reportable
events and with respect to certain plans. (The PBGC has waived the
requirements of section 4043 with respect to multiemployer plans.)
However, it does not include rules based on the amendments made to
section 4043 by the Retirement Protection Act of 1994 (Pub. L. 103-465,
section 771). Subpart B contains rules for notifying the PBGC of a
failure to make certain required contributions under section 302(f)(4)
of ERISA or section 412(n)(4) of the Code.
    (b) This subpart applies with respect to any single-employer plan
which is covered by section 4021 of ERISA and for which either no
notice of intent to terminate has been issued or, if such a notice has
been issued, until the proposed termination date specified under
section 4041 (b) or (c) of ERISA and part 4041 of this chapter;
provided, that, if a termination proceeding is suspended pursuant to
Sec. 4041.5 of this chapter, this subpart continues to apply unless and
until the PBGC reactivates the termination proceeding. The collection
of information requirements contained in this subpart have been
approved by the Office of Management and Budget under control number
1212-0013.

Sec. 4043.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter:
Code, contributing sponsor, controlled group, ERISA, fair market value,
insurer, irrevocable commitment, IRS, multiemployer plan,
nonforfeitable benefit, notice of intent to terminate, PBGC, person,
plan, plan administrator, plan year, proposed termination date, and
single-employer plan.
    In addition, for purposes of this part, the following definitions
apply:
    Distribution means a direct or indirect benefit payment made in any
form by a plan to a participant, including but not limited to, a
monthly annuity payment, a lump-sum payment or a direct transfer of a
plan asset other than cash. A cash payment made by an insurer pursuant
to an irrevocable commitment shall not be considered a distribution.
    Nonforfeitable benefits which are not funded means nonforfeitable
benefits, as provided in Sec. 4022.5 of this chapter, in excess of plan
assets.
    Parent means the parent of a parent-subsidiary controlled group of
corporations or group of trades or businesses under common control
(within the meaning of subsection (b) or (c) of section 414 of the Code
and the regulations thereunder). Where there is more than one parent in
a parent-subsidiary group, the term parent (for purposes of subpart B)
refers to the parent at the highest level in the chain of corporations
and/or other organizations comprising the group.
    Participant has the same meaning as in Sec. 4007.2 of this chapter.
    Retirement benefit means a benefit payable upon late, normal,
early, or disability retirement, other than a welfare benefit described
in section 3(1) of ERISA, to a participant who leaves or has left
covered employment.

Sec. 4043.3  Requirement of notice.

    (a) Obligation to file. Except where the requirement is expressly
waived by this subpart, the plan administrator, or a duly authorized
representative, shall file with the PBGC a notice of all reportable
events described in this subpart no later than 30 days after the plan
administrator knows or has reason to know a reportable event has
occurred. When a notice is submitted by a plan administrator's duly
authorized representative, other than an attorney at

[[Page 34056]]

law, it shall be accompanied by a notarized power of attorney, signed
by the plan administrator, which authorizes the representative to sign
and submit a notice and, if desired, also authorizes the representative
to act on behalf of the plan administrator in connection with the
notice.
    (b) Contents of notice. The plan administrator shall include the
information listed in this paragraph, and when applicable, the
information specified in paragraph (c) of this section, in a notice
required to be submitted under this section. The plan administrator
shall submit the most recent information available. The plan
administrator shall identify the response to each numbered item in this
paragraph by item number. If any requested information is included in
an IRS form or submission attached to the notice, instead, the
information may be incorporated by reference to the number, date, and
page(s) of the IRS form or submission where it appears. Any required
documentation previously filed with the PBGC need not be refiled, but
may be incorporated by reference to the previous submission. The plan
administrator shall include the following information in a notice:
    (1) The name of the plan;
    (2) The name, address, and telephone number of the contributing
sponsor(s);
    (3) The name, address, and telephone number of the plan
administrator. If the plan administrator is a corporate body, the name
of an individual that should be contacted;
    (4) The nine-digit Employer Identification Number (EIN) assigned by
the IRS to the contributing sponsor and the three-digit Plan Number
(PN) assigned by the contributing sponsor to the plan, and, if
different, also state the EIN-PN last filed with the PBGC. If an EIN-PN
has not been assigned, so indicate;
    (5) A brief statement of the pertinent facts relating to the
reportable event;
    (6) A copy of the plan document currently in effect, i.e., a copy
of the last restatement of the plan and all subsequent amendments;
    (7) A copy of the most recent actuarial statement and opinion (if
any) relating to the plan;
    (8) A statement of any material change in the assets or liabilities
of the plan occurring after the date of the most recent actuarial
statement and opinion relating to the plan; and
    (9) A copy of the most recent determination letter issued by the
IRS (if any) relating to the plan.
    (c) Additional information. With respect to the following
reportable events, the information specified below must be submitted in
addition to that listed in paragraph (b) of this section:
    (1) For an event described in Sec. 4043.14(a) (relating to an
active participant reduction): The number of participants and the
number of active participants as of the beginning of the immediately
preceding and the current plan year and as of the date of the event;
the number of active participants with fully vested rights, the number
of such participants with partially vested rights, and the number of
such participants without vested rights, as of the date of the event
or, if this information is not available as of this date, as of the
beginning of the current plan year; the number of retired participants
receiving benefits as of the date of the event or, if this information
is not available as of this date, as of the beginning of the current
plan year; the number of former employees with vested rights and the
number of deceased participants whose beneficiaries are receiving or
entitled to receive benefits as of the date of the event or, if this
information is not available as of this date, the beginning of the
current plan year. (For those plans determining the number of active
participants as of the end of a plan year, instead of at the beginning
of a plan year, in accordance with Sec. 4043.14(c), the information
required by this paragraph as of the beginning of a plan year shall be
provided as of the end of the previous plan year.)
    (2) For an event described in Sec. 4043.16(a) (relating to a
minimum funding violation):
    A statement of the current funding standard account, or its
alternative, showing the balance at the beginning of the plan year and
the charges and credits to the account for the plan year that are
required under section 302 of ERISA and section 412 of the Code; in the
case of a plan maintained by one contributing sponsor or by two or more
contributing sponsors that are members of the same controlled group, a
copy of the most recent audited (or if not available, unaudited)
financial statements, and the most recent interim financial statements,
of the contributing sponsor (individually or where financial statements
are only available on a consolidated basis with other members of the
same controlled group, on a consolidated basis), including balance
sheets, income statements, statements of changes in financial position
and annual reports.
    (3) For an event described in Sec. 4043.17(a) (relating to an
inability to pay benefits when due):
    The reason(s) why the plan is unable to pay benefits, including a
statement of how long this inability is likely to continue; the amount
of the benefits due during the current payment period and the amount of
assets available to pay those benefits; the normal date of benefit
payment; the amount and date of the last benefit payment.
    (4) For an event described in Sec. 4043.18(a) (relating to a
distribution to a substantial owner):
    The amount and form of the distribution; a statement of whether an
indemnity agreement has been entered into between the participant
receiving the distribution and the plan trustee concerning lump-sum
distributions to the 25 highest paid employees of the benefits subject
to the early termination restrictions of Treas. Reg. Sec. 1.401-4(c).
    (5) For an event described in Sec. 4043.21(a) (relating to a
bankruptcy, insolvency, or similar settlement):
    A copy of all papers filed in the relevant proceedings, including
but not limited to, petitions and supporting schedules; the last date
for filing claims, if known; the name, address and telephone number of
any trustee or receiver of the contributing sponsor.
    (6) For an event described in Sec. 4043.23(a) (relating to a
transaction involving a change in the same controlled group as a
contributing sponsor):
    The name, address, and telephone number of the new contributing
sponsor or of the person no longer under common control with the
contributing sponsor, as applicable; a copy of the most recent audited
(or if not available, unaudited) financial statements, and the most
recent interim financial statements, of the contributing sponsor before
and after the transaction and of the person no longer under common
control with the contributing sponsor (individually or where financial
statements are only available on a consolidated basis with other
members of the same controlled group, on a consolidated basis),
including balance sheets, income statements, statements of changes in
financial position and annual reports.
    (d) Requests for additional information. The PBGC may, in any case,
require the submission of additional information.
    (e) How and where to file. A notice and information required to be
filed with the PBGC by this subpart may be sent by mail or submitted by
hand during normal working hours to: Reports Processing, Insurance
Operations Department, Pension Benefit Guaranty Corporation, 1200 K
Street NW., Washington, DC 20005-4026.
    (f) Optional consolidated filing. A plan administrator may file a
single notice with respect to the occurrence of

[[Page 34057]]

more than one reportable event, or two or more plan administrators may
file a single notice with respect to one or more reportable events
when--
    (1) More than one event for which a notice is required by this
section has occurred and the plan administrator is able to give the
PBGC simultaneous timely notification of the events; or
    (2) An event described in Secs. 4043.21(a), 4043.22(a), or
4043.23(a) has occurred, and all plan administrators who are required
to file a notice pursuant to this section sign the same notice.
    (g) Effect of failure to file. Failure to file a notice required by
this section or failure to include all information required in the
notice constitutes a violation of title IV of ERISA.

Sec. 4043.4   Reporting of reportable events on annual report.

    The requirement that the plan administrator report the occurrence
of a reportable event described in this subpart in the annual report
filed pursuant to part 4065 of this chapter is waived pursuant to the
provisions of section 4065 of ERISA.

Sec. 4043.5   Obligation of contributing sponsor.

    Whenever a contributing sponsor under a plan covered by section
4021 of ERISA, knows or has reason to know that a reportable event has
occurred, it shall notify the plan administrator immediately.

Sec. 4043.6   Date of filing.

    (a) Any notice or document required to be filed under this subpart
is considered filed on the date of the United States postmark stamped
on the cover in which the document is mailed, if--
    (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) are not met, the notice or document is considered
filed on the date it is received by the PBGC. Notices or documents
received after regular business hours are considered filed on the next
regular business day.

Sec. 4043.7   Computation of time.

    In computing any period of time prescribed or allowed by the rules
of this subpart, 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 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.

Sec. 4043.11   Tax disqualification.

    (a) Reportable event. A reportable event occurs when the Secretary
of the Treasury issues a notice that a plan has ceased to be a plan
described in section 4021(a)(2) of ERISA.
    (b) Waiver. The 30-day notice requirement contained in
Sec. 4043.3(a) is waived for the event described in this section.

Sec. 4043.12   Title I non-compliance.

    (a) Reportable event. A reportable event occurs when the Secretary
of Labor determines that a plan is not in compliance with title I of
ERISA.
    (b) Waiver. The 30-day notice requirement contained in
Sec. 4043.3(a) is waived for the event described in this section.

Sec. 4043.13   Amendment decreasing benefits payable.

    (a) Reportable event. A reportable event occurs when an amendment
to a plan is adopted under which the retirement benefit payable from
employer contributions with respect to any participant may be
decreased.
    (b) Waiver. The 30-day notice requirement contained in
Sec. 4043.3(a) is waived for the event described in this section.

Sec. 4043.14   Active participant reduction.

    (a) Reportable event. A reportable event occurs when the number of
active participants under a plan is less than 80 percent of the number
of active participants at the beginning of the plan year, or is less
than 75 percent of the number of active plan participants at the
beginning of the previous plan year.
    (b) Waiver. The 30-day notice requirement contained in
Sec. 4043.3(a) is waived for the event described in this section, if
the conditions in paragraph (b)(1), (b)(2), or (b)(3) of this section
exist.
    (1) The plan has less than 100 participants as of the beginning of
either the current or the previous plan year.
    (2) With respect to a plan maintained by one contributing sponsor
or by two or more contributing sponsors that are members of the same
controlled group, as of the date of the event, the total number of
active participants covered by all the plans covered by this part that
are maintained by a contributing sponsor and all members of the same
controlled group, if any, either is not less than 80 percent of the
total number of active participants in all such plans determined as of
the beginning of each such plan's current plan year, or is not less
than 75 percent of the total number of active participants in all such
plans determined as of the beginning of each such plan's previous plan
year.
    (3) The present value of unfunded vested benefits under the plan
(as reported on the most recently filed IRS/DOL/PBGC Form 5500 or Form
5500-C/R) is less than $250,000.
    (c) Determination of the number of active participants. (1) The
number of active participants as of the beginning of a plan year may be
determined as of the end of the previous plan year.
    (2) For purposes of this section and information submitted pursuant
to Sec. 4043.3(c)(1), with respect to a plan maintained by one
contributing sponsor or by two or more contributing sponsors that are
members of the same controlled group, include as ``active'' only a
participant who--
    (i) Is receiving compensation for work performed;
    (ii) Is on paid or unpaid leave granted for a reason other than a
layoff;
    (iii) Is laid off from work for a period of time that has lasted
less than 30 days; or
    (iv) Is absent from work due to a recurring reduction in employment
that occurs at least annually.

Sec. 4043.15   Termination or partial termination.

    (a) Reportable event. A reportable event occurs when the Secretary
of the Treasury determines that there has been a termination or partial
termination of a plan within the meaning of section 411(d)(3) of the
Code.
    (b) Waiver. The 30-day notice requirement contained in
Sec. 4043.3(a) is waived for the events described in this section.

Sec. 4043.16   Failure to meet minimum funding standards and granting
of funding waiver.

    (a) Reportable event. A reportable event occurs when a plan fails
to meet the minimum funding standards or is granted a minimum funding
waiver under section 412 of the Code or section 302 of ERISA.
    (b) Waiver. The 30-day notice requirement contained in
Sec. 4043.3(a) is waived for the event described in this section,
unless a plan fails to meet minimum funding standards or is granted a
minimum funding waiver and the present value of unfunded vested
benefits under the plan (as reported on the most recently filed IRS/
DOL/PBGC Form 5500 or Form 5500-C/R) equals or exceeds $250,000. In
addition, the 30-day notice requirement contained in Sec. 4043.3(a) is
waived for the event described in this section if, with respect to the
same failure, Form 200 has been

[[Page 34058]]

completed and submitted (including all required documentation and other
information) in accordance with subpart B of this part.

Sec. 4043.17   Inability to pay benefits when due.

    (a) Reportable event. A reportable event occurs when a plan is
unable to pay benefits when due. Except as provided in paragraph (c) of
this section, a plan is unable to pay benefits when due if the plan
does not pay any participant, who is then entitled to benefit payments,
the full promised benefits to which he or she is entitled in the form
prescribed under the terms of the plan.
    (b) Waiver. The 30-day notice requirement in Sec. 4043.3(a) is not
waived for the event described in this section.
    (c) Administrative delays. A plan shall not be treated as being
unable to pay benefits when due if its failure to pay benefits is
caused solely by: (1) The need to verify any participant's eligibility
for benefits; (2) the inability to locate any participant; or (3) any
other administrative delay if such delay lasts less than the shorter of
two months or two full benefit payment periods.

Sec. 4043.18   Distribution to a substantial owner.

    (a) Reportable event. A reportable event occurs when there is a
distribution or distributions under the plan to a participant who is a
substantial owner if--
    (1) The total of all distributions to the substantial owner within
a 24-month period has a value of $10,000 or more;
    (2) The distribution or distributions were not made by reason of
the death of the participant; and
    (3) Immediately after the distribution or the last distribution in
a series, the plan has nonforfeitable benefits which are not funded.
    (b) Waiver. The 30-day notice requirement contained in Sec. 4043.3
is waived for the event described in this section, unless--
    (1) A plan makes a distribution or distributions within a 12-month
period to a substantial owner having a total value of $10,000 or more;
and
    (2) The amount of the distribution or distributions exceeds the
amount of the maximum guaranteeable benefit for the substantial owner,
determined under Sec. 4022.27 of this chapter, for the year in which
the distribution or the last distribution in a series was made.
    (c) Valuation of distribution. The value of a distribution
described in paragraph (a) or (b) of this section is determined in
accordance with the provisions of this paragraph.
    (1) The value of a distribution, other than an irrevocable
commitment, equals the sum of the cash amounts actually received by the
participant and the fair market value of any assets distributed in a
form other than cash, determined as of the distribution date.
    (2) The value of an irrevocable commitment is the purchase price of
the irrevocable commitment, or the value, determined in accordance with
reasonable actuarial assumptions, of the benefits payable pursuant to
that irrevocable commitment. For this purpose, reasonable actuarial
assumptions are the actuarial assumptions used by the PBGC under
subpart B of part 4044 of this chapter, or the actuarial assumptions
used by the plan for purposes of section 302 of ERISA and section 412
of the Code.
    (d) Date of substantial owner distribution. The date of
distribution to a substantial owner of an irrevocable commitment is the
date on which the obligation to provide benefits passes from the plan
to the insurer. The date of distribution to a substantial owner of a
cash distribution shall be the date it is received by the participant.
The date of all other distributions to a substantial owner shall be the
date when the plan relinquishes control over the assets transferred
directly or indirectly to the participant.
    (e) Determination date. The determination of whether a participant
is a substantial owner, or has been in the preceding 60 months, is made
on the date when there has been a distribution or distributions with a
total value of $10,000 or more.
    (f) Valuation of assets and benefits. For purposes of paragraph
(a)(3) of this section, in determining whether a plan has
nonforfeitable benefits which are not funded--
    (1) Assets are valued at fair market value; and
    (2) Benefits are valued in accordance with reasonable actuarial
assumptions. For this purpose, reasonable actuarial assumptions are the
actuarial assumptions used by the PBGC under subpart B of part 4044 of
this chapter, or the actuarial assumptions used by the plan for
purposes of section 302 of ERISA and section 412 of the Code.

Sec. 4043.19   Plan merger, consolidation or transfer.

    (a) Reportable event. A reportable event occurs when a plan merges,
consolidates, or transfers its assets or liabilities under section 208
of ERISA or section 414(1) of the Code.
    (b) Waiver. The 30-day notice requirement contained in
Sec. 4043.3(a) is waived for the events described in this section.

Sec. 4043.20   Alternative compliance with reporting and disclosure
requirements of Title I.

    (a) Reportable event. A reportable event occurs when an alternative
method of compliance (not of general applicability) is prescribed for a
plan by the Secretary of Labor under section 110 of ERISA.
    (b) Waiver. The 30-day notice requirement contained in
Sec. 4043.3(a) is waived for the event described in this section.

Sec. 4043.21   Bankruptcy, insolvency, or similar settlements.

    (a) Reportable event. A reportable event occurs with respect to a
plan maintained by one contributing sponsor or by two or more
contributing sponsors that are members of the same controlled group
when a contributing sponsor--
    (1) Commences a bankruptcy case (under Title 11, U.S.C.), or has a
bankruptcy case commenced against it;
    (2) Commences or has commenced against it, any other type of
insolvency proceeding (including, but not limited to the appointment of
a receiver);
    (3) Commences, or has commenced against it, a proceeding to effect
a composition, extension or settlement with creditors;
    (4) Executes a general assignment for the benefit of creditors; or
    (5) Undertakes to effect any other non-judicial composition,
extension or settlement with substantially all its creditors.
    (b) Waiver. The 30-day notice requirement contained in
Sec. 4043.3(a) is not waived for the event described in this section.

Sec. 4043.22   Liquidation or dissolution.

    (a) Reportable event. Except as provided in paragraph (c) of this
section, a reportable event occurs with respect to a plan maintained by
one contributing sponsor or by two or more contributing sponsors that
are members of the same controlled group when a contributing sponsor--
    (1) Is involved in any transaction to implement its complete
liquidation; or
    (2) Institutes or has instituted against it a proceeding to be
dissolved, or is dissolved, whichever occurs first.
    (b) Waiver. The 30-day notice requirement contained in
Sec. 4043.3(a) is not waived for the event described in this section.
    (c) Reorganizations described in section 4069(b). This section does
not cover any of the reoganizations described in section 4069(b) of
ERISA.

[[Page 34059]]

Sec. 4043.23   Transaction involving a change in contributing sponsor
or controlled group.

    (a) Reportable event. Except as provided in paragraph (c) of this
section, a reportable event occurs with respect to a plan maintained by
one contributing sponsor or by two or more contributing sponsors that
are members of the same controlled group with nonforfeitable benefits
which are not funded of $1 million or more when--
    (1) As a result of a transaction involving a transfer of assets of
or an ownership interest in a contributing sponsor--
    (i) There is or will be a new contributing sponsor that is not a
member of the controlled group of the previous contributing sponsor;
    (ii) The contributing sponsor leaves or will leave the controlled
group; or
    (iii) The contributing sponsor becomes or will become a member of a
different controlled group, except where the new controlled group is or
will be the same, but for the addition of another person, as the
contributing sponsor's controlled group before the transaction; or
    (2) As a result of a transaction involving a transfer by a
contributing sponsor of assets of or an ownership interest in another
person, the contributing sponsor and that person are or will be no
longer part of the same controlled group.
    (b) Waiver. The 30-day notice requirement contained in
Sec. 4043.3(a) is not waived for the event described in this section.
    (c) Certain reorganizations. This section does not apply to--
    (1) A reorganization involving a mere change in identity, form or
place of organization, however effected;
    (2) A reorganization involving a liquidation into a parent
corporation; and
    (3) A reorganization involving a merger, consolidation, or division
solely between (or among) members of the same controlled group as the
contributing sponsor.
    (d) Definition of transaction. For purposes of this section, the
term transaction includes, but is not limited to, a legally binding
agreement, whether or not written, to transfer, and a change in
ownership that occurs as a matter of law or through the exercise or
lapse of pre-existing rights.
    (e) Valuation of assets and benefits. For purposes of paragraph (a)
of this section, in determining whether a plan has nonforfeitable
benefits which are not funded of $1 million or more--
    (1) Assets are valued at fair market value; and
    (2) Benefits are valued in accordance with reasonable actuarial
assumptions. For this purpose, reasonable actuarial assumptions are the
actuarial assumptions used by the PBGC under subpart B of part 4044 of
this chapter, or the actuarial assumptions used by the plan for
purposes of section 302 of ERISA and section 412 of the Code.

Subpart B--Section 302(f); Notice of Failure To Make Required
Contributions

Sec. 4043.31   PBGC Form 200, notice of failure to make required
contributions; supplementary information.

    (a) General rules. To comply with the notification requirement in
section 302(f)(4) of ERISA and section 412(n)(4) of the Code, a
contributing sponsor of a single-employer plan that is covered under
section 4021 of ERISA and, if that contributing sponsor is a member of
a parent-subsidiary controlled group, the parent must complete and
submit a properly certified Form 200 that includes all required
documentation and other information, as described in the related filing
instructions, in accordance with this section. Notice of failure to
make required contributions is required whenever the unpaid balance of
a required installment or any other payment required under section 302
of ERISA and section 412 of the Code (including interest), when added
to the aggregate unpaid balance of all preceding such installments or
other payments for which payment was not made when due (including
interest), exceeds $1 million.
    (1) Form 200 must be filed with the PBGC no later than 10 days
after the due date for any required payment for which payment was not
made when due.
    (i) The 10-day period for filing Form 200 is computed in accordance
with Sec. 4043.7 of this chapter.
    (ii) The filing date for Form 200 is the date on which it is
received by the PBGC office specified in the instructions if it is
received no later than 4 p.m. on a weekday other than a Federal
holiday. If it is received after 4 p.m. or on a weekend or Federal
holiday, the Form 200 is deemed to be filed on the next regular
business day.
     (2) If a contributing sponsor or the parent completes and submits
Form 200 in accordance with this section, the PBGC will deem the other
person to have so filed and it will consider the notification
requirement in section 302(f)(4) of ERISA and section 412(n)(4) of the
Code to be satisfied by all members of a controlled group of which the
person who has filed Form 200 is a member.
    (b) Supplementary information. If, upon review of a Form 200, the
PBGC concludes that it needs additional information in order to make
decisions regarding enforcement of a lien imposed by section 302(f) of
ERISA and section 412(n) of the Code, the PBGC, by written
notification, may require any contributing sponsor or member of a
controlled group of which a contributing sponsor is a member to
supplement the Form 200. Such additional information must be filed with
the PBGC office specified within 7 days after the date of the written
notification, as determined in accordance with Secs. 4043.6 and 4043.7
of this chapter, or by a different time specified therein.

PART 4044--ALLOCATION OF ASSETS IN SINGLE-EMPLOYER PLANS

Subpart A--Allocation of Assets

General Provisions

Sec.
4044.1  Purpose and scope.
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

General Provisions

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.

[[Page 34060]]

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.

    Note: Certain provisions of part 4044 have been superseded by
legislative changes. For example, there are references to provisions
formerly codified in 29 CFR part 2617, subpart C (and to the Notice
of Sufficiency provided for thereunder) that no longer exist because
of changes in the PBGC's plan termination regulations in response to
the Single-Employer Pension Plan Amendments Act of 1986 and the
Pension Protection Act of 1987. The PBGC intends to amend part 4044
at a later date to conform it to current statutory provisions.

Subpart A--Allocation of Assets

General Provisions

Sec. 4044.1   Purpose and scope.

    This part implements section 4044 of ERISA, which contains rules
for allocating a plan's assets when the plan terminates. These rules
have been in effect since September 2, 1974, the date of enactment of
ERISA. This part applies to any single-employer plan covered by title
IV of ERISA that submits a notice of intent to terminate, or for which
PBGC commences an action to terminate the plan under section 4042 of
ERISA.
    (a) Subpart A. Sections 4044.1 through 4044.4 set forth general
rules for applying Secs. 4044.10 through 4044.17. Sections 4044.10
through 4044.17 interpret the rules and describe procedures for
allocating plan assets to priority categories 1 through 6.
    (b) Subpart B. The purpose of subpart B is to establish the method
of determining the value of benefits and assets under terminating
single-employer pension plans covered by title IV of ERISA. This
valuation is needed for both plans trusteed under title IV and plans
which are not trusteed. For the former, the valuation is needed to
allocate plan assets in accordance with subpart A of this part and to
determine the amount of any plan asset insufficiency. For the latter,
the valuation is needed to allocate assets in accordance with subpart A
and to distribute the assets in accordance with subpart B of part 4041
of this chapter.
     (1) Section 4044.41 sets forth the general provisions of subpart B
and applies to all terminating single-employer plans. Sections 4044.51
through 4044.57 prescribe the benefit valuation rules for plans that
receive or that expect to receive a Notice of Inability to Determine
Sufficiency from PBGC and are placed into trusteeship by PBGC,
including (in Secs. 4044.55 through 4044.57) the rules and procedures a
plan administrator shall follow to determine the expected retirement
age (XRA) for a plan participant entitled to early retirement benefits
for whom the annuity starting date is not known as of the valuation
date. This applies to all trusteed plans which have such early
retirement benefits. The plan administrator shall determine an XRA
under Sec. 4044.55, Sec. 4044.56 or Sec. 4044.57, as appropriate, for
each active participant or participant with a deferred vested benefit
who is entitled to an early retirement benefit and who as of the
valuation date has not selected an annuity starting date. [See Note at
beginning of part 4044.]
    (2) Sections 4044.71 through 4044.75 prescribe the benefit
valuation rules for calculating the value of a benefit to be paid a
participant or beneficiary under a terminating pension plan that is
distributing assets where the plan has received a Notice of Sufficiency
issued by PBGC pursuant to part 2617 of this chapter and has not been
placed into trusteeship by PBGC. [See Note at beginning of part 4044.]

Sec. 4044.2  Definitions.

    (a) The following terms are defined in Sec. 4001.2 of this chapter:
annuity, basic-type benefit, Code, distribution date, ERISA, fair
market value, guaranteed benefit, insurer, IRS, irrevocable commitment,
mandatory employee contributions, nonbasic-type benefit, nonforfeitable
benefit, normal retirement age, notice of intent to terminate, PBGC,
person, plan, plan administrator, single-employer plan, substantial
owner, termination date, and voluntary employee contributions.
    (b) For purposes of this part:
    Deferred annuity means an annuity under which the specified date or
age at which payments are to begin occurs after the valuation date.
    Earliest retirement age at valuation date means the later of (a) a
participant's age on his or her birthday nearest to the valuation date,
or (b) the earliest age at which the participant can retire under the
terms of the plan.
    Early retirement benefit means an annuity benefit payable under the
terms of the plan, under which the participant is entitled to begin
receiving payments before his or her normal retirement age and which is
not payable on account of the disability of the participant. It may be
reduced according to the terms of the plan.
    Expected retirement age (XRA) means the age, determined in
accordance with Secs. 4044.55 through 4044.57, at which a participant
is expected to begin receiving benefits when the participant has not
elected, before the allocation date, an annuity starting date. This is
the age to which a participant's benefit payment is assumed to be
deferred for valuation purposes. An XRA is equal to or greater than the
participant's earliest retirement age at valuation date but less than
his or her normal retirement age.
    Non-trusteed plan means a single-employer plan which receives a
Notice of Sufficiency from PBGC and is able to close out by purchasing
annuities in the private sector in accordance with part 2617 of this
chapter. [See Note at beginning of part 4044.]
     Notice of Sufficiency means a notice issued by the PBGC that it
has determined that plan assets are sufficient to discharge when due
all obligations of the plan with respect to benefits in priority
categories 1 through 4 after plan assets have been allocated to
benefits in accordance with section 4044 of ERISA and this subpart.
[See Note at beginning of part 4044.]
    Priority category means one of the categories contained in sections
4044 (a)(1) through (a)(6) of ERISA that establish the order in which
plan assets are to be allocated.
    Trusteed plan means a single-employer plan which has been placed
into trusteeship by PBGC.
    Unreduced retirement age (URA) means the earlier of the normal
retirement age specified in the plan or the age at which an unreduced
benefit is first payable.
    Valuation date means (1) for non-trusteed plans, the date of
distribution and (2) for trusteed plans, the date of termination.
    (c) For purposes of subpart B of this part (unless otherwise
required by the context):
    Age means the participant's age at his or her nearest birthday and
is determined by rounding the individual's exact age to the nearest
whole year. Half years are rounded to the next highest year. This is
also known as the ``insurance age.''
    (d) For purposes of Secs. 4044.55 through 4044.57:
    Monthly benefit means the guaranteed benefit payable by PBGC.
    (e) For purposes of Secs. 4044.71 through 4044.75:
    Lump sum payable in lieu of an annuity means a benefit that is
payable in a single installment and is derived from an annuity payable
under the plan.

[[Page 34061]]

    Other lump sum benefit means a benefit in priority category 5 or 6,
determined under subpart A of this part, that is payable in a single
installment (or substantially so) under the terms of the plan, and that
is not derived from an annuity payable under the plan. The benefit may
be a severance pay benefit, a death benefit or other single installment
benefit.
    Qualifying bid means a bid obtained from an insurer in accordance
with Sec. 2617.14(b) of this chapter. [See Note at beginning of part
4044.]

Sec. 4044.3  General rule.

    (a) Asset allocation. Upon the termination of a single-employer
plan, the plan administrator shall allocate the plan assets available
to pay for benefits under the plan in the manner prescribed by this
subpart. Plan assets available to pay for benefits include all plan
assets (valued according to Sec. 4044.41(b)) remaining after the
subtraction of all liabilities, other than liabilities for future
benefit payments, paid or payable from plan assets under the provisions
of the plan. Liabilities include expenses, fees and other
administrative costs, and benefit payments due before the allocation
date. Except as provided in Sec. 4044.4(b), an irrevocable commitment
by an insurer to pay a benefit, which commitment is in effect on the
date of the asset allocation, is not considered a plan asset, and a
benefit payable under such a commitment is excluded from the allocation
process.
    (b) Allocation date. For plans that close out pursuant to a Notice
of Sufficiency under the provisions of subpart C of part 2617 of this
chapter, assets shall be allocated as of the date plan assets are to be
distributed. For other plans, assets shall be allocated as of the
termination date. [See Note at beginning of part 4044.]

Sec. 4044.4  Violations.

    (a) General. A plan administrator violates ERISA if plan assets are
allocated or distributed upon plan termination in a manner other than
that prescribed in section 4044 of ERISA and this subpart, except as
may be required to prevent disqualification of the plan under the Code
and regulations thereunder.
    (b) Distributions in anticipation of termination. A distribution,
transfer, or allocation of assets to a participant or to an insurance
company for the benefit of a participant, made in anticipation of plan
termination, is considered to be an allocation of plan assets upon
termination, and is covered by paragraph (a) of this section. In
determining whether a distribution, transfer, or allocation of assets
has been made in anticipation of plan termination PBGC will consider
all of the facts and circumstances including--
    (1) Any change in funding or operation procedures;
    (2) Past practice with regard to employee requests for forms of
distribution;
    (3) Whether the distribution is consistent with plan provisions;
and
    (4) Whether an annuity contract that provides for a cutback based
on the guarantee limits in subpart B of part 4022 of this chapter could
have been purchased from an insurance company.

Allocation of Assets to Benefit Categories

Sec. 4044.10  Manner of allocation.

    (a) General. The plan administrator shall allocate plan assets
available to pay for benefits under the plan using the rules and
procedures set forth in paragraphs (b) through (f) of this section, or
any other procedure that results in each participant (or beneficiary)
receiving the same benefits he or she would receive if the procedures
in paragraphs (b) through (f) were followed.
    (b) Assigning benefits. The basic-type and nonbasic-type benefits
payable with respect to each participant in a terminated plan shall be
assigned to one or more priority categories in accordance with
Secs. 4044.11 through 4044.16. Benefits derived from voluntary employee
contributions, which are assigned only to priority category 1, are
treated, under section 204(c)(4) of ERISA and section 411(d)(5) of the
Code, as benefits under a separate plan. The amount of a benefit
payable with respect to each participant shall be determined as of the
termination date.
    (c) Valuing benefits. The value of a participant's benefit or
benefits assigned to each priority category shall be determined, as of
the allocation date, in accordance with the provisions of subpart B of
this part. The value of each participant's basic-type benefit or
benefits in a priority category shall be reduced by the value of the
participant's benefit of the same type that is assigned to a higher
priority category. Except as provided in the next two sentences, the
same procedure shall be followed for nonbasic-type benefits. The value
of a participant's nonbasic-type benefits in priority categories 3, 5,
and 6 shall not be reduced by the value of the participant's nonbasic-
type benefit assigned to priority category 2. Benefits in priority
category 1 shall neither be included in nor subtracted from lower
priority categories. In no event shall a benefit assigned to a priority
category be valued at less than zero.
    (d) Allocating assets to priority categories. Plan assets available
to pay for benefits under the plan shall be allocated to each priority
category in succession, beginning with priority category 1. If the plan
has sufficient assets to pay for all benefits in a priority category,
the remaining assets shall then be allocated to the next lower priority
category. This process shall be repeated until all benefits in priority
categories 1 through 6 have been provided or until all available plan
assets have been allocated.
    (e) Allocating assets within priority categories. Except for
priority category 5, if the plan assets available for allocation to any
priority category are insufficient to pay for all benefits in that
priority category, those assets shall be distributed among the
participants according to the ratio that the value of each
participant's benefit or benefits in that priority category bears to
the total value of all benefits in that priority category. If the plan
assets available for allocation to priority category 5 are insufficient
to pay for all benefits in that category, the assets shall be
allocated, first, to the value of each participant's nonforfeitable
benefits that would be assigned to priority category 5 under
Sec. 4044.15 after reduction for the value of benefits assigned to
higher priority categories, based only on the provisions of the plan in
effect at the beginning of the 5-year period immediately preceding the
termination date. If assets available for allocation to priority
category 5 are sufficient to fully satisfy the value of those benefits,
assets shall then be allocated to the value of the benefit increase
under the oldest amendment during the 5-year period immediately
preceding the termination date, reduced by the value of benefits
assigned to higher priority categories (including higher subcategories
in priority category 5). This allocation procedure shall be repeated
for each succeeding plan amendment within the 5-year period until all
plan assets available for allocation have been exhausted. If an
amendment decreased benefits, amounts previously allocated with respect
to each participant in excess of the value of the reduced benefit shall
be reduced accordingly. In the subcategory in which assets are
exhausted, the assets shall be distributed among the participants
according to the ratio that the value of each participant's benefit or
benefits in that subcategory bears to the total value of all benefits
in that subcategory.
    (f) Applying assets to basic-type or nonbasic-type benefits within
priority

[[Page 34062]]

categories. The assets allocated to a participant's benefit or benefits
within each priority category shall first be applied to pay for the
participant's basic-type benefit or benefits assigned to that priority
category. Any assets allocated on behalf of that participant remaining
after satisfying the participant's basic-type benefit or benefits in
that priority category shall then be applied to pay for the
participant's nonbasic-type benefit or benefits assigned to that
priority category. If the assets allocable to a participant's basic-
type benefit or benefits in all priority categories are insufficient to
pay for all of the participant's guaranteed benefits, the assets
allocated to that participant's benefit in priority category 4 shall be
applied, first, to the guaranteed portion of the participant's benefit
in priority category 4. The remaining assets allocated to that
participant's benefit in priority category 4, if any, shall be applied
to the nonguaranteed portion of the participant's benefit.
    (g) Allocation to established subclasses. Notwithstanding
paragraphs (e) and (f) of this section, the assets of a plan that has
established subclasses within any priority category may be allocated to
the plan's subclasses in accordance with the rules set forth in
Sec. 4044.17.

Sec. 4044.11  Priority category 1 benefits.

    (a) Definition. The benefits in priority category 1 are
participants' accrued benefits derived from voluntary employee
contributions.
    (b) Assigning benefits. Absent an election described in the next
sentence, the benefit assigned to priority category 1 with respect to
each participant is the balance of the separate account maintained for
the participant's voluntary contributions. If a participant has elected
to receive an annuity in lieu of his or her account balance, the
benefit assigned to priority category 1 with respect to that
participant is the present value of that annuity.

Sec. 4044.12  Priority category 2 benefits.

    (a) Definition. The benefits in priority category 2 are
participants' accrued benefits derived from mandatory employee
contributions, whether to be paid as an annuity benefit with a pre-
retirement death benefit that returns mandatory employee contributions
or, if a participant so elects under the terms of the plan and subpart
A of part 4022 of this chapter, as a lump sum benefit. Benefits are
primarily basic-type benefits although nonbasic-type benefits may also
be included as follows:
    (1) Basic-type benefits. The basic-type benefit in priority
category 2 with respect to each participant is the sum of the values of
the annuity benefit and the pre-retirement death benefit determined
under the provisions of paragraph (c)(1) of this section.
    (2) Nonbasic-type benefits. If a participant elects to receive a
lump sum benefit and if the value of the lump sum benefit exceeds the
value of the basic-type benefit in priority category 2 determined with
respect to the participant, the excess is a nonbasic-type benefit.
There is no nonbasic-type benefit in priority category 2 for a
participant who does not elect to receive a lump sum benefit.
    (b) Conversion of mandatory employee contributions to an annuity
benefit. Subject to the limitation set forth in paragraph (b)(3) of
this section, a participant's accumulated mandatory employee
contributions shall be converted to an annuity form of benefit payable
at the normal retirement age or, if the plan provides for early
retirement, at the expected retirement age. The conversion shall be
made using the interest rates and factors specified in paragraph (b)(2)
of this section. The form of the annuity benefit (e.g., straight life
annuity, joint and survivor annuity, cash refund annuity, etc.) is the
form that the participant or beneficiary is entitled to on the
termination date. If the participant does not have a nonforfeitable
right to a benefit, other than the return of his or her mandatory
contributions in a lump sum, the annuity form of benefit is the form
the participant would be entitled to if the participant had a
nonforfeitable right to an annuity benefit under the plan on the
termination date.
    (1) Accumulated mandatory employee contributions. Subject to any
addition for the cost of ancillary benefits plus interest, as provided
in the following sentence, the amount of the accumulated mandatory
employee contributions for each participant is the participant's total
nonforfeitable mandatory employee contributions remaining in the plan
on the termination date plus interest, if any, under the plan
provisions. Mandatory employee contributions, if any, used after the
effective date of the minimum vesting standards in section 203 of ERISA
and section 411 of the Code for costs or to provide ancillary benefits
such as life insurance or health insurance, plus interest under the
plan provisions, shall be added to the contributions that remain in the
plan to determine the accumulated mandatory employee contributions.
    (2) Interest rates and conversion factors. The interest rates and
conversion factors used in the administration of the plan shall be used
to convert a participant's accumulated mandatory contributions to the
annuity form of benefit. In the absence of plan rules and factors, the
interest rates and conversion factors established by the IRS for
allocation of accrued benefits between employer and employee
contributions under the provisions of section 204(c) of ERISA and
section 411(c) of the Code shall be used.
    (3) Minimum accrued benefit. The annuity benefit derived from
mandatory employee contributions may not be less than the minimum
accrued benefit under the provisions of section 204(c) of ERISA and
section 411(c) of the Code.
    (c) Assigning benefits. If a participant or beneficiary elects to
receive a lump sum benefit, his or her benefit shall be determined
under paragraph (c)(2) of this section. Otherwise, the benefits with
respect to a participant shall be determined under paragraph (c)(1) of
this section.
    (1) Annuity benefit and pre-retirement death benefit. The annuity
benefit and the pre-retirement death benefit assigned to priority
category 2 with respect to a participant are determined as follows:
    (i) The annuity benefit is the benefit computed under paragraph (b)
of this section.
    (ii) Except for adjustments necessary to meet the minimum lump sum
requirements as hereafter provided, the pre-retirement death benefit is
the benefit under the plan that returns all or a portion of the
participant's mandatory employee contributions upon the death of the
participant before retirement. A benefit that became payable in a
single installment (or substantially so) because the participant died
before the termination date is a liability of the plan within the
meaning of Sec. 4044.3(a) and should not be assigned to priority
category 2. A benefit payable upon a participant's death that is
included in the annuity form of the benefit derived from mandatory
employee contributions (e.g., the survivor's portion of a joint and
survivor annuity or the cash refund portion of a cash refund annuity)
is assigned to priority category 2 as part of the annuity benefit under
paragraph (c)(1)(i) of this section and is not assigned as a death
benefit. The pre-retirement death benefit may not be less than the
minimum lump sum required upon withdrawal of mandatory employee
contributions by the IRS under section 204(c) of ERISA and section
411(c) of the Code.

[[Page 34063]]

    (2) Lump sum benefit. Except for adjustments necessary to meet the
minimum lump sum requirements as hereafter provided, if a participant
elects to receive a lump sum benefit under the provisions of the plan,
the amount of the benefit that is assigned to priority category 2 with
respect to the participant is--
    (i) The combined value of the annuity benefit and the pre-
retirement death benefit determined according to paragraph (c)(1)
(which constitutes the basic-type benefit) plus
    (ii) The amount, if any, of the participant's accumulated mandatory
employee contributions that exceeds the combined value of the annuity
benefit and the pre-retirement death benefit (which constitutes the
nonbasic-type benefit), but not more than
    (iii) The amount of the participant's accumulated mandatory
contributions.
    (3) For purposes of paragraph (c)(2) of this section, accumulated
mandatory contributions means the contributions with interest, if any,
payable under plan provisions to the participant or beneficiary on
termination of the plan or, in the absence of such provisions, the
amount that is payable if the participant withdrew his or her
contributions on the termination date. The lump sum benefit may not be
less than the minimum lump required by the IRS under section 204(c) of
ERISA and section 411(c) of the Code upon withdrawal of mandatory
employee contributions.

Sec. 4044.13  Priority category 3 benefits.

    (a) Definition. The benefits in priority category 3 are those
annuity benefits that were in pay status before the beginning of the 3-
year period ending on the termination date, and those annuity benefits
that could have been in pay status for participants who were eligible
to receive annuity benefits before the beginning of the 3-year period
ending on the termination date. Benefit increases that became effective
before the beginning of the 5-year period ending on the termination
date, including automatic benefit increases after that date to the
extent provided in paragraph (b)(5) of this section, shall be included
in determining the priority category 3 benefit. Benefits are primarily
basic-type benefits, although nonbasic-type benefits will be included
if any portion of a participant's priority category 3 benefit is not
guaranteeable under the provisions of subpart A of part 4022 of this
chapter.
    (b) Assigning benefits. The annuity benefit that is assigned to
priority category 3 with respect to each participant is the lowest
annuity that was paid or payable under the rules in paragraphs (b)(2)
through (b)(6) of this section.
    (1) Eligibility of participants and beneficiaries. A participant or
beneficiary is eligible for a priority category 3 benefit if either of
the following applies:
    (i) The participant's (or beneficiary's) benefit was in pay status
before the beginning of the 3-year period ending on the termination
date.
    (ii) The participant was eligible for an annuity and his or her
benefit could have been in pay status before the beginning of the 3-
year period ending on the termination date. Whether a participant was
eligible to receive an annuity before the beginning of the 3-year
period shall be determined using the plan provisions in effect on the
day before the beginning of the 3-year period.
    (iii) If a participant described in either of the preceding two
paragraphs died during the 3-year period ending on the date of the plan
termination and his or her beneficiary is entitled to an annuity, the
beneficiary is eligible for a priority category 3 benefit.
    (2) Plan provisions governing determination of benefit. In
determining the amount of the priority category 3 annuity with respect
to a participant, the plan administrator shall use the participant's
age, service, actual or expected retirement age, and other relevant
facts as of the following dates:
    (i) Except as provided in the next sentence, for a participant or
beneficiary whose benefit was in pay status before the beginning of the
3-year period ending on the termination date, the priority category 3
benefit shall be determined according to plan provisions in effect on
the date the benefit commenced. Benefit increases that became effective
before the beginning of the 5-year period ending on the date of plan
termination, including automatic benefit increases after that date to
the extent provided in paragraph (b)(5) of this section, shall be
included in determining the priority category 3 benefit. The form of
annuity elected by a retiree is considered the normal form of annuity
for that participant.
    (ii) For a participant who was eligible to receive an annuity
before the beginning of the 3-year period ending on the termination
date but whose benefit was not in pay status, the priority category 3
benefit and the normal form of annuity shall be determined according to
plan provisions in effect on the day before the beginning of the 3-year
period ending on the termination date as if the benefit had commenced
at that time.
    (3) General benefit limitations. The general benefit limitation is
determined as follows:
    (i) If a participant's benefit was in pay status before the
beginning of the 3-year period, the benefit assigned to priority
category 3 with respect to that participant is limited to the lesser of
the lowest annuity benefit in pay status during the 3-year period
ending on the termination date and the lowest annuity benefit payable
under the plan provisions at any time during the 5-year period ending
on the termination date.
    (ii) Unless a benefit was in pay status before the beginning of the
3-year period ending on the termination date, the benefit assigned to
priority category 3 with respect to a participant is limited to the
lowest annuity benefit payable under the plan provisions, including any
reduction for early retirement, at any time during the 5-year period
ending on the termination date. If the annuity form of benefit under a
formula that appears to produce the lowest benefit differs from the
normal annuity form for the participant under paragraph (b)(2)(ii) of
this section, the benefits shall be compared after the differing form
is converted to the normal annuity form, using plan factors. In the
absence of plan factors, the factors in subpart B of part 4022 of this
chapter shall be used.
    (iii) For purposes of this paragraph, if a terminating plan has
been in effect less than five years on the termination date, computed
in accordance with paragraph (b)(6) of this section, the lowest annuity
benefit under the plan during the 5-year period ending on the
termination date is zero. If the plan is a successor to a previously
established defined benefit plan within the meaning of section 4021(a)
of ERISA, the time it has been in effect will include the time the
predecessor plan was in effect.
    (4) Determination of beneficiary's benefit. If a beneficiary is
eligible for a priority category 3 benefit because of the death of a
participant during the 3-year period ending on the termination date,
the benefit assigned to priority category 3 for the beneficiary shall
be determined as if the participant had died the day before the 3-year
period began.
    (5) Automatic benefit increases. If plan provisions adopted and
effective before the beginning of the 5-year period ending on the
termination date provided for automatic increases in the benefit
formula for both active participants and those in pay status or for
participants in pay status only, the lowest annuity benefit payable
during the 5-year period ending on the termination date determined
under paragraph (b)(3) of this section includes the automatic

[[Page 34064]]

increases scheduled during the fourth and fifth years preceding
termination, subject to the restriction that benefit increases for
active participants in excess of the increases for retirees shall not
be taken into account.
    (6) Computation of time periods. For purposes of this section, a
plan or amendment is ``in effect'' on the later of the date on which it
is adopted or the date it becomes effective.

Sec. 4044.14  Priority category 4 benefits.

    The benefits assigned to priority category 4 with respect to each
participant are the participant's basic-type benefits that do not
exceed the guarantee limits set forth in subpart B of part 4022 of this
chapter, except as provided in the next sentence. The benefit assigned
to priority category 4 with respect to a participant is not limited by
the aggregate benefits limitations set forth in Sec. 4022B.1 of this
chapter for individuals who are participants in more than one plan or
by the phase-in limitation applicable to substantial owners set forth
in Sec. 4022.26.

Sec. 4044.15  Priority category 5 benefits.

    The benefits assigned to priority category 5 with respect to each
participant are all of the participant's nonforfeitable benefits under
the plan.

Sec. 4044.16  Priority category 6 benefits.

    The benefits assigned to priority category 6 with respect to each
participant are all of the participant's benefits under the plan,
whether forfeitable or nonforfeitable.

Sec. 4044.17  Subclasses.

    (a) General rule. A plan may establish one or more subclasses
within any priority category, other than priority categories 1 and 2,
which subclasses will govern the allocation of assets within that
priority category. The subclasses may be based only on a participant's
longer service, older age, or disability, or any combination thereof.
    (b) Limitation. Except as provided in paragraph (c) of this
section, whenever the allocation within a priority category on the
basis of the subclasses established by the plan increases or decreases
the cumulative amount of assets that otherwise would be allocated to
guaranteed benefits, the assets so shifted shall be reallocated to
other participants' benefits within the priority category in accordance
with the subclasses.
    (c) Exception for subclasses in effect on September 2, 1974. A plan
administrator may allocate assets to subclasses within any priority
category, other than priority categories 1 and 2, without regard to the
limitation in paragraph (b) of this section if, on September 2, 1974,
the plan provided for allocation of plan assets upon termination of the
plan based on a participant's longer service, older age, or disability,
or any combination thereof, and--
    (1) Such provisions are still in effect; or
    (2) The plan, if subsequently amended to modify or remove those
subclasses, is re-amended to re-establish the same subclasses on or
before July 28, 1981.
    (d) Discrimination under Code. Notwithstanding the provisions of
paragraphs (a) through (c) of this section, allocation of assets to
subclasses established under this section is permitted only to the
extent that the allocation does not result in discrimination prohibited
under the Code and regulations thereunder.

Allocation of Residual Assets

Sec. 4044.30  [Reserved.]

Subpart B--Valuation of Benefits and Assets

General Provisions

Sec. 4044.41  General valuation rules.

    (a) Valuation of benefits--(1) Trusteed plans. The plan
administrator of a plan that has been or will be placed into
trusteeship by the PBGC shall value plan benefits in accordance with
Secs. 4044.51 through 4044.57.
    (2) Non-trusteed plans. The plan administrator of a non-trusteed
plan shall value plan benefits in accordance with Sec. 4044.71 through
4044.75. If a plan with respect to which PBGC has issued a Notice of
Sufficiency is unable to satisfy all benefits assigned to priority
categories 1 through 4 on the distribution date, the PBGC will place it
into trusteeship and the plan administrator shall re-value the benefits
in accordance with Secs. 4044.51 through 4044.57. [See Note at
beginning of part 4044.]
    (b) Valuation of assets. Plan assets shall be valued at their fair
market value, based on the method of valuation that most accurately
reflects such fair market value.

Trusteed Plans

Sec. 4044.51  Benefits to be valued.

    (a) Form of benefit. The plan administrator shall determine the
form of each benefit to be valued in accordance with the following
rules:
    (1) If a benefit is in pay status as of the valuation date, the
plan administrator shall value the form of the benefit being paid.
    (2) If a benefit is not in pay status as of the valuation date but
a valid election with respect to the form of benefit has been made on
or before the valuation date, the plan administrator shall value the
form of benefit so elected.
    (3) If a benefit is not in pay status as of the valuation date and
no valid election with respect to the form of benefit has been made on
or before the valuation date, the plan administrator shall value the
form of benefit that, under the terms of the plan, is payable in the
absence of a valid election.
    (b) Timing of benefit. The plan administrator shall value benefits
whose starting date is subject to election using the assumption
specified in paragraph (b)(1) or (b)(2) of this section.
    (1) Where election made. If a valid election of the starting date
of a benefit has been made on or before the valuation date, the plan
administrator shall assume that the starting date of the benefit is the
starting date so elected.
    (2) Where no election made. If no valid election of the starting
date of a benefit has been made on or before the valuation date, the
plan administrator shall assume that the starting date of the benefit
is the later of--
    (i) The expected retirement age, as determined under Secs. 4044.55
through 4044.57, of the participant with respect to whom the benefit is
payable, or
    (ii) The valuation date.

Sec. 4044.52  Valuation of benefits.

    (a) General rule. Except as otherwise provided in paragraph (b) of
this section (regarding the valuation of benefits payable as lump
sums), the plan administrator shall value annuity benefits as of the
valuation date by--
    (1) Using the mortality assumptions prescribed by Sec. 4044.53 and
the interest assumptions prescribed by Table I of appendix B to this
part;
    (2) Using interpolation methods, where necessary, at least as
accurate as linear interpolation;
    (3) Using valuation formulas that accord with generally accepted
actuarial principles and practices;
    (4) Taking mortality into account during the deferral period of a
deferred joint and survivor benefit only with respect to the
participant (or other principal annuitant), if upon the death of the
beneficiary the participant may elect an actuarially increased single
life annuity or if a new beneficiary may succeed to the survivor
portion of the benefit; and
    (5) Adjusting the values to reflect the loading for expenses in
accordance with appendix C to this part.

[[Page 34065]]

    (b) Benefits payable as lump sums. For valuing benefits payable as
lump sums (including the return of accumulated employee contributions
upon death), and for determining whether the lump sum value of a
benefit exceeds $3,500, the plan administrator shall value benefits in
the same manner as benefits to be paid as annuities except that--
    (1) The mortality assumptions prescribed in Sec. 4044.54 and the
interest assumptions set forth in Table II of appendix B to this part
shall apply,
    (2) There shall be no adjustment to reflect the loading for
expenses, and
    (3) Beneficiary mortality during the deferral period shall be
disregarded as provided in paragraph (a)(4) of this section without
regard to whether the participant may elect an actuarially increased
single life annuity upon the death of the beneficiary or whether a new
beneficiary may succeed to the survivor portion of the benefit.

Sec. 4044.53  Mortality assumptions--in general.

    (a) General rule. Subject to paragraph (b) of this section
(regarding certain death benefits), the plan administrator shall use
the mortality factors prescribed in paragraphs (c), (d), and (e) of
this section to value benefits under Sec. 4044.52(a).
    (b) Certain death benefits. If an annuity for one person is in pay
status on the valuation date, and if the payment of a death benefit
after the valuation date to another person, who need not be
identifiable on the valuation date, depends in whole or in part on the
death of the pay status annuitant, then the plan administrator shall
value the death benefit using--
    (1) the mortality rates that are applicable to the annuity in pay
status under this section to represent the mortality of the pay status
annuitant; and
    (2) the mortality rates applicable to annuities not in pay status
and to deferred benefits other than annuities, under paragraph (c) of
this section, to represent the mortality of the death beneficiary.
    (c) Mortality rates for healthy lives. The mortality rates
applicable to annuities in pay status on the valuation date that are
not being received as disability benefits, to annuities not in pay
status on the valuation date, and to deferred benefits other than
annuities, are--
    (1) For male participants, the rates in Table 1 of appendix A to
this part, and
    (2) For female participants, the rates in Table 1 of appendix A to
this part, set back 6 years.
    (d) Mortality rates for disabled lives (other than Social Security
disability). The mortality rates applicable to annuities in pay status
on the valuation date that are being received as disability benefits
and for which neither eligibility for, nor receipt of, Social Security
disability benefits is a prerequisite, are--
    (1) For male participants, the rates in Table 1 of appendix A to
this part, set forward 3 years, and
    (2) For female participants, the rates in Table 1 of appendix A to
this part, set back 3 years.
    (e) Mortality rates for disabled lives (Social Security
disability). The mortality rates applicable to annuities in pay status
on the valuation date that are being received as disability benefits
and for which either eligibility for, or receipt of, Social Security
disability benefits is a prerequisite, are the rates in Tables 2-M and
2-F of appendix A to this part.

Sec. 4044.54  Mortality assumptions--lump sums.

    For determining whether the value of a benefit is $3,500 or less
under Sec. 4022.7(b)(1) of this chapter and for calculating the amount
of a lump sum benefit, the PBGC will use the mortality rates in Table 3
of appendix A to this part.

Expected Retirement Age

Sec. 4044.55  XRA when a participant must retire to receive a benefit.

    (a) Applicability. Except as provided in Sec. 4044.57, the plan
administrator shall determine the XRA under this section when plan
provisions or established plan practice require a participant to retire
from his or her job to begin receiving an early retirement benefit.
    (b) Data needed. The plan administrator shall determine for each
participant who is entitled to an early retirement benefit--
    (1) The amount of the participant's monthly benefit payable at
unreduced retirement age in the normal form payable under the terms of
the plan or in the form validly elected by the participant before the
termination date;
    (2) The calendar year in which the participant reaches unreduced
retirement age (``URA'');
    (3) The participant's URA; and
    (4) The participant's earliest retirement age at the valuation
date.
    (c) Procedure. (1) The plan administrator shall determine whether a
participant is in the high, medium or low retirement rate category
using the applicable Selection of Retirement Rate Category Table in
appendix D, based on the participant's benefit determined under
paragraph (b)(1) of this section and the year in which the participant
reaches URA.
    (2) Based on the retirement rate category determined under
paragraph (c)(1), the plan administrator shall determine the XRA from
Table II-A, II-B or II-C, as appropriate, by using the participant's
URA and earliest retirement age at valuation date.

Sec. 4044.56  XRA when a participant need not retire to receive a
benefit.

    (a) Applicability. Except as provided in Sec. 4044.57, the plan
administrator shall determine the XRA under this section when plan
provisions or established plan practice do not require a participant to
retire from his or her job to begin receiving his or her early
retirement benefit.
    (b) Data needed. The plan administrator shall determine for each
participant--
    (1) The participant's URA; and
    (2) The participant's earliest retirement age at valuation date.
    (c) Procedure. Participants in this case are always assigned to the
high retirement rate category and therefore the plan administrator
shall use Table II-C of appendix D to determine the XRA. The plan
administrator shall determine the XRA from Table II-C by using the
participant's URA and earliest retirement age at termination date.

Sec. 4044.57  Special rule for facility closing.

    (a) Applicability. The plan administrator shall determine the XRA
under this section, rather than Sec. 4044.55 or Sec. 4044.56, when both
the conditions set forth in paragraphs (a)(1) and (a)(2) of this
section exist.
    (1) The facility at which the participant is or was employed
permanently closed within one year before the valuation date, or is in
the process of being permanently closed on the valuation date.
    (2) The participant left employment at the facility less than one
year before the valuation date or was still employed at the facility on
the valuation date.
    (b) XRA. The XRA is equal to the earliest retirement age at
valuation date.

Non-Trusteed Plans

Sec. 4044.71  Valuation of annuity benefits.

    The value of a benefit which is to be paid as an annuity is the
cost of purchasing the annuity on the date of distribution from an
insurer under the qualifying bid.

Sec. 4044.72  Form of annuity to be valued.

    (a) When both the participant and beneficiary are alive on the date
of distribution, the form of annuity to be valued is--

[[Page 34066]]

    (1) For a participant or beneficiary already receiving a monthly
benefit, that form which is being received, or
    (2) For a participant or beneficiary not receiving a monthly
benefit, the normal annuity form payable under the plan or the optional
form for which the participant has made a valid election pursuant to
Sec. 2617.4(c) of this chapter. [See Note at beginning of part 4044.]
    (b) When the participant dies after the date of plan termination
but before the date of distribution, the form of annuity to be valued
is determined under paragraph (b)(1) or (b)(2) of this section:
    (1) For a participant who was entitled to a deferred annuity--
    (i) If the form was a single or joint life annuity, no benefit
shall be valued; or
    (ii) If the participant had made a valid election of a lump sum
benefit before he or she died, the form to be valued is the lump sum.
    (2) For a participant who was eligible for immediate retirement,
and for a participant who was in pay status at the date of
termination--
    (i) If the form was a single life annuity, no benefit shall be
valued;
    (ii) If the form was an annuity for a period certain and life
thereafter, the form to be valued is an annuity for the certain period;
    (iii) If the form was a joint and survivor annuity, the form to be
valued is a single life annuity payable to the beneficiary, unless the
beneficiary has also died, in which case no benefit shall be valued;
    (iv) If the form was an annuity for a period certain and joint and
survivor thereafter, the form to be valued is an annuity for the
certain period and the life of the beneficiary thereafter, unless the
beneficiary has also died, in which case the form to be valued is an
annuity for the certain period;
    (v) If the form was a cash refund annuity, the form to be valued is
the remaining lump sum death benefit; or
    (vi) If the participant had elected a lump sum benefit before he or
she died, the form to be valued is the lump sum.
    (c) When the participant is still living and the named beneficiary
or spouse dies after the date of termination but before the date of
distribution, the form of annuity to be valued is determined under
paragraph (c)(1) or (c)(2) of this section:
    (1) For a participant entitled to a deferred annuity--
    (i) If the form was a joint and survivor annuity, the form to be
valued is a single life annuity payable to the participant; or
    (ii) If the form was an annuity for a period certain and joint and
survivor thereafter, the form to be valued is an annuity for the
certain period and the life of the participant thereafter.
    (2) For a participant eligible for immediate retirement and for a
participant in pay status at the date of termination--
    (i) If the form was a joint and survivor annuity, the form to be
valued is a single life annuity payable to the participant; or
    (ii) If the form was an annuity for a period certain and joint
survivor thereafter annuity, the form to be valued is an annuity for
the certain period and for the life of the participant thereafter.

Sec. 4044.73  Lump sums and other alternative forms of distribution in
lieu of annuities.

    (a) Valuation. (1) The value of the lump sum or other alternative
form of distribution is the present value of the normal form of benefit
provided by the plan payable at normal retirement age, determined as of
the date of distribution using reasonable actuarial assumptions as to
interest and mortality.
    (2) If the participant dies before the date of distribution, but
had elected a lump sum benefit, the present value shall be determined
as if the participant were alive on the date of distribution.
    (b) Actuarial assumptions. The plan administrator shall specify the
actuarial assumptions used to determine the value calculated under
paragraph (a) of this section when the plan administrator submits the
benefit valuation data to the PBGC pursuant to Sec. 2617.12 of part
2617 of this chapter. The same actuarial assumptions shall be used for
all such calculations. The PBGC reserves the right to review the
actuarial assumptions used and to re-value the benefits determined by
the plan administrator if the actuarial assumptions are found to be
unreasonable.
    [See Note at beginning of part 4044.]

Sec. 4044.74  Withdrawal of employee contributions.

    (a) If a participant has not started to receive monthly benefit
payments on the date of distribution, the value of the lump sum which
returns mandatory employee contributions is equal to the total amount
of contributions made by the participant, plus interest that is payable
to the participant under the terms of the plan, plus interest on that
total amount from the date of termination to the date of distribution.
The rate of interest credited on employee contributions up to the date
of termination shall be the greater of the interest rate provided under
the terms of the plan or the interest rate required under section
204(c) of ERISA or section 411(c) of the IRC.
    (b) If a participant has started to receive monthly benefit
payments on the date of distribution, part of which are attributable to
his or her contributions, the value of the lump sum which returns
employee contributions is equal to the excess of the amount described
in paragraph (b)(1) of this section over the amount computed in
paragraph (b)(2) of this section.
    (1) The amount of accumulated mandatory employee contributions
remaining in the plan as of the date of termination plus interest from
the date of termination to the date of distribution.
    (2) The excess of benefit payments made from the plan between date
of plan termination and the date of distribution, over the amount of
payments that would have been made if the employee contributions had
been paid as a lump sum on the date of plan termination, with interest
accumulated on the excess from the date of payment to the date of
distribution.
    (c) Interest assumptions. The interest rate used under this section
to credit interest between the date of termination to the date of
distribution shall be a reasonable rate and shall be the same for both
paragraphs (a) and (b).

Sec. 4044.75  Other lump sum benefits.

     The value of a lump sum benefit which is not covered under
Sec. 4044.73 or Sec. 4044.74 is equal to--
    (a) The value under the qualifying bid, if an insurer provides the
benefit; or
    (b) The present value of the benefit as of the date of
distribution, determined using reasonable actuarial assumptions, if the
benefit is to be distributed other than by the purchase of the benefit
from an insurer. The PBGC reserves the right to review the actuarial
assumptions as to reasonableness and re-value the benefit if the
actuarial assumptions are unreasonable.
    [See Note at beginning of part 4044.]

Appendix A to Part 4044--Mortality Rate Tables

     The tables in this appendix set forth for each age x the
probability qX that an individual aged x will not survive to
attain age x+1.

         Table 1.--Mortality Table for Healthy Male Participants
------------------------------------------------------------------------
                            Age x                                  qx
------------------------------------------------------------------------
5............................................................   0.000342
6............................................................   0.000318
7............................................................   0.000302
8............................................................   0.000294
9............................................................   0.000292

[[Page 34067]]


10...........................................................   0.000293
11...........................................................   0.000298
12...........................................................   0.000304
13...........................................................   0.000310
14...........................................................   0.000317
15...........................................................   0.000325
16...........................................................   0.000333
17...........................................................   0.000343
18...........................................................   0.000353
19...........................................................   0.000365
20...........................................................   0.000377
21...........................................................   0.000392
22...........................................................   0.000408
23...........................................................   0.000424
24...........................................................   0.000444
25...........................................................   0.000464
26...........................................................   0.000488
27...........................................................   0.000513
28...........................................................   0.000542
29...........................................................   0.000572
30...........................................................   0.000607
31...........................................................   0.000645
32...........................................................   0.000687
33...........................................................   0.000734
34...........................................................   0.000785
35...........................................................   0.000860
36...........................................................   0.000907
37...........................................................   0.000966
38...........................................................   0.001039
39...........................................................   0.001128
40...........................................................   0.001238
41...........................................................   0.001370
42...........................................................   0.001527
43...........................................................   0.001715
44...........................................................   0.001932
45...........................................................   0.002183
46...........................................................   0.002471
47...........................................................   0.002790
48...........................................................   0.003138
49...........................................................   0.003513
50...........................................................   0.003909
51...........................................................   0.004324
52...........................................................   0.004755
53...........................................................   0.005200
54...........................................................   0.005660
55...........................................................   0.006131
56...........................................................   0.006618
57...........................................................   0.007139
58...........................................................   0.007719
59...........................................................   0.008384
60...........................................................   0.009158
61...........................................................   0.010064
62...........................................................   0.011133
63...........................................................   0.012391
64...........................................................   0.013868
65...........................................................   0.015592
66...........................................................   0.017579
67...........................................................   0.019804
68...........................................................   0.022229
69...........................................................   0.024817
70...........................................................   0.027530
71...........................................................   0.030354
72...........................................................   0.033370
73...........................................................   0.036680
74...........................................................   0.040388
75...........................................................   0.044597
76...........................................................   0.049388
77...........................................................   0.054758
78...........................................................   0.060678
79...........................................................   0.067125
80...........................................................   0.074070
81...........................................................   0.081484
82...........................................................   0.089320
83...........................................................   0.097525
84...........................................................   0.106047
85...........................................................   0.114836
86...........................................................   0.124170
87...........................................................   0.133870
88...........................................................   0.144073
89...........................................................   0.154859
90...........................................................   0.166307
91...........................................................   0.178214
92...........................................................   0.190460
93...........................................................   0.203007
94...........................................................   0.217904
95...........................................................   0.234086
96...........................................................   0.248436
97...........................................................   0.263954
98...........................................................   0.280803
99...........................................................   0.299154
100..........................................................   0.319185
101..........................................................   0.341086
102..........................................................   0.365052
103..........................................................   0.393102
104..........................................................   0.427255
105..........................................................   0.469531
106..........................................................   0.521945
107..........................................................   0.586518
108..........................................................   0.665268
109..........................................................   0.760215
110..........................................................   1.000000
------------------------------------------------------------------------

  Table 2-M.--Mortality Table for Disabled Male Participants Receiving
               Social Security Disability Benefit Payments
------------------------------------------------------------------------
                          Age x                                 T2x
------------------------------------------------------------------------
5.......................................................        0.000000
6.......................................................        0.000000
7.......................................................        0.000000
8.......................................................        0.000000
9.......................................................        0.000000
10......................................................        0.000000
11......................................................        0.000000
12......................................................        0.000000
13......................................................        0.000000
14......................................................        0.000000
15......................................................        0.000000
16......................................................        0.000000
17......................................................        0.000000
18......................................................        0.000000
19......................................................        0.000000
20......................................................        0.048300
21......................................................        0.048300
22......................................................        0.048300
23......................................................        0.048300
24......................................................        0.048300
25......................................................        0.048300
26......................................................        0.046100
27......................................................        0.043600
28......................................................        0.041100
29......................................................        0.038600
30......................................................        0.036200
31......................................................        0.033900
32......................................................        0.032000
33......................................................        0.032000
34......................................................        0.028800
35......................................................        0.027800
36......................................................        0.027200
37......................................................        0.027100
38......................................................        0.027300
39......................................................        0.027600
40......................................................        0.028200
41......................................................        0.028800
42......................................................        0.029700
43......................................................        0.030500
44......................................................        0.031400
45......................................................        0.032200
46......................................................        0.033000
47......................................................        0.034000
48......................................................        0.035300
49......................................................        0.036700
50......................................................        0.038300
51......................................................        0.040100
52......................................................        0.042000
53......................................................        0.043900
54......................................................        0.046000
55......................................................        0.048200
56......................................................        0.050600
57......................................................        0.053100
58......................................................        0.055500
59......................................................        0.058100
60......................................................        0.060300
61......................................................        0.062400
62......................................................        0.064300
63......................................................        0.065700
64......................................................        0.066800
65......................................................        0.069225
66......................................................        0.071813
67......................................................        0.074526
68......................................................        0.077350
69......................................................        0.080366
70......................................................        0.083676
71......................................................        0.087384
72......................................................        0.091593
73......................................................        0.096384
74......................................................        0.101754
75......................................................        0.107674
76......................................................        0.114121
77......................................................        0.121066
78......................................................        0.128480
79......................................................        0.136316
80......................................................        0.144521
81......................................................        0.153043
82......................................................        0.161832
83......................................................        0.171166
84......................................................        0.180866
85......................................................        0.191069
86......................................................        0.201855
87......................................................        0.213303
88......................................................        0.225210
89......................................................        0.237456
90......................................................        0.250003
91......................................................        0.264900
92......................................................        0.281082
93......................................................        0.295432
94......................................................        0.310950
95......................................................        0.327799
96......................................................        0.346150
97......................................................        0.366181
98......................................................        0.388082
99......................................................        0.412048
100.....................................................        0.440098
101.....................................................        0.474251

[[Page 34068]]


102.....................................................        0.516527
103.....................................................        0.568941
104.....................................................        0.633514
105.....................................................        0.712264
106.....................................................        0.807211
107.....................................................        1.000000
------------------------------------------------------------------------

 Table 2-F.--Mortality Table for Disabled Female Participants Receiving
               Social Security Disability Benefit Payments
------------------------------------------------------------------------
                            Age x                                  qx
------------------------------------------------------------------------
5............................................................   0.000000
6............................................................   0.000000
7............................................................   0.000000
8............................................................   0.000000
9............................................................   0.000000
10...........................................................   0.000000
11...........................................................   0.000000
12...........................................................   0.000000
13...........................................................   0.000000
14...........................................................   0.000000
15...........................................................   0.000000
16...........................................................   0.000000
17...........................................................   0.000000
18...........................................................   0.000000
19...........................................................   0.000000
20...........................................................   0.026300
21...........................................................   0.026300
22...........................................................   0.026300
23...........................................................   0.026300
24...........................................................   0.026300
25...........................................................   0.026300
26...........................................................   0.025700
27...........................................................   0.025300
28...........................................................   0.024700
29...........................................................   0.024200
30...........................................................   0.023700
31...........................................................   0.023200
32...........................................................   0.022700
33...........................................................   0.022200
34...........................................................   0.021800
35...........................................................   0.021400
36...........................................................   0.021200
37...........................................................   0.021000
38...........................................................   0.020800
39...........................................................   0.020800
40...........................................................   0.020900
41...........................................................   0.021000
42...........................................................   0.021300
43...........................................................   0.021600
44...........................................................   0.021900
45...........................................................   0.022400
46...........................................................   0.022900
47...........................................................   0.023500
48...........................................................   0.024200
49...........................................................   0.024900
50...........................................................   0.025700
51...........................................................   0.026400
52...........................................................   0.027200
53...........................................................   0.028100
54...........................................................   0.028800
55...........................................................   0.029500
56...........................................................   0.030100
57...........................................................   0.030700
58...........................................................   0.031500
59...........................................................   0.032300
60...........................................................   0.033100
61...........................................................   0.033900
62...........................................................   0.034700
63...........................................................   0.035500
64...........................................................   0.036200
65...........................................................   0.037269
66...........................................................   0.038527
67...........................................................   0.040004
68...........................................................   0.041728
69...........................................................   0.043715
70...........................................................   0.045940
71...........................................................   0.048365
72...........................................................   0.050953
73...........................................................   0.053666
74...........................................................   0.056490
75...........................................................   0.059506
76...........................................................   0.062816
77...........................................................   0.066524
78...........................................................   0.070733
79...........................................................   0.057524
80...........................................................   0.080894
81...........................................................   0.086814
82...........................................................   0.093261
83...........................................................   0.100206
84...........................................................   0.107620
85...........................................................   0.115456
86...........................................................   0.123661
87...........................................................   0.132183
88...........................................................   0.140972
89...........................................................   0.150306
90...........................................................   0.160006
91...........................................................   0.170209
92...........................................................   0.180995
93...........................................................   0.192443
94...........................................................   0.204350
95...........................................................   0.216596
96...........................................................   0.229143
97...........................................................   0.244040
98...........................................................   0.260222
99...........................................................   0.274572
100..........................................................   0.290090
101..........................................................   0.306939
102..........................................................   0.325290
103..........................................................   0.345321
104..........................................................   0.367222
105..........................................................   0.391188
106..........................................................   0.419238
107..........................................................   0.453391
108..........................................................   0.495667
109..........................................................   0.548081
110..........................................................   0.612654
111..........................................................   0.691404
112..........................................................   0.786351
113..........................................................   1.000000
------------------------------------------------------------------------

                   Table 3.--Lump Sum Mortality Table
------------------------------------------------------------------------
                             Age                                   qx
------------------------------------------------------------------------
12...........................................................   0.000000
13...........................................................   0.000000
14...........................................................   0.000000
15...........................................................   0.000000
16...........................................................   0.001437
17...........................................................   0.001414
18...........................................................   0.001385
19...........................................................   0.001351
20...........................................................   0.001311
21...........................................................   0.001267
22...........................................................   0.001219
23...........................................................   0.001167
24...........................................................   0.001149
25...........................................................   0.001129
26...........................................................   0.001107
27...........................................................   0.001083
28...........................................................   0.001058
29...........................................................   0.001083
30...........................................................   0.001111
31...........................................................   0.001141
32...........................................................   0.001173
33...........................................................   0.001208
34...........................................................   0.001297
35...........................................................   0.001398
36...........................................................   0.001513
37...........................................................   0.001643
38...........................................................   0.001792
39...........................................................   0.001948
40...........................................................   0.002125
41...........................................................   0.002327
42...........................................................   0.002556
43...........................................................   0.002818
44...........................................................   0.003095
45...........................................................   0.003410
46...........................................................   0.003769
47...........................................................   0.004180
48...........................................................   0.004635
49...........................................................   0.005103
50...........................................................   0.005616
51...........................................................   0.006196
52...........................................................   0.006853
53...........................................................   0.007543
54...........................................................   0.008278
55...........................................................   0.009033
56...........................................................   0.009875
57...........................................................   0.010814
58...........................................................   0.011863
59...........................................................   0.012952
60...........................................................   0.014162
61...........................................................   0.015509
62...........................................................   0.017010
63...........................................................   0.018685
64...........................................................   0.020517
65...........................................................   0.022562
66...........................................................   0.024847
67...........................................................   0.027232
68...........................................................   0.029634
69...........................................................   0.032073
70...........................................................   0.034743
71...........................................................   0.037667
72...........................................................   0.040871
73...........................................................   0.044504
74...........................................................   0.048504
75...........................................................   0.052913
76...........................................................   0.057775
77...........................................................   0.063142
78...........................................................   0.068628
79...........................................................   0.074648
80...........................................................   0.081256
81...........................................................   0.088518
82...........................................................   0.096218
83...........................................................   0.104310
84...........................................................   0.112816
85...........................................................   0.122079
86...........................................................   0.132174

[[Page 34069]]


87...........................................................   0.143179
88...........................................................   0.155147
89...........................................................   0.168208
90...........................................................   0.182461
91...........................................................   0.198030
92...........................................................   0.215035
93...........................................................   0.232983
94...........................................................   0.252545
95...........................................................   0.273878
96...........................................................   0.297152
97...........................................................   0.322553
98...........................................................   0.349505
99...........................................................   0.378865
100..........................................................   0.410875
101..........................................................   0.445768
102..........................................................   0.483830
103..........................................................   0.524301
104..........................................................   0.568365
105..........................................................   0.616382
106..........................................................   0.668696
107..........................................................   0.725745
108..........................................................   0.786495
109..........................................................   0.852659
110..........................................................   0.924666
111..........................................................   1.000000
------------------------------------------------------------------------

Appendix B to Part 4044--Interest Rates Used To Value Annuities and
Lump Sums

                                         Table I.--[Annuity Valuations]
  [This table sets forth, for each indicated calendar month, the interest rates (denoted by i1, i2, . . ., and
  referred to generally as it) assumed to be in effect between specified anniversaries of a valuation date that
 occurs within that calendar month; those anniversaries are specified in the columns adjacent to the rates. The
              last listed rate is assumed to be in effect after the last listed anniversary date.]
----------------------------------------------------------------------------------------------------------------
                                                                               The values of i1 are:
          For valuation dates occurring in the month--           -----------------------------------------------
                                                                    i1    for t=    i1    for t=    i1    for t=
----------------------------------------------------------------------------------------------------------------
November 1993...................................................   .0560    1-25   .0525     >25     N/A     N/A
December 1993...................................................   .0560    1-25   .0525     >25     N/A     N/A
January 1994....................................................   .0590    1-25   .0525     >25     N/A     N/A
February 1994...................................................   .0590    1-25   .0525     >25     N/A     N/A
March 1994......................................................   .0580    1-25   .0525     >25     N/A     N/A
April 1994......................................................   .0620    1-25   .0525     >25     N/A     N/A
May 1994........................................................   .0650    1-25   .0525     >25     N/A     N/A
June 1994.......................................................   .0670    1-25   .0525     >25     N/A     N/A
July 1994.......................................................   .0690    1-25   0.525     >25     N/A     N/A
August 1994.....................................................   .0700    1-25   .0525     >25     N/A     N/A
September 1994..................................................   .0690    1-25   .0525     >25     N/A     N/A
October 1994....................................................   .0700    1-25   .0525     >25     N/A     N/A
November 1994...................................................   .0730    1-25   .0525     >25     N/A     N/A
December 1994...................................................   .0750    1-25   .0525     >25     N/A     N/A
January 1995....................................................   .0750    1-20   .0575     >20     N/A     N/A
February 1995...................................................   .0730    1-20   .0575     >20     N/A     N/A
March 1995......................................................   .0730    1-20   .0575     >20     N/A     N/A
April 1995......................................................   .0710    1-20   .0575     >20     N/A     N/A
May 1995........................................................   .0690    1-20   .0575     >20     N/A     N/A
June 1995.......................................................   .0680    1-20   .0575     >20     N/A     N/A
July 1995.......................................................   .0630    1-20   .0575     >20     N/A     N/A
August 1995.....................................................   .0620    1-20   .0575     >20     N/A     N/A
September 1995..................................................   .0640    1-20   .0575     >20     N/A     N/A
October 1995....................................................   .0630    1-20   .0575     >20     N/A     N/A
November 1995...................................................   .0620    1-20   .0575     >20     N/A     N/A
December 1995...................................................   .0600    1-20   .0575     >20     N/A     N/A
January 1996....................................................   .0560    1-20   .0475     >20     N/A     N/A
February 1996...................................................   .0540    1-20   .0475     >20     N/A     N/A
March 1996......................................................   .0550    1-20   .0475     >20     N/A     N/A
April 1996......................................................   .0580    1-20   .0475     >20     N/A     N/A
May 1996........................................................   .0600    1-20   .0475     >20     N/A     N/A
June 1996.......................................................   .0620    1-20   .0475     >20     N/A     N/A
July 1996.......................................................   .0620    1-20   .0475     >20     N/A     N/A
----------------------------------------------------------------------------------------------------------------

[[Page 34070]]

                                        Table II.--[Lump Sum Valuations]
 [In using this table: (1) For benefits for which the participant or beneficiary is entitled to be in pay status
on the valuation date, the immediate annuity rate shall apply; (2) For benefits for which the deferral period is
   y years (where y is an interger and o < y  n1), interest rate i1 shall apply from the valuation date for a
  period of y years; thereafter the immediate annuity rate shall apply; (3) For benefits for which the deferral
 period is y years (where y is an integer and n1 < y  n1 + n2); interest rate i2 shall apply from the valuation
    date for a period of y-n1 years, interest rate i1 shall apply for the following n1 years; thereafter the
  immediate annuity rate shall apply; (4) For benefits for which the deferral period is y years (where y is an
  integer and y > n1 + n2), interest rate i3 shall apply from the valuation date for a period of y-n1-n2 years;
   interest rate i2 shall apply for the following n2 years; interest rate i1 shall apply for the following n1
                           years; thereafter the immediate annuity rate shall apply.]
----------------------------------------------------------------------------------------------------------------
                                         For plans with a                      Deferred annuities (percent)
                                          valuation date      Immediate  ---------------------------------------
               Rate set               ----------------------   annuity
                                         On or                   rate       i1      i2      i3      n1      n2
                                         after      Before    (percent)
----------------------------------------------------------------------------------------------------------------
1....................................    11-1-93    12-1-93         4.25    4.00    4.00    4.00       7       8
2....................................    12-1-93     1-1-94         4.25    4.00    4.00    4.00       7       8
3....................................     1-1-94     2-1-94         4.50    4.00    4.00    4.00       7       8
4....................................     2-1-94     3-1-94         4.50    4.00    4.00    4.00       7       8
5....................................     3-1-94     4-1-94         4.50    4.00    4.00    4.00       7       8
6....................................     4-1-94     5-1-94         4.75    4.00    4.00    4.00       7       8
7....................................     5-1-94     6-1-94         5.25    4.50    4.00    4.00       7       8
8....................................     6-1-94     7-1-94         5.25    4.50    4.00    4.00       7       8
9....................................     7-1-94     8-1-94         5.50    4.75    4.00    4.00       7       8
10...................................     8-1-94     9-1-94         5.75    5.00    4.00    4.00       7       8
11...................................     9-1-94    10-1-94         5.50    4.75    4.00    4.00       7       8
12...................................    10-1-94    11-1-94         5.50    4.75    4.00    4.00       7       8
13...................................    11-1-94    12-1-94         6.00    5.25    4.00    4.00       7       8
14...................................    12-1-94     1-1-95         6.25    5.50    4.25    4.00       7       8
15...................................     1-1-95     2-1-95         6.00    5.25    4.00    4.00       7       8
16...................................     2-1-95     3-1-95         6.00    5.25    4.00    4.00       7       8
17...................................     3-1-95     4-1-95         6.00    5.25    4.00    4.00       7       8
18...................................     4-1-95     5-1-95         5.75    5.00    4.00    4.00       7       8
19...................................     5-1-95     6-1-95         5.50    4.75    4.00    4.00       7       8
20...................................     6-1-95     7-1-95         5.50    4.75    4.00    4.00       7       8
21...................................     7-1-95     8-1-95         4.75    4.00    4.00    4.00       7       8
22...................................     8-1-95     9-1-95         4.75    4.00    4.00    4.00       7       8
23...................................     9-1-95    10-1-95         5.00    4.25    4.00    4.00       7       8
24...................................    10-1-95    11-1-95         4.75    4.00    4.00    4.00       7       8
25...................................    11-1-95    12-1-95         4.75    4.00    4.00    4.00       7       8
26...................................    12-1-95     1-1-96         4.50    4.00    4.00    4.00       7       8
27...................................     1-1-96     2-1-96         4.50    4.00    4.00    4.00       7       8
28...................................     2-1-96     3-1-96         4.25    4.00    4.00    4.00       7       8
29...................................     3-1-96     4-1-96         4.25    4.00    4.00    4.00       7       8
30...................................     4-1-96     5-1-96         4.75    4.00    4.00    4.00       7       8
31...................................     5-1-96     6-1-96         5.00    4.25    4.00    4.00       7       8
32...................................     6-1-96     7-1-96         5.00    4.25    4.00    4.00       7       8
33...................................     7-1-96     8-1-96         5.00    4.25    4.00    4.00       7       8
----------------------------------------------------------------------------------------------------------------

Appendix C to Part 4044--Loading Assumptions

----------------------------------------------------------------------------------------------------------------
If the total value of the plan's benefit liabilities (as defined in 29 U.S.C.
          Sec.  1301(a)(16)), exclusive of the loading charge, is--
------------------------------------------------------------------------------    The loading charge equals--
                  greater than                     but less than or equal to
----------------------------------------------------------------------------------------------------------------
$0.............................................                      $200,000  5% of the total value of the
                                                                                plan's benefits, plus $200 for
                                                                                each plan participant.
$200,000.......................................  ............................  $10,000, plus a percentage of the
                                                                                excess of the total value over
                                                                                $200,000, plus $200 for each
                                                                                plan participant; the percentage
                                                                                is equal to 1%+[(P%-7.50%)/10],
                                                                                where P% is the initial rate,
                                                                                expressed as a percentage, set
                                                                                forth in Table I of appendix B
                                                                                for the valuation of annuities.
----------------------------------------------------------------------------------------------------------------

[[Page 34071]]

Appendix D to Part 4044--Tables Used To Determine Expected
Retirement Age

                               Table I-96.--Selection of Retirement Rate Category
               [For Plans with valuation dates after December 31, 1995, and before January 1, 1997]
----------------------------------------------------------------------------------------------------------------
                                                                  Participant's retirement rate category is--
                                                             ---------------------------------------------------
                                                                             Medium \2\ if monthly   High \3\ if
                                                               Low \1\ if      benefit at NRA is       monthly
              Participant reaches NRA in year--                 monthly   --------------------------  benefit at
                                                               benefit at                               NRA is
                                                              NRA is less      From          To        greater
                                                                 than--                                 than--
----------------------------------------------------------------------------------------------------------------
1997........................................................          400          400        1,684        1,684
1998........................................................          413          413        1,738        1,738
1999........................................................          426          426        1,794        1,794
2000........................................................          440          440        1,850        1,850
2001........................................................          453          453        1,907        1,907
2002........................................................          467          467        1,966        1,966
2003........................................................          482          482        2,027        2,027
2004........................................................          497          497        2,090        2,090
2005........................................................          512          512        2,155        2,155
2006 or later...............................................          528          528        2,221        2,221
----------------------------------------------------------------------------------------------------------------
\1\ Table II-A.
\2\ Table II-B.
\3\ Table II-C.

                    Table II-A.--Expected Retirement Ages for Individuals in the Low Category
----------------------------------------------------------------------------------------------------------------
                                                                Normal retirement age
 Participant's earliest retirement  ----------------------------------------------------------------------------
       age at valuation date.          60     61     62     63     64     65     66     67     68     69     70
----------------------------------------------------------------------------------------------------------------
42.................................     53     53     53     54     54     54     54     54     54     54     54
43.................................     53     54     54     54     55     55     55     55     55     55     55
44.................................     54     54     55     55     55     55     55     56     56     56     56
45.................................     54     55     55     56     56     56     56     56     56     56     56
46.................................     55     55     56     56     56     57     57     57     57     57     57
47.................................     56     56     56     57     57     57     57     57     57     57     57
48.................................     56     57     57     57     58     58     58     58     58     58     58
49.................................     56     57     58     58     58     58     59     59     59     59     59
50.................................     57     57     58     58     59     59     59     59     59     59     59
51.................................     57     58     58     59     59     60     60     60     60     60     60
52.................................     58     58     59     59     60     60     60     60     60     60     60
53.................................     58     59     59     60     60     61     61     61     61     61     61
54.................................     58     59     60     60     61     61     61     61     61     61     61
55.................................     59     59     60     61     61     61     62     62     62     62     62
56.................................     59     60     60     61     61     62     62     62     62     62     62
57.................................     59     60     61     61     62     62     62     62     62     62     62
58.................................     59     60     61     61     62     62     63     63     63     63     63
59.................................     59     60     61     62     62     63     63     63     63     63     63
60.................................     60     60     61     62     62     63     63     63     63     63     63
61.................................  .....     61     61     62     63     63     63     63     64     64     64
62.................................  .....  .....     62     62     63     63     63     64     64     64     64
63.................................  .....  .....  .....     63     63     64     64     64     65     65     65
64.................................  .....  .....  .....  .....     64     64     65     65     65     65     65
65.................................  .....  .....  .....  .....  .....     65     65     65     65     65     65
66.................................  .....  .....  .....  .....  .....  .....     66     66     66     66     66
67.................................  .....  .....  .....  .....  .....  .....  .....     67     67     67     67
68.................................  .....  .....  .....  .....  .....  .....  .....  .....     68     68     68
69.................................  .....  .....  .....  .....  .....  .....  .....  .....  .....     69     69
70.................................  .....  .....  .....  .....  .....  .....  .....  .....  .....  .....     70
----------------------------------------------------------------------------------------------------------------

                  Table II-B.--Expected Retirement Ages for Individuals in the Medium Category
----------------------------------------------------------------------------------------------------------------
                                                                Normal retirement age
 Participant's earliest retirement  ----------------------------------------------------------------------------
       age at valuation date           60     61     62     63     64     65     66     67     68     69     70
----------------------------------------------------------------------------------------------------------------
42.................................     49     49     49     49     49     49     49     49     49     49     49
43.................................     50     50     50     50     50     50     50     50     50     50     50
44.................................     50     51     51     51     51     51     51     51     51     51     51
45.................................     51     51     52     52     52     52     52     52     52     52     52
46.................................     52     52     52     53     53     53     53     53     53     53     53

[[Page 34072]]


47.................................     53     53     53     53     53     54     54     54     54     54     54
48.................................     54     54     54     54     54     54     54     54     54     54     54
49.................................     54     55     55     55     55     55     55     55     55     55     55
50.................................     55     55     56     56     56     56     56     56     56     56     56
51.................................     56     56     56     57     57     57     57     57     57     57     57
52.................................     56     57     57     57     57     58     58     58     58     58     58
53.................................     57     57     58     58     58     58     58     58     58     58     58
54.................................     57     58     58     59     59     59     59     59     59     59     59
55.................................     58     58     59     59     59     60     60     60     60     60     60
56.................................     58     59     59     60     60     60     60     60     60     60     60
57.................................     59     59     60     60     61     61     61     61     61     61     61
58.................................     59     60     60     61     61     61     61     61     61     61     61
59.................................     59     60     61     61     62     62     62     62     62     62     62
60.................................     60     60     61     62     62     62     62     62     62     62     62
61.................................  .....     61     61     62     62     63     63     63     63     63     63
62.................................  .....  .....     62     62     62     63     63     63     63     63     63
63.................................  .....  .....  .....     63     63     64     64     64     64     64     64
64.................................  .....  .....  .....  .....     64     64     64     64     64     64     64
65.................................  .....  .....  .....  .....  .....     65     65     65     65     65     65
66.................................  .....  .....  .....  .....  .....  .....     66     66     66     66     66
67.................................  .....  .....  .....  .....  .....  .....  .....     67     67     67     67
68.................................  .....  .....  .....  .....  .....  .....  .....  .....     68     68     68
69.................................  .....  .....  .....  .....  .....  .....  .....  .....  .....     69     69
70.................................  .....  .....  .....  .....  .....  .....  .....  .....  .....  .....     70
----------------------------------------------------------------------------------------------------------------

                   Table II-C.--Expected Retirement Ages for Individuals in the High Category
----------------------------------------------------------------------------------------------------------------
                                                                Normal retirement age
 Participant's earliest retirement  ----------------------------------------------------------------------------
       age at valuation date.          60     61     62     63     64     65     66     67     68     69     70
----------------------------------------------------------------------------------------------------------------
42.................................     46     46     46     46     46     47     47     47     47     47     47
43.................................     47     47     47     47     47     47     47     47     47     47     47
44.................................     48     48     48     48     48     48     48     48     48     48     48
45.................................     49     49     49     49     49     49     49     49     49     49     49
46.................................     50     50     50     50     50     50     50     50     50     50     50
47.................................     51     51     51     51     51     51     51     51     51     51     51
48.................................     52     52     52     52     52     52     52     52     52     52     52
49.................................     53     53     53     53     53     53     53     53     53     53     53
50.................................     54     54     54     54     54     54     54     54     54     54     54
51.................................     54     55     55     55     55     55     55     55     55     55     55
52.................................     55     55     56     56     56     56     56     56     56     56     56
53.................................     56     56     56     57     57     57     57     57     57     57     57
54.................................     57     57     57     57     57     58     58     58     58     58     58
55.................................     57     58     58     58     58     58     58     58     58     58     58
56.................................     58     58     59     59     59     59     59     59     59     59     59
57.................................     58     59     59     60     60     60     60     60     60     60     60
58.................................     59     59     60     60     60     60     61     61     61     61     61
59.................................     59     60     60     61     61     61     61     61     61     61     61
60.................................     60     60     61     61     61     62     62     62     62     62     62
61.................................  .....     61     61     62     62     62     62     62     62     62     62
62.................................  .....  .....     62     62     62     62     62     62     62     62     62
63.................................  .....  .....  .....     63     63     63     64     64     64     64     64
64.................................  .....  .....  .....  .....     64     64     64     64     64     64     64
65.................................  .....  .....  .....  .....  .....     65     65     65     65     65     65
66.................................  .....  .....  .....  .....  .....  .....     66     66     66     66     66
67.................................  .....  .....  .....  .....  .....  .....  .....     67     67     67     67
68.................................  .....  .....  .....  .....  .....  .....  .....  .....     68     68     68
69.................................  .....  .....  .....  .....  .....  .....  .....  .....  .....     69     69
70.................................  .....  .....  .....  .....  .....  .....  .....  .....  .....  .....     70
----------------------------------------------------------------------------------------------------------------

[[Page 34073]]

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.

Sec. 4047.1  Purpose and scope.

    Section 4047 of ERISA gives the PBGC broad authority to take any
necessary actions in furtherance of a plan restoration order issued
pursuant to section 4047. This part (along with Treasury regulation 26
CFR 1.412(c)(1)-3) describes certain legal obligations that arise
incidental to a plan restoration under section 4047. This part also
establishes procedures with respect to these obligations that are
intended to facilitate the orderly transition of a restored plan from
terminated (or terminating) status to ongoing status, and to help
ensure that the restored plan will continue to be ongoing consistent
with the best interests of the plan's participants and beneficiaries
and the single-employer insurance program. This part applies to
terminated and terminating single-employer plans (except for plans
terminated and terminating under ERISA section 4041(b)) with respect to
which the PBGC has issued or is issuing a plan restoration order
pursuant to ERISA section 4047.

Sec. 4047.2  Definitions.

     The following terms are defined in Sec. 4001.2 of this chapter:
controlled group, ERISA, IRS, PBGC, plan, plan administrator, plan
year, and single-employer plan.

Sec. 4047.3  Funding of restored plan.

    (a) General. Whenever the PBGC issues or has issued a plan
restoration order under ERISA section 4047, it shall issue to the plan
sponsor a restoration payment schedule order in accordance with the
rules of this section. PBGC, through its Executive Director, shall also
issue a certification to its Board of Directors and the IRS, as
described in paragraph (c) of this section. If more than one plan is or
has been restored, the PBGC shall issue a separate restoration payment
schedule order and separate certification with respect to each restored
plan.
    (b) Restoration payment schedule order. A restoration payment
schedule order shall set forth a schedule of payments sufficient to
amortize the initial restoration amortization base described in
paragraph (b) of 26 CFR 1.412(c)(1)-3 over a period extending no more
than 30 years after the initial post-restoration valuation date, as
defined in paragraph (a)(1) of 26 CFR 1.412(c)(1)-3. The restoration
payment schedule shall be consistent with the requirements of 26 CFR
1.412(c)(1)-3 and may require payments at intervals of less than one
year, as determined by the PBGC. The PBGC may, in its discretion, amend
the restoration payment schedule at any time, consistent with the
requirements of 26 CFR 1.412(c)(1)-3.
    (c) Certification. The Executive Director's certification to the
Board of Directors and the IRS pursuant to paragraph (a) of this
section shall state that the PBGC has reviewed the funding of the plan,
the financial condition of the plan sponsor and its controlled group
members, the payments required under the restoration payment schedule
(taking into account the availability of deferrals as permitted under
paragraph (c)(4) of 26 CFR 1.412(c)(1)-3) and any other factor that the
PBGC deems relevant, and, based on that review, determines that it is
in the best interests of the plan's participants and beneficiaries and
the single-employer insurance program that the restored plan not be
reterminated.
    (d) Periodic PBGC review. As long as a restoration payment schedule
order issued under this section is in effect, the PBGC shall review
annually the funding status of the plan with respect to which the order
applies. As part of this review, the PBGC, through its Executive
Director, shall issue a certification in the form described in
paragraph (c) of this section. As a result of its funding review, PBGC
may amend the restoration payment schedule, consistent with the
requirements of paragraph (c)(2) of 26 CFR 1.412(c)(1)-3.

Sec. 4047.4  Payment of premiums.

    (a) General. Upon restoration of a plan pursuant to ERISA section
4047, the obligation to pay PBGC premiums pursuant to ERISA section
4007 is reinstated as of the date on which the plan was trusteed under
section 4042 of ERISA. Except as otherwise specifically provided in
paragraphs (b) and (c) of this section, the amount of the outstanding
premiums owed shall be computed and paid by the plan administrator in
accordance with part 4006 of this chapter (Premium Rates) and the forms
and instructions issued pursuant thereto, as in effect for the plan
years for which premiums are owed.
    (b) Notification of premiums owed. Whenever the PBGC issues or has
issued a plan restoration order, it shall send a written notice to the
plan administrator of the restored plan advising the plan administrator
of the plan year(s) for which premiums are owed. PBGC will include with
the notice the necessary premium payment forms and instructions. The
notice shall prescribe the payment due dates for the outstanding
premiums.
    (c) Methods for determining variable rate portion of the premium.
In general, the variable rate portion of the outstanding premiums shall
be determined in accordance with the premium regulation and forms, as
provided in paragraph (a) of this section, except that for any plan
year following a plan year for which Form 5500, Schedule B was not
filed because the plan was terminated, the alternative calculation
method in Sec. 4006.4(c) of this chapter may not be used.

Sec. 4047.5  Repayment of PBGC payments of guaranteed benefits.

    (a) General. Upon restoration of a plan pursuant to ERISA section
4047, amounts paid by the PBGC from its single-employer insurance fund
(the fund established pursuant to ERISA section 4005(a)) to pay
guaranteed benefits and related expenses under the plan while it was
terminated are a debt of the restored plan. The terms and conditions
for payment of this debt shall be determined by the PBGC.
    (b) Repayment terms. The PBGC shall prescribe reasonable terms and
conditions for payment of the debt described in paragraph (a) of this
section, including the number, amount and commencement date of the
payments. In establishing the terms, PBGC will consider the cash needs
of the plan, the timing and amount of contributions owed to the plan,
the liquidity of plan assets, the interests of the single-employer
insurance program, and any other factors PBGC deems relevant. PBGC may,
in its discretion, revise any of the payment terms and conditions, upon
written notice to the plan administrator in accordance with paragraph
(c) of this section.
    (c) Notification to plan administrator. Whenever the PBGC issues or
has issued a plan restoration order, it shall send a written notice to
the plan administrator of the restored plan advising the plan
administrator of the amount owed the PBGC pursuant to paragraph (a) of
this section. The notice shall also include the terms and conditions
for payment of this debt, as established under paragraph (b) of this
section.

[[Page 34074]]

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.

Appendix A to Part 4050--Examples of Designated Benefit Determinations
for Missing Participants Under Sec. 4050.5

Appendix B to Part 4050--Examples of Benefit Payments for Missing
participants Under Secs. 4050.8 Through 4050.10

Sec. 4050.1  Purpose and scope.

    This part prescribes rules for distributing benefits under a
terminating single-employer plan for any individual whom the plan
administrator has not located when distributing benefits under
Sec. 4041.27(c) of this chapter. This part applies to a plan if the
plan's deemed distribution date (or the date of a payment made in
accordance with Sec. 4050.12) is in a plan year beginning on or after
January 1, 1996.

Sec. 4050.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter:
annuity, benefit liabilities, Code, ERISA, insurer, irrevocable
commitment, mandatory employee contributions, normal retirement age,
PBGC, person, plan, plan administrator, plan year and title IV benefit.
    In addition, for purposes of this part:
    Deemed distribution date means the last day of the period in which
distribution may be made (determined without regard to the provisions
of this part) under Sec. 4041.27(a) or Sec. 4041.48(a) of this chapter
(whichever applies) or such earlier date as may be selected by the plan
administrator of a terminating plan that is on or after the date when
all benefit distributions have been made under the plan except for
distributions to--
    (1) Late-discovered participants,
    (2) Missing participants (including recently-missing participants)
whose designated benefits are paid to the PBGC, and
    (3) Recently-missing participants whose benefits are distributed by
purchasing an irrevocable commitment from an insurer.
    Designated benefit means the amount payable to the PBGC for a
missing participant pursuant to Sec. 4050.5.
    Designated benefit interest rate means the rate of interest
applicable to underpayments of guaranteed benefits by the PBGC under
Sec. 4022.81(d) of this chapter.
    Guaranteed benefit form means, with respect to a benefit, the form
in which the PBGC would pay a guaranteed benefit to a participant or
beneficiary in the PBGC's program for trusteed plans under subparts A
and B of part 4022 of this chapter (treating the deemed distribution
date as the termination date for this purpose).
    Late-discovered participant means a participant or beneficiary
entitled to a distribution under a terminating plan whom the plan
administrator locates before the plan administrator pays the
individual's designated benefit to the PBGC (or distributes the
individual's benefit by purchasing an irrevocable commitment from an
insurer) and not more than 90 days before the deemed distribution date.
    Missing participant means a participant or beneficiary entitled to
a distribution under a terminating plan whom the plan administrator has
not located as of the date when the plan administrator pays the
individual's designated benefit to the PBGC (or distributes the
individual's benefit by purchasing an irrevocable commitment from an
insurer). In the absence of proof of death, individuals not located are
presumed living.
    Missing participant annuity assumptions means the interest rate
assumptions and actuarial methods (using the interest rates for annuity
valuations in Table I of appendix B to part 4044 of this chapter) for
valuing a benefit to be paid by the PBGC as an annuity under subpart B
of part 4044, applied--
    (1) As if the deemed distribution date were the termination date;
    (2) Using unisex mortality rates that are a fixed blend of 50
percent of the male mortality rates and 50 percent of the female
mortality rates from the 1983 Group Annuity Mortality Table as
prescribed in Rev. Rul. 95-6, 1995-1 C.B. 80 (Cumulative Bulletins are
available from the Superintendent of Documents, Government Printing
Office, Washington, DC 20402);
    (3) Without using the expected retirement age assumptions in
Secs. 4044.55 through 4044.57 of this chapter;
    (4) Without making the adjustment for expenses provided for in
Sec. 4044.52(a)(5) of this chapter; and
    (5) By adding $300, as an adjustment (loading) for expenses, for
each missing participant whose designated benefit without such
adjustment would be greater than $3,500.
    Missing participant forms and instructions means PBGC Forms 501 and
602, Schedule MP thereto, and related forms, and their instructions.
    Missing participant lump sum assumptions means the interest rate
assumptions and actuarial methods (using the interest rates for lump
sum valuations in Table II of appendix B to part 4044 of this chapter)
for valuing a benefit to be paid by the PBGC as a lump sum under
subpart B of part 4044 of this chapter, applied--
    (1) As if the deemed distribution date were the termination date;
    (2) Using mortality assumptions from Table 3 of appendix A to part
4044 of this chapter; and
    (3) Without using the expected retirement age assumptions in
Secs. 4044.55 through 4044.57 of this chapter.
    Pay status means, with respect to a benefit under a plan, that the
plan administrator has made or (except for administrative delay or a
waiting period) would have made one or more benefit payments.
    Post-distribution certification means the post-distribution
certification required by Sec. 4041.27(h) or Sec. 4041.48(b) of this
chapter.
    Recently-missing participant means a participant or beneficiary
whom the plan administrator discovers to be a missing participant on or
after the 90th day before the deemed distribution date.
    Unloaded designated benefit means the designated benefit reduced by
$300; except that the reduction shall not apply in the case of a
designated benefit determined using the missing participant annuity
assumptions without adding the $300 load described in paragraph (5) of
the definition of ``missing participant annuity assumptions.''

Sec. 4050.3  Method of distribution for missing participants.

    The plan administrator of a terminating plan shall distribute
benefits for each missing participant by--
    (a) purchasing from an insurer an irrevocable commitment that
satisfies the requirements of Sec. 4041.27(c) or Sec. 4041.48(a)(1) of
this chapter (whichever is applicable); or
    (b) paying the PBGC a designated benefit in accordance with
Secs. 4050.4

[[Page 34075]]

through 4050.6 (subject to the special rules in Sec. 4050.12).

Sec. 4050.4  Diligent search.

    (a) Search required. A diligent search shall be made for each
missing participant whose designated benefit (or voluntary employee
contributions under Sec. 4050.12(d)(2)) is paid to the PBGC. The search
shall be made before the payment is made.
    (b) Diligence. A search is a diligent search only if the search--
    (1) Begins not more than 6 months before notices of intent to
terminate are issued and is carried on in such a manner that if the
individual is found, distribution to the individual can reasonably be
expected to be made on or before the deemed distribution date (or, in
the case of a recently-missing participant, on or before the 90th day
after the deemed distribution date);
    (2) Includes inquiry of any plan beneficiaries (including alternate
payees) of the missing participant whose names and addresses are known
to the plan administrator; and
    (3) Includes use of a commercial locator service to search for the
missing participant (without charge to the missing participant or
reduction of the missing participant's plan benefit).

Sec. 4050.5  Designated benefit.

    (a) Amount of designated benefit. The amount of the designated
benefit shall be the amount determined under paragraph (a)(1), (a)(2),
(a)(3), or (a)(4) of this section (whichever is applicable) or, if
less, the maximum amount that could be provided under the plan to the
missing participant in the form of a single sum in accordance with
section 415 of the Code.
    (1) Mandatory lump sum. The designated benefit of a missing
participant required under a plan to receive a mandatory lump sum as of
the deemed distribution date shall be the lump sum payment that the
plan administrator would have distributed to the missing participant as
of the deemed distribution date.
    (2) De minimis lump sum. The designated benefit of a missing
participant not described in paragraph (a)(1) of this section whose
benefit is not in pay status as of the deemed distribution date and
whose benefit has a de minimis actuarial present value ($3,500 or less)
as of the deemed distribution date under the missing participant lump
sum assumptions shall be such value.
    (3) No lump sum. The designated benefit of a missing participant
not described in paragraph (a)(1) or (a)(2) of this section who, as of
the deemed distribution date, cannot elect an immediate lump sum under
the plan shall be the actuarial present value of the missing
participant's benefit as of the deemed distribution date under the
missing participant annuity assumptions.
    (4) Elective lump sum. The designated benefit of a missing
participant not described in paragraph (a)(1), (a)(2), or (a)(3) of
this section shall be the greater of the amounts determined under the
methodologies of paragraph (a)(1) or (a)(3) of this section.
    (b) Assumptions. When the plan administrator uses the missing
participant annuity assumptions or the missing participant lump sum
assumptions for purposes of determining the designated benefit under
paragraph (a) of this section, the plan administrator shall value the
most valuable benefit, as determined under paragraph (b)(1) of this
section, using the assumptions described in paragraph (b)(2) or (b)(3)
of this section (whichever is applicable).
    (1) Most valuable benefit. For a missing participant whose benefit
is in pay status as of the deemed distribution date, the most valuable
benefit is the pay status benefit. For a missing participant whose
benefit is not in pay status as of the deemed distribution date, the
most valuable benefit is the benefit payable at the age on or after the
deemed distribution date (beginning with the participant's earliest
early retirement age and ending with the participant's normal
retirement age) for which the present value as of the deemed
distribution date is the greatest. The present value as of the deemed
distribution date with respect to any age is determined by multiplying:
    (i) the monthly (or other periodic) benefit payable under the plan;
by
    (ii) the present value (determined as of the deemed distribution
date using the missing participant annuity assumptions) of a $1 monthly
(or other periodic) annuity beginning at the applicable age.
    (2) Participant. A missing participant who is a participant, and
whose benefit is not in pay status as of the deemed distribution date,
is assumed to be married to a spouse the same age, and the form of
benefit that must be valued is the qualified joint and survivor annuity
benefit that would be payable under the plan. If the participant's
benefit is in pay status as of the deemed distribution date, the form
and beneficiary of the participant's benefit are the form of benefit
and beneficiary of the pay status benefit.
    (3) Beneficiary. A missing participant who is a beneficiary, and
whose benefit is not in pay status as of the deemed distribution date,
is assumed not to be married, and the form of benefit that must be
valued is the survivor benefit that would be payable under the plan. If
the beneficiary's benefit is in pay status as of the deemed
distribution date, the form and beneficiary of the beneficiary's
benefit are the form of benefit and beneficiary of the pay status
benefit.
    (4) Examples. See Appendix A to this part for examples illustrating
the provisions of this section.
    (c) Missed payments. In determining the designated benefit, the
plan administrator shall include the value of any payments that were
due before the deemed distribution date but that were not made.
    (d) Payment of designated benefits. Payment of designated benefits
shall be made in accordance with Sec. 4050.6 and shall be deemed made
on the deemed distribution date.

Sec. 4050.6  Payment and required documentation.

    (a) Time of payment and filing--(1) General rule. The plan
administrator shall pay designated benefits, and file the information
and certifications (of the plan administrator and the plan's enrolled
actuary) specified in the missing participant forms and instructions,
by the time the post-distribution certification is due (determined in
accordance with Sec. 4041.9 of this chapter). Except as otherwise
provided in the missing participant forms and instructions, the plan
administrator shall submit the designated benefits, information, and
certifications with the post-distribution certification.
    (2) Recently-missing participants. For a recently-missing
participant, the plan administrator shall either purchase an
irrevocable commitment from an insurer not later than 90 days after the
deemed distribution date or pay a designated benefit to the PBGC by the
time the amended post-distribution certification is due under paragraph
(a)(2)(ii) of this section. Except as otherwise provided in the missing
participant forms and instructions--
    (i) Payment. The plan administrator shall submit the designated
benefit with the amended post-distribution certification described in
paragraph (a)(2)(ii) of this section; and
    (ii) Filing. If (in the case of a recently-missing participant for
whom a designated benefit is to be paid to the PBGC) a diligent search
has not been completed or (in the case of any other recently-missing
participant) an irrevocable commitment has not been

[[Page 34076]]

purchased when the plan administrator submits the filing described in
paragraph (a)(1) of this section, the plan administrator shall so
indicate in that filing and submit an amended filing (including an
amended post-distribution certification) within 120 days after the
deemed distribution date (subject to extension under Sec. 4050.12(h))
in accordance with the missing participant forms and instructions.
    (3) Late-discovered participants. When it is impracticable for the
plan administrator to include complete and accurate final information
on a late-discovered participant in a timely post-distribution
certification, the plan administrator shall submit an amended post-
distribution certification within 120 days after the deemed
distribution date (subject to extension under Sec. 4050.12(h)) in
accordance with the missing participant forms and instructions.
    (b) Interest on late payments. If the plan administrator does not
pay a designated benefit by the time specified in paragraph (a) of this
section, the plan administrator shall pay interest as assessed by the
PBGC for the period beginning on the deemed distribution date and
ending on the date when the payment is received by the PBGC. Interest
will be assessed at the rate provided for late premium payments in
Sec. 4007.7 of this chapter. Interest assessed under this paragraph
shall be deemed paid in full if payment of the amount assessed is
received by the PBGC within 30 days after the date of a PBGC bill for
such amount.
    (c) Supplemental information. Within 30 days after the date of a
written request from the PBGC, a plan administrator required to provide
the information and certifications described in paragraph (a) of this
section shall file supplemental information, as requested, for the
purpose of verifying designated benefits, determining benefits to be
paid by the PBGC under this part, and substantiating diligent searches.
    (1) Information mailed. Supplemental information filed under this
paragraph (c) is considered filed 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 information was mailed postage prepaid, properly addressed
to the PBGC.
    (2) Information delivered. When the plan administrator sends or
transmits the information to the PBGC by means other than the United
States Postal Service, the information is considered filed 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.

Sec. 4050.7  Benefits of missing participants--in general.

    (a) If annuity purchased. If a plan administrator distributes a
missing participant's benefit by purchasing an irrevocable commitment
from an insurer, and the missing participant (or his or her beneficiary
or estate) later contacts the PBGC, the PBGC will inform the person of
the identity of the insurer and the relevant policy number.
    (b) If designated benefit paid. If the PBGC locates or is contacted
by a missing participant (or his or her beneficiary or estate) for whom
a plan administrator paid a designated benefit to the PBGC, the PBGC
will pay benefits in accordance with Secs. 4050.8 through 4050.10
(subject to the limitations and special rules in Secs. 4050.11 and
4050.12).
    (c) Examples. See Appendix B to this part for examples illustrating
the provisions of Secs. 4050.8 through 4050.10.

Sec. 4050.8  Automatic lump sum.

    This section applies to a missing participant whose designated
benefit was determined under Sec. 4050.5(a)(1) (mandatory lump sum) or
Sec. 4050.5(a)(2) (de minimis lump sum).
    (a) General rule--(1) Benefit paid. The PBGC will pay a single sum
benefit equal to the designated benefit plus interest at the designated
benefit interest rate from the deemed distribution date to the date on
which the PBGC pays the benefit.
    (2) Payee. Payment shall be made--
    (i) To the missing participant, if located;
    (ii) If the missing participant died before the deemed distribution
date, and if the plan so provides, to the missing participant's
beneficiary or estate; or
    (iii) If the missing participant dies on or after the deemed
distribution date, to the missing participant's estate.
    (b) De minimis annuity alternative. If the guaranteed benefit form
for a missing participant whose designated benefit was determined under
Sec. 4050.5(a)(2) (de minimis lump sum) (or the guaranteed benefit form
for a beneficiary of such a missing participant) would provide for the
election of an annuity, the missing participant (or the beneficiary)
may elect to receive an annuity. If such an election is made--
    (1) The PBGC will pay the benefit in the elected guaranteed benefit
form, beginning on the annuity starting date elected by the missing
participant (or the beneficiary), which shall not be before the later
of the date of the election or the earliest date on which the missing
participant (or the beneficiary) could have begun receiving benefits
under the plan; and
    (2) The benefit paid will be actuarially equivalent to the
designated benefit, i.e., each monthly (or other periodic) benefit
payment will equal the designated benefit divided by the present value
(determined as of the deemed distribution date under the missing
participant lump sum assumptions) of a $1 monthly (or other periodic)
annuity beginning on the annuity starting date.

Sec. 4050.9  Annuity or elective lump sum--living missing participant.

    This section applies to a missing participant whose designated
benefit was determined under Sec. 4050.5(a)(3) (no lump sum) or
Sec. 4050.5(a)(4) (elective lump sum) and who is living on the date as
of which the PBGC begins paying benefits.
    (a) Missing participant whose benefit was not in pay status as of
the deemed distribution date. The PBGC will pay the benefit of a
missing participant whose benefit was not in pay status as of the
deemed distribution date as follows.
    (1) Time and form of benefit. The PBGC will pay the missing
participant's benefit in the guaranteed benefit form, beginning on the
annuity starting date elected by the missing participant (which shall
not be before the later of the date of the election or the earliest
date on which the missing participant could have begun receiving
benefits under the plan).
    (2) Amount of benefit. The PBGC will pay a benefit that is
actuarially equivalent to the unloaded designated benefit, i.e., each
monthly (or other periodic) benefit payment will equal the unloaded
designated benefit divided by the present value (determined as of the
deemed distribution date under the missing participant annuity
assumptions) of a $1 monthly (or other periodic) annuity beginning on
the annuity starting date.
    (b) Missing participant whose benefit was in pay status as of the
deemed distribution date. The PBGC will pay the benefit of a missing
participant whose benefit was in pay status as of the deemed
distribution date as follows.
    (1) Time and form of benefit. The PBGC will pay the benefit in the
form that was in pay status, beginning when the missing participant is
located.
    (2) Amount of benefit. The PBGC will pay the monthly (or other
periodic) amount of the pay status benefit, plus a lump sum equal to
the payments the missing participant would have

[[Page 34077]]

received under the plan, plus interest on the missed payments (at the
plan rate up to the deemed distribution date and thereafter at the
designated benefit interest rate) to the date as of which the PBGC pays
the lump sum.
    (c) Payment of lump sum. If a missing participant whose designated
benefit was determined under Sec. 4050.5(a)(4) (elective lump sum) so
elects, the PBGC will pay his or her benefit in the form of a single
sum. This election is not effective unless the missing participant's
spouse consents (if such consent would be required under section 205 of
ERISA). The single sum equals the designated benefit plus interest (at
the designated benefit interest rate) from the deemed distribution date
to the date as of which the PBGC pays the benefit.

Sec. 4050.10  Annuity or elective lump sum--beneficiary of deceased
missing participant.

    This section applies to a beneficiary of a deceased missing
participant whose designated benefit was determined under
Sec. 4050.5(a)(3) (no lump sum) or Sec. 4050.5(a)(4) (elective lump
sum) and whose benefit is not payable under Sec. 4050.9.
    (a) If deceased missing participant's benefit was not in pay status
as of the deemed distribution date. The PBGC will pay a benefit with
respect to a deceased missing participant whose benefit was not in pay
status as of the deemed distribution date as follows.
    (1) General rule.--(i) Beneficiary. The PBGC will pay a benefit to
the surviving spouse of a missing participant who was a participant
(unless the surviving spouse has properly waived a benefit in
accordance with section 205 of ERISA).
    (ii) Form and amount of benefit. The PBGC will pay the survivor
benefit in the form of a single life annuity. Each monthly (or other
periodic) benefit payment will equal 50% of the quotient that results
when the unloaded designated benefit is divided by the present value
(determined as of the deemed distribution date under the missing
participant annuity assumptions, and assuming that the missing
participant survived to the deemed distribution date) of a $1 monthly
(or other periodic) joint and 50 percent survivor annuity beginning on
the annuity starting date, under which reduced payments (at the 50
percent level) are made only after the death of the missing participant
during the life of the spouse (and not after the death of the spouse
during the missing participant's life).
    (iii) Time of benefit. The PBGC will pay the survivor benefit
beginning at the time elected by the surviving spouse (which shall not
be before the later of the date of the election or the earliest date on
which the surviving spouse could have begun receiving benefits under
the plan).
    (2) If missing participant died before deemed distribution date.
Notwithstanding the provisions of paragraph (a)(1) of this section, if
a beneficiary of a missing participant who died before the deemed
distribution date establishes to the PBGC's satisfaction that he or she
is the proper beneficiary or would have received benefits under the
plan in a form, at a time, or in an amount different from the benefit
paid under paragraph (a)(1)(ii) or (a)(1)(iii) of this section, the
PBGC will make payments in accordance with the facts so established,
but only in the guaranteed benefit form.
    (3) Elective lump sum. Notwithstanding the provisions of paragraphs
(a)(1) and (a)(2) of this section, if the beneficiary of a missing
participant whose designated benefit was determined under
Sec. 4050.5(a)(4) (elective lump sum) so elects, the PBGC will pay his
or her benefit in the form of a single sum. The single sum will be
equal to the actuarial present value (determined as of the deemed
distribution date under the missing participant annuity assumptions) of
the death benefit payable on the annuity starting date, plus interest
(at the designated benefit interest rate) from the deemed distribution
date to the date as of which the PBGC pays the benefit.
    (b) If deceased missing participant's benefit was in pay status as
of the deemed distribution date. The PBGC will pay a benefit with
respect to a deceased missing participant whose benefit was in pay
status as of the deemed distribution date as follows.
    (1) Beneficiary. The PBGC will pay a benefit to the beneficiary (if
any) of the benefit that was in pay status as of the deemed
distribution date.
    (2) Form and amount of benefit. The PBGC will pay a monthly (or
other periodic) amount equal to the monthly (or other periodic) amount,
if any, that the beneficiary would have received under the form of
payment in effect, plus a lump sum payment equal to the payments the
beneficiary would have received under the plan subsequent to the
missing participant's death and prior to the date as of which the
benefit is paid under paragraph (b)(4) of this section, plus interest
on the missed payments (at the plan rate up to the deemed distribution
date and thereafter at the designated benefit interest rate) to the
date as of which the benefit is paid under paragraph (b)(4) of this
section.
    (3) Lump sum payment to estate. The PBGC will make a lump sum
payment to the missing participant's estate equal to the payments that
the missing participant would have received under the plan for the
period prior to the missing participant's death, plus interest on the
missed payments (at the plan rate up to the deemed distribution date
and thereafter at the designated benefit interest rate) to the date
when the lump sum is paid. Notwithstanding the preceding sentence, if a
beneficiary of a missing participant other than the estate establishes
to the PBGC's satisfaction that the beneficiary is entitled to the lump
sum payment, the PBGC will pay the lump sum to such beneficiary.
    (4) Time of benefit. The PBGC will pay the survivor benefit
beginning when the beneficiary is located.
    (5) Spouse deceased. If the PBGC locates the estate of the deceased
missing participant's spouse under circumstances where a benefit would
have been paid under this paragraph (b) if the spouse had been located
while alive, the PBGC shall pay to the spouse's estate a lump sum
payment computed in the same manner as provided for in paragraph (b)(2)
of this section based on the period from the missing participant's
death to the death of the spouse.

Sec. 4050.11  Limitations.

    (a) Exclusive benefit. The benefits provided for under this part
shall be the only benefits payable by the PBGC to missing participants
or to beneficiaries based on the benefits of deceased missing
participants.
    (b) Limitation on benefit value. The total actuarial present value
of all benefits paid with respect to a missing participant under
Secs. 4050.8 through 4050.10, determined as of the deemed distribution
date, shall not exceed the missing participant's designated benefit.
    (c) Guaranteed benefit. If a missing participant or his or her
beneficiary establishes to the PBGC's satisfaction that the benefit
under Secs. 4050.8 through 4050.10 (based on the designated benefit
actually paid to the PBGC) is less than the minimum benefit in this
paragraph (c), the PBGC shall instead pay the minimum benefit. The
minimum benefit shall be the lesser of:
    (1) The benefit as determined under the PBGC's rules for paying
guaranteed benefits in trusteed plans under subparts A and B of part
4022 of this chapter (treating the deemed distribution date as the
termination date for this purpose); or

[[Page 34078]]

    (2) The benefit based on the designated benefit that should have
been paid under Sec. 4050.5.
    (d) Limitation on annuity starting date. A missing participant (or
his or her survivor) may not elect an annuity starting date after the
later of--
    (1) the required beginning date under section 401(a)(9) of the
Code; or
    (2) the date when the missing participant (or the survivor) is
notified of his or her right to a benefit.

Sec. 4050.12  Special rules.

    (a) Late-discovered participants. The plan administrator of a plan
that terminates with one or more late-discovered participants shall
(after issuing notices to each such participant in accordance with
Secs. 4041.21 and 4041.41 or 4041.46 of this chapter (whichever
apply)), distribute each such late-discovered participant's benefit
within the period (determined without regard to the provisions of this
part) described in Sec. 4041.27(a) or Sec. 4041.48(a) of this chapter
(whichever applies) if practicable or (if not) as soon thereafter as
practicable, but not more than 90 days after the deemed distribution
date (subject to extension under Sec. 4050.12(h)).
    (b) Missing participants located quickly. Notwithstanding the
provisions of Secs. 4050.8 through 4050.10, if the PBGC or the plan
administrator locates a missing participant within 30 days after the
PBGC receives the missing participant's designated benefit, the PBGC
may in its discretion return the missing participant's designated
benefit to the plan administrator, and the plan administrator shall
treat the missing participant like a late-discovered participant.
    (c) Qualified domestic relations orders. Plan administrators and
the PBGC shall take the provisions of qualified domestic relations
orders (QDROs) under section 206(d)(3) of ERISA or section 414(p) of
the Code into account in determining designated benefits and benefit
payments by the PBGC, including treating an alternate payee under an
applicable QDRO as a missing participant or as a beneficiary of a
missing participant, as appropriate, in accordance with the terms of
the QDRO. For purposes of calculating the amount of the designated
benefit of an alternate payee, the plan administrator shall use the
assumptions for a missing participant who is a beneficiary under
Sec. 4050.5(b).
    (d) Employee contributions--(1) Mandatory employee contributions.
Notwithstanding the provisions of Sec. 4050.5, if a missing participant
made mandatory contributions (within the meaning of section 4044(a)(2)
of ERISA), the missing participant's designated benefit shall not be
less than the sum of the missing participant's mandatory contributions
and interest to the deemed distribution date at the plan's rate or the
rate under section 204(c) of ERISA (whichever produces the greater
amount).
    (2) Voluntary employee contributions.
    (i) Applicability. This paragraph (d)(2) applies to any employee
contributions that were not mandatory (within the meaning of section
4044(a)(2) of ERISA) to which a missing participant is entitled in
connection with the termination of a defined benefit plan.
    (ii) Payment to PBGC. A plan administrator, in accordance with the
missing participant forms and instructions, shall pay the employee
contributions described in paragraph (d)(2)(i) of this section
(together with any earnings thereon) to the PBGC, and shall file
Schedule MP with the PBGC, by the time the designated benefit is due
under Sec. 4050.6. Any such amount shall be in addition to the
designated benefit and shall be separately identified.
    (iii) Payment by PBGC. In addition to any other amounts paid by the
PBGC under Secs. 4050.8 through 4050.10, the PBGC shall pay any amount
paid to it under paragraph (d)(2)(ii) of this section, with interest at
the designated benefit interest rate from the date of receipt by the
PBGC to the date of payment by the PBGC, in the same manner as
described in Sec. 4050.8 (automatic lump sums), except that if the
missing participant died before the deemed distribution date and there
is no beneficiary, payment shall be made to the missing participant's
estate.
    (e) Residual assets. The PBGC shall determine, in a manner
consistent with the purposes of this part and section 4050 of ERISA,
how the provisions of this part shall apply to any distribution, to
participants and beneficiaries who cannot be located, of residual
assets remaining after the satisfaction of benefit liabilities in
connection with the termination of a defined benefit plan. Unless the
PBGC otherwise determines, the deadline for payment of residual assets
for a missing participant and for submission to the PBGC of a Schedule
MP (or an amended Schedule MP) is the 30th day after the date on which
all residual assets have been distributed to all participants and
beneficiaries other than missing participants for whom payment of
residual assets is made to the PBGC.
    (f) Sufficient distress terminations. In the case of a plan
undergoing a distress termination (under section 4041(c) of ERISA) that
is sufficient for at least all guaranteed benefits and that distributes
its assets in the manner described in section 4041(b)(3) of ERISA, the
benefit assumed to be payable by the plan for purposes of determining
the amount of the designated benefit under Sec. 4050.5 shall be limited
to the Title IV benefit plus any benefit to which funds under section
4022(c) of ERISA have been allocated.
    (g) Similar rules for later payments. If the PBGC determines that
one or more persons should receive benefits (which may be in addition
to benefits already provided) in order for a plan termination to be
valid (e.g., upon audit of the termination), and one or more of such
individuals cannot be located, the PBGC shall determine, in a manner
consistent with the purposes of this part and section 4050 of ERISA,
how the provisions of this part shall apply to such benefits.
    (h) Discretionary extensions. The PBGC may in its sole discretion
extend the 120-day amended filing periods in Sec. 4050.6(a)(2)(ii) and
(3) and the 90-day distribution periods in Sec. 4050.6(a)(2) and in
paragraph (a) of this section--
    (1) Where a recently-missing participant becomes a late-discovered
participant,
    (2) Where the PBGC returns the designated benefit of a missing
participant who is located quickly to the plan administrator under
Sec. 4050.12(b), or
    (3) In other unusual circumstances.
    (i) Payments beginning after age 70\1/2\. If the PBGC begins paying
an annuity under Sec. 4050.9(a) or 4050.10(a) to a participant or a
participant's spouse after the January 1 following the date when the
participant attained or would have attained age 70\1/2\, the PBGC shall
pay to the participant or the spouse (or their respective estates) or
both, as appropriate, the lump sum equivalent of the past annuity
payments the participant and spouse would have received if the PBGC had
begun making payments on such January 1. The PBGC shall also pay lump
sum equivalents under this paragraph (i) if the PBGC locates the estate
of the participant or spouse after both are deceased. (Nothing in this
paragraph (i) shall increase the total value of the benefits payable
with respect to a missing participant.)

Sec. 4050.13  OMB control number.

    The collection of information requirements contained in this part
have been approved by the Office of Management under OMB Control Number
1212-0036.

[[Page 34079]]

Appendix A to part 4050--Examples of Designated Benefit Determinations
for Missing Participants under Sec. 4050.5

    The calculation of the designated benefit under Sec. 4050.5 is
illustrated by the following examples.
    Example 1. Plan A provides that any participant whose benefit
has a value at distribution of $1,750 or less will be paid a lump
sum, and that no other lump sums will be paid. P, Q, and R are
missing participants.
    (1) As of the deemed distribution date, the value of P's benefit
is $1,700 under plan A's assumptions. Under Sec. 4050.5(a)(1), the
plan administrator pays the PBGC $1,700 as P's designated benefit.
    (2) As of the deemed distribution date, the value of Q's benefit
is $3,700 under plan A's assumptions and $3,200 under the missing
participant lump sum assumptions. Under Sec. 4050.5(a)(2), the plan
administrator pays the PBGC $3,200 as Q's designated benefit.
    (3) As of the deemed distribution date, the value of R's benefit
is $3,400 under plan A's assumptions, $3,600 under the missing
participant lump sum assumptions, and $3,450 under the missing
participant annuity assumptions. Under Sec. 4050.5(a)(3), the plan
administrator pays the PBGC $3,450 as R's designated benefit.
    Example 2. Plan B provides for a normal retirement age of 65 and
permits early commencement of benefits at any age between 60 and 65,
with benefits reduced by 5 percent for each year before age 65 that
the benefit begins. The qualified joint and 50 percent survivor
annuity payable under the terms of the plan requires in all cases a
16 percent reduction in the benefit otherwise payable. The plan does
not provide for elective lump sums.
    (1) M is a missing participant who separated from service under
plan B with a deferred vested benefit. M is age 50 at the deemed
distribution date, and has a normal retirement benefit of $1,000 per
month payable at age 65 in the form of a single life annuity. M's
benefit as of the deemed distribution date has a value greater than
$3,500 using either plan assumptions or the missing participant lump
sum assumptions. Accordingly, M's designated benefit is to be
determined under Sec. 4050.5(a)(3).
    (2) For purposes of determining M's designated benefit, M is
assumed to be married to a spouse who is also age 50 on the deemed
distribution date. M's monthly benefit in the form of the qualified
joint and survivor annuity under the plan varies from $840 at age 65
(the normal retirement age) ($1,000  x  (1 - .16)) to $630 at age 60
(the earliest retirement age) ($1,000  x  (1 - 5  x  (.05))  x  (1 -
.16)).
    (3) Under Sec. 4050.5(a)(3), M's benefit is to be valued using
the missing participant annuity assumptions. The select and ultimate
interest rates on Plan B's deemed distribution date are 7.50 percent
for the first 20 years and 5.75 percent thereafter. Using these
rates and the blended mortality table described in paragraph (2) of
the definition of ``missing participant annuity assumptions'' in
Sec. 4050.2, the plan administrator determines that the benefit
commencing at age 60 is the most valuable benefit (i.e., the benefit
at age 60 is more valuable than the benefit at ages 61, 62, 63, 64
or 65). The present value as of the deemed distribution date of each
dollar of annual benefit (payable monthly as a joint and 50 percent
survivor annuity) is $5.4307 if the benefit begins at age 60.
(Because a new spouse may succeed to the survivor benefit, the
mortality of the spouse during the deferral period is ignored.)
Thus, without adjustment (loading) for expenses, the value of the
benefit beginning at age 60 is $41,056 (12  x  $630  x  5.4307). The
designated benefit is equal to this value plus an expense adjustment
of $300, or a total of $41,356.

Appendix B to Part 4050--Examples of Benefit Payments for Missing
Participants Under Secs. 4050.8 Through 4050.10

    The provisions of Secs. 4050.8 through 4050.10 are illustrated
by the following examples.
    Example 1. Participant M from Plan B (see Example 2 in Appendix
A of this part) is located. M's spouse is ten years younger than M.
M elects to receive benefits in the form of a joint and 50 percent
survivor annuity commencing at age 62.
    (1) M's designated benefit was $41,356. The unloaded designated
benefit was $41,056. As of Plan B's deemed distribution date (and
using the missing participant annuity assumptions), the present
value per dollar of monthly benefit (payable monthly as a joint and
50 percent survivor annuity commencing at age 62 and reflecting the
actual age of M's spouse) is $4.7405. Thus, the monthly benefit to M
at age 62 is $722 ($41,056 / (4.7405  x  12)). M's spouse will
receive $361 (50 percent of $722) per month for life after the death
of M.
    (2) If M had instead been found to have died on or after the
deemed distribution date, and M's spouse wanted benefits to commence
when M would have attained age 62, the same calculation would be
performed to arrive at a monthly benefit of $361 to M's spouse.
    Example 2. Participant P is a missing participant from Plan C, a
plan that allows elective lump sums upon plan termination. Plan C's
administrator pays a designated benefit of $10,000 to the PBGC on
behalf of P, who was age 30 on the deemed distribution date.
    (1) P's spouse, S, is located and has a death certificate
showing that P died on or after the deemed distribution date with S
as spouse. S is the same age as P, and would like survivor benefits
to commence immediately, at age 55 (as permitted by the plan). S's
benefit is the survivor's share of the joint and 50 percent survivor
annuity which is actuarially equivalent, as of the deemed
distribution date, to $9,700 (the unloaded designated benefit).
    (2) The select and ultimate interest rates on Plan C's deemed
distribution date were 7.50 percent for the first 20 years and 5.75
percent thereafter. Using these rates and the blended mortality
table described in paragraph (2) of the definition of ``missing
participant annuity assumptions'' in Sec. 4050.2, the present value
as of the deemed distribution date of each dollar of annual benefit
(payable monthly as a joint and 50 percent survivor annuity) is
$2.4048 if the benefit begins when S and P would have been age 55.
Thus, the monthly benefit to S commencing at age 55 is $168 (50
percent of $9,700 / (2.4048  x  12)). Since P could have elected a
lump sum upon plan termination, S may elect a lump sum. S's lump sum
is the present value as of the deemed distribution date (using the
missing participant annuity assumptions) of the monthly benefit of
$168, accumulated with interest at the designated benefit interest
rate to the date paid.

PART 4061--AMOUNTS PAYABLE BY THE PENSION BENEFIT GUARANTY
CORPORATION

Sec. 4061.1  Cross-references.

    See part 4022 of this chapter regarding benefits payable under
terminated single-employer plans and Sec. 4281.47 of this chapter
regarding financial assistance to pay benefits under insolvent
multiemployer plans.

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  Filing of documents.
4062.10  Computation of time.

    Authority: 29 U.S.C. 1302(b)(3), 1362-1364, 1367, 1368.

Sec. 4062.1  Purpose and scope.

    The purpose of this part is to set forth rules for determination
and payment of the liability incurred, under section 4062(b) of ERISA,
upon termination of any single-employer plan and, to the extent
appropriate, determination of the liability incurred with respect to
multiple employer plans under sections 4063 and 4064 of ERISA. The
provisions of this part regarding the amount of liability to the PBGC
that is incurred upon termination of a single-employer plan apply with
respect to a plan for which a notice of intent to terminate under
section 4041(c) of ERISA is issued or proceedings to terminate under
section 4042 of ERISA are instituted after December 17, 1987. Those
provisions also apply, to the extent described in paragraph (a) of this
section, to the amount of liability for withdrawal from a multiple
employer plan after that date.

[[Page 34080]]

Sec. 4062.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter:
benefit liabilities, Code, contributing sponsor, controlled group,
ERISA, fair market value, guaranteed benefit, multiple employer plan,
notice of intent to terminate, PBGC, person, plan, plan administrator,
proposed termination date, single-employer plan, and termination date.
    In addition, for purposes of this part, the term collective net
worth of persons subject to liability in connection with a plan
termination means the sum of the individual net worths of all persons
that have individual net worths which are greater than zero and that
(as of the termination date) are contributing sponsors of the
terminated plan or members of their controlled groups, as determined in
accordance with section 4062(d)(1) of ERISA and Sec. 4062.4 of this
part.

Sec. 4062.3  Amount and payment of section 4062(b) liability.

    (a) Amount of liability.--(1) General rule. Except as provided in
paragraph (a)(2) of this section, the amount of section 4062(b)
liability is the total amount (as of the termination date) of the
unfunded benefit liabilities (within the meaning of section 4001(a)(18)
of ERISA) to all participants and beneficiaries under the plan,
together with interest calculated from the termination date in
accordance with Sec. 4062.7.
    (2) Special rule in case of subsequent finding of inability to pay
guaranteed benefits. In any distress termination proceeding under
section 4041(c) of ERISA and part 4041 of this chapter in which (as
described in section 4041(c)(3)(C)(ii) of ERISA), after a determination
that the plan is sufficient for benefit liabilities or for guaranteed
benefits, the plan administrator finds that the plan is or will be
insufficient for guaranteed benefits and the PBGC concurs with that
finding, or the PBGC makes such a finding on its own initiative,
actuarial present values shall be determined as of the date of the
notice to, or the finding by, the PBGC of insufficiency for guaranteed
benefits.
    (b) Payment of liability. Section 4062(b) liability is due and
payable as of the termination date, in cash or securities acceptable to
the PBGC, except that, as provided in Sec. 4062.8(c), the PBGC shall
prescribe commercially reasonable terms for payment of so much of such
liability as exceeds 30 percent of the collective net worth of persons
subject to liability in connection with a plan termination. The PBGC
may make alternative arrangements, as provided in Sec. 4062.8(b).

Sec. 4062.4  Determinations of net worth and collective net worth.

    (a) General rules. When a contributing sponsor, or member(s) of a
contributing sponsor's controlled group, notifies and submits
information to the PBGC in accordance with Sec. 4062.6, the PBGC shall
determine the net worth, as of the net worth record date, of that
contributing sponsor and any members of its controlled group based on
the factors set forth in paragraph (c) of this section and shall
include the value of any assets that it determines, pursuant to
paragraph (d) of this section, have been improperly transferred. In
making such determinations, the PBGC will consider information
submitted pursuant to Sec. 4062.6. The PBGC shall then determine the
collective net worth of persons subject to liability in connection with
a plan termination.
    (b) Partnerships and sole proprietorships. In the case of a person
that is a partnership or a sole proprietorship, net worth does not
include the personal assets and liabilities of the partners or sole
proprietor, except for the assets included pursuant to paragraph (d) of
this section. As used in this paragraph, ``personal assets'' are those
assets which do not produce income for the business being valued or are
not used in the business.
    (c) Factors for determining net worth. A person's net worth is
equal to its fair market value and fair market value shall be
determined on the basis of the factors set forth below, to the extent
relevant; different factors may be considered with respect to different
portions of the person's operations.
    (1) A bona fide sale of, agreement to sell, or offer to purchase or
sell the business of the person made on or about the net worth record
date.
    (2) A bona fide sale of, agreement to sell, or offer to purchase or
sell stock or a partnership interest in the person, made on or about
the net worth record date.
    (3) If stock in the person is publicly traded, the price of such
stock on or about the net worth record date.
    (4) The price/earnings ratios and prices of stocks of similar
trades or businesses on or about the net worth record date.
    (5) The person's economic outlook, as reflected by its earnings and
dividend projections, current financial condition, and business
history.
    (6) The economic outlook for the person's industry and the market
it serves.
    (7) The appraised value, including the liquidating value, of the
person's tangible and intangible assets.
    (8) The value of the equity assumed in a plan of reorganization of
a person in a case under title 11, United States Code, or any similar
law of a state or political subdivision thereof.
    (9) Any other factor relevant in determining the person's net
worth.
    (d) Improper transfers. A person's net worth shall include the
value of any assets transferred by the person which the PBGC determines
were improperly transferred for the purpose, as inferred from all the
facts and circumstances, and with the effect of avoiding liability
under this part. Assets ``improperly transferred'' include but are not
limited to assets sold, leased or otherwise transferred for less than
adequate consideration and assets distributed as gifts, capital
distributions and stock redemptions inconsistent with past practices of
the employer. The word ``transfer'' includes but is not limited to
sales, assignments, pledges, leases, gifts and dividends.

Sec. 4062.5  Net worth record date.

    (a) General. Unless the PBGC establishes an earlier net worth
record date pursuant to paragraph (b) of this section, the net worth
record date, for all purposes under this part, is the plan's
termination date.
    (b) Establishment of an earlier net worth record date. At any time
during a termination proceeding, the PBGC, in order to prevent undue
loss to or abuse of the plan termination insurance system, may
establish as the net worth record date an earlier date during the 120-
day period ending with the termination date.
    (c) Notification. Whenever the PBGC establishes an earlier net
worth record date, it shall immediately give liable person(s) written
notification of that fact. The written notice may also include a
request for additional information, as provided in Sec. 4062.6(a)(3).

Sec. 4062.6  Net worth notification and information.

    (a) General. (1) A contributing sponsor or member of the
contributing sponsor's controlled group that believes section 4062(b)
liability exceeds 30 percent of the collective net worth of persons
subject to liability in connection with a plan termination shall--
    (i) So notify the PBGC by the 90th day after the notice of intent
to terminate is filed with the PBGC or, if no notice of intent to
terminate is filed with the PBGC and the PBGC institutes

[[Page 34081]]

proceedings under section 4042 of ERISA, within 30 days after the
establishment of the plan's termination date in such proceedings; and
    (ii) Submit to the PBGC the information specified in paragraph (b)
of this section with respect to the contributing sponsor and each
member of the contributing sponsor's controlled group (if any)--
    (A) By the 120th day after the proposed termination date, or
    (B) If no notice of intent to terminate is filed with the PBGC and
the PBGC institutes proceedings under section 4042 of ERISA, within 120
days after the establishment of the plan's termination date in such
proceedings.
    (2) If a contributing sponsor or a member of its controlled group
complies with the requirements of paragraph (a)(1) of this section, the
PBGC will consider the requirements to be satisfied by all members of
that controlled group.
    (3) The PBGC may require any person subject to liability--
    (i) To submit the information specified in paragraph (b) of this
section within a shorter period whenever the PBGC believes that its
ability to obtain information or payment of liability is in jeopardy,
and
    (ii) To submit additional information within 30 days, or a
different specified time, after the PBGC's written notification that it
needs such information to make net worth determinations.
    (4) If a provision of paragraph (b) of this section or a PBGC
notice specifies information previously submitted to the PBGC, a person
may respond by identifying the previous submission in which the
response was provided.
    (b) Net worth information. The following information specifications
apply, individually, with respect to each person subject to liability:
    (1) An estimate, made in accordance with Sec. 4062.4, of the
person's net worth on the net worth record date and a statement, with
supporting evidence, of the basis for the estimate.
    (2) A copy of the person's audited (or if not available, unaudited)
financial statements for the 5 full fiscal years plus any partial
fiscal year preceding the net worth record date. The statements must
include balance sheets, income statements, and statements of changes in
financial position and must be accompanied by the annual reports, if
available.
    (3) A statement of all sales and copies of all offers or agreements
to buy or sell at least 25 percent of the person's assets or at least 5
percent of the person's stock or partnership interest, made on or about
the net worth record date.
    (4) A statement of the person's current financial condition and
business history.
    (5) A statement of the person's business plans, including projected
earnings and, if available, dividend projections.
    (6) Any appraisal of the person's fixed and intangible assets made
on or about the net worth record date.
    (7) A copy of any plan of reorganization, whether or not confirmed,
with respect to a case under title 11, United States Code, or any
similar law of a state or political subdivision thereof, involving the
person and occurring within 5 calendar years prior to or any time after
the net worth record date.
    (c) Incomplete submission. If a contributing sponsor and/or members
of the contributing sponsor's controlled group do not submit all of the
information required pursuant to paragraph (a) of this section (other
than the estimate described in paragraph (b)(1) of this section) with
respect to each person subject to liability, the PBGC may base
determinations of net worth and the collective net worth of persons
subject to liability in connection with a plan termination on any such
information that such person(s) did submit, as well as any other
pertinent information that the PBGC may have. In general, the PBGC will
view information as of a date further removed from the net worth record
date as having less probative value than information as of a date
nearer to the net worth record date.

Sec. 4062.7  Calculating interest on liability and refunds of
overpayments.

    (a) Interest. Whether or not the PBGC has granted deferred payment
terms pursuant to Sec. 4062.8, the amount of liability under this part
includes interest, from the termination date, on any unpaid portion of
the liability. Such interest accrues at the rate set forth in paragraph
(c) of this section until the liability is paid in full and is
compounded daily. When liability under this part is paid in more than
one payment, the PBGC will apply each payment to the satisfaction of
accrued interest and then to the reduction of principal.
    (b) Refunds. If a contributing sponsor or member(s) of a
contributing sponsor's controlled group pays the PBGC an amount that
exceeds the full amount of liability under this part, the PBGC shall
refund the excess amount, with interest at the rate set forth in
paragraph (c) of this section. Interest on an overpayment accrues from
the later of the date of the overpayment or 10 days prior to the
termination date until the date of the refund and is compounded daily.
    (c) Interest rate. The interest rate on liability under this part
and refunds thereof is the annual rate prescribed in section 6601(a) of
the Code, and will change whenever the interest rate under section
6601(a) of the Code changes.

Sec. 4062.8  Arrangements for satisfying liability.

    (a) General. The PBGC will defer payment, or agree to other
arrangements for the satisfaction, of any portion of liability to the
PBGC only when--
    (1) As provided in paragraph (b) of this section, the PBGC
determines that such action is necessary to avoid the imposition of a
severe hardship and that there is a reasonable possibility that the
terms so prescribed will be met and the entire liability paid; or
    (2) As provided in paragraph (c) of this section, the PBGC
determines that section 4062(b) liability exceeds 30 percent of the
collective net worth of persons subject to liability in connection with
a plan termination.
    (b) Upon request. If the PBGC determines that such action is
necessary to avoid the imposition of a severe hardship on persons that
are or may become liable under section 4062, 4063, or 4064 of ERISA and
that there is a reasonable possibility that persons so liable will be
able to meet the terms prescribed and pay the entire liability, the
PBGC, in its discretion and when so requested in accordance with
paragraph (b)(2) of this section, may grant deferred payment or other
terms for the satisfaction of such liability.
    (1) In determining what, if any, terms to grant, the PBGC shall
examine the following factors:
    (i) The ratio of the liability to the net worth of the person
making the request and (if different) to the collective net worth of
persons subject to liability in connection with a plan termination.
    (ii) The overall financial condition of persons that are or may
become liable, including, with respect to each such person--
    (A) The amounts and terms of existing debts;
    (B) The amount and availability of liquid assets;
    (C) Current and past cash flow; and
    (D) Projected cash flow, including a projection of the impact on
operations that would be caused by the immediate full payment of the
liability.
    (iii) The availability of credit from private sector sources to the
person making the request and to other liable persons.
    (2) A contributing sponsor or member of a contributing sponsor's
controlled

[[Page 34082]]

group may request deferred payment or other terms for the satisfaction
of any portion of the liability under section 4062, 4063, or 4064 of
ERISA at any time by filing a written request. The request must include
the information specified in Sec. 4062.6(b), except that--
    (i) If the request is filed one year or more after the net worth
record date, references to ``the net worth record date'' in
Sec. 4062.6(b) shall be replaced by ``the most recent annual
anniversary of the net worth record date''; and
    (ii) Information that already has been submitted to the PBGC need
not be submitted again.
    (c) Liability exceeding 30 percent of collective net worth. If the
PBGC determines that section 4062(b) liability exceeds 30 percent of
the collective net worth of persons subject to the liability, the PBGC
will, after making a reasonable effort to reach agreement with such
persons, prescribe commercially reasonable terms for payment of so much
of the liability as exceeds 30 percent of the collective net worth of
such persons. The terms prescribed by the PBGC for payment of that
portion of the liability (including interest) will provide for deferral
of 50 percent of any amount otherwise payable for any year if a person
subject to such liability demonstrates to the satisfaction of the PBGC
that no person subject to such liability has any individual pre-tax
profits (within the meaning of section 4062(d)(2) of ERISA) for such
person's last full fiscal year ending during that year.
    (d) Interest. Interest on unpaid liability is calculated in
accordance with Sec. 4062.7(a).
    (e) Security during period of deferred payment. As a condition to
the granting of deferred payment terms, PBGC may, in its discretion,
require that the liable person(s) provide PBGC with such security for
its obligations as the PBGC deems adequate.

Sec. 4062.9  Filing of documents.

    (a) Date of filing. Any document (including information) 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. Payments of liability shall be clearly
designated as such and include the name of the plan. Such payments
shall be sent to the address specified in the notification or demand
for liability issued by the PBGC under Sec. 4068.3 or, if not so
specified, to the address provided, upon request, by the Investment
Management Division, Pension Benefit Guaranty Corporation, 1200 K
Street, NW., Washington, DC 20005-4026. Any document (including
information) required or permitted to be filed under this part, except
for documents relating to appeals, shall be submitted to the Insurance
Operations Department, Pension Benefit Guaranty Corporation, at the
above address. Any document submitted pursuant to part 4003 in
connection with an appeal of an initial determination shall be
submitted to the Appeals Board, Pension Benefit Guaranty Corporation,
at the above address.

Sec. 4062.10  Computation of time.

    In computing any period of time prescribed or allowed by this
subpart, 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. For the purpose of computing interest accrued, a Saturday,
Sunday or Federal holiday referred to in the previous sentence shall be
included.

(Approved by the Office of Management and Budget under control
number 1212-0017.)

PART 4063--WITHDRAWAL LIABILITY; PLANS UNDER MULTIPLE CONTROLLED
GROUPS

    Authority: 29 U.S.C. 1302(b)(3).

Sec. 4063.1  Cross-references.

    (a) Part 4062, subpart A, of this chapter sets forth rules for
determination and payment of the liability incurred, under section
4062(b) of ERISA, upon termination of any single-employer plan and, to
the extent appropriate, determination of the liability incurred with
respect to multiple employer plans under sections 4063 and 4064 of
ERISA.
    (b) Part 4068 of this chapter includes rules regarding the PBGC's
lien under section 4068 of ERISA with respect to liability arising
under section 4062, 4063, or 4064.

PART 4064--LIABILITY ON TERMINATION OF SINGLE-EMPLOYER PLANS UNDER
MULTIPLE CONTROLLED GROUPS

    Authority: 29 U.S.C. 1302(b)(3).

Sec. 4064.1  Cross-references.

    (a) Part 4062, subpart A, of this chapter sets forth rules for
determination and payment of the liability incurred under section
4062(b) of ERISA, upon termination of any single-employer plan and, to
the extent appropriate, determination of the liability incurred with
respect to multiple employer plans under sections 4063 and 4064 of
ERISA.
    (b) Part 4068 of this chapter includes rules regarding the PBGC's
lien under section 4068 of ERISA with respect to liability arising
under section 4062, 4063, or 4064.

PART 4065--ANNUAL REPORT

Sec.
4065.1  Purpose and scope.
4065.2  Definitions.
4065.3  Filing requirement.

    Authority: 29 U.S.C. 1302, 1365.

Sec. 4065.1  Purpose and scope.

    The purpose of this part is to specify the form and content of the
Annual Report required by section 4065 of ERISA. This part applies to
all plans covered by title IV of ERISA.

Sec. 4065.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter:
ERISA, IRS, PBGC, and plan.

Sec. 4065.3  Filing requirement.

    Plan administrators shall file the Annual Report on IRS/DOL/PBGC
Forms 5500, 5500-C, 5500-K or 5500-R, as appropriate, in accordance
with the instructions therein. (Approved by the Office of Management
and Budget under control number 1212-0026.)

PART 4067--RECOVERY OF LIABILITY FOR PLAN TERMINATIONS

Sec. 4067.1  Cross-reference.

    Section 4062.8 of this chapter contains rules on deferred payment
and other arrangements for satisfaction of liability to the PBGC after
termination of single-employer plans.

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.

[[Page 34083]]

    Authority: 29 U.S.C. 1302(b)(3), 1362-1364, 1367-1368.

Sec. 4068.1  Purpose; cross-references.

    This part contains rules regarding the PBGC's lien under section
4068 of ERISA with respect to liability arising under section 4062,
4063, or 4064 of ERISA.

Sec. 4068.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter:
ERISA, PBGC, person, plan, and termination date.
    Collective net worth of persons subject to liability in connection
with a plan termination has the meaning in Sec. 4062.2.

Sec. 4068.3  Notification of and demand for liability.

    (a) Notification of liability. Except as provided in paragraph (c)
of this section, when the PBGC has determined the amount of the
liability under part 4062 and whether or not the liability has already
been paid, the PBGC shall notify liable person(s) in writing of the
amount of the liability. If the full liability has not yet been paid,
the notification will include a request for payment of the full
liability and will indicate that, as provided in Sec. 4062.8, the PBGC
will prescribe commercially reasonable terms for payment of so much of
the liability as it determines exceeds 30 percent of the collective net
worth of persons subject to liability in connection with a plan
termination. In all cases, the notification will include a statement of
the right to appeal the assessment of liability pursuant to part 4003.
    (b) Demand for liability. Except as provided in paragraph (c) of
this section, if person(s) liable to the PBGC fail to pay the full
liability and no appeal is filed or an appeal is filed and the decision
on appeal finds liability, the PBGC will issue a demand letter for the
liability--
    (1) If no appeal is filed, upon the expiration of time to file an
appeal under part 4003; or
    (2) If an appeal is filed, upon issuance of a decision on the
appeal finding that there is liability under this part.
    The demand letter will indicate that, as provided in Sec. 4062.8,
the PBGC will prescribe commercially reasonable terms for payment of so
much of the liability as it determines exceeds 30 percent of the
collective net worth of such persons.
    (c) Special rule. Notwithstanding paragraphs (a) and (b) of this
section, the PBGC may, in any case in which it believes that its
ability to assert or obtain payment of liability is in jeopardy, issue
a demand letter for the liability under this part immediately upon
determining the liability, without first issuing a notification of
liability pursuant to paragraph (a) of this section. When the PBGC
issues a demand letter under this paragraph, there is no right to an
appeal pursuant to part 4003 of this chapter.

Sec. 4068.4  Lien.

    If any person liable to the PBGC under section 4062, 4063, or 4064
of ERISA fails or refuses to pay the full amount of such liability
within the time specified in the demand letter issued under
Sec. 4068.3, the PBGC shall have a lien in the amount of the liability,
including interest, arising as of the plan's termination date, upon all
property and rights to property, whether real or personal, belonging to
that person, except that such lien may not be in an amount in excess of
30 percent of the collective net worth of all persons described in
section 4062(a) of ERISA and part 4062 of this chapter.

PART 4203--EXTENSION OF SPECIAL WITHDRAWAL LIABILITY RULES

Sec.
4203.1  Purpose and scope.
4203.2  Definitions.
4203.3  Plan adoption of special withdrawal rules.
4203.4  Requests for PBGC approval of plan amendments.
4203.5  PBGC action on requests.
4203.6  OMB control number.

    Authority: 29 U.S.C. 1302(b)(3).

Sec. 4203.1  Purpose and scope.

    (a) Purpose. The purpose of this part is to prescribe procedures
whereby a multiemployer plan may, pursuant to sections 4203(f) and
4208(e)(3) of ERISA, request the PBGC to approve a plan amendment which
establishes special complete or partial withdrawal liability rules.
    (b) Scope. This part applies to a multiemployer pension plan
covered by Title IV of ERISA.

Sec. 4203.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter:
complete withdrawal, employer, ERISA, multiemployer plan, PBGC, person,
plan, plan sponsor, and plan year.

Sec. 4203.3  Plan adoption of special withdrawal rules.

    (a) General rule. A plan may, subject to the approval of the PBGC,
establish by plan amendment special complete or partial withdrawal
liability rules. A complete withdrawal liability rule adopted pursuant
to this part shall be similar to the rules for the construction and
entertainment industries described in section 4203 (b) and (c) of
ERISA. A partial withdrawal liability rule adopted pursuant to this
part shall be consistent with the complete withdrawal rule adopted by
the plan. A plan amendment adopted under this part may not be put into
effect until it is approved by the PBGC.
    (b) Discretionary provisions of the plan amendment. A plan
amendment adopted pursuant to this part may--
    (1) Cover an entire industry or industries, or be limited to a
segment of an industry; and
    (2) Apply to cessations of the obligation to contribute that
occurred prior to the adoption of the amendment.

Sec. 4203.4  Requests for PBGC approval of plan amendments.

    (a) Filing of request. A plan shall apply to the PBGC for approval
of a plan amendment which establishes special complete or partial
withdrawal liability rules. The request for approval shall be filed
after the amendment is adopted. PBGC approval shall also be required
for any subsequent modification of the plan amendment, other than a
repeal of the amendment which results in employers being subject to the
general statutory rules on withdrawal.
    (b) Who may request. The plan sponsor, or a duly authorized
representative acting on behalf of the plan sponsor, shall sign and
submit the request.
    (c) Where to file. The request shall be delivered by mail or
submitted by hand to Reports Processing, Insurance Operations
Department, Pension Benefit Guaranty Corporation, 1200 K Street NW.,
Washington, DC 20005-4026.
    (d) Information. Each request shall contain the following
information:
    (1) The name and address of the plan for which the plan amendment
is being submitted, and the telephone number of the plan sponsor or its
authorized representative.
    (2) A copy of the executed amendment, including the proposed
effective date.
    (3) A statement certifying that notice of the adoption of the
amendment and the request for approval filed under this part has been
given to all employers who have an obligation to contribute under the
plan and to all employee organizations representing employees covered
under the plan.
    (4) A statement indicating how the withdrawal rules in the plan
amendment would operate in the event of a sale of assets by a
contributing employer or the cessation of the obligation to contribute
or the cessation of covered operations by all employers.
    (5) A copy of the plan's most recent actuarial valuation.

[[Page 34084]]

    (6) For each of the previous five plan years, information on the
number of plan participants by category (active, retired and separate
vested) and a complete financial statement. This requirement may be
satisfied by the submission for each of those years of Form 5500,
including schedule B, or similar reports required under prior law.
    (7) A detailed description of the industry to which the plan
amendment will apply, including information sufficient to demonstrate
the effect of withdrawals on the plan's contribution base, and
information establishing industry characteristics which would indicate
that withdrawals in the industry do not typically have an adverse
effect on the plan's contribution base. Such industry characteristics
include the mobility of employees, the intermittent nature of
employment, the project-by-project nature of the work, extreme
fluctuations in the level of an employer's covered work under the plan,
the existence of a consistent pattern of entry and withdrawal by
employers, and the local nature of the work performed.
    (e) Supplemental information. In addition to the information
described in paragraph (d) of this section, a plan may submit any other
information it believes is pertinent to its request. The PBGC may
require the plan sponsor to submit any other information the PBGC
determines it needs to review a request under this part.

Sec. 4203.5  PBGC action on requests.

    (a) General. The PBGC shall approve a plan amendment providing for
the application of special complete or partial withdrawal liability
rules upon a determination by the PBGC that the plan amendment--
    (1) Will apply only to an industry that has characteristics that
would make use of the special withdrawal rules appropriate; and
    (2) Will not pose a significant risk to the insurance system.
    (b) Notice of pendency of request. As soon as practicable after
receiving a request for approval of a plan amendment containing all the
information required under Sec. 4203.4, the PBGC shall publish a notice
of the pendency of the request in the Federal Register. The notice
shall contain a summary of the request and invite interested persons to
submit written comments to the PBGC concerning the request. The notice
will normally provide for a comment period of 45 days.
    (c) PBGC decision on request. After the close of the comment
period, PBGC shall issue its decision in writing on the request for
approval of a plan amendment. Notice of the decision shall be published
in the Federal Register.

Sec. 4203.6  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.

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).

Subpart A--General

Sec. 4204.1  Purpose and scope.

    (a) Purpose. Under section 4204 of ERISA, an employer that ceases
covered operations under a multiemployer plan, or ceases to have an
obligation to contribute for such operations, because of a bona fide,
arm's-length sale of assets to an unrelated purchaser does not incur
withdrawal liability if certain conditions are met. One condition is
that the sale contract provide that the seller will be secondarily
liable if the purchaser withdraws from the plan within five years and
does not pay its withdrawal liability. Another condition is that the
purchaser furnish a bond or place funds in escrow, for a period of five
plan years, in a prescribed amount. Section 4204 also authorizes the
PBGC to provide for variances or exemptions from these requirements.
Subpart B of this part provides variances and exemptions from the
requirements for certain sales of assets. Subpart C of this part
establishes procedures under which a purchaser or seller may, when the
conditions set forth in subpart B are not satisfied or when the parties
decline to provide certain financial information to the plan, request
the PBGC to grant individual or class variances or exemptions from the
requirements.
    (b) Scope. In general, this part applies to any sale of assets
described in section 4204(a)(1) of ERISA. However, this part does not
apply to a sale of assets involving operations for which the seller is
obligated to contribute to a plan described in section 404(c) of the
Code, or a continuation of such a plan, unless the plan is amended to
provide that section 4204 applies.

Sec. 4204.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter:
Code, employer, ERISA, IRS, multiemployer plan, PBGC, person, plan,
plan administrator, plan sponsor, and plan year.
    In addition, for purposes of this part:
    Date of determination means the date on which a seller ceases
covered operations or ceases to have an obligation to contribute for
such operations as a result of a sale of assets within the meaning of
section 4204(a) of ERISA.
    Net income after taxes means revenue minus expenses after taxes
(excluding extraordinary and non-recurring income or expenses), as
presented in an audited financial statement or, in the absence of such
statement, in an unaudited financial statement, each prepared in
conformance with generally accepted accounting principles.
    Net tangible assets means tangible assets (assets other than
licenses, patents copyrights, trade names, trademarks, goodwill,
experimental or organizational expenses, unamortized debt discounts and
expenses and all other assets which, under generally accepted
accounting principles, are deemed intangible) less liabilities (other
than pension liabilities). Encumbered assets shall be excluded from net
tangible assets only to the extent of the amount of the encumbrance.
    Purchaser means a purchaser described in section 4204(a)(1) of
ERISA.
    Seller means a seller described in section 4204(a)(1) of ERISA.

Subpart B--Variance of the Statutory Requirements

Sec. 4204.11  Variance of the bond/escrow and sale-contract
requirements.

    (a) General rule. A purchaser's bond or escrow under section
4204(a)(1)(B) of ERISA and the sale-contract provision under section
4204(a)(1)(C) are not required if the parties to the sale inform the
plan in writing of their intention that the sale be covered by section
4204 of ERISA and demonstrate to the satisfaction of the plan that at
least one of the criteria contained in Sec. 4204.12 or Sec. 4204.13(a)
is satisfied.
    (b) Requests after posting of bond or establishment of escrow. A
request for a

[[Page 34085]]

variance may be filed at any time. If, after a purchaser has posted a
bond or placed money in escrow pursuant to section 4204(a)(1)(B) of
ERISA, the purchaser demonstrates to the satisfaction of the plan that
the criterion in either Sec. 4204.13 (a)(1) or (a)(2) is satisfied,
then the bond shall be cancelled or the amount in escrow shall be
refunded. For purposes of considering a request after the bond or
escrow is in place, the words ``the year preceding the date of the
variance request'' shall be substituted for ``the date of
determination'' for the first mention of that term in both Sec. 4204.13
(a)(1) and (a)(2). In addition, in determining the purchaser's average
net income after taxes under Sec. 4204.13(a)(1), for any year included
in the average for which the net income figure does not reflect the
interest expense incurred with respect to the sale, the purchaser's net
income shall be reduced by the amount of interest paid with respect to
the sale in the fiscal year following the date of determination.
    (c) Information required. A request for a variance shall contain
financial or other information that is sufficient to establish that one
of the criteria in Sec. 4204.12 or Sec. 4204.13(a) is satisfied. A
request on the basis of either Sec. 4204.13 (a)(1) or (a)(2) shall also
include a copy of the purchaser's audited (if available) or (if not)
unaudited financial statements for the specified time period.
    (d) Limited exemption during pendency of request. Provided that all
of the information required to be submitted is submitted before the
first day of the first plan year beginning after the sale, a plan may
not, pending its decision on the variance, require a purchaser to post
a bond or place an amount in escrow pursuant to section 4204(a)(1)(B).
In the event a bond or escrow is not in place pursuant to the preceding
sentence, and the plan determines that the request does not qualify for
a variance, the purchaser shall comply with section 4204(a)(1)(B)
within 30 days after the date on which it receives notice of the plan's
decision.

(Approved by the Office of Management and Budget under control
number 1212--0021)

Sec. 4204.12  De minimis transactions.

    The criterion under this section is that the amount of the bond or
escrow does not exceed the lesser of $250,000 or two percent of the
average total annual contributions made by all employers to the plan,
for the purposes of section 412(b)(3)(A) of the Code, for the three
most recent plan years ending before the date of determination. For
this purpose, ``contributions made'' shall have the same meaning as the
term has under Sec. 4211.12(a) of this chapter.

Sec. 4204.13  Net income and net tangible assets tests.

    (a) General. The criteria under this section are that either--
    (1) Net income test. The purchaser's average net income after taxes
for its three most recent fiscal years ending before the date of
determination (as defined in Sec. 4204.12), reduced by any interest
expense incurred with respect to the sale which is payable in the
fiscal year following the date of determination, equals or exceeds 150
percent of the amount of the bond or escrow required under ERISA
section 4204(a)(1)(B); or
    (2) Net tangible assets test. The purchaser's net tangible assets
at the end of the fiscal year preceding the date of determination (as
defined in Sec. 4204.12), equal or exceed--
    (i) If the purchaser was not obligated to contribute to the plan
before the sale, the amount of unfunded vested benefits allocable to
the seller under section 4211 (with respect to the purchased
operations), as of the date of determination, or
    (ii) If the purchaser was obligated to contribute to the plan
before the sale, the sum of the amount of unfunded vested benefits
allocable to the purchaser and to the seller under ERISA section 4211
(with respect to the purchased operations), each as of the date of
determination.
    (b) Special rule when more than one plan is covered by request. For
the purposes of paragraphs (a)(1) and (a)(2), if the transaction
involves the assumption by the purchaser of the seller's obligation to
contribute to more than one multiemployer plan, then the total amount
of the bond or escrow or of the unfunded vested benefits, as
applicable, for all of the plans with respect to which the purchaser
has not posted a bond or escrow shall be used to determine whether the
applicable test is met.
    (c) Non-applicability of tests in event of purchaser's insolvency.
A purchaser will not qualify for a variance under this subpart pursuant
to paragraph (a)(1) or (a)(2) of this section if, as of the earlier of
the date of the plan's decision on the variance request or the first
day of the first plan year beginning after the date of determination,
the purchaser is the subject of a petition under title 11, United
States Code, or of a proceeding under similar provisions of state
insolvency laws.

Subpart C--Procedures for Individual and Class Variances or
Exemptions

Sec. 4204.21  Requests to PBGC for variances and exemptions.

    (a) General. If a transaction covered by this part does not satisfy
the conditions set forth in subpart B of this part, or if the parties
decline to provide to the plan privileged or confidential financial
information within the meaning of section 552(b)(4) of the Freedom of
Information Act (5 U.S.C. 552), the purchaser or seller may request
from the PBGC an exemption or variance from the requirements of section
4204(a)(1) (B) and (C) of ERISA.
    (b) Who may request. A purchaser or a seller may file a request for
a variance or exemption. The request may be submitted by one or more
duly authorized representatives acting on behalf of the party or
parties. When a contributing employer withdraws from a plan as a result
of related sales of assets involving several purchasers, or withdraws
from more than one plan as a result of a single sale, the application
may request a class variance or exemption for all the transactions.
    (c) Where to file. The request shall be delivered by mail or
submitted by hand to Reports Processing, Insurance Operations
Department, Pension Benefit Guaranty Corporation, 1200 K Street NW.,
Washington, DC 20005-4026.
    (d) Information. Each request shall contain the following
information:
    (1) The name and address of the plan or plans for which the
variance or exemption is being requested, and the telephone number of
the plan administrator of each plan.
    (2) For each plan described in paragraph (d)(1) of this section,
the nine-digit Employer Identification Number (EIN) assigned by the IRS
to the plan sponsor and the three-digit Plan Identification Number (PN)
assigned by the plan sponsor to the plan, and, if different, also the
EIN and PN last filed with the PBGC. If an EIN or PN has not been
assigned, that should be indicated.
    (3) The name, address and telephone number of the seller and of its
duly authorized representative, if any.
    (4) The name, address and telephone number of the purchaser and of
its duly authorized representative, if any.
    (5) A full description of each transaction for which the request is
being made, including effective date.
    (6) A statement explaining why the requested variance or exemption
would not significantly increase the risk of financial loss to the
plan, including evidence, financial or otherwise, that supports that
conclusion.

[[Page 34086]]

    (7) When the request for a variance or exemption is filed by the
seller alone, a statement signed by the purchaser indicating its
intention that section 4204 of ERISA apply to the sale of assets.
    (8) A statement indicating the amount of the purchaser's bond or
escrow required under section 4204(a)(1)(B) of ERISA.
    (9) The estimated amount of withdrawal liability that the seller
would otherwise incur as a result of the sale if section 4204 did not
apply to the sale.
    (10) A certification that a complete copy of the request has been
sent to each plan described in paragraph (d)(1) of this section and
each collective bargaining representative of the seller's employees by
certified mail, return receipt requested.
    (e) Additional information. In addition to the information
described in paragraph (d) of this section, the PBGC may require the
purchaser, the seller, or the plan to submit any other information the
PBGC determines it needs to review the request.
    (f) Disclosure of information. Any party submitting information
pursuant to this section may include a statement of whether any of the
information is of a nature that its disclosure may not be required
under the Freedom of Information Act, 5 U.S.C. 552. The statement
should specify the information that may not be subject to disclosure
and the grounds therefor.

(Approved by the Office of Management and Budget under control
number 1212-0021)

Sec. 4204.22  PBGC action on requests.

    (a) General. The PBGC shall approve a request for a variance or
exemption if PBGC determines that approval of the request is warranted,
in that it--
    (1) Would more effectively or equitably carry out the purposes of
title IV of ERISA; and
    (2) Would not significantly increase the risk of financial loss to
the plan.
    (b) Notice of pendency of request. As soon as practicable after
receiving a variance or exemption request containing all the
information specified in Sec. 4204.21, the PBGC shall publish a notice
of the pendency of the request in the Federal Register. The notice
shall provide that any interested person may, within the period of time
specified therein, submit written comments to the PBGC concerning the
request. The notice will usually provide for a comment period of 45
days.
    (c) PBGC decision on request. The PBGC shall issue a decision on a
variance or exemption request as soon as practicable after the close of
the comment period described in paragraph (b) of this section. PBGC's
decision shall be in writing, and if the PBGC disapproves the request,
the decision shall state the reasons therefor. Notice of the decision
shall be published in the Federal Register.

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.
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) and 1386(b).

Sec. 4206.1  Purpose and scope.

    (a) Purpose. The purpose of this part is to prescribe rules,
pursuant to section 4206(b) of ERISA, for adjusting the partial or
complete withdrawal liability of an employer that previously partially
withdrew from the same multiemployer plan. Section 4206(b)(1) provides
that when an employer that has partially withdrawn from a plan
subsequently incurs liability for another partial or a complete
withdrawal from that plan, the employer's liability for the subsequent
withdrawal is to be reduced by the amount of its liability for the
prior partial withdrawal (less any waiver or reduction of that prior
liability). Section 4206(b)(2) requires the PBGC to prescribe
regulations adjusting the amount of this credit to ensure that the
liability for the subsequent withdrawal properly reflects the
employer's share of liability with respect to the plan. The purpose of
the credit is to protect a withdrawing employer from being charged
twice for the same unfunded vested benefits of the plan. The reduction
in the credit protects the other employers in the plan from becoming
responsible for unfunded vested benefits properly allocable to the
withdrawing employer. In the interests of simplicity, the rules in this
part provide for, generally, a one-step calculation of the adjusted
credit under section 4206(b)(2) against the subsequent liability,
rather than for separate calculations first of the credit under section
4206(b)(1) and then of the reduction in the credit under paragraph
(b)(2) of that section. In cases where the withdrawal liability for the
prior partial withdrawal was reduced by an abatement or other reduction
of that liability, the adjusted credit is further reduced in accordance
with Sec. 4206.8 of this part.
    (b) Scope. This part applies to multiemployer plans covered under
Title IV of ERISA, and to employers that have partially withdrawn from
such plans after September 25, 1980 and subsequently completely or
partially withdraw from the same plan.

Sec. 4206.2  Definitions.

    The following are defined in Sec. 4001.2 of this chapter: Code,
employer, ERISA, multiemployer plan, PBGC, plan, and plan year.
    In addition, for purposes of this part:
    Complete withdrawal means a complete withdrawal as described in
section 4203 of ERISA.
    Partial withdrawal means a partial withdrawal as described in
section 4205 of ERISA.

Sec. 4206.3  Credit against liability for a subsequent withdrawal.

    Whenever an employer that was assessed withdrawal liability for a
partial withdrawal from a plan partially or completely withdraws from
that plan in a subsequent plan year, it shall receive a credit against
the new withdrawal liability in an amount greater than or equal to
zero, determined in accordance with this part. If the credit determined
under Secs. 4206.4 through 4206.9 is less than zero, the amount of the
credit shall equal zero.

Sec. 4206.4  Amount of credit in plans using the presumptive method.

    (a) General. In a plan that uses the presumptive allocation method
described in section 4211(b) of ERISA, the credit shall equal the sum
of the unamortized old liabilities determined under paragraph (b) of
this section, multiplied by the fractions described or determined under
paragraph (c) of this section. When an employer's prior partial
withdrawal liability has been reduced or waived, this credit shall be
adjusted in accordance with Sec. 4206.8.
    (b) Unamortized old liabilities. The amounts determined under this
paragraph are the employer's proportional shares, if any, of the
unamortized amounts as of the end of the plan year preceding the
withdrawal for which the credit is being calculated, of--

[[Page 34087]]

    (1) The plan's unfunded vested benefits as of the end of the last
plan year ending before September 26, 1980;
    (2) The annual changes in the plan's unfunded vested benefits for
plan years ending after September 25, 1980, and before the year of the
prior partial withdrawal; and
    (3) The reallocated unfunded vested benefits (if any), as
determined under section 4211(b)(4) of ERISA, for plan years ending
before the year of the prior partial withdrawal.
    (c) Employer's allocable share of old liabilities. The sum of the
amounts determined under paragraph (b) are multiplied by the two
fractions described in this paragraph in order to determine the amount
of the old liabilities that was previously assessed against the
employer.
    (1) The first fraction is the fraction determined under section
4206(a)(2) of ERISA for the prior partial withdrawal.
    (2) The second fraction is a fraction, the numerator of which is
the amount of the liability assessed against the employer for the prior
partial withdrawal, and the denominator of which is the product of--
    (i) The amount of unfunded vested benefits allocable to the
employer as if it had completely withdrawn as of the date of the prior
partial withdrawal (determined without regard to any adjustments),
multiplied by--
    (ii) The fraction determined under section 4206(a)(2) of ERISA for
the prior partial withdrawal.

Sec. 4206.5  Amount of credit in plans using the modified presumptive
method.

    (a) General. In a plan that uses the modified presumptive method
described in section 4211(c)(2) of ERISA, the credit shall equal the
sum of the unamortized old liabilities determined under paragraph (b)
of this section, multiplied by the fractions described or determined
under paragraph (c) of this section. When an employer's prior partial
withdrawal liability has been reduced or waived, this credit shall be
adjusted in accordance with Sec. 4206.8.
    (b) Unamortized old liabilities. The amounts described in this
paragraph shall be determined as of the end of the plan year preceding
the withdrawal for which the credit is being calculated, and are the
employer's proportional shares, if any, of--
    (1) The plan's unfunded vested benefits as of the end of the last
plan year ending before September 26, 1980, reduced as if those
obligations were being fully amortized in level annual installments
over 15 years beginning with the first plan year ending on or after
such date; and
    (2) The aggregate post-1980 change amount determined under section
4211(c)(2)(C) of ERISA as if the employer had completely withdrawn in
the year of the prior partial withdrawal, reduced as if those
obligations were being fully amortized in level annual installments
over the 5-year period beginning with the plan year in which the prior
partial withdrawal occurred.
    (c) Employer's allocable share of old liabilities. The sum of the
amounts determined under paragraph (b) are multiplied by the two
fractions described in this paragraph in order to determine the amount
of old liabilities that was previously assessed against the employer.
    (1) The first fraction is the fraction determined under section
4206(a)(2) of ERISA for the prior partial withdrawal.
    (2) The second fraction is a fraction, the numerator of which is
the amount of the liability assessed against the employer for the prior
partial withdrawal, and the denominator of which is the product of--
    (i) The amount of unfunded vested benefits allocable to the
employer as if it had completely withdrawn as of the date of the prior
partial withdrawal (determined without regard to any adjustments),
multiplied by--
    (ii) The fraction determined under section 4206(a)(2) of ERISA for
the prior partial withdrawal.

Sec. 4206.6  Amount of credit in plans using the rolling-5 method.

    In a plan that uses the rolling-5 allocation method described in
section 4211(c)(3) of ERISA, the credit shall equal the amount of the
liability assessed for the prior partial withdrawal, reduced as if that
amount was being fully amortized in level annual installments over the
5-year period beginning with the plan year in which the prior partial
withdrawal occurred. When an employer's prior partial withdrawal
liability has been reduced or waived, this credit shall be adjusted in
accordance with Sec. 4206.8.

Sec. 4206.7  Amount of credit in plans using the direct attribution
method.

    In a plan that uses the direct attribution allocation method
described in section 4211(c)(4) of ERISA, the credit shall equal the
amount of the liability assessed for the prior partial withdrawal,
reduced as if that amount was being fully amortized in level annual
installments beginning with the plan year in which the prior partial
withdrawal occurred, over the greater of 10 years or the amortization
period for the resulting base when the combined charge base and the
combined credit base are offset under section 412(b)(4) of the Code.
When an employer's prior partial withdrawal liability has been reduced
or waived, this credit shall be adjusted in accordance with
Sec. 4206.8.

Sec. 4206.8  Reduction of credit for abatement or other reduction of
prior partial withdrawal liability.

    (a) General. If an employer's withdrawal liability for a prior
partial withdrawal has been reduced or waived, the credit determined
pursuant to Secs. 4206.4 through 4206.7 shall be adjusted in accordance
with this section.
    (b) Computation. The adjusted credit is calculated by multiplying
the credit determined under the preceding sections of this part by a
fraction--
    (1) the numerator of which is the excess of the total partial
withdrawal liability of the employer for all partial withdrawals in
prior years (excluding those partial withdrawals for which the credit
is zero) over the present value of each abatement or other reduction of
that prior withdrawal liability calculated as of the date on which that
prior partial withdrawal liability was determined; and
    (2) the denominator of which is the total partial withdrawal
liability of the employer for all partial withdrawals in prior years
(excluding those partial withdrawals for which the credit is zero).

Sec. 4206.9  Amount of credit in plans using alternative allocation
methods.

    A plan that has adopted an alternative method of allocating
unfunded vested benefits pursuant to section 4211(c)(5) of ERISA and
part 4211 of this chapter shall adopt, by plan amendment, a method of
calculating the credit provided by Sec. 4206.3 that is consistent with
the rules in Secs. 4206.4 through 4206.8 for plans using the statutory
allocation method most similar to the plan's alternative allocation
method.

Sec. 4206.10  Special rule for 70-percent decline partial withdrawals.

    For the purposes of applying the rules in Secs. 4206.4 through
4206.9 in any case in which either the prior or subsequent partial
withdrawal resulted from a 70-percent contribution decline (or a 35-
percent decline in the case of certain retail food industry plans), the
first year of the 3-year testing period shall be deemed to be the plan
year in which the partial withdrawal occurred.

[[Page 34088]]

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.

Sec. 4207.1  Purpose and scope.

    (a) Purpose. The purpose of this part is to prescribe rules,
pursuant to section 4207(a) of ERISA, for reducing or waiving the
withdrawal liability of certain employers that have completely
withdrawn from a multiemployer plan and subsequently resume covered
operations under the plan. This part prescribes rules pursuant to which
the plan must waive the employer's obligation to make future liability
payments with respect to its complete withdrawal and must calculate the
amount of the employer's liability for a partial or complete withdrawal
from the plan after its reentry into the plan. This part also provides
procedures, pursuant to section 4207(b) of ERISA, for plan sponsors of
multiemployer plans to apply to PBGC for approval of plan amendments
that provide for the reduction or waiver of complete withdrawal
liability under conditions other than those specified in section
4207(a) of ERISA and this part.
    (b) Scope. This part applies to multiemployer plans covered under
title IV of ERISA, and to employers that have completely withdrawn from
such plans after September 25, 1980, and that have not, as of the date
of their reentry into the plan, fully satisfied their obligation to pay
withdrawal liability arising from the complete withdrawal.

Sec. 4207.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter:
employer, ERISA, IRS, Multiemployer Act, multiemployer plan,
nonforfeitable benefit, PBGC, plan, and plan year .
    In addition, for purposes of this part:
    Complete withdrawal means a complete withdrawal as described in
section 4203 of ERISA.
    Eligible employer means the employer, as defined in section 4001(b)
of ERISA, as it existed on the date of its initial partial or complete
withdrawal, as applicable. An eligible employer shall continue to be an
eligible employer notwithstanding the occurrence of any of the
following events:
    (1) A restoration involving a mere change in identity, form or
place of organization, however effected;
    (2) A reorganization involving a liquidation into a parent
corporation;
    (3) A merger, consolidation or division solely between (or among)
trades or businesses (whether or not incorporated) of the employer; or
    (4) An acquisition by or of, or a merger or combination with
another trade or business.
    Partial withdrawal means a partial withdrawal as described in
section 4205 of ERISA.
    Period of withdrawal means the plan year in which the employer
completely withdrew from the plan, the plan year in which the employer
reentered the plan and all intervening plan years.

Sec. 4207.3  Abatement.

    (a) General. Whenever an eligible employer that has completely
withdrawn from a multiemployer plan reenters the plan, it may apply to
the plan for abatement of its complete withdrawal liability.
Applications shall be filed by the date of the first scheduled
withdrawal liability payment falling due after the employer resumes
covered operations or, if later, the fifteenth calendar day after the
employer resumes covered operations. Applications shall identify the
eligible employer, the withdrawn employer, if different, the date of
withdrawal, and the date of resumption of covered operations. Upon
receiving an application for abatement, the plan sponsor shall
determine, in accordance with paragraph (b) of this section, whether
the employer satisfies the requirements for abatement of its complete
withdrawal liability under Sec. 4207.5, Sec. 4207.9, or a plan
amendment which has been approved by PBGC pursuant to Sec. 4207.10. If
the plan sponsor determines that the employer satisfies the
requirements for abatement of its complete withdrawal liability, the
provisions of paragraph (c) of this section shall apply. If the plan
sponsor determines that the employer does not satisfy the requirements
for abatement of its complete withdrawal liability, the provisions of
paragraphs (d) and (e) of this section shall apply.
    (b) Determination of abatement. As soon as practicable after an
eligible employer that completely withdrew from a multiemployer plan
applies for abatement, the plan sponsor shall determine whether the
employer satisfies the requirements for abatement of its complete
withdrawal liability under this part and shall notify the employer in
writing of its determination and of the consequences of its
determination, as described in paragraphs (c) or (d) and (e) of this
section, as appropriate. If a bond or escrow has been provided to the
plan under Sec. 4207.4, the plan sponsor shall send a copy of the
notice to the bonding or escrow agent.
    (c) Effects of abatement. If the plan sponsor determines that the
employer satisfies the requirements for abatement of its complete
withdrawal liability under this part, then--
    (1) The employer shall have no obligation to make future withdrawal
liability payments to the plan with respect to its complete withdrawal;
    (2) The employer's liability for a subsequent withdrawal shall be
determined in accordance with Sec. 4207.7 or Sec. 4207.8, as
applicable;
    (3) Any bonds furnished under Sec. 4207.4 shall be cancelled and
any amounts held in escrow under Sec. 4207.4 shall be refunded to the
employer; and
    (4) Any withdrawal liability payments due after the reentry and
made by the employer to the plan shall be refunded by the plan without
interest.
    (d) Effects of non-abatement. If the plan sponsor determines that
the employer does not satisfy the requirements for abatement of its
complete withdrawal liability under this part, then--
    (1) The bond or escrow furnished under Sec. 4207.4 shall be paid to
the plan within 30 days after the date of the plan sponsor's notice
under paragraph (b) of this section;
    (2) The employer shall pay to the plan within 30 days after the
date of the plan sponsor's notice under paragraph (b) of this section,
the amount of its withdrawal liability payment or payments, with
respect to which the bond or escrow was furnished, in excess of the
bond or escrow;
    (3) The employer shall resume making its withdrawal liability
payments as they are due to the plan; and
    (4) The employer shall be treated as a new employer for purposes of
any future application of the withdrawal liability rules in sections
4201-4225 of title IV of ERISA with respect to its participation in the
plan after its reentry into the plan, except that in plans using the
``direct attribution'' method (section 4211(c)(4) of ERISA), the
nonforfeitable benefits attributable to service with the employer shall
include nonforfeitable benefits attributable to service prior to

[[Page 34089]]

reentry that were not nonforfeitable at that time.
    (e) Collection of payments due and review of non-abatement
determination. The rules in part 4219, subpart C, of this chapter
(relating to overdue, defaulted, and overpaid withdrawal liability)
shall apply with respect to all payments required to be made under
paragraphs (d)(2) and (d)(3) of this section. For this purpose, a
payment required to be made under paragraph (d)(2) shall be treated as
a withdrawal liability payment due on the 30th day after the date of
the plan sponsor's notice under paragraph (b) of this section.
    (1) Review of non-abatement determination. A plan sponsor's
determination that the employer does not satisfy the requirements for
abatement under this part shall be subject to plan review under section
4219(b)(2) of ERISA and to arbitration under section 4221 of ERISA,
within the times prescribed by those sections. For this purpose, the
plan sponsor's notice under paragraph (b) of this section shall be
treated as a demand under section 4219(b)(1) of ERISA.
    (2) Determination of abatement. If the plan sponsor or an
arbitrator determines that the employer satisfies the requirements for
abatement of its complete withdrawal liability under this part, the
plan sponsor shall immediately refund the following payments (plus
interest, except as indicated below, determined in accordance with
Sec. 4219.31(d) of this chapter as if the payments were overpayments of
withdrawal liability) to the employer in a lump sum:
    (i) The amount of the employer's withdrawal liability payment or
payments, without interest, due after its reentry and made by the
employer.
    (ii) The bond or escrow paid to the plan under paragraph (d)(1) of
this section.
    (iii) The amount of the employer's withdrawal liability payment or
payments in excess of the bond or escrow, paid to the plan under
paragraph (d)(2) of this section.
    (iv) Any withdrawal liability payment made by the employer to the
plan pursuant to paragraph (d)(3) of this section after the plan
sponsor's notice under paragraph (b) of this section.

Sec. 4207.4  Withdrawal liability payments during pendency of abatement
determination.

    (a) General rule. An eligible employer that completely withdraws
from a multiemployer plan and subsequently reenters the plan may, in
lieu of making withdrawal liability payments due after its reentry,
provide a bond to, or establish an escrow account for, the plan that
satisfies the requirements of paragraph (b) of this section or any plan
rules adopted under paragraph (d) of this section, pending a
determination by the plan sponsor under Sec. 4207.3(b) of whether the
employer satisfies the requirements for abatement of its complete
withdrawal liability. An employer that applies for abatement and
neither provides a bond/escrow nor pays its withdrawal liability
payments remains eligible for abatement.
    (b) Bond/escrow. The bond or escrow allowed by this section shall
be in an amount equal to 70 percent of the withdrawal liability
payments that would otherwise be due. The bond or escrow relating to
each payment shall be furnished before the due date of that payment. A
single bond or escrow may be provided for more than one payment due
during the pendency of the plan sponsor's determination. The bond or
escrow agreement shall provide that if the plan sponsor determines that
the employer does not satisfy the requirements for abatement of its
complete withdrawal liability under this part, the bond or escrow shall
be paid to the plan upon notice from the plan sponsor to the bonding or
escrow agent. A bond provided under this paragraph shall be issued by a
corporate surety company that is an acceptable surety for purposes of
section 412 of ERISA.
    (c) Notice of bond/escrow. Concurrently with posting a bond or
establishing an escrow account under paragraph (b) of this section, the
employer shall notify the plan sponsor. The notice shall include a
statement of the amount of the bond or escrow, the scheduled payment or
payments with respect to which the bond or escrow is being furnished,
and the name and address of the bonding or escrow agent.
    (d) Plan amendments concerning bond/escrow. A plan may, by
amendment, adopt rules decreasing the amount specified in paragraph (b)
of a bond or escrow allowed under this section. A plan amendment
adopted under this paragraph may be applied only to the extent that it
is consistent with the purposes of ERISA.

Sec. 4207.5  Requirements for abatement.

    (a) General rule. Except as provided in Sec. 4207.9 (d) and (e)
(pertaining to acquisitions, mergers and other combinations), an
eligible employer that completely withdraws from a multiemployer plan
and subsequently reenters the plan shall have its liability for that
withdrawal abated in accordance with Sec. 4207.3(c) if the employer
resumes covered operations under the plan, and the number of
contribution base units with respect to which the employer has an
obligation to contribute under the plan for the measurement period (as
defined in paragraph (b) of this section) after it resumes covered
operations exceeds 30 percent of the number of contribution base units
with respect to which the employer had an obligation to contribute
under the plan for the base year (as defined in paragraph (c) of this
section).
    (b) Measurement period. If the employer resumes covered operations
under the plan at least six full months prior to the end of a plan year
and would satisfy the test in paragraph (a) based on its contribution
base units for that plan year, then the measurement period shall be the
period from the date it resumes covered operations until the end of
that plan year. If the employer would not satisfy this test, or if the
employer resumes covered operations under the plan less than six full
months prior to the end of the plan year, the measurement period shall
be the first twelve months after it resumes covered operations.
    (c) Base year. For purposes of paragraph (a) of this section, the
employer's number of contribution base units for the base year is the
average number of contribution base units for the two plan years in
which its contribution base units were the highest, within the five
plan years immediately preceding the year of its complete withdrawal.

Sec. 4207.6  Partial withdrawals after reentry.

    (a) General rule. For purposes of determining whether there is a
partial withdrawal of an eligible employer whose liability is abated
under this part upon the employer's reentry into the plan or at any
time thereafter, the plan sponsor shall apply the rules in section 4205
of ERISA, as modified by the rules in this section, and section 108 of
the Multiemployer Act. A partial withdrawal of an employer whose
liability is abated under this part may occur under these rules upon
the employer's reentry into the plan. However, a plan sponsor may not
demand payment of withdrawal liability for a partial withdrawal
occurring upon the employer's reentry before the plan sponsor has
determined that the employer's liability for its complete withdrawal is
abated under this part and has so notified the employer in accordance
with Sec. 4207.3(b).
    (b) Partial withdrawal--70-percent contribution decline. The plan
sponsor shall determine whether there is a partial withdrawal described
in section 4205(a)(1) of ERISA (relating to a 70-

[[Page 34090]]

percent contribution decline) in accordance with the rules in section
4205 of ERISA and section 108 of the Multiemployer Act, as modified by
the rules in this paragraph, and shall determine the amount of an
employer's liability for that partial withdrawal in accordance with the
rules in Sec. 4207.8(b).
    (1) Definition of ``3-year testing period.'' For purposes of
section 4205(b)(1) of ERISA, the term ``3-year testing period'' means
the period consisting of the plan year for which the determination is
made and the two immediately preceding plan years, excluding any plan
year during the period of withdrawal.
    (2) Contribution base units for high base year. For purposes of
section 4205(b)(1) of ERISA and except as provided in section 108(d)(3)
of the Multiemployer Act, in determining the number of contribution
base units for the high base year, if the five plan years immediately
preceding the beginning of the 3-year testing period include a plan
year during the period of withdrawal, the number of contribution base
units for each such year of withdrawal shall be deemed to be the
greater of--
    (i) The employer's contribution base units for that plan year; or
    (ii) The average of the employer's contribution base units for the
three plan years preceding the plan year in which the employer
completely withdrew from the plan.
    (c) Partial withdrawal--partial cessation of contribution
obligation. The plan sponsor shall determine whether there is a partial
withdrawal described in section 4205(a)(2) of ERISA (relating to a
partial cessation of the employer's contribution obligation) in
accordance with the rules in section 4205 of ERISA, as modified by the
rules in this paragraph, and section 108 of the Multiemployer Act. In
making this determination, the sponsor shall exclude all plan years
during the period of withdrawal. A partial withdrawal under this
paragraph can occur no earlier than the plan year of reentry. If the
sponsor determines that there was a partial withdrawal, it shall
determine the amount of an employer's liability for that partial
withdrawal in accordance with the rules in Sec. 4207.8(c).

Sec. 4207.7  Liability for subsequent complete withdrawals and related
adjustments for allocating unfunded vested benefits.

    (a) General. When an eligible employer that has had its liability
for a complete withdrawal abated under this part completely withdraws
from the plan, the employer's liability for that subsequent withdrawal
shall be determined in accordance with the rules in sections 4201-4225
of title IV, as modified by the rules in this section, and section 108
of the Multiemployer Act. In the case of a combination described in
Sec. 4207.9(d), the modifications described in this section shall be
applied only with respect to that portion of the eligible employer that
had previously withdrawn from the plan. In the case of a combination
described in Sec. 4207.9(e), the modifications shall be applied
separately with respect to each previously withdrawn employer that
comprises the eligible employer. In addition, when a plan has abated
the liability of a reentered employer, if the plan uses either the
``presumptive'' or the ``direct attribution'' method (section 4211(b)
or (c)(4), respectively) for allocating unfunded vested benefits, the
plan shall modify those allocation methods as described in this section
in allocating unfunded vested benefits to any employer that withdraws
from the plan after the reentry.
    (b) Allocation of unfunded vested benefits for subsequent
withdrawal in plans using ``presumptive'' method. In a plan using the
``presumptive'' allocation method under section 4211(b) of ERISA, the
amount of unfunded vested benefits allocable to a reentered employer
for a subsequent withdrawal shall equal the sum of--
    (1) The unamortized amount of the employer's allocable shares of
the amounts described in section 4211(b)(1), for the plan years
preceding the initial withdrawal, determined as if the employer had not
previously withdrawn;
    (2) The sum of the unamortized annual credits attributable to the
year of the initial withdrawal and each succeeding year ending prior to
reentry; and
    (3) The unamortized amount of the employer's allocable shares of
the amounts described in section 4211(b)(1) (A) and (C) for plan years
ending after its reentry. For purposes of paragraph (b)(2), the annual
credit for a plan year is the amount by which the employer's withdrawal
liability payments for the year exceed the greater of the employer's
imputed contributions or actual contributions for the year. The
employer's imputed contributions for a year shall equal the average
annual required contributions of the employer for the three plan years
preceding the initial withdrawal. The amount of the credit for a plan
year is reduced by 5 percent of the original amount for each succeeding
plan year ending prior to the year of the subsequent withdrawal.
    (c) Allocation of unfunded vested benefits for subsequent
withdrawal in plans using ``modified presumptive'' or ``rolling-5''
method. In a plan using either the ``modified presumptive'' allocation
method under section 4211(c)(2) of ERISA or the ``rolling-5'' method
under section 4211(c)(3), the amount of unfunded vested benefits
allocable to a reentered employer for a subsequent withdrawal shall
equal the sum of--
    (1) The amount determined under section 4211 (c)(2) or (c)(3) of
ERISA, as appropriate, as if the date of reentry were the employer's
initial date of participation in the plan; and
    (2) The outstanding balance, as of the date of reentry, of the
unfunded vested benefits allocated to the employer for its previous
withdrawal (as defined in paragraph (c)(2)(i) of this section) reduced
as if that amount were being fully amortized in level annual
installments, at the plan's funding rate as of the date of reentry,
over the period described in paragraph (c)(2)(ii), beginning with the
first plan year after reentry.
    (i) The outstanding balance of the unfunded vested benefits
allocated to an employer for its previous withdrawal is the excess of
the amount determined under section 4211 (c)(2) or (c)(3) of ERISA as
of the end of the plan year in which the employer initially withdrew,
accumulated with interest at the plan's funding rate for that year,
from that year to the date of reentry, over the withdrawal liability
payments made by the employer, accumulated with interest from the date
of payment to the date of reentry at the plan's funding rate for the
year of entry.
    (ii) The period referred to in paragraph (c)(2) for plans using the
modified presumptive method is the greater of five years, or the number
of full plan years remaining on the amortization schedule under section
4211(c)(2)(B)(i) of ERISA. For plans using the rolling-5 method, the
period is five years.
    (d) Adjustments applicable to all employers in plans using
``presumptive'' method. In a plan using the ``presumptive'' allocation
method under section 4211(b) of ERISA, when the plan has abated the
withdrawal liability of a reentered employer pursuant to this part, the
following adjustments to the allocation method shall be made in
computing the unfunded vested benefits allocable to any employer that
withdraws from the plan in a plan year beginning after the reentry:
    (1) The sum of the unamortized amounts of the annual credits of a
reentered employer shall be treated as a reallocated amount under
section

[[Page 34091]]

4211(b)(4) of ERISA in the plan year in which the employer reenters.
    (2) In the event that the 5-year period used to compute the
denominator of the fraction described in section 4211 (b)(2)(E) and
(b)(4)(D) of ERISA includes a year during the period of withdrawal of a
reentered employer, the contributions for a year during the period of
withdrawal shall be adjusted to include any actual or imputed
contributions of the employer, as determined under paragraph (b) of
this section.
    (e) Adjustments applicable to all employers in plans using ``direct
attribution'' method. In a plan using the ``direct attribution'' method
under section 4211(c)(4) of ERISA, when the plan has abated the
withdrawal liability of a reentered employer pursuant to this part, the
following adjustments to the allocation method shall be made in
computing the unfunded vested benefits allocable to any employer that
withdraws from the plan in a plan year beginning after the reentry:
    (1) The nonforfeitable benefits attributable to service with a
reentered employer prior to its initial withdrawal shall be treated as
benefits that are attributable to service with that employer.
    (2) For purposes of section 4211(c)(4)(D) (ii) and (iii) of ERISA,
withdrawal liability payments made by a reentered employer shall be
treated as contributions made by the reentered employer.
    (f) Plans using alternative allocation methods under section
4211(c)(5). A plan that has adopted an alternative method of allocating
unfunded vested benefits pursuant to section 4211(c)(5) of ERISA and
part 4211 of this chapter shall adopt by plan amendment a method of
determining a reentered employer's allocable share of the plan's
unfunded vested benefits upon its subsequent withdrawal. The method
shall treat the reentered employer and other withdrawing employers in a
manner consistent with the treatment under the paragraph(s) of this
section applicable to plans using the statutory allocation method most
similar to the plan's alternative allocation method.
    (g) Adjustments to amount of annual withdrawal liability payments
for subsequent withdrawal. For purposes of section 4219(c)(1)(C) (i)(I)
and (ii)(I) of ERISA, in determining the amount of the annual
withdrawal liability payments for a subsequent complete withdrawal, if
the period of ten consecutive plan years ending before the plan year in
which the withdrawal occurs includes a plan year during the period of
withdrawal, the employer's number of contribution base units, used in
section 4219(c)(1)(C)(i)(I), or the required employer contributions,
used in section 4219(c)(1)(C)(ii)(I), for each such plan year during
the period of withdrawal shall be deemed to be the greater of--
    (1) The employer's contribution base units or the required employer
contributions, as applicable, for that year; or
    (2) The average of the employer's contribution base units or of the
required employer contributions, as applicable, for those plan years
not during the period of withdrawal, within the ten consecutive plan
years ending before the plan year in which the employer's subsequent
complete withdrawal occurred.

Sec. 4207.8  Liability for subsequent partial withdrawals.

    (a) General. When an eligible employer that has had its liability
for a complete withdrawal abated under this part partially withdraws
from the plan, the employer's liability for that subsequent partial
withdrawal shall be determined in accordance with the rules in sections
4201-4225 of ERISA, as modified by the rules in Sec. 4207.7 (b) through
(g) of this part and the rules in this section, and section 108 of the
Multiemployer Act.
    (b) Liability for a 70-percent contribution decline. The amount of
an employer's liability under section 4206(a) (relating to the
calculation of liability for a partial withdrawal), section 4208
(relating to the reduction of liability for a partial withdrawal) and
section 4219(c)(1) (relating to the schedule of partial withdrawal
liability payments) of ERISA, for a subsequent partial withdrawal
described in section 4205(a)(1) of ERISA (relating to a 70-percent
contribution decline) shall be modified in accordance with the rules in
this paragraph.
    (1) Definition of ``3-year testing period.'' For purposes of
sections 4206(a) and 4219(c)(1) of ERISA, and paragraphs (b)(2)-(b)(4)
of this section, the term ``3-year testing period'' means the period
consisting of the plan year for which the determination is made and the
two immediately preceding plan years, excluding any plan year during
the period of withdrawal.
    (2) Determination date of section 4211 allocable share. For
purposes of section 4206(a)(1)(B) of ERISA, the amount determined under
section 4211 shall be determined as if the employer had withdrawn from
the plan in a complete withdrawal on the last day of the first plan
year in the 3-year testing period or the last day of the plan year in
which the employer reentered the plan, whichever is later.
    (3) Calculation of fractional share of section 4211 amount. For
purposes of sections 4206(a)(2)(B)(ii) and 4219(c)(1)(E)(ii) of ERISA,
if the five plan years immediately preceding the beginning of the 3-
year testing period include a plan year during the period of
withdrawal, then, in determining the denominator of the fraction
described in section 4206(a)(2), the employer's contribution base units
for each such year of withdrawal shall be deemed to be the greater of--
    (i) The employer's contribution base units for that plan year; or
    (ii) The average of the employer's contribution base units for the
three plan years preceding the plan year in which the employer
completely withdrew from the plan.
    (4) Contribution base units for high base year. If the five plan
years immediately preceding the beginning of the 3-year testing period
include a plan year during the period of withdrawal, then for purposes
of section 4208 (a) and (b)(1) of ERISA, the number of contribution
base units for the high base year shall be the number of contribution
base units determined under paragraph (b)(3) of this section.
    (c) Liability for partial cessation of contribution obligation. The
amount of an employer's liability under section 4206(a) (relating to
the calculation of liability for a partial withdrawal) and section
4219(c)(1) (relating to the amount of the annual partial withdrawal
liability payments) of ERISA, for a subsequent partial withdrawal
described in section 4205(a)(2) of ERISA (relating to a partial
cessation of the contribution obligation) shall be modified in
accordance with the rules in this paragraph. For purposes of sections
4206(a)(2)(B)(i) and 4219(c)(1)(E)(ii) of ERISA, if the five plan years
immediately preceding the plan year in which the partial withdrawal
occurs include a plan year during the period of withdrawal, the
denominator of the fraction described in section 4206(a)(2) shall be
determined in accordance with the rule set forth in paragraph (b)(3) of
this section.

Sec. 4207.9  Special rules.

    (a) Employer that has withdrawn and reentered the plan before the
effective date of this part. This part shall apply, in accordance with
the rules in this paragraph, with respect to an eligible employer that
completely withdraws from a multiemployer plan after September 25,
1980, and is performing covered work under the plan on the effective
date of this part. Upon the

[[Page 34092]]

application of an employer described in the preceding sentence, the
plan sponsor of a multiemployer plan shall determine whether the
employer satisfies the requirements for abatement of its complete
withdrawal liability under this part. Pending the plan sponsor's
determination, the employer may provide the plan with a bond or escrow
that satisfies the requirements of Sec. 4207.4, in lieu of making its
withdrawal liability payments due after its application for an
abatement determination. The plan sponsor shall notify the employer in
writing of its determination and the consequences of its determination
as described in Sec. 4207.3 (c) or (d) and (e), as applicable. If the
plan sponsor determines that the employer qualifies for abatement, only
withdrawal liability payments made prior to the employer's reentry
shall be retained by the plan; payments made by the employer after its
reentry shall be refunded to the employer, with interest on those made
prior to the application for abatement, in accordance with
Sec. 4207.3(e)(2). If a bond or escrow has been provided to the plan in
accordance with Sec. 4207.4, the plan sponsor shall send a copy of the
notice to the bonding or escrow agent. Sections 4207.6 through 4207.8
shall apply with respect to the employer's subsequent complete
withdrawal occurring on or after the effective date of this part, or
partial withdrawal occurring either before or after that date. This
paragraph shall not negate reasonable actions taken by plans prior to
the effective date of this part under plan rules implementing section
4207(a) of ERISA that were validly adopted pursuant to section 405 of
the Multiemployer Act.
    (b) Employer with multiple complete withdrawals that has reentered
the plan before effective date of this part. If an employer described
in paragraph (a) of this section has completely withdrawn from a
multiemployer plan on two or more occasions before the effective date
of this part, the rules in paragraph (a) of this section shall be
applied as modified by this paragraph.
    (1) The plan sponsor shall determine whether the employer satisfies
the requirements for abatement under Sec. 4207.5 based on the most
recent complete withdrawal.
    (2) If the employer satisfies the requirements for abatement, the
employer's liability with respect to all previous complete withdrawals
shall be abated.
    (3) If the liability is abated, Secs. 4207.6 and 4207.7 shall be
applied as if the employer's earliest complete withdrawal were its
initial complete withdrawal.
    (c) Employer with multiple complete withdrawals that has not
reentered the plan as of the effective date of this part. If an
eligible employer has completely withdrawn from a multiemployer plan on
two or more occasions between September 26, 1980 and the effective date
of this part and is not performing covered work under the plan on the
effective date of this regulation, the rules in this part shall apply,
subject to the modifications specified in paragraphs (b)(1)-(b)(3) of
this section, upon the employer's reentry into the plan.
    (d) Combination of withdrawn employer with contributing employer.
If a withdrawn employer merges or otherwise combines with an employer
that has an obligation to contribute to the plan from which the first
employer withdrew, the combined entity is the eligible employer, and
the rules of Sec. 4207.5 shall be applied--
    (1) By subtracting from the measurement period contribution base
units the contribution base units for which the non-withdrawn portion
of the employer was obligated to contribute in the last plan year
ending prior to the combination;
    (2) By determining the base year contribution base units solely by
reference to the contribution base units of the withdrawn portion of
the employer; and
    (3) By using the date of the combination, rather than the date of
resumption of covered operations, to begin the measurement period.
    (e) Combination of two or more withdrawn employers. If two or more
withdrawn employers merge or otherwise combine, the combined entity is
the eligible employer, and the rules of Sec. 4207.5 shall be applied by
combining the number of contribution base units with respect to which
each portion of the employer had an obligation to contribute under the
plan for its base year. However, the combined number of contribution
base units shall not include contribution base units of a withdrawn
portion of the employer that had fully paid its withdrawal liability as
of the date of the resumption of covered operations.

Sec. 4207.10  Plan rules for abatement.

    (a) General rule. Subject to the approval of the PBGC, a plan may,
by amendment, adopt rules for the reduction or waiver of complete
withdrawal liability under conditions other than those specified in
Secs. 4207.5 and 4207.9 (c) and (d), provided that such conditions
relate to events occurring or factors existing subsequent to a complete
withdrawal year. The request for PBGC approval shall be filed after the
amendment is adopted. A plan amendment under this section may not be
put into effect until it is approved by the PBGC. However, an amendment
that is approved by the PBGC may apply retroactively to the date of the
adoption of the amendment. PBGC approval shall also be required for any
subsequent modification of the amendment, other than repeal of the
amendment. Sections 4207.6, 4207.7, and 4207.8 shall apply to all
subsequent partial withdrawals after a reduction or waiver of complete
withdrawal liability under a plan amendment approved by the PBGC
pursuant to this section.
    (b) Who may request. The plan sponsor, or a duly authorized
representative acting on behalf of the plan sponsor, shall sign and
submit the request.
    (c) Where to file. The request shall be addressed to Reports
Processing, Insurance Operations Department, Pension Benefit Guaranty
Corporation, 1200 K Street, NW., Washington, DC 20005-4026.
    (d) Information. Each request shall contain the following
information:
    (1) The name and address of the plan for which the plan amendment
is being submitted and the telephone number of the plan sponsor or its
duly authorized representative.
    (2) The nine-digit Employer Identification Number (EIN) assigned to
the plan sponsor by the IRS and the three-digit Plan Identification
Number (PN) assigned to the plan by the plan sponsor, and, if
different, the EIN and PN last filed with the PBGC. If no EIN or PN has
been assigned, that should be indicated.
    (3) A copy of the executed amendment, including--
    (i) The date on which the amendment was adopted;
    (ii) The proposed effective date; and
    (iii) The full text of the rules on the reduction or waiver of
complete withdrawal liability.
    (4) A copy of the most recent actuarial valuation report of the
plan.
    (5) A statement certifying that notice of the adoption of the
amendment and of the request for approval filed under this section has
been given to all employers that have an obligation to contribute under
the plan and to all employee organizations representing employees
covered under the plan.
    (e) Supplemental information. In addition to the information
described in paragraph (d) of this section, a plan may submit any other
information that it believes it pertinent to its request. The PBGC may
require the plan sponsor to submit any other information that the

[[Page 34093]]

PBGC determines it needs to review a request under this section.
    (f) Criteria for PBGC approval. The PBGC shall approve a plan
amendment authorized by paragraph (a) of this section if it determines
that the rules therein are consistent with the purposes of ERISA. An
abatement rule is not consistent with the purposes of ERISA if--
    (1) Implementation of the rule would be adverse to the interest of
plan participants and beneficiaries; or
    (2) The rule would increase the PBGC's risk of loss with respect to
the plan.

(Approved by the Office of Management and Budget under control
number 1212-0044)

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).

Sec. 4208.1  Purpose and scope.

    (a) Purpose. The purpose of this part is to establish rules for
reducing or waiving the liability of certain employers that have
partially withdrawn from a multiemployer pension plan.
    (b) Scope. This part applies to multiemployer pension plans covered
under title IV of ERISA and to employers that have partially withdrawn
from such plans after September 25, 1980, and that have not, as of the
date on which they satisfy the conditions for reducing or eliminating
their partial withdrawal liability, fully satisfied their obligation to
pay that partial withdrawal liability. This rule shall not negate
reasonable actions taken by plans prior to the effective date of this
part under plan rules implementing section 4208 of ERISA that were
validly adopted pursuant to section 405 of the Multiemployer Act.

Sec. 4208.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter:
employer, ERISA, IRS, Multiemployer Act, multiemployer plan, PBGC,
plan, and plan year.
    In addition, for purposes of this part:
    Complete withdrawal means a complete withdrawal as described in
section 4203 of ERISA.
    Eligible employer means the employer, as defined in section 4001(b)
of ERISA, as it existed on the date of its initial partial or complete
withdrawal, as applicable. An eligible employer shall continue to be an
eligible employer notwithstanding the occurrence of any of the
following events:
    (1) A restoration involving a mere change in identity, form or
place of organization, however effected;
    (2) A reorganization involving a liquidation into a parent
corporation;
    (3) A merger, consolidation or division solely between (or among)
trades or businesses (whether or not incorporated) of the employer; or
    (4) An acquisition by or of, or a merger or combination with
another trade or business.
    Partial withdrawal means a partial withdrawal as described in
section 4205 of ERISA.
    Partial withdrawal year means the third year of the 3-year testing
period in the case of a partial withdrawal caused by a 70-percent
contribution decline, or the year of the partial cessation in the case
of a partial withdrawal caused by a partial cessation of the employer's
contribution obligation.

Sec. 4208.3  Abatement.

    (a) General. Whenever an eligible employer that has partially
withdrawn from a multiemployer plan satisfies the requirements in
Sec. 4208.4 for the reduction or waiver of its partial withdrawal
liability, it may apply to the plan for abatement of its partial
withdrawal liability. Applications shall identify the eligible
employer, the withdrawn employer (if different), the date of
withdrawal, and the basis for reduction or waiver of its withdrawal
liability. Upon receiving a complete application for abatement, the
plan sponsor shall determine, in accordance with paragraph (b) of this
section, whether the employer satisfies the requirements for abatement
of its partial withdrawal liability under Sec. 4208.4. If the plan
sponsor determines that the employer satisfies the requirements for
abatement of its partial withdrawal liability, the provisions of
paragraph (c) of this section shall apply. If the plan sponsor
determines that the employer does not satisfy the requirements for
abatement of its partial withdrawal liability, the provisions of
paragraphs (d) and (e) of this section shall apply.
    (b) Determination of abatement. Within 60 days after an eligible
employer that partially withdrew from a multiemployer plan applies for
abatement in accordance with paragraph (a) of this section, the plan
sponsor shall determine whether the employer satisfies the requirements
for abatement of its partial withdrawal liability under Sec. 4208.4 and
shall notify the employer in writing of its determination and of the
consequences of its determination, as described in paragraphs (c) or
(d) and (e) of this section, as appropriate. If a bond or escrow has
been provided to the plan under Sec. 4208.5 of this part, the plan
sponsor shall send a copy of the notice to the bonding or escrow agent.
    (c) Effects of abatement. If the plan sponsor determines that the
employer satisfies the requirements for abatement of its partial
withdrawal liability under Sec. 4208.4, then--
    (1) The employer's partial withdrawal liability shall be eliminated
or its annual partial withdrawal liability payments shall be reduced in
accordance with Sec. 4208.6, as applicable;
    (2) The employer's liability for a subsequent withdrawal shall be
determined in accordance with Sec. 4208.7;
    (3) Any bonds furnished under Sec. 4208.5 shall be canceled and any
amounts held in escrow under Sec. 4208.5 shall be refunded to the
employer; and
    (4) Any withdrawal liability payments originally due and paid after
the end of the plan year in which the conditions for abatement were
satisfied, in excess of the amount due under this part after that date
shall be credited to the remaining withdrawal liability payments, if
any, owed by the employer, beginning with the first payment due after
the revised payment schedule is issued pursuant to this paragraph. If
the credited amount is greater than the outstanding amount of the
employer's partial withdrawal liability, the amount remaining after
satisfaction of the liability shall be refunded to the employer.
Interest on the credited amount at the rate prescribed in part 4219,
subpart C, of this chapter (relating to overdue, defaulted, and
overpaid withdrawal liability) shall be added if the plan sponsor does
not issue a revised payment schedule reflecting the credit or make the
required refund within 60 days after receipt by the plan sponsor of a
complete abatement application. Interest shall accrue from the 61st
day.
    (d) Effects of non-abatement. If the plan sponsor determines that
the employer does not satisfy the requirements for abatement of its
partial withdrawal liability under Sec. 4208.4, then the employer shall
take or cause to

[[Page 34094]]

be taken the actions set forth in paragraphs (d)(1)-(d)(3) of this
section. The rules in part 4219, subpart C, shall apply with respect to
all payments required to be made under paragraphs (d)(2) and (d)(3).
For this purpose, a payment required under paragraph (d)(2) shall be
treated as a withdrawal liability payment due on the 30th day after the
date of the plan sponsor's notice under paragraph (b) of this section.
    (1) Any bond or escrow furnished under Sec. 4208.5 shall be paid to
the plan within 30 days after the date of the plan sponsor's notice
under paragraph (b) of this section.
    (2) The employer shall pay to the plan within 30 days after the
date of the plan sponsor's notice under paragraph (b) of this section,
the amount of its withdrawal liability payment or payments, with
respect to which the bond or escrow was furnished, in excess of the
bond or escrow.
    (3) The employer shall resume or continue making its partial
withdrawal liability payments as they are due to the plan.
    (e) Review of non-abatement determination. A plan sponsor's
determinations that the employer does not satisfy the requirements for
abatement under Sec. 4208.4 and of the amount of reduction determined
under Sec. 4208.6 shall be subject to plan review under section
4219(b)(2) of ERISA and to arbitration under section 4221 of ERISA and
part 4221 of this chapter, within the times prescribed by those
provisions. For this purpose, the plan sponsor's notice under paragraph
(b) of this section shall be treated as a demand under section
4219(b)(1) of ERISA. If the plan sponsor upon review or an arbitrator
determines that the employer satisfies the requirements for abatement
of its partial withdrawal liability under Sec. 4208.4, the plan sponsor
shall immediately refund the amounts described in paragraph (e)(1) of
this section if the liability is waived, or credit and refund the
amounts described in paragraph (e)(2) if the annual payment is reduced.
    (1) Refund for waived liability. If the employer's partial
withdrawal liability is waived, the plan sponsor shall refund to the
employer the payments made pursuant to paragraphs (d)(1)-(d)(3) of this
section (plus interest determined in accordance with Sec. 4219.31(d) of
this chapter as if the payments were overpayments of withdrawal
liability).
    (2) Credit for reduced annual payment. If the employer's annual
partial withdrawal liability payment is reduced, the plan sponsor shall
credit the payments made pursuant to paragraphs (d)(1)-(d)(3) of this
section (plus interest determined in accordance with Sec. 4219.31(d) of
this chapter as if the payments were overpayments of withdrawal
liability) to future withdrawal liability payments owed by the
employer, beginning with the first payment that is due after the
determination, and refund any credit (including interest) remaining
after satisfaction of the outstanding amount of the employer's partial
withdrawal liability.

Sec. 4208.4  Conditions for abatement.

    (a) Waiver of liability for a 70-percent contribution decline. An
employer that has incurred a partial withdrawal under section
4205(a)(1) of ERISA shall have no obligation to make payments with
respect to that partial withdrawal (other than delinquent payments) for
plan years beginning after the second consecutive plan year in which
the conditions of either paragraph (a)(1) or (a)(2) are satisfied for
each of the two years:
    (1) The number of contribution base units with respect to which the
employer has an obligation to contribute under the plan for each year
is not less than 90 percent of the total number of contribution base
units with respect to which the employer had an obligation to
contribute to the plan for the high base year (as defined in paragraph
(d) of this section).
    (2) The conditions of this paragraph are satisfied if--
    (i) The number of contribution base units with respect to which the
employer has an obligation to contribute for each year exceeds 30
percent of the total number of contribution base units with respect to
which the employer had an obligation to contribute to the plan for the
high base year (as defined in paragraph (d) of this section); and
    (ii) The total number of contribution base units with respect to
which all employers under the plan have obligations to contribute in
each of the two years is not less than 90 percent of the total number
of contribution base units for which all employers had obligations to
contribute in the partial withdrawal year.
    (b) Waiver of liability for a partial cessation of the employer's
contribution obligation. Except as provided in Sec. 4208.8, an employer
that has incurred partial withdrawal liability under section 4205(a)(2)
of ERISA shall have no obligation to make payments with respect to that
partial withdrawal (other than delinquent payments) for plan years
beginning after the second consecutive plan year in which the employer
satisfies the conditions under either paragraph (b)(1) or (b)(2) of
this section.
    (1) Partial restoration of withdrawn work. The employer satisfies
the conditions under this paragraph if, for each of two consecutive
plan years--
    (i) The employer makes contributions for the same facility or under
the same collective bargaining agreement that gave rise to the partial
withdrawal;
    (ii) The employer's contribution base units for that facility or
under that agreement exceed 30 percent of the contribution base units
with respect to which the employer had an obligation to contribute for
that facility or under that agreement for the high base year (as
defined in paragraph (d) of this section); and
    (iii) The total number of contribution base units with respect to
which the employer has an obligation to contribute to the plan equals
at least 90 percent of the total number of contribution base units with
respect to which the employer had an obligation to contribute under the
plan for the high base year (as defined in paragraph (d) of this
section).
    (2) Substantial restoration of withdrawn work. The employer
satisfies the conditions under this paragraph if, for each of two
consecutive plan years--
    (i) The employer makes contributions for the same facility or under
the same collective bargaining agreement that gave rise to the partial
withdrawal;
    (ii) The employer's contribution base units for that facility or
under that agreement are not less than 90 percent of the contribution
base units with respect to which the employer had an obligation to
contribute for that facility or under that agreement for the high base
year (as defined in paragraph (d) of this section); and
    (iii) The total number of contribution base units with respect to
which the employer has an obligation to contribute to the plan equals
or exceeds the sum of--
    (A) The number of contribution base units with respect to which the
employer had an obligation to contribute in the year prior to the
partial withdrawal year, determined without regard to the contribution
base units for the facility or under the agreement that gave rise to
the partial withdrawal; and
    (B) 90 percent of the contribution base units with respect to which
the employer had an obligation to contribute for that facility or under
that agreement in either the year prior to the partial withdrawal year
or the high base year (as defined in paragraph (d) of this section),
whichever is less.
    (c) Reduction in annual partial withdrawal liability payment--

[[Page 34095]]

    (1) Partial withdrawals under section 4205(a)(1). An employer shall
be entitled to a reduction of its annual partial withdrawal liability
payment for a plan year if the number of contribution base units with
respect to which the employer had an obligation to contribute during
the plan year exceeds the greater of--
    (i) 110 percent (or such lower number as the plan may, by
amendment, adopt) of the number of contribution base units with respect
to which the employer had an obligation to contribute in the partial
withdrawal year; or
    (ii) The total number of contribution base units with respect to
which the employer had an obligation to contribute to the plan for the
plan year following the partial withdrawal year.
    (2) Partial withdrawals under section 4205(a)(2). An employer that
resumes the obligation to contribute with respect to a facility or
collective bargaining agreement that gave rise to a partial withdrawal,
but does not qualify to have that liability waived under paragraph (b)
of this section, shall have its annual partial withdrawal liability
payment reduced for any plan year in which the total number of
contribution base units with respect to which the employer has an
obligation to contribute equals or exceeds the sum of--
    (i) The number of contribution base units for the reentered
facility or agreement during that year; and
    (ii) The total number of contribution base units with respect to
which the employer had an obligation to contribute to the plan for the
year following the partial withdrawal year.
    (d) High base year. For purposes of paragraphs (a) and (b)(1)(iii)
of this section, the high base year contributions are the average of
the total contribution base units for the two plan years for which the
employer's total contribution base units were highest within the five
plan years immediately preceding the beginning of the 3-year testing
period defined in section 4205(b)(1)(B)(i) of ERISA, with respect to
paragraph (a) of this section, or the partial withdrawal year, with
respect to paragraph (b)(1)(iii) of this section. For purposes of
paragraphs (b)(1)(ii) and (b)(2) of this section, the high base year
contributions are the average number of contribution base units for the
facility or under the agreement for the two plan years for which the
employer's contribution base units for that facility or under that
agreement were highest within the five plan years immediately preceding
the partial withdrawal.

Sec. 4208.5   Withdrawal liability payments during pendency of
abatement determination.

    (a) Bond/Escrow. An employer that has satisfied the requirements of
Sec. 4208.4(a)(1) without regard to ``90 percent of'' or Sec. 4208.4(b)
for one year with respect to all partial withdrawals it incurred in a
plan year may, in lieu of making scheduled withdrawal liability
payments in the second year for those withdrawals, provide a bond to,
or establish an escrow account for, the plan that satisfies the
requirements of paragraph (b) of this section or any plan rules adopted
under paragraph (d) of this section, pending a determination by the
plan sponsor of whether the employer satisfies the requirements of
Sec. 4208.4 (a)(1) or (b) for the second consecutive plan year. An
employer that applies for abatement and neither provides a bond/escrow
nor makes its withdrawal liability payments remains eligible for
abatement.
    (b) Amount of bond/escrow. The bond or escrow allowed by this
section shall be in an amount equal to 50 percent of the withdrawal
liability payments that would otherwise be due. The bond or escrow
relating to each payment shall be furnished before the due date of that
payment. A single bond or escrow may be provided for more than one
payment due during the pendency of the plan sponsor's determination.
The bond or escrow agreement shall provide that if the plan sponsor
determines that the employer does not satisfy the requirements for
abatement of its partial withdrawal liability under Sec. 4208.4 (a)(1)
or (b), the bond or escrow shall be paid to the plan upon notice from
the plan sponsor to the bonding or escrow agent. A bond provided under
this paragraph shall be issued by a corporate surety company that is an
acceptable surety for purposes of section 412 of ERISA.
    (c) Notice of bond/escrow. Concurrently with posting a bond or
establishing an escrow account under this section, the employer shall
notify the plan sponsor. The notice shall include a statement of the
amount of the bond or escrow, the scheduled payment or payments with
respect to which the bond or escrow is being furnished, and the name
and address of the bonding or escrow agent.
    (d) Plan amendments concerning bond/escrow. A plan may, by
amendment, adopt rules decreasing the amount of the bond or escrow
specified in paragraph (b) of this section. A plan amendment adopted
under this paragraph may be applied only to the extent that it is
consistent with the purposes of ERISA. An amendment satisfies this
requirement only if it does not create an unreasonable risk of loss to
the plan.
    (e) Plan sponsor determination. Within 60 days after the end of the
plan year in which the bond/escrow is furnished, the plan sponsor shall
determine whether the employer satisfied the requirements of
Sec. 4208.4 (a)(1) or (b) for the second consecutive plan year. The
plan sponsor shall notify the employer and the bonding or escrow agent
in writing of its determination and of the consequences of its
determination, as described in Sec. 4208.3 (c) or (d) and (e), as
appropriate.

Sec. 4208.6   Computation of reduced annual partial withdrawal
liability payment.

    (a) Amount of reduced payment. An employer that satisfies the
requirements of Sec. 4208.4 (c)(1) or (c)(2) shall have its annual
partial withdrawal liability payment for that plan year reduced in
accordance with paragraph (a)(1) or (a)(2) of this section,
respectively.
    (1) The reduced annual payment amount for an employer that
satisfies Sec. 4208.4(c)(1) shall be determined by substituting the
number of contribution base units in the plan year in which the
requirements are satisfied for the number of contribution base units in
the year following the partial withdrawal year in the numerator of the
fraction described in section 4206(a)(2)(A) of ERISA.
    (2) The reduced annual payment for an employer that satisfies
Sec. 4208.4(c)(2) shall be determined by adding the contribution base
units for which the employer is obligated to contribute with respect to
the reentered facility or agreement in the year in which the
requirements are satisfied to the numerator of the fraction described
in section 4206(a)(2)(A) of ERISA.
    (b) Credit for reduction. The plan sponsor shall credit the account
of an employer that satisfies the requirements of Sec. 4208.4(c)(1) or
(c)(2) with the amount of annual withdrawal liability that it paid in
excess of the amount described in paragraph (a)(1) or (a)(2) of this
section, as appropriate. The credit shall be applied, a revised payment
schedule issued, refund made and interest added, all in accordance with
Sec. 4208.3(c)(4).

Sec. 4208.7   Adjustment of withdrawal liability for subsequent
withdrawals.

    The liability of an employer for a partial or complete withdrawal
from a plan subsequent to a partial withdrawal from that plan in a
prior plan year shall be reduced in accordance with part 4206 of this
chapter.

[[Page 34096]]

Sec. 4208.8   Multiple partial withdrawals in one plan year.

    (a) General rule. If an employer partially withdraws from the same
multiemployer plan on two or more occasions during the same plan year,
the rules of Sec. 4208.4 shall be applied as modified by this section.
    (b) Partial withdrawals under section 4205 (a)(1) and (a)(2) in the
same plan year. If an employer partially withdraws from the same
multiemployer plan as a result of a 70-percent contribution decline and
a partial cessation of the employer's contribution obligation in the
same plan year, the employer shall not be eligible for abatement under
Sec. 4208.4 (b) or (c)(2) or under paragraph (c) of this section. The
employer may qualify for abatement under Sec. 4208.4(a) and (c)(1) and
under any rules adopted by the plan pursuant to Sec. 4208.9.
    (c) Multiple partial cessations of the employer's contribution
obligation. If an employer permanently ceases to have an obligation to
contribute for more than one facility, under more than one collective
bargaining agreement, or for one or more facilities and under one or
more collective bargaining agreements, resulting in multiple partial
withdrawals under section 4205(b)(2)(A) in the same plan year, the
abatement rules in Sec. 4208.4(b) shall be applied as modified by this
paragraph. If an employer resumes work at all such facilities and under
all such collective bargaining agreements, the determination of whether
the employer qualifies for elimination of its liability under
Sec. 4208.4(b) shall be made by substituting the test set forth in
paragraph (c)(1) of this section for that prescribed by Sec. 4208.4
(b)(1)(ii) or (b)(2)(ii), as applicable. If the employer resumes work
at or under fewer than all the facilities or collective bargaining
agreements described in this paragraph, the employer cannot qualify for
elimination of its liability under Sec. 4208.4(b). However, the
employer may qualify for a reduction in its partial withdrawal
liability pursuant to paragraph (c)(2) of this section.
    (1) Resumption of work at all facilities and under all bargaining
agreements. The test under this paragraph is satisfied if for each of
the two consecutive plan years referred to in Sec. 4208.4(b), the
employer's total contribution base units for the facilities and under
the collective bargaining agreements with respect to which the employer
incurred the multiple partial withdrawals exceed 30 percent of the
total number of contribution base units with respect to which the
employer had an obligation to contribute for those facilities and under
those agreements for the base year (as defined in paragraph (d) of this
section).
    (2) Resumption at fewer than all facilities or under fewer than all
bargaining agreements. If the employer satisfies the conditions in
Sec. 4208.4 (b)(1)(i) and (b)(1)(iii) and paragraph (c)(2)(i) of this
section, or the conditions in Sec. 4208.4 (b)(2)(i) and (b)(2)(iii) and
paragraph (c)(2)(ii) of this section, as applicable, the employer's
withdrawal liability shall be partially waived as set forth in
paragraph (c)(2)(iii) of this section.
    (i) With respect to a resumption of work under Sec. 4208.4(b)(1),
the condition under this paragraph is satisfied if, for the two
consecutive plan years referred to in Sec. 4208.4(b)(1), the employer's
contribution base units for any reentered facility or agreement exceed
30 percent of the number of contribution base units with respect to
which the employer had an obligation to contribute for that facility or
under that agreement for the base year (as defined in paragraph (d) of
this section).
    (ii) With respect to a resumption of work under Sec. 4208.4(b)(2),
the condition under this paragraph is satisfied if, for the two
consecutive plan years referred to in Sec. 4208.4(b)(2), the employer's
contribution base units for any reentered facility or agreement exceed
90 percent of the number of contribution base units with respect to
which the employer had an obligation to contribute for that facility or
under that agreement for the base year (as defined in paragraph (d) of
this section).
    (iii) The employer's reduced withdrawal liability and, if any, the
reduced annual payments of the liability shall be determined by adding
the average number of contribution base units that the employer is
required to contribute for those two consecutive years for that
facility(ies) or agreement(s) to the numerator of the fraction
described in section 4206(a)(2)(A) of ERISA. The amount of any
remaining partial withdrawal liability shall be paid over the schedule
originally established starting with the first payment due after the
revised payment schedule is issued under Sec. 4208.3(c)(4).
    (d) Base Year. For purposes of this section, the base year
contribution base units for a reentered facility(ies) or under a
reentered agreement(s) are the average number of contribution base
units for the facility(ies) or under the agreement(s) for the two plan
years for which the employer's contribution base units for that
facility(ies) or under that agreement(s) were highest within the five
plan years immediately preceding the partial withdrawal.

Sec. 4208.9   Plan adoption of additional abatement conditions.

    (a) General rule. A plan may by amendment, subject to the approval
of the PBGC, adopt rules for the reduction or waiver of partial
withdrawal liability under conditions other than those specified in
Sec. 4208.4, provided that such conditions relate to events occurring
or factors existing subsequent to a partial withdrawal year. The
request for PBGC approval shall be filed after the amendment is
adopted. PBGC approval shall also be required for any subsequent
modification of the amendment, other than repeal of the amendment. A
plan amendment under this section may not be put into effect until it
is approved by the PBGC. An amendment that is approved by the PBGC may
apply retroactively.
    (b) Who may request. The plan sponsor, or a duly authorized
representative acting on behalf of the plan sponsor, shall sign and
submit the request.
    (c) Where to file. The request shall be addressed to Reports
Processing, Insurance Operations Department, Pension Benefit Guaranty
Corporation, 1200 K Street NW., Washington, DC 20005-4026.
    (d) Information. Each request shall contain the following
information:
    (1) The name and address of the plan for which the plan amendment
is being submitted and the telephone number of the plan sponsor or its
duly authorized representative.
    (2) The nine-digit Employer Identification Number (EIN) assigned to
the plan sponsor by the IRS and the three-digit Plan Identification
Number (PIN) assigned to the plan by the plan sponsor, and, if
different, also the EIN-PIN last filed with the PBGC. If an EIN-PIN has
not been assigned, that should be indicated.
    (3) A copy of the executed amendment, including--
    (i) the date on which the amendment was adopted;
    (ii) the proposed effective date;
    (iii) the full text of the rules on the reduction or waiver of
partial withdrawal liability; and
    (iv) the full text of the rules adjusting the reduction in the
employer's liability for a subsequent partial or complete withdrawal,
as required by section 4206(b)(1) of ERISA.
    (4) A copy of the most recent actuarial valuation report of the
plan.
    (5) A statement certifying that notice of the adoption of the
amendment and of the request for approval filed under this section has
been given to all employers that have an obligation to contribute under
the plan and to all

[[Page 34097]]

employee organizations representing employees covered under the plan.
    (e) Supplemental information. In addition to the information
described in paragraph (d) of this section, a plan may submit any other
information that it believes is pertinent to its request. The PBGC may
require the plan sponsor to submit any other information that the PBGC
determines that it needs to review a request under this section.
    (f) Criteria for PBGC approval. The PBGC shall approve a plan
amendment authorized by paragraph (a) of this section if it determines
that the rules therein are consistent with the purposes of ERISA. An
abatement amendment is not consistent with the purposes of ERISA unless
the PBGC determines that--
    (1) The amendment is not adverse to the interests of plan
participants and beneficiaries in the aggregate; and
    (2) The amendment would not significantly increase the PBGC's risk
of loss with respect to the plan.

(Approved by the Office of Management and Budget under control no.
1212-0039)

PART 4211--ALLOCATING UNFUNDED VESTED BENEFITS TO WITHDRAWING
EMPLOYERS

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).

Subpart A--General

Sec. 4211.1  Purpose and scope.

    (a) Purpose. Section 4211 of ERISA provides four methods for
allocating unfunded vested benefits to employers that withdraw from a
multiemployer plan: the presumptive method (section 4211(b)); the
modified presumptive method (section 4211(c)(2)); the rolling-5 method
(section 4211(c)(3)); and the direct attribution method (section
4211(c)(4)). With the minor exceptions covered in Sec. 4211.3, a plan
determines the amount of unfunded vested benefits allocable to a
withdrawing employer in accordance with the presumptive method, unless
the plan is amended to adopt an alternative allocative method.
Generally, the PBGC must approve the adoption of an alternative
allocation method. On September 25, 1984, 49 FR 37686, the PBGC granted
a class approval of all plan amendments adopting one of the statutory
alternative allocation methods. Subpart C sets forth the criteria and
procedures for PBGC approval of nonstatutory alternative allocation
methods. Section 4211(c)(5) of ERISA also permits certain modifications
to the statutory allocation methods. The PBGC is to prescribe these
modifications in a regulation, and plans may adopt them without PBGC
approval. Subpart B contains the permissible modifications to the
statutory methods. Plans may adopt other modifications subject to PBGC
approval under subpart C. Finally, under section 4211(f) of ERISA, the
PBGC is required to prescribe rules governing the application of the
statutory allocation methods or modified methods by plans following
merger of multiemployer plans. Subpart D sets forth alternative
allocative methods to be used by merged plans. In addition, such plans
may adopt any of the allocation methods or modifications described
under subparts B and C in accordance with the rules under subparts B
and C.
    (b) Scope. This part applies to all multiemployer plans covered by
title IV of ERISA.

Sec. 4211.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter:
Code, employer, IRS, multiemployer plan, nonforfeitable benefit, PBGC,
plan, and plan year.
    In addition, for purposes of this part:
    Initial plan year means a merged plan's first complete plan year
that begins after the establishment of the merged plan.
    Initial plan year unfunded vested benefits means the unfunded
vested benefits as of the close of the initial plan year, less the
value as of the end of the initial plan year of all outstanding claims
for withdrawal liability that can reasonably be expected to be
collected from employers that had withdrawn as of the end of the
initial plan year.
    Merged plan means a plan that is the result of the merger of two or
more multiemployer plans.
    Merger means the combining of two or more multiemployer plans into
one multiemployer plan.
    Prior plan means the plan in which an employer participated
immediately before that plan became a part of the merged plan.
    Unfunded vested benefits means an amount by which the value of
nonforfeitable benefits under the plan exceeds the value of the assets
of the plan.
    Withdrawing employer means the employer for whom withdrawal
liability is being calculated under section 4201 of ERISA.
    Withdrawn employer means an employer who, prior to the withdrawing
employer, has discontinued contributions to the plan or covered
operations under the plan and whose obligation to contribute has not
been assumed by a successor employer within the meaning of section 4204
of ERISA. A temporary suspension of contributions, including a
suspension described in section 4218(2) of ERISA, is not considered a
discontinuance of contributions.

Sec. 4211.3  Special rules for construction industry and IRC section
404(c) plans.

    (a) Construction plans. Except as provided in Secs. 4211.11(b) and
4211.21(b), a plan that primarily covers employees in the building and
construction industry shall use the presumptive method for allocating
unfunded vested benefits.
    (b) Section 404(c) plans. A plan described in section 404(c) of the
Code or a continuation of such a plan shall allocate unfunded vested
benefits under the rolling-5 method unless the plan, by amendment,
adopts an alternative method or modification.

[[Page 34098]]

Subpart B--Changes Not Subject to PBGC Approval

Sec. 4211.11  Changes not subject to PBGC approval.

    (a) General rule. A plan, other than a plan that primarily covers
employees in the building and construction industry, may adopt, by
amendment, any of the statutory allocation methods and any of the
modifications set forth in Secs. 4211.12 and 4211.13, without the
approval of the PBGC.
    (b) Building and construction industry plans. A plan that primarily
covers employees in the building and construction industry may adopt,
by amendment, any of the modifications to the presumptive rule set
forth in Sec. 4211.12 without the approval of the PBGC.

Sec. 4211.12  Modifications to the presumptive, modified presumptive
and rolling-5 methods.

    (a) ``Contributions made'' and ``total amount contributed''. Each
of the allocation fractions used in the presumptive, modified
presumptive and rolling-5 methods is based on contributions that
certain employers have made to the plan for a five-year period. For
purposes of these methods, and except as provided in paragraph (b) of
this section, ``the sum of all contributions made'' or ``total amount
contributed'' by employers for a plan year means the amounts (other
than withdrawal liability payments) considered contributed to the plan
for the plan year for purposes of section 412(b)(3)(A) of the Code. For
plan years before section 412 applies to the plan, ``the sum of all
contributions made'' or ``total amount contributed'' means the amount
reported to the IRS or the Department of Labor as total contributions
for the plan year; for example, for plan years in which the plan filed
the Form 5500, the amount reported as total contributions on that form.
Employee contributions, if any, shall be excluded from the totals.
    (b) Changing the period for counting contributions. A plan sponsor
may amend a plan to modify the denominators in the presumptive,
modified presumptive and rolling-5 methods in accordance with one of
the alternatives described in this paragraph. Except as provided in
paragraph (b)(4) of this section, any amendment adopted under this
paragraph shall be applied consistently to all plan years.
Contributions counted for one plan year may be not counted for any
other plan year. If a contribution is counted as part of the ``total
amount contributed'' for any plan year used to determine a denominator,
that contribution may not also be counted as a contribution owed with
respect to an earlier year used to determine the same denominator,
regardless of when the plan collected that contribution.
    (1) A plan sponsor may amend a plan to provide that ``the sum of
all contributions made'' or ``total amount contributed'' for a plan
year means the amount of contributions that the plan actually received
during the plan year, without regard to whether the contributions are
treated as made for that plan year under section 412(b)(3)(A) of the
Code.
    (2) A plan sponsor may amend a plan to provide that ``the sum of
all contributions made'' or ``total amount contributed'' for a plan
year means the amount of contributions actually received during the
plan year, increased by the amount of contributions received during a
specified period of time after the close of the plan year not to exceed
the period described in section 412(c)(10) of the Code and regulations
thereunder.
    (3) A plan sponsor may amend a plan to provide that ``the sum of
all contributions made'' or ``total amount contributed'' for a plan
year means the amount of contributions actually received during the
plan year, increased by the amount of contributions accrued during the
plan year and received during a specified period of time after the
close of the plan year not to exceed the period described in section
412(c)(10) of the Code and regulations thereunder.
    (4) A plan sponsor may amend a plan to provide that--
    (i) For plan years ending before September 26, 1980, ``the sum of
all contributions made'' or ``total amount contributed'' means the
amount of total contributions reported on Form 5500 and, for years
before the plan was required to file Form 5500, the amount of total
contributions reported on any predecessor reporting form required by
the Department of Labor or the IRS; and
    (ii) For subsequent plan years, ``the sum of all contributions
made'' or ``total amount contributed'' means the amount described in
paragraph (a) of this section, or the amount described in paragraph
(b)(1), (b)(2) or (b)(3) of this section.
    (c) Excluding contributions of significant withdrawn employers.
Contributions of certain withdrawn employers are excluded from the
denominator in each of the fractions used to determine a withdrawing
employer's share of unfunded vested benefits under the presumptive,
modified presumptive and rolling-5 methods. Except as provided in
paragraph (c)(1) of this section, contributions of all employers that
permanently cease to have an obligation to contribute to the plan or
permanently cease covered operations before the end of the period of
plan years used to determine the fractions for allocating unfunded
vested benefits under each of those methods (and contributions of all
employers that withdrew before September 26, 1980) are excluded from
the denominators of the fractions.
    (1) The plan sponsor of a plan using the presumptive, modified
presumptive or rolling-5 method may amend the plan to provide that only
the contributions of significant withdrawn employers shall be excluded
from the denominators of the fractions used in those methods.
    (2) For purposes of this paragraph (c), ``significant withdrawn
employer'' means--
    (i) An employer to which the plan has sent a notice of withdrawal
liability under section 4219 of ERISA; or
    (ii) A withdrawn employer that in any plan year used to determine
the denominator of a fraction contributed at least $250,000 or, if
less, 1% of all contributions made by employers for that year.
    (3) If a group of employers withdraw in a concerted withdrawal, the
plan shall treat the group as a single employer in determining whether
the members are significant withdrawn employers under paragraph (c)(2)
of this section. A ``concerted withdrawal'' means a cessation of
contributions to the plan during a single plan year--
    (i) By an employer association;
    (ii) By all or substantially all of the employers covered by a
single collective bargaining agreement; or
    (iii) By all or substantially all of the employers covered by
agreements with a single labor organization.

Sec. 4211.13  Modifications to the direct attribution method.

    (a) Error in direct attribution method. The unfunded vested
benefits allocated to a withdrawing employer under the direct
attribution method are the sum of the employer's attributable
liability, determined under section 4211(c)(4) (A)(i) and (B) of ERISA,
and the employer's share of the plan's unattributable liability,
determined under section 4211(c)(4)(E) and allocated to the employer
under section 4211(c)(4)(F). Plan sponsors should allocate
unattributable liabilities on the basis of the employer's share of the
attributable liabilities. However, section 4211(c)(4)(F) of ERISA,
which describes the allocation of unattributable liabilities, contains
a typographical

[[Page 34099]]

error. Therefore, plans adopting the direct attribution method shall
modify the phrase ``as the amount determined under subparagraph (C) for
the employer bears to the sum of the amounts determined under
subparagraph (C) for all employers under the plan'' in section
4211(c)(4)(F) by substituting ``subparagraph (B)'' for ``subparagraph
(C)'' in both places it appears.
    (b) Allocating unattributable liability based on contributions in
period before withdrawal. A plan that is amended to adopt the direct
attribution method may provide that instead of allocating the
unattributable liability in accordance with section 4211(c)(4)(F) of
ERISA, the employer's share of the plan's unattributable liability
shall be determined by multiplying the plan's unattributable liability
determined under section 4211(c)(4)(E) by a fraction--
    (1) The numerator of which is the total amount of contributions
required to be made by the withdrawing employer over a period of
consecutive plan years (not fewer than five) ending before the
withdrawal; and
    (2) The denominator of which is the total amount contributed under
the plan by all employers for the same period of years used in
paragraph (b)(1) of this section, decreased by any amount contributed
by an employer that withdrew from the plan during those plan years.

Subpart C--Changes Subject to PBGC Approval

Sec. 4211.21  Changes subject to PBGC approval.

    (a) General rule. Subject to the approval of the PBGC pursuant to
this subpart, a plan, other than a plan that primarily covers employees
in the building and construction industry, may adopt, by amendment, any
allocation method or modification to an allocation method that is not
permitted under subpart B of this part.
    (b) Building and construction industry plans. Subject to the
approval of the PBGC pursuant to this subpart, a plan that primarily
covers employees in the building and construction industry may adopt,
by amendment, any allocation method or modification to an allocation
method that is not permitted under Sec. 4211.12 if the method or
modification is applicable only to its employers that are not
construction industry employers within the meaning of section
4203(b)(1)(A) of ERISA.
    (c) Substantial overallocation not allowed. No plan may adopt an
allocation method or modification to an allocation method that results
in a systematic and substantial overallocation of the plan's unfunded
vested benefits.
    (d) Use of method prior to approval. A plan may implement an
alternative allocation method or modification to an allocation method
that requires PBGC approval before that approval is given. However, the
plan sponsor shall assess liability in accordance with this paragraph.
    (1) Demand for payment. Until the PBGC approves the allocation
method or modification, a plan may not demand withdrawal liability
under section 4219 of ERISA in an amount that exceeds the lesser of the
amount calculated under the amendment or the amount calculated under
the allocation method that the plan would be required to use if the
PBGC did not approve the amendment. The plan must inform each
withdrawing employer of both amounts and explain that the higher amount
may become payable depending on the PBGC's decision on the amendment.
    (2) Adjustment of liability. When necessary because of the PBGC
decision on the amendment, the plan shall adjust the amount demanded
from each employer under paragraph (c)(1) of this section and the
employer's withdrawal liability payment schedule. The length of the
payment schedule shall be increased, as necessary. The plan shall
notify each affected employer of the adjusted liability and payment
schedule and shall collect the adjusted amount in accordance with the
adjusted schedule.

Sec. 4211.22  Requests for PBGC approval.

    (a) General. A plan shall submit a request for approval of an
alternative allocation method or modification to an allocation method
to the PBGC in accordance with the requirements of this section as soon
as practicable after the adoption of the amendment.
    (b) Who shall submit. The plan sponsor, or a duly authorized
representative acting on behalf of the plan sponsor, shall sign the
request.
    (c) Where to submit. The plan shall submit the request by first
class mail or courier service to Reports Processing, Insurance
Operations Department, Pension Benefit Guaranty Corporation, 1200 K
Street, NW., Washington, DC 20005-4026, or by hand to the above
address.
    (d) Content. Each request shall contain the following information:
    (1) The name, address and telephone number of the plan sponsor, and
of the duly authorized representative, if any, of the plan sponsor.
    (2) The name of the plan.
    (3) The nine-digit Employer Identification Number (EIN) that the
Internal Revenue Service assigned to the plan sponsor and the three-
digit Plan Identification Number (PIN) that the plan sponsor assigned
to the plan, and, if different, also the EIN-PIN that the plan last
filed with the PBGC. If the plan has no EIN-PIN, the request shall so
indicate.
    (4) The date the amendment was adopted.
    (5) A copy of the amendment, setting forth the full text of the
alternative allocation method or modification.
    (6) The allocation method that the plan currently uses and a copy
of the plan amendment (if any) that adopted the method.
    (7) A statement certifying that notice of the adoption of the
amendment has been given to all employers that have an obligation to
contribute under the plan and to all employee organizations that
represent employees covered by the plan.
    (e) Additional information. In addition to the information listed
in paragraph (d) of this section, the PBGC may require the plan sponsor
to submit any other information that the PBGC determines is necessary
for the review of an alternative allocation method or modification to
an allocation method.

(Approved by the Office of Management and Budget under control
number 1212-0035)

Sec. 4211.23  Approval of alternative method.

    (a) General. The PBGC shall approve an alternative allocation
method or modification to an allocation method if the PBGC determines
that adoption of the method or modification would not significantly
increase the risk of loss to plan participants and beneficiaries or to
the PBGC.
    (b) Criteria. An alternative allocation method or modification to
an allocation method satisfies the requirements of paragraph (a) of
this section if it meets the following three conditions:
    (1) The method or modification allocates a plan's unfunded vested
benefits, both for the adoption year and for the five subsequent plan
years, to the same extent as any of the statutory allocation methods,
or any modification to a statutory allocation method permitted under
subpart B.
    (2) The method or modification allocates unfunded vested benefits
to each employer on the basis of either the employer's share of
contributions to the plan or the unfunded vested benefits attributable
to each employer. The method or modification may take into account
differences in contribution rates paid by different employers and

[[Page 34100]]

differences in benefits of different employers' employees.
    (3) The method or modification fully reallocates among employers
that have not withdrawn from the plan all unfunded vested benefits that
the plan sponsor has determined cannot be collected from withdrawn
employers, or that are not assessed against withdrawn employers because
of sections 4209, 4219(c)(1)(B) or 4225 of ERISA.
    (c) PBGC action on request. The PBGC's decision on a request for
approval shall be in writing. If the PBGC disapproves the request, the
decision shall state the reasons for the disapproval and shall include
a statement of the sponsor's right to request a reconsideration of the
decision pursuant to part 4003 of this chapter.

Sec. 4211.24  Special rule for certain alternative methods previously
approved.

    A plan may not apply to any employer withdrawing on or after
November 25, 1987, an allocation method approved by the PBGC before
that date that allocates to the employer the greater of the amounts of
unfunded vested benefits determined under two different allocation
rules. Until a plan that has been using such a method is amended to
adopt a valid allocation method, its allocation method shall be deemed
to be the statutory allocation method that would apply if it had never
been amended.

Subpart D--Allocation Methods for Merged Multiemployer Plans

Sec. 4211.31  Allocation of unfunded vested benefits following the
merger of plans.

    (a) General Rule. Except as provided in paragraphs (b) through (d)
of this section, when two or more multiemployer plans merge, the merged
plan shall adopt one of the statutory allocation methods, in accordance
with subpart B of this part, or one of the allocation methods
prescribed in Secs. 4211.32 through 4211.35, and the method adopted
shall apply to all employer withdrawals occurring after the initial
plan year. Alternatively, a merged plan may adopt its own allocation
method in accordance with subpart C of this part. If a merged plan
fails to adopt an allocation method pursuant to this subpart or subpart
B or C, it shall use the presumptive allocation method prescribed in
Sec. 4211.32. In addition, a merged plan may adopt any of the
modifications prescribed in Sec. 4211.36 or in subpart B of this part.
    (b) Construction plans. Except as provided in the next sentence, a
merged plan that primarily covers employees in the building and
construction industry shall use the presumptive allocation method
prescribed in Sec. 4211.32. However, the plan may, with respect to
employers that are not construction industry employers within the
meaning of section 4203(b)(1)(A) of ERISA, adopt, by amendment, one of
the alternative methods prescribed in Secs. 4211.33 through 4211.35 or
any other allocation method. Any such amendment shall be adopted in
accordance with subpart C of this part. A construction plan may,
without the PBGC's approval, adopt by amendment any of the
modifications set forth in Sec. 4211.36 or any of the modifications to
the statutory presumptive method set forth in Sec. 4211.12.
    (c) Section 404(c) plans. A merged plan that is a continuation of a
plan described in section 404(c) of the Code shall use the rolling-5
allocation method prescribed in Sec. 4211.34, unless the plan, by
amendment, adopts an alternative method. The plan may adopt one of the
statutory allocation methods or one of the allocation methods set forth
in Secs. 4211.32 through 4211.35 without PBGC approval; adoption of any
other allocation method is subject to PBGC approval under subpart B of
this plan. The plan may, without the PBGC's approval, adopt by
amendment any of the modifications set forth in Sec. 4211.36 or in
subpart B of this part.
    (d) Withdrawals before the end of the initial plan year. For
employer withdrawals after the effective date of a merger and prior to
the end of the initial plan year, the amount of unfunded vested
benefits allocable to a withdrawing employer shall be determined in
accordance with Sec. 4211.37.

Sec. 4211.32  Presumptive method for withdrawals after the initial plan
year.

    (a) General rule. Under this section, the amount of unfunded vested
benefits allocable to an employer that withdraws from a merged plan
after the initial plan year is the sum (but not less than zero) of--
    (1) The employer's proportional share, if any, of the unamortized
amount of the plan's initial plan year unfunded vested benefits, as
determined under paragraph (b) of this section;
    (2) The employer's proportional share of the unamortized amount of
the change in the plan's unfunded vested benefits for plan years ending
after the initial plan year, as determined under paragraph (c) of this
section; and
    (3) The employer's proportional share of the unamortized amounts of
the reallocated unfunded vested benefits (if any) as determined under
paragraph (d) of this section.
    (b) Share of initial plan year unfunded vested benefits. An
employer's proportional share, if any, of the unamortized amount of the
plan's initial plan year unfunded vested benefits is the sum of the
employer's share of its prior plan's liabilities (determined under
paragraph (b)(1) of this section) and the employer's share of the
adjusted initial plan year unfunded vested benefits (determined under
paragraph (b)(2) of this section), with such sum reduced by five
percent of the original amount for each plan year subsequent to the
initial year.
    (1) Share of prior plan liabilities. An employer's share of its
prior plan's liabilities is the amount of unfunded vested benefits that
would have been allocable to the employer if it had withdrawn on the
first day of the initial plan year, determined as if each plan had
remained a separate plan.
    (2) Share of adjusted initial plan year unfunded vested benefits.
An employer's share of the adjusted initial plan year unfunded vested
benefits equals the plan's initial plan year unfunded vested benefits,
less the amount that would be determined under paragraph (b)(1) of this
section for each employer that had not withdrawn as of the end of the
initial plan year, multiplied by a fraction--
    (i) The numerator of which is the amount determined under paragraph
(b)(1) of this section; and
    (ii) The denominator of which is the sum of the amounts that would
be determined under paragraph (b)(1) of this section for each employer
that had not withdrawn as of the end of the initial plan year.
    (c) Share of annual changes. An employer's proportional share of
the unamortized amount of the change in the plan's unfunded vested for
the plan years ending after the end of the initial plan year is the sum
of the employer's proportional shares (determined under paragraph
(c)(2) of this section) of the unamortized amount of the change in
unfunded vested benefits (determined under paragraph (c)(1) of this
section) for each plan year in which the employer has an obligation to
contribute under the plan ending after the initial plan year and before
the plan year in which the employer withdraws.
    (1) Change in plan's unfunded vested benefits. The change in a
plan's unfunded vested benefits for a plan year is the amount by which
the unfunded vested benefits at the end of a plan year, less the value
as of the end of such year of all outstanding claims for withdrawal
liability that can reasonably be expected

[[Page 34101]]

to be collected from employers that had withdrawn as of the end of the
initial plan year, exceed the sum of the unamortized amount of the
initial plan year unfunded vested benefits (determined under paragraph
(c)(1)(i) of this section) and the unamortized amounts of the change in
unfunded vested benefits for each plan year ending after the initial
plan year and preceding the plan year for which the change is
determined (determined under paragraph (c)(1)(ii) of this section).
    (i) Unamortized amount of initial plan year unfunded vested
benefits. The unamortized amount of the initial plan year unfunded
vested benefits is the amount of those benefits reduced by five percent
of the original amount for each succeeding plan year.
    (ii) Unamortized amount of the change. The unamortized amount of
the change in a plan's unfunded vested benefits with respect to a plan
year is the change in unfunded vested benefits for the plan year,
reduced by five percent of such change for each succeeding plan year.
    (2) Employer's proportional share. An employer's proportional share
of the amount determined under paragraph (c)(1) of this section is
computed by multiplying that amount by a fraction--
    (i) The numerator of which is the total amount required to be
contributed under the plan (or under the employer's prior plan) by the
employer for the plan year in which the change arose and the four
preceding full plan years; and
    (ii) The denominator of which is the total amount contributed under
the plan (or under employer's prior plan) for the plan year in which
the change arose and the four preceding full plan years by all
employers that had an obligation to contribute under the plan for the
plan year in which such change arose, reduced by any amount contributed
by an employer that withdrew from the plan in the year in which the
change arose.
    (d) Share of reallocated amounts. An employer's proportional share
of the unamortized amounts of the reallocated unfunded vested benefits,
if any, is the sum of the employer's proportional shares (determined
under paragraph (d)(2) of this section) of the unamortized amount of
the reallocated unfunded vested benefits (determined under paragraph
(d)(1) of this section) for each plan year ending before the plan year
in which the employer withdrew from the plan.
    (1) Unamortized amount of reallocated unfunded vested benefits. The
unamortized amount of the reallocated unfunded vested benefits with
respect to a plan year is the sum of the amounts described in
paragraphs (d)(1)(i), (d)(1)(ii), and (d)(1)(iii) of this section for
the plan year, reduced by five percent of such sum for each succeeding
plan year.
    (i) Uncollectible amounts. Amounts included as reallocable under
this paragraph are those that the plan sponsor determines in that plan
year to be uncollectible for reasons arising out of cases or
proceedings under Title 11, United States Code, or similar proceedings,
with respect to an employer that withdrew after the close of the
initial plan year.
    (ii) Relief amounts. Amounts included as reallocable under this
paragraph are those that the plan sponsor determines in that plan year
will not be assessed as a result of the operation of sections 4209,
4219(c)(1)(B), or 4225 of ERISA with respect to an employer that
withdrew after the close of the initial plan year.
    (iii) Other amounts. Amounts included as reallocable under this
paragraph are those that the plan sponsor determines in that plan year
to be uncollectible or unassessable for other reasons under standards
not inconsistent with regulations prescribed by the PBGC.
    (2) Employer's proportional share. An employer's proportional share
of the amount of the reallocated unfunded vested benefits with respect
to a plan year is computed by multiplying the unamortized amount of the
reallocated unfunded vested benefits (as of the end of the year
preceding the plan year in which the employer withdraws) by the
allocation fraction described in paragraph (c)(2) of this section for
the same plan year.

Sec. 4211.33   Modified presumptive method for withdrawals after the
initial plan year.

    (a) General rule. Under this section, the amount of unfunded vested
benefits allocable to an employer that withdraws from a merged plan
after the initial plan year is the sum of the employer's proportional
share, if any, of the unamortized amount of the plan's initial plan
year unfunded vested benefits (determined under paragraph (b) of this
section) and the employer's proportional share of the unamortized
amount of the unfunded vested benefits arising after the initial plan
year (determined under paragraph (c) of this section).
    (b) Share of initial plan year unfunded vested benefits. An
employer's proportional share, if any, of the unamortized amount of the
plan's initial plan year unfunded vested benefits is the sum of the
employer's share of its prior plan's liabilities, as determined under
Sec. 4211.32(b)(1), and the employer's share of the adjusted initial
plan year unfunded vested benefits, as determined under
Sec. 4211.32(b)(2), with such sum reduced as if it were being fully
amortized in level annual installments over fifteen years beginning
with the first plan year after the initial plan year.
    (c) Share of unfunded vested benefits arising after the initial
plan year. An employer's proportional share of the amount of the plan's
unfunded vested benefits arising after the initial plan year is the
employer's proportional share (determined under paragraph (c)(2) of
this section) of the plan's unfunded vested benefits as of the end of
the plan year preceding the plan year in which the employer withdraws,
reduced by the amount of the plan's unfunded vested benefits as of the
close of the initial plan year (determined under paragraph (c)(1) of
this section).
    (1) Amount of unfunded vested benefits. The plan's unfunded vested
benefits as of the end of the plan year preceding the plan year in
which the employer withdraws shall be reduced by the sum of--
    (i) The value as of that date of all outstanding claims for
withdrawal liability that can reasonably be expected to be collected,
with respect to employers that withdrew before that plan year; and
    (ii) The sum of the amounts that would be allocable under paragraph
(b) of this section to all employers that have an obligation to
contribute in the plan year preceding the plan year in which the
employer withdraws and that also had an obligation to contribute in the
first plan year ending after the initial plan year.
    (2) Employer's proportional share. An employer's proportional share
of the amount determined under paragraph (c)(1) of this section is
computed by multiplying that amount by a fraction--
    (i) The numerator of which is the total amount required to be
contributed under the plan (or under the employer's prior plan) by the
employer for the last five full plan years ending before the date on
which the employer withdraws; and
    (ii) The denominator of which is the total amount contributed under
the plan (or under each employer's prior plan) by all employers for the
last five full plan years ending before the date on which the employer
withdraws, increased by the amount of any employer contributions owed
with respect to earlier periods that were collected in those plan
years, and decreased by any amount contributed by an employer that

[[Continued on page 34102]]