federal register - Pension Benefit Guaranty Corporation · 34002 Federal Register/Vol. 61, No. 127/Monday, July 1, 1996/Rules and Regulations PENSION BENEFIT GUARANTY CORPORATION

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Part II

Pension BenefitGuarantyCorporation29 CFR Chapters XXVI and XLReorganization, Renumbering andReinvention of Regulations; Final Rule

34002 Federal Register / Vol. 61, No. 127 / Monday, July 1, 1996 / Rules and Regulations

PENSION BENEFIT GUARANTYCORPORATION

29 CFR Chs. XXVI and XL

RIN 1212–AA75

Reorganization, Renumbering, andReinvention of Regulations

AGENCY: Pension Benefit GuarantyCorporation.ACTION: Final rule.

SUMMARY: In accordance with thePresident’s Regulatory ReinventionInitiative, the Pension Benefit GuarantyCorporation is reorganizing,renumbering, and reinventing itsregulations. The amendments willclarify and simplify the PBGC’sregulations and make them easier to use.EFFECTIVE DATE: July 1, 1996.FOR FURTHER INFORMATION CONTACT:Harold J. Ashner, Assistant GeneralCounsel, or Marc L. Jordan, Attorney,Office of the General Counsel, PensionBenefit Guaranty Corporation, 1200 KStreet, NW., Washington, DC 20005–4026, 202–326–4024 (202–326–4179 forTTY and TDD).SUPPLEMENTARY INFORMATION: The PBGCis renumbering and reorganizing itsregulations to make it easier forpractitioners and the public to researchand use the rules under Title IV of theEmployee Retirement Income SecurityAct of 1974. Under the new approach,the regulations will be numbered totrack the statutory sections theyimplement.

On July 8, 1994 (at 59 FR 35067), thePBGC published a notice in the FederalRegister inviting public comment on aproposal to reorganize and renumber itsregulations to track Title IV. Nocomments were received.

On March 4, 1995, the Presidentissued his Regulatory ReinventionInitiative, directing Federal agencies toeliminate or revise those regulationsthat are outdated or otherwise in needof reform. The PBGC is reorganizing,renumbering, and reinventing itsregulations. The reinvention is limitedto nonsubstantive corrections andclarifications and deletion of materialthat is unnecessary or that has beensubstantially superseded (or is no longerapplicable).

For example, the reinventedregulations omit existing provisionsdealing with the allocation of residualassets (part 2618, subpart C) becausethese provisions were largelysuperseded by changes in section4044(d) of ERISA made by the PensionProtection Act of 1987. Similarly, theprovision regarding interest rate

assumptions for paying lump sums(existing § 2619.26(b)(2)) has beeneliminated because of changes insection 417(e)(3) of the Internal RevenueCode and section 205(g)(3) of ERISAmade by the Retirement Equity Act of1984, the Tax Reform Act of 1986, andthe Retirement Protection Act of 1994.

To clarify the rules on missingparticipants in terminating plans,nonsubstantive language changes havebeen made in the missing participantsregulation (existing part 2629, new part4050), related sections in thetermination regulations (existing parts2616 and 2617, new part 4041), and inthe definition of ‘‘distribution date’’ innew § 4001.2.

The new regulation on premium rates(part 4006, which contains portions ofexisting part 2610) omits the variable-rate premium cap reduction rules(which have expired) and the cap rulesthemselves (repealed by the RetirementProtection Act of 1994). The rule reflectsnew provisions in the RetirementProtection Act of 1994 dealing withregulated public utility plans.

In some cases, provisions that mayhave been partially superseded bystatutory changes have been retainedpending revision—for example, theregulation on allocation of assets interminating single-employer plans(renumbered part 4044). A note at thebeginning of part 4044 and reminderswithin the part alert readers that someregulatory material republished in part4044 must be read in the light of theseother changes in the law.

The PBGC welcomes public commenton this rule to correct any editorialerrors—e.g., in cross-references—thatmay have been overlooked due to themagnitude of the revision project.

Under this final rule, the PBGC’sregulations will be moved from chapterXXVI to chapter XL of title 29 of theCFR. Sections will be numbered in the4000’s. Part 4000 consists of findingaids—tables correlating provisions ofold chapter XXVI and new chapter XL.Part 4001 contains definitions of termsused throughout the PBGC’s regulations.A table of contents showing the rest ofthe new structure, along with the fulltext of the revised regulations, is setforth below.

Rulemaking Requirements and E.O.12866

The PBGC has determined that thisaction is not a ‘‘significant regulatoryaction’’ under the criteria set forth inExecutive Order 12866.

The PBGC has determined that thenotice and comment requirements of theAdministrative Procedure Act (5 U.S.C.553(b)) do not apply to this final rule.

The PBGC previously notified thepublic of the primary changes made bythis rule and provided an opportunityfor public comment. None of theamendments in this rule (includingthose that clarify the regulations orremove or replace provisions madeobsolete by the passage of time or bysubsequent statutory or regulatorychanges) affects applicable substantivelegal requirements. Therefore, the PBGChas, for good cause, found that furthernotice and public procedure thereon areunnecessary.

For the same reasons, the PBGC findspursuant to section 553(d)(3) of theAdministrative Procedure Act (5 U.S.C.553(d)(3)) that there is good cause tomake this rule effective less than 30days from the date of its publication.

The PBGC also certifies that theamendments in this regulation will nothave a significant economic impact ona substantial number of small entities.Accordingly, as provided in section605(b) of the Regulatory Flexibility Act(5 U.S.C. 601 et seq.), sections 603 and604 of the Regulatory Flexibility Act donot apply. None of the amendments inthis rule affects applicable substantivelegal requirements.

Issued in Washington, DC, on the 24th dayof June 1996.Robert B. Reich,Chairman, Board of Directors, Pension BenefitGuaranty Corporation.

Issued on the date set forth above pursuantto a resolution of the Board of Directorsauthorizing its Chairman to issue this finalrule.James J. Keightley,Secretary, Board of Directors Pension BenefitGuaranty Corporation.

List of Subjects in 29 CFR ChaptersXXVI and XL

Parts 2601 and 4002Authority delegations (Government

agencies), Organization and functions(Government agencies).

Part 2602Conflict of interests, Government

employees, Penalties, Political activities(Government employees), Productionand disclosure of information,Testimony.

Parts 2603 and 4901Freedom of Information.

Parts 2604 and 4906Administrative practice and

procedure, Conflict of interests,Penalties.

Parts 2606 and 4003Administrative practice and

procedure, Organization and functions

34003Federal Register / Vol. 61, No. 127 / Monday, July 1, 1996 / Rules and Regulations

(Government agencies), Pensioninsurance, Pensions.

Parts 2607 and 4902

Privacy.

Parts 2608 and 4907

Blind, Civil rights, Deaf, Disabled,Discrimination against handicapped,Equal employment opportunity, Federalbuildings and facilities, Handicapped,Nondiscrimination, Physicallyhandicapped.

Parts 2609 and 4903

Administrative practice andprocedure, Claims, Organization andfunctions (Government agencies).

Part 2610 and 4007

Penalties, Pension insurance,Pensions, Reporting and recordkeepingrequirements.

Parts 2611, 2615, 2616, 2617, 2623,2642, 2674, 4022, 4041, 4041A, 4065,4211, and 4245

Pension insurance, Pensions,Reporting and recordkeepingrequirements.

Parts 2612 and 4068

Business and industry, Pensioninsurance, Pensions, Small businesses.

Parts 2613, 2618, 2619, 2620, 2621,2640, 2670, 4006, 4022, 4022B, 4044,and 4061

Pension insurance, Pensions.

Parts 2622, 2643, 4062, 4063, 4064, and4204

Business and industry, Pensioninsurance, Pensions, Reporting andrecordkeeping requirements, Smallbusinesses.

Parts 2641 and 4221

Business and industry, Pensions,Small businesses.

Parts 2644, 2645, 2647, 2649, 2676,2677, 4203, 4206, 4207, and 4220

Pensions.

Parts 2627, 2628, 2629, 2646, 2648,2672, 2675, 4001, 4010, 4050, 4208,4219, 4231, 4261, and 4281

Pensions, Reporting andrecordkeeping requirements.

Part 2673

Pension insurance.

Part 4000

Administrative practice andprocedure, Authority delegations(Government agencies), Blind, Businessand industry, Civil rights, Claims,Conflict of interests, Deaf, Disabled,

Discrimination against handicapped,Equal employment opportunity, Federalbuildings and facilities, Freedom ofInformation, Government employees,Handicapped, Nondiscrimination,Organization and functions(Government agencies), Penalties,Pension insurance, Pensions, Physicallyhandicapped, Political activities(Government employees), Privacy,Production and disclosure ofinformation, Reporting andrecordkeeping requirements, Smallbusinesses, Testimony.

Part 4001

Business and industry, Organizationand functions (Government agencies),Pension insurance, Pensions, Smallbusinesses.

Part 4903

Conflict of interests, Governmentemployees, Penalties, Political activities(Government employees).

Part 4904

Government employees, Penalties,Production and disclosure ofinformation, Testimony.

For the reasons set forth above, thePBGC is amending subtitle B of title 29of the Code of Federal Regulations asfollows:

CHAPTER XXVI—[REMOVED]1. Chapter XXVI is removed.2. Chapter XL is added to read as

follows:

CHAPTER XL—PENSION BENEFITGUARANTY CORPORATION

SUBCHAPTER A—GENERAL

Part 4000—Finding Aids

Sec.4000.1 Distribution table.4000.2 Derivation table.

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

Part 4001—Terminology

Sec.4001.1 Purpose and scope.4001.2 Definitions.4001.3 Trades or businesses under common

control; controlled groups.Authority: 29 U.S.C. 1301(a), 1301(b)(1),

1302(b)(3).

Part 4002—Bylaws of the Pension BenefitGuaranty Corporation

Sec.4002.1 Name.4002.2 Offices.4002.3 Board of Directors.4002.4 Chairman.4002.5 Quorum.4002.6 Meetings.4002.7 Place of meetings; use of conference

call communications equipment.4002.8 Alternate voting procedure.4002.9 Amendments.

Authority: 29 U.S.C. 1302(f).

Part 4003—Rules for Administrative Reviewof Agency Decisions

Subpart A—General ProvisionsSec.4003.1 Purpose and scope.4003.2 Definitions.4003.3 PBGC assistance in obtaining

information.4003.4 Extension of time.4003.5 Non-timely request for review.4003.6 Representation.4003.7 Exhaustion of administrative

remedies.4003.8 Request for confidential treatment.4003.9 Filing of documents.4003.10 Computation of time.

Subpart B—Initial Determinations4003.21 Form and contents of initial

determinations.4003.22 Effective date of determinations.

Subpart C—Reconsideration of InitialDeterminations4003.31 Who may request reconsideration.4003.32 When to request reconsideration.4003.33 Where to submit request for

reconsideration.4003.34 Form and contents of request for

reconsideration.4003.35 Final decision on request for

reconsideration.

Subpart D—Administrative Appeals4003.51 Who may appeal or participate in

appeals.4003.52 When to file.4003.53 Where to file.4003.54 Contents of appeal.4003.55 Opportunity to appear and to

present witnesses.4003.56 Consolidation of appeals.4003.57 Appeals affecting third parties.4003.58 Powers of the Appeals Board.4003.59 Decision by the Appeals Board.4003.60 Referral of appeal to the Executive

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

SUBCHAPTER B—PREMIUMS

Part 4006—Premium Rates

Sec.4006.1 Purpose and scope.4006.2 Definitions.4006.3 Premium rate.4006.4 Determination of unfunded vested

benefits.4006.5 Exemptions and special rules.

Authority: 29 U.S.C. 1302(b)(3), 1306,1307.

Part 4007—Payment of Premiums

Sec.4007.1 Purpose and scope.4007.2 Definitions.4007.3 Filing requirement and forms.4007.4 Filing address.4007.5 Date of filing.4007.6 Computation of time.4007.7 Late payment interest charges.4007.8 Late payment penalty charges.4007.9 Coverage for guaranteed basic

benefits.4007.10 Recordkeeping requirements; PBGC

audits.


4007.11 Due dates.4007.12 Liability for single-employer

premiums.Authority: 29 U.S.C. 1302(b)(3), 1306,

1307.

SUBCHAPTER C—CERTAIN REPORTINGAND DISCLOSURE REQUIREMENTS

Part 4010—Annual Financial and ActuarialInformation ReportingSec.4010.1 Purpose and scope.4010.2 Definitions.4010.3 Filing requirement.4010.4 Filers.4010.5 Information year.4010.6 Information to be filed.4010.7 Identifying information.4010.8 Plan actuarial information.4010.9 Financial information.4010.10 Due date and filing with the PBGC.4010.11 Waivers and extensions.4010.12 Confidentiality of information

submitted.4010.13 Penalties.4010.14 OMB control number.

Authority: 29 U.S.C. 1302(b)(3); 29 U.S.C.1310.

Part 4011—Disclosure to ParticipantsSec.4011.1 Purpose and scope.4011.2 Definitions.4011.3 Notice requirement.4011.4 Small plan rules.4011.5 Exemption for new and newly-

covered plans.4011.6 Mergers, consolidations, and

spinoffs.4011.7 Persons entitled to receive notice.4011.8 Time of notice.4011.9 Manner of issuance of notice.4011.10 Form of notice.4011.11 OMB control number.Appendix A to part 4011—Model participant

notice.Appendix B to part 4011—Table of maximum

guaranteed benefits.Authority: 29 U.S.C. 1302(b)(3), 1311.

SUBCHAPTER D—COVERAGE ANDBENEFITS

Part 4022—Benefits Payable in TerminatedSingle-Employer Plans

Subpart A—General Provisions; GuaranteedBenefitsSec.4022.1 Purpose and scope.4022.2 Definitions.4022.3 Guaranteed benefits.4022.4 Entitlement to a benefit.4022.5 Determination of nonforfeitable

benefits.4022.6 Annuity payable for total disability.4022.7 Benefits payable in a single

installment.

Subpart B—Limitations on GuaranteedBenefits4022.21 Limitations; in general.4022.22 Maximum guaranteeable benefit.4022.23 Computation of maximum

guaranteeable benefit.4022.24 Benefit increases.4022.25 Five-year phase-in of benefit

guarantee for participants other thansubstantial owners.

4022.26 Phase-in of benefit guarantee forparticipants who are substantial owners.

4022.27 Effect of tax disqualification.

Subpart C—Calculation and Payment ofUnfunded Nonguaranteed Benefits[Reserved]

Subpart D—Benefit Reductions inTerminating Plans4022.61 Limitations on benefit payments by

plan administrator.4022.62 Estimated guaranteed benefit.4022.63 Estimated title IV benefit.

Subpart E—PBGC Recoupment andReimbursement of Benefit Overpaymentsand Underpayments4022.81 General rules.4022.82 Method of recoupment.4022.83 PBGC reimbursement of benefit

underpayments.Appendix to Part 4022—Maximum

Guaranteeable Monthly BenefitAuthority: 29 U.S.C. 1302(b)(3), 1322,

1322b, 1341(c)(3)(D), 1344.

Part 4022B—Aggregate Limits onGuaranteed BenefitsSec.4022B.1 Aggregate payments limitation.


SUBCHAPTER E—PLAN TERMINATIONS

Part 4041—Termination of Single-EmployerPlans

Subpart A—General ProvisionsSec.4041.1 Purpose and scope.4041.2 Definitions.4041.3 Requirements for a standard or a

distress termination.4041.4 Administration of plan during

pendency of termination proceedings.4041.5 Challenges to plan termination

under collective bargaining agreement.4041.6 Annuity requirements.4041.7 Facilitating plan sufficiency in a

standard termination.4041.8 Disaster relief—distress termination.4041.9 Filing with the PBGC.4041.10 Computation of time.4041.11 Maintenance of plan records.4041.12 Information collection.

Subpart B—Standard Terminations4041.21 Notice of intent to terminate.4041.22 Issuance of notices of plan benefits.4041.23 Form and contents of notices of

plan benefits.4041.24 Standard termination notice.4041.25 PBGC action upon filing of

standard termination notice.4041.26 Notice of noncompliance.4041.27 Closeout of plan.

Subpart C—Distress Terminations4041.41 Notice of intent to terminate.4041.42 PBGC review of notice of intent to

terminate.4041.43 Distress termination notice.4041.44 PBGC determination of compliance

with requirements for distresstermination.

4041.45 PBGC determination of plansufficiency/insufficiency.

4041.46 Notices of benefit distribution.4041.47 Verification of plan sufficiency

prior to closeout.4041.48 Closeout of plan.Appendix to Part 4041—Agreement for

Commitment to Make Plan Sufficient forBenefit Liabilities

Authority: 29 U.S.C. 1302(b)(3), 1341,1344.

Part 4041A—Termination of MultiemployerPlans

Subpart A—General ProvisionsSec.4041A.1 Purpose and scope.4041A.2 Definitions.4041A.3 Submission of documents.

Subpart B—Notice of Termination4041A.11 Requirement of notice.4041A.12 Contents of notice.

Subpart C—Plan Sponsor Duties4041A.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 Plans4041A.41 General rule.4041A.42 Method of distribution.4041A.43 Benefit forms.4041A.44 Cessation of withdrawal liability.

Authority: 29 U.S.C. 1302(b)(3), 1341a,1441.

Part 4043—Reportable Events and CertainOther Notification Requirements

Subpart A—Reportable Events; In GeneralSec.4043.1 Purpose and scope.4043.2 Definitions.4043.3 Requirement of notice.4043.4 Reporting of reportable events on

annual report.4043.5 Obligation of contributing sponsor.4043.6 Date of filing.4043.7 Computation of time.4043.11 Tax disqualification.4043.12 Title I non-compliance.4043.13 Amendment decreasing benefits

payable.4043.14 Active participant reduction.4043.15 Termination or partial termination.4043.16 Failure to meet minimum funding

standards and granting of fundingwaiver.

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 ofTitle I.

4043.21 Bankruptcy, insolvency, or similarsettlements.

4043.22 Liquidation or dissolution.


4043.23 Transactions involving a change incontributing sponsor or controlled group.

Subpart B—Section 302(f); Notice of Failureto Make Required Contributions4043.31 PBGC Form 200, notice of failure to

make required contributions.Authority: 29 U.S.C. 1302(b)(3), 1343,

1365.

Part 4044—Allocation of Assets in Single-Employer Plans

Subpart A—Allocation of Assets

General ProvisionsSec.4044.1 Purpose and scope of subpart A.4044.2 Definitions.4044.3 General rule.4044.4 Violations.

Allocation of Assets to Benefit Categories4044.10 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 Assets4044.30 [Reserved.]

Subpart B—Valuation of Benefits and Assets4044.41 General valuation rules.

Trusteed Plans4044.51 Benefits to be valued.4044.52 Valuation of benefits.4044.53 Mortality assumptions—in general.4044.54 Mortality assumptions—lump

sums.

Expected Retirement Age4044.55 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 Plans4044.71 Valuation of annuity benefits.4044.72 Form of annuity to be valued.4044.73 Lump sums and other alternative

forms of distribution in lieu of annuities.4044.74 Withdrawal of employee

contributions.4044.75 Other lump sum benefits.Appendix A to Part 4044—Mortality Rate

TablesAppendix B to Part 4044—Interest Rates

Used to Value Annuities and LumpSums

Appendix C to Part 4044—LoadingAssumptions

Appendix D to Part 4044—Tables Used ToDetermine Expected Retirement Age

Authority: 29 U.S.C. 1301(a), 1302(b)(3),1341, 1344, 1362.

Part 4047—Restoration of Terminating andTerminated PlansSec.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


Part 4050—Missing ParticipantsSec.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 missingparticipant.

4050.11 Limitations.4050.12 Special rules.4050.13 OMB control number.

SUBCHAPTER F—LIABILITY

Part 4061—Amounts Payable by thePension Benefit Guaranty CorporationSec.4061.1 Cross-references.


Part 4062—Liability for Termination ofSingle-Employer PlansSec.4062.1 Purpose and scope.4062.2 Definitions.4062.3 Amount and payment of section

4062(b) liability.4062.4 Determinations of net worth and

collective net worth.4062.5 Net worth record date.4062.6 Net worth notification and

information.4062.7 Calculating interest on liability and

refunds of overpayments.4062.8 Arrangements for satisfying liability.4062.9 Notification of and demand for

liability.4062.10 Filing of documents.4062.11 Computation of time.

Part 4063—Withdrawal Liability; PlansUnder Multiple Controlled Groups

Sec.4063.1 Cross-references.


Part 4064—Liability on Termination ofSingle-Employer Plans Under MultipleControlled Groups

Sec.4064.1 Cross-references.Authority: 29 U.S.C. 1302(b)(3).

SUBCHAPTER G—ANNUAL REPORTINGREQUIREMENTS

Part 4065—Annual ReportSec.4065.1 Purpose and scope.4065.2 Definitions.4065.3 Filing requirement.

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

SUBCHAPTER H—ENFORCEMENTPROVISIONS

Part 4067—Recovery of Liability for PlanTerminations

Sec.4067.1 Cross-reference.

Authority: 29 U.S.C. 1302, 1367.

Part 4068—Lien for Liability

Sec.4068.1 Purpose; cross-references.4068.2 Definitions.4068.3 Notification of and demand for

liability.4068.4 Lien.

Authority: 29 U.S.C. 1302(b)(3), 1368.

SUBCHAPTER I—WITHDRAWALLIABILITY FOR MULTIEMPLOYER PLANS

Part 4203—Extension of Special WithdrawalLiability Rules

Sec.4203.1 Purpose and scope.4203.2 Plan adoption of special withdrawal

rules.4203.3 Requests for PBGC approval of plan

amendments.4203.4 PBGC action on requests.4203.5 OMB control number.

Authority: 29 U.S.C. 1302(b)(3), 1383(f),1388(e)(3).

Part 4204—Variances for Sale of Assets

Subpart A—GeneralSec.4204.1 Purpose and scope.4204.2 Definitions.

Subpart B—Variance of the StatutoryRequirements4204.11 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 andClass Variances or Exemptions4204.21 Requests to PBGC for variances and

exemptions.4204.22 PBGC action on requests.

Authority: 29 U.S.C. 1302(b)(3), 1384(c).

Part 4206—Adjustment of Liability for aWithdrawal Subsequent to a PartialWithdrawal

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 partialwithdrawal liability.

4206.9 Amount of credit in plans usingalternative allocation methods.


4206.10 Special rule for 70-percent declinepartial withdrawals.

Authority: 29 U.S.C. 1302(b)(3), 1386(b).

Part 4207—Reduction or Waiver ofComplete Withdrawal LiabilitySec.4207.1 Purpose and scope.4207.2 Definitions.4207.3 Abatement.4207.4 Withdrawal liability payments

during pendency of abatementdetermination.

4207.5 Requirements for abatement.4207.6 Partial withdrawals after reentry.4207.7 Liability for subsequent complete

withdrawals and related adjustments forallocating unfunded vested benefits.

4207.8 Liability for subsequent partialwithdrawals.

4207.9 Special rules.4207.10 Plan rules for abatement.

Authority: 29 U.S.C. 1302(b)(3), 1387.

Part 4208—Reduction or Waiver of PartialWithdrawal LiabilitySec.4208.1 Purpose and scope.4208.2 Definitions.4208.3 Abatement.4208.4 Conditions for abatement.4208.5 Withdrawal liability payments


4208.6 Computation of reduced annualpartial withdrawal liability payment.

4208.7 Adjustment of withdrawal liabilityfor subsequent withdrawals.

4208.8 Multiple partial withdrawals in oneplan year.

4208.9 Plan adoption of additionalabatement conditions.

Authority: 29 U.S.C. 1302(b)(3), 1388 (c)and (e).

Part 4211—Allocating Unfunded VestedBenefits

Subpart A—GeneralSec.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 PBGCApproval4211.11 Changes not subject to PBGC

approval.4211.12 Modifications to the presumptive,

modified presumptive and rolling-5methods.

4211.13 Modifications to the directattribution method.

Subpart C—Changes Subject to PBGCApproval4211.21 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 MergedMultiemployer Plans4211.31 Allocation of unfunded vested

benefits following the merger of plans.

4211.32 Presumptive method forwithdrawals after the initial plan year.

4211.33 Modified presumptive method forwithdrawals after the initial plan year.

4211.34 Rolling-5 method for withdrawalsafter the initial plan year.

4211.35 Direct attribution method forwithdrawals after the initial plan year.

4211.36 Modifications to the determinationof initial liabilities, the amortization ofinitial liabilities, and the allocationfraction.

4211.37 Allocating unfunded vestedbenefits for withdrawals before the endof the initial plan year.

Authority: 29 U.S.C. 1302(b)(3), 1391(c)(1), (c)(2)(D), (c)(5)(A), (c)(5)(B), (c)(5) (D),and (f).

Part 4219—Notice, Collection, andRedetermination of Withdrawal Liability


Subpart B—Redetermination of WithdrawalLiability Upon Mass Withdrawal4219.11 Withdrawal liability upon mass

withdrawal.4219.12 Employers liable upon mass

withdrawal.4219.13 Amount of liability for de minimis

amounts.4219.14 Amount of liability for 20-year-

limitation amounts.4219.15 Determination of reallocation

liability.4219.16 Imposition of liability.4219.17 Filings with PBGC.4219.18 Withdrawal in a plan year in which

substantially all employers withdraw.4219.19 Information collection.

Subpart C—Overdue, Defaulted, andOverpaid Withdrawal LiabilitySec.4219.31 Overdue and defaulted withdrawal

liability; overpayment.4219.32 Interest on overdue, defaulted and

overpaid withdrawal liability.4219.34 Plan rules concerning overdue and

defaulted withdrawal liability.Authority: 29 U.S.C. 1302(b)(3), 1389 (c)

and (d), 1399 (c)(1)(D) and (c)(6).

Part 4220—Procedures for PBGC Approvalof Plan AmendmentsSec.4220.1 Purpose and scope.4220.2 Requests for PBGC approval.4220.3 PBGC action on requests.

Authority: 29 U.S.C. 1302(b)(3), 1400.

Part 4221—Arbitration of Disputes inMultiemployer Plans

Sec.4221.1 Purpose and scope.4221.2 Definitions.4221.3 Initiation of arbitration.4221.4 Appointment of the arbitrator.4221.5 Powers and duties of the arbitrator.4221.6 Hearing.4221.7 Reopening of proceedings.4221.8 Award.4221.9 Reconsideration of award.

4221.10 Costs.4221.11 Waiver of rules.4221.12 Calculation of periods of time.4221.13 Filing or service of documents.4221.14 PBGC-approved arbitration

procedures.Authority: 29 U.S.C. 1302(b)(3), 1401.

SUBCHAPTER J—INSOLVENCY,REORGANIZATION, TERMINATION, ANDOTHER RULES APPLICABLE TOMULTIEMPLOYER PLANS

Part 4231—Mergers and Transfers BetweenMultiemployer Plans

Sec.4231.1 Purpose and scope.4231.2 Definitions.4231.3 Requirements for mergers and

transfers.4231.4 Preservation of accrued benefits.4231.5 Valuation requirement.4231.6 Plan solvency tests.4231.7 De minimis mergers and transfers.4231.8 Notice of merger or transfer.4231.9 Request for compliance

determination.4231.10 Actuarial calculations and

assumptions.Authority: 29 U.S.C. 1302(b)(3), 1411.

Part 4245—Notice of Insolvency

Sec.4245.1 Purpose and scope.4245.2 Definitions.4245.3 Notice of insolvency.4245.4 Contents of notice of insolvency.4245.5 Notice of insolvency benefit level.4245.6 Contents of notice of insolvency

benefit level.4245.7 PBGC address.

Authority: 29 U.S.C. 1302(b)(3), 1426(e).

Part 4261—Financial Assistance toMultiemployer Plans

Sec.4261.1 Cross-reference.


Part 4281—Duties of Plan SponsorFollowing Mass Withdrawal

Subpart A—General

Sec.4281.1 Purpose and scope.4281.2 Definitions.4281.3 Submission of documents.4281.4 Collection of information.

Subpart B—Valuation of Plan Benefits andPlan Assets

4281.11 Valuation dates.4281.12 Benefits to be valued.4281.13 Benefit valuation methods—in

general.4281.14 Mortality assumptions—in general.4281.15 Mortality assumptions—lump

sums under trusteed plans.4281.16 Benefit valuation methods—plans

closing out.4281.17 Asset valuation methods—in

general.4281.18 Outstanding claims for withdrawal

liability.


Subpart C—Benefit Reductions4281.31 Plan amendment.4281.32 Notices of benefit reductions.4281.33 Restoration of benefits.

Subpart D—Benefit Suspensions4281.41 Benefit suspensions.4281.42 Retroactive payments.4281.43 Notices of insolvency and annual

updates.4281.44 Contents of notices of insolvency

and annual updates.4281.45 Notices of insolvency benefit level.4281.46 Contents of notices of insolvency

benefit level.4281.47 Application for financial

assistance.Appendix A to Part 4281—Interest Rates

Used to Value Lump Sums andAnnuities

Appendix B to Part 4281—LoadingAssumptions

Authority: 29 U.S.C. 1302(b)(3), 1341a,1399(c)(1)(D), and 1441.

SUBCHAPTER K—INTERNAL ANDADMINISTRATIVE RULES ANDPROCEDURES

Part 4901—Examination and Copying ofPension Benefit Guaranty CorporationRecords

Subpart A—GeneralSec.4901.1 Purpose and scope.4901.2 Definitions.4901.3 Disclosure facilities.4901.4 Information maintained in public

reference room.4901.5 Disclosure of other information.

Subpart B—Procedure for Formal Requests4901.11 Submittal of requests for access to

records.4901.12 Description of information

requested.4901.13 Receipt by agency of request.4901.14 Action on request.4901.15 Appeals from denial of requests.4901.16 Extensions of time.4901.17 Exhaustion of administrative

remedies.

Subpart C—Restrictions on Disclosure4901.21 Restrictions in general.4901.22 Partial disclosure.4901.23 Records of concern to more than

one agency.

4901.24 Special rules for trade secrets andconfidential commercial or financialinformation submitted to the PBGC.

Subpart D—Fees4901.31 Charges for services.4901.32 Fee schedule.4901.33 Payment of fees.4901.34 Waiver or reduction of charges.

Authority: 5 U.S.C. 552; 29 U.S.C.1302(b)(3); E.O. 12600, 52 FR 23781.

Part 4902—Disclosure and Amendment ofRecords Under the Privacy ActSec.4902.1 Purpose and scope.4902.2 Definitions.4902.3 Procedures for determining

existence of and requesting access torecords.

4902.4 Disclosure of record to anindividual.

4902.5 Procedures for requestingamendment of a record.

4902.6 Action on request for amendment ofa record.

4902.7 Appeal of a denial of a request foramendment of a record.

4902.8 Fees.4902.9 Specific exemptions.

Authority: 5 U.S.C. 552a; 29 U.S.C.1302(b)(3).

Part 4903—Debt Collection

Subpart A—GeneralSec.4903.1 Purpose and scope.4903.2 General.4903.3 Definitions.

Subpart B—Administrative Offset4903.21 Application of Federal Claims

Collection Standards.4903.22 Administrative offset procedures.4903.23 PBGC requests for offset to other

agencies.4903.24 Requests for offset from other

agencies.

Subpart C—Tax Refund Offset4903.31 Eligibility of debt for tax refund

offset.4903.32 Tax refund offset procedures.4903.33 Referral of debt for tax refund

offset.

Subpart D—Salary Offset [Reserved]Authority: 29 U.S.C. 1302(b); 31 U.S.C.

3701, 3711(f), 3720A; 4 CFR part 102; 26 CFR301.6402–6.

Part 4904—Ethical Conduct of Employees

Sec.4904.1 Ethical conduct; standards and

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

Part 4905—Appearances in CertainProceedings

Sec.4905.1 Purpose and scope.4905.2 Definitions.4905.3 General.4905.4 Appearances by PBGC employees.4905.5 Requests for authenticated copies of

PBGC records.4905.6 Penalty.

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

Part 4906—[Reserved]

Part 4907—Enforcement ofNondiscrimination on the Basis of Handicapin Programs or Activities Conducted by thePension Benefit Guaranty Corporation

Sec.4907.101 Purpose.4907.102 Application.4907.103 Definitions.4907.110 Self-evaluation.4907.111 Notice.4907.130 General prohibitions against

discrimination.4907.140 Employment.4907.149 Program accessibility:

Discrimination prohibited.4907.150 Program accessibility: Existing

facilities.4907.151 Program accessibility: New

construction and alterations.4907.160 Communications.4907.170 Compliance procedures.

Authority: 29 U.S.C. 794, 1302(b)(3).

PART 4000—FINDING AIDS

Sec.4000.1 Distribution table.4000.2 Derivation table.Authority: 29 U.S.C. 1302(b)(3).

§ 4000.1 Distribution table.

The following table shows where inchapter XL of 29 CFR to find regulationspreviously codified in chapter XXVI.

Ch. XXVI PartSubpart(s)/Section(s)

Ch. XL Part(s)/Subpart(s)Subpart(s)/Section(s)

Subchapter A—Internal and Administrative Rules

2601 .......................................................................................................... 40022602:

Subpart A ........................................................................................... 4904Subpart B ........................................................................................... 4905

2603 .......................................................................................................... 49012604 .......................................................................................................... Repealed2606 .......................................................................................................... 40032607 .......................................................................................................... 49022608 .......................................................................................................... 49072609 .......................................................................................................... 4903


Ch. XXVI PartSubpart(s)/Section(s)

Ch. XL Part(s)/Subpart(s)Subpart(s)/Section(s)

Subchapter B—Rules Applicable to Single-Employer and Multiemployer Plans

2610 .......................................................................................................... 4006 & 4007§§ 2610.1, 2610.21, 2610.31 ............................................................. §§ 4006.1 & 4007.1§§ 2610.2 ........................................................................................... §§ 4006.2 & 4007.2§§ 2610.3–2610.9 & 2610.11 ............................................................ 4007§ 2610.10 ........................................................................................... 4006.5(e)§§ 2610.22–2610.24 & 2610.33 ........................................................ 4006§§ 2610.25, 2610.26 & 2610.34 ........................................................ 4007

2611 .......................................................................................................... 40652612 .......................................................................................................... 4001, Subpart B2613 .......................................................................................................... 4022, Subpart A

Subchapter C—Single-Employer Plans

2615 .......................................................................................................... 40432616 .......................................................................................................... 4041

Subpart A ........................................................................................... Subpart ASubpart B ........................................................................................... Subpart C

2617 .......................................................................................................... 4041Subpart A ........................................................................................... Subpart ASubpart B ........................................................................................... Subpart B

2618 .......................................................................................................... 4044, Subpart A2619 .......................................................................................................... 4044, Subpart B2620 .......................................................................................................... 4044, Subpart B2621 (except § 2621.23(b)) ....................................................................... 4022, Subpart B2621.23(b) ................................................................................................. 4022B2622 (except 2622.9) ................................................................................ 4062

§ 2622.9 ............................................................................................. 40682623 .......................................................................................................... 4022, Subparts D & E2625 .......................................................................................................... 40472627 .......................................................................................................... 40112628 .......................................................................................................... 40102629 .......................................................................................................... 4050

Subchapter F—Withdrawal Liability in Multiemployer Plans

2640:§ 2640.2 ............................................................................................. § 4001.2§ 2640.3 ............................................................................................. § 4221.2§ 2640.4 ............................................................................................. § 4211.2§ 2640.5 ............................................................................................. § 4204.2§ 2640.6 ............................................................................................. § 4207.2, 4208.2§ 2640.7 ............................................................................................. § 4219.2§ 2640.8 ............................................................................................. § 4206.2

2641 .......................................................................................................... 42212642 .......................................................................................................... 42112643 .......................................................................................................... 42042644 .......................................................................................................... 4219, Subpart C2645 .......................................................................................................... 42032646 .......................................................................................................... 42082647 .......................................................................................................... 42072648 .......................................................................................................... 4219, Subpart B2649 .......................................................................................................... 4206

Subchapter H—Other Rules Applicable to Multiemployer Plans

2670:§ 2670.2 ............................................................................................. § 4001.2§ 2670.3 ............................................................................................. § 4231.2§ 2670.4 ............................................................................................. §§ 4041A.2, 4245.2, & 4281.2

2672 .......................................................................................................... 42312673 .......................................................................................................... 4041A, Subpart B, & 4041A.3(a)2674 .......................................................................................................... 42452675 .......................................................................................................... 4041A, Subparts C & D, & 4281, Subparts C & D2676 .......................................................................................................... 4281, Subpart B2677 .......................................................................................................... 4220

§ 4000.2 Derivation table.

The following table shows where in previous chapter XXVI of 29 CFR to find regulations now codified in chapterXL.


Ch. XL PartSubpart/Section(s)

Ch. XXVI Part(s)Subpart/Section(s)

Subchapter A—General

4000 .......................................................................................................... [tables]4001:

Subpart A ........................................................................................... [various statutory and regulatory definitions]Subpart B ........................................................................................... 2612

4002 .......................................................................................................... 26014003 .......................................................................................................... 2606

Subchapter B—Premiums

4006 .......................................................................................................... 26104007 .......................................................................................................... 2610

Subchapter C—Certain Reporting and Disclosure Requirements

4010 .......................................................................................................... 26284011 .......................................................................................................... 2627

Subchapter D—Coverage and Benefits

4022:Subpart A ........................................................................................... 2613Subpart B ........................................................................................... 2621 (except § 2621.23(b))Subparts D & E ................................................................................. 2623

4022B ........................................................................................................ § 2621.23(b)

Subchapter E—Plan Terminations

4041:Subpart A ........................................................................................... §§ 2616 & 2617, Subparts ASubpart B ........................................................................................... 2617, Subpart BSubpart C .......................................................................................... 2616, Subpart B

4041A:Subpart A ........................................................................................... §§ 2670.4, 2673.1, 2673.4, 2675.1 & 2675.2Subpart B ........................................................................................... §§ 2673.2 & .3Subparts C & D ................................................................................. 2675, Subparts B & E

4043 .......................................................................................................... 26154044 .......................................................................................................... 2618, 2619 & 26204047 .......................................................................................................... 26254050 .......................................................................................................... 2629

Subchapter F—Liability

4061 .......................................................................................................... [cross-references]4062 .......................................................................................................... 2622 (except § 2622.9)4063 .......................................................................................................... [cross-references]4064 .......................................................................................................... [cross-references]

Subchapter G—Annual Reporting Requirements

4065 .......................................................................................................... 2611

Subchapter H—Enforcement Provisions

4067 .......................................................................................................... [cross-reference]4068 .......................................................................................................... 2622.9

Subchapter I—Withdrawal Liability in Multiemployer Plans

4203 .......................................................................................................... 26454204 .......................................................................................................... 2643 & § 2640.54206 .......................................................................................................... 2649 & § 2640.84207 .......................................................................................................... 2647 & 2640.64208 .......................................................................................................... 2646 & 2640.64211 .......................................................................................................... 2642 & 2640.44219:

Subpart A ........................................................................................... § 2640.7Subpart B ........................................................................................... 2648Subpart C .......................................................................................... 2644

4220 .......................................................................................................... 26774221 .......................................................................................................... 2641 & § 2640.3

Subchapter J—Insolvency, Reorganization, Termination, and Other Rules Applicable to Multiemployer Plans

4231 .......................................................................................................... 2672 & § 2670.3


Ch. XL PartSubpart/Section(s)

Ch. XXVI Part(s)Subpart/Section(s)

4245 .......................................................................................................... 2674 & 2670.44261 .......................................................................................................... [cross-reference]4281:

Subpart A ........................................................................................... 2675, Subpart A, & 2670.4Subpart B ........................................................................................... 2676Subpart C .......................................................................................... 2675, Subpart CSubpart D .......................................................................................... 2675, Subpart D

Subchapter K—Internal Administrative Rules and Procedures

4901 .......................................................................................................... 26034902 .......................................................................................................... 26074903 .......................................................................................................... 26094904 .......................................................................................................... 2602, Subpart A4905 .......................................................................................................... 2602, Subpart B4907 .......................................................................................................... 2608

PART 4001—TERMINOLOGY

Sec.4001.1 Purpose and scope.4001.2 Definitions.4001.3 Trades or businesses under common control; controlled groups.

Authority: 29 U.S.C. 1301, 1302(b)(3).

§ 4001.1 Purpose and scope.

This part contains definitions ofcertain terms used in this chapter andthe regulations under which the PBGCmakes various controlled groupdeterminations.

§ 4001.2 Definitions.

For purposes of this chapter (unlessotherwise indicated or required by thecontext):

Affected party means, with respect toa plan—

(1) Each participant in the plan;(2) Each beneficiary of a deceased

participant;(3) Each alternate payee under an

applicable qualified domestic relationsorder, as defined in section 206(d)(3) ofERISA;

(4) Each employee organization thatcurrently represents any group ofparticipants;

(5) For any group of participants notcurrently represented by an employeeorganization, the employeeorganization, if any, that lastrepresented such group of participantswithin the 5-year period precedingissuance of the notice of intent toterminate; and

(6) the PBGC. If an affected party hasdesignated, in writing, a person toreceive a notice on behalf of the affectedparty, any reference to the affected party(in connection with the notice) shall beconstrued to refer to such person.

Annuity means a series of periodicpayments to a participant or survivingbeneficiary for a fixed or contingentperiod.

Basic-type benefit means a benefit thatis guaranteed under the provisions ofpart 4022, subpart A, of this chapter, orwould be guaranteed if the guaranteelimits in part 4022, subpart B, of thischapter did not apply.

Benefit liabilities means the benefitsof participants and their beneficiariesunder the plan (within the meaning ofsection 401(a)(2) of the Code).

Code means the Internal RevenueCode of 1986, as amended.

Complete withdrawal means acomplete withdrawal as described insection 4203 of ERISA.

Contributing sponsor means a personwho is a contributing sponsor as definedin section 4001(a)(13) of ERISA.

Controlled group means, inconnection with any person, a groupconsisting of such person and all otherpersons under common control withsuch person, determined under section4001.3 of this part. For purposes ofdetermining the persons liable forcontributions under section412(c)(11)(B) of the Code or section302(c)(11)(B) of ERISA, or for premiumsunder section 4007(e)(2) of ERISA, acontrolled group also includes anygroup treated as a single employerunder section 414 (m) or (o) of the Code.

Corporation means the PensionBenefit Guaranty Corporation, exceptwhere the context demonstrates that adifferent meaning is intended.

Defined benefit plan means a plandescribed in section 3(35) of ERISA.

Distress termination means thevoluntary termination of a single-employer plan in accordance with

section 4041(c) of ERISA and part 4041,subpart C, of this chapter.

Distribution date means:(1) Except as provided in paragraph

(2)—(i) For benefits provided through the

purchase of irrevocable commitments,the date on which the obligation toprovide the benefits passes from theplan to the insurer; and

(ii) For benefits provided other thanthrough the purchase of irrevocablecommitments, the date on which thebenefits are delivered to the participantor beneficiary (or to another plan orbenefit arrangement or other recipientauthorized by the participant orbeneficiary in accordance withapplicable law and regulations)personally or by deposit with a mail orcourier service (as evidenced by apostmark or written receipt); or

(2) Other than for purposes ofdetermining the interest rate to be usedin calculating the value of a benefit tobe paid as a lump sum to a late-discovered participant, the deemeddistribution date (as defined in § 4050.2)in the case of a designated benefit paidto the PBGC, a benefit provided after thedeemed distribution date to a late-discovered participant, or an irrevocablecommitment purchased from an insurerafter the deemed distribution date for arecently-missing participant inaccordance with part 4050 of thischapter (dealing with missingparticipants).

Employer means all trades orbusinesses (whether or notincorporated) that are under common


control, within the meaning of § 4001.3of this chapter.

ERISA means the EmployeeRetirement Income Security Act of 1974,as amended.

Fair market value means the price atwhich property would change handsbetween a willing buyer and a willingseller, neither being under anycompulsion to buy or sell and bothhaving reasonable knowledge ofrelevant facts.

FOIA means the Freedom ofInformation Act, as amended (5 U.S.C.552).

Funding standard account means anaccount established and maintainedunder section 302(b) of ERISA or section412(b) of the Code.

Guaranteed benefit means a benefitunder a single-employer plan that isguaranteed by the PBGC under section4022(a) of ERISA and part 4022 of thischapter, or a benefit under amultiemployer plan that is guaranteedby the PBGC under section 4022A ofERISA.

Insurer means a company authorizedto do business as an insurance carrierunder the laws of a State or the Districtof Columbia.

Irrevocable commitment means anobligation by an insurer to pay benefitsto a named participant or survivingbeneficiary, if the obligation cannot becancelled under the terms of theinsurance contract (except for fraud ormistake) without the consent of theparticipant or beneficiary and is legallyenforceable by the participant orbeneficiary.

IRS means the Internal RevenueService.

Mandatory employee contributionsmeans amounts contributed to the planby a participant that are required as acondition of employment, as a conditionof participation in such plan, or as acondition of obtaining benefits underthe plan attributable to employercontributions.

Mass withdrawal means thewithdrawal of every employer from theplan, or the withdrawal of substantiallyall employers pursuant to an agreementor arrangement to withdraw.

Multiemployer Act means theMultiemployer Pension PlanAmendments Act of 1980.

Multiemployer plan means a plan thatis described in section 4001(a)(3) ofERISA and that is covered by title IV ofERISA.

Multiple employer plan means asingle-employer plan maintained by twoor more contributing sponsors that arenot members of the same controlledgroup, under which all plan assets are

available to pay benefits to all planparticipants and beneficiaries.

Nonbasic-type benefit means anybenefit provided by a plan other than abasic-type benefit.

Nonforfeitable benefit means a benefitdescribed in section 4001(a)(8) ofERISA. Benefits that becomenonforfeitable solely as a result of thetermination of a plan will be consideredforfeitable.

Normal retirement age means the agespecified in the plan as the normalretirement age. This age shall not exceedthe later of age 65 or the age attainedafter 5 years of participation in the plan.If no normal retirement age is specifiedin the plan, it is age 65.

Notice of intent to terminate meansthe notice of a proposed termination ofa single-employer plan, as required bysection 4041(a)(2) of ERISA and§ 4041.21 (in a standard termination) or§ 4041.41 (in a distress termination) ofthis chapter.

PBGC means the Pension BenefitGuaranty Corporation.

Person means a person defined insection 3(9) of ERISA.

Plan means a defined benefit planwithin the meaning of section 3(35) ofERISA that is covered by title IV ofERISA.

Plan administrator means anadministrator, as defined in section3(16)(A) of ERISA.

Plan sponsor means, with respect to amultiemployer plan, the persondescribed in section 4001(a)(10) ofERISA.

Plan year means the calendar, policy,or fiscal year on which the records ofthe plan are kept.

Proposed termination date means thedate specified as such by the planadministrator of a single-employer planin a notice of intent to terminate or, iflater, in the standard or distresstermination notice, in accordance withsection 4041 of ERISA and part 4041 ofthis chapter.

Single-employer plan means anydefined benefit plan (as defined insection 3(35) of ERISA) that is not amultiemployer plan (as defined insection 4001(a)(3) of ERISA) and that iscovered by title IV of ERISA.

Standard termination means thevoluntary termination, in accordancewith section 4041(b) of ERISA and part4041, subpart B, of this chapter, of asingle-employer plan that is able toprovide for all of its benefit liabilitieswhen plan assets are distributed.

Substantial owner means a substantialowner as defined in section4022(b)(5)(A) of ERISA.

Sufficient for benefit liabilities meansthat there is no amount of unfunded

benefit liabilities, as defined in section4001(a)(18) of ERISA.

Sufficient for guaranteed benefitsmeans that there is no amount ofunfunded guaranteed benefits, asdefined in section 4001(a)(17) of ERISA.

Termination date means the dateestablished pursuant to section 4048(a)of ERISA.

Title IV benefit means the guaranteedbenefit plus any additional benefits towhich plan assets are allocated pursuantto section 4044 of ERISA and part 4044of this chapter.

Voluntary employee contributionsmeans amounts contributed by anemployee to a plan, pursuant to theprovisions of the plan, that are notmandatory employee contributions.

§ 4001.3 Trades or businesses undercommon control; controlled groups.

For purposes of title IV of ERISA:(a)(1) The PBGC will determine that

trades and businesses (whether or notincorporated) are under commoncontrol if they are ‘‘two or more tradesor businesses under common control’’,as defined in regulations prescribedunder section 414(c) of the Code.

(2) The PBGC will determine that allemployees of trades or businesses(whether or not incorporated) which areunder common control shall be treatedas employed by a single employer, andall such trades and businesses shall betreated as a single employer.

(3) An individual who owns the entireinterest in an unincorporated trade orbusiness is treated as his own employer,and a partnership is treated as theemployer of each partner who is anemployee within the meaning of section401(c)(1) of the Code.

(b) In the case of a single-employerplan:

(1) In connection with any person, acontrolled group consists of that personand all other persons under commoncontrol with such person.

(2) Persons are under common controlif they are members of a ‘‘controlledgroup of corporations’’, as defined inregulations prescribed under section414(b) of the Code, or if they are ‘‘twoor more trades or businesses undercommon control’’, as defined inregulations prescribed under section414(c) of the Code.

PART 4002—BYLAWS OF THEPENSION BENEFIT GUARANTYCORPORATION

Sec.4002.1 Name.4002.2 Offices.4002.3 Board of Directors.4002.4 Chairman.4002.5 Quorum.


4002.6 Meetings.4002.7 Place of meetings; use of conference

call communications equipment.4002.8 Alternate voting procedure.4002.9 Amendments.

Authority: 29 U.S.C. 1302(f).

§ 4002.1 Name.The name of the Corporation is the

Pension Benefit Guaranty Corporation.

§ 4002.2 Offices.The principal office of the

Corporation shall be in the Metropolitanarea of the City of Washington, Districtof Columbia. The Corporation may haveadditional offices at such other places asthe Board of Directors may deemnecessary or desirable to the conduct ofits business.

§ 4002.3 Board of Directors.(a) The Board of Directors shall

establish the policies of the Corporationand shall perform the other functionsassigned to the Board of Directors intitle IV of the Employee RetirementIncome Security Act of 1974. The Boardof Directors of the Corporation shall becomposed of the Secretary of Labor, theSecretary of the Treasury, and theSecretary of Commerce. Members of theBoard shall serve withoutcompensation, but shall be reimbursedby the Corporation for travel,subsistence, and other necessaryexpenses incurred in the performance oftheir duties as members of the Board. Aperson at the time of a meeting of theBoard of Directors who is serving asSecretary of Labor, Secretary of theTreasury or Secretary of Commerce inan acting capacity, shall serve as amember of the Board of Directors withthe same authority and effect as thedesignated Secretary.

(b) The following powers areexpressly reserved to the Board ofDirectors and shall not be delegated:

(1) Approval of all final substantiveregulations prior to publication in theFederal Register, except foramendments to the regulations onAllocation of Assets in Single-employerPlans and Duties of Plan SponsorFollowing Mass Withdrawal (parts 4044and 4281 of this chapter) establishingnew interest rates and factors, whichmay be approved by the ExecutiveDirector of the PBGC.

(2) Approval of all reports orrecommendations to the Congress thatare required by statute;

(3) Establishment from time to time ofthe Corporation’s budget and debtceiling up to the statutory limit;

(4) Determination from time to time oflimits on advances to the revolvingfunds administered by the Corporationpursuant to section 4005(a) of ERISA;

(5) Final decision on any policymatter that would materially affect therights of a substantial number ofemployers or covered participants andbeneficiaries.

(c) Final non-substantive regulationsand all proposed regulations shall beapproved by the Executive Directorprior to publication in the FederalRegister; provided that all proposedsubstantive regulations shall first becirculated for review to the Board ofDirectors or their designees, and maythereafter be issued by the ExecutiveDirector after responding to anycomments made within 21 days aftercirculation of the proposed regulation,or, if no comments are received, afterexpiration of the 21-day period.

§ 4002.4 Chairman.The Secretary of Labor shall be the

Chairman of the Board of Directors andhe shall be the administrator of theCorporation with responsibility for itsmanagement, including overallsupervision of the Corporation’spersonnel, organization, and budgetpractices, and shall exercise suchincidental powers as may be necessaryto carry out his administrativeresponsibilities. The Chairman maydelegate his administrativeresponsibilities.

§ 4002.5 Quorum.A majority of the Directors shall

constitute a quorum for the transactionof business. Any act of a majority of theDirectors present at any meeting atwhich there is a quorum shall be the actof the Board, except as may otherwisebe provided in these bylaws.

§ 4002.6 Meetings.Regular meetings of the Board of

Directors shall be held at such times asthe Chairman shall select. Specialmeetings of the Board of Directors shallbe called by the Chairman on therequest of any other Director.Reasonable notice of any meetings shallbe given to each Director. The GeneralCounsel of the Corporation shall serveas Secretary to the Board of Directorsand keep its minutes. As soon aspracticable after each meeting, a draft ofthe minutes of such meeting shall bedistributed to each member of the Boardfor correction or approval.

§ 4002.7 Place of meetings; use ofconference call communicationsequipment.

Meetings of the Board of Directorsshall be held at the principal office ofthe Corporation unless otherwisedetermined by the Board of Directors orthe Chairman. Any Director mayparticipate in a meeting of the Board of

Directors through the use of conferencecall telephone or similarcommunications equipment, by meansof which all persons participating in themeeting can simultaneously speak toand hear each other. Any Director soparticipating in a meeting shall bedeemed present for all purposes.Actions taken by the Board of Directorsat meetings conducted through the useof such equipment, including the votesof each member, shall be recorded in theusual manner in the minutes of themeetings of the Board of Directors. Aresolution of the Board of Directorssigned by each of its three membersshall have the same force and effect asif agreed at a duly called meeting andshall be recorded in the minutes of theBoard of Directors.

§ 4002.8 Alternate voting procedure.

(a) A Director shall be deemed to haveparticipated in a meeting of the Boardof Directors for all purposes if,

(1) That Director was represented atthat meeting by an individual who wasdesignated to act on his behalf, and

(2) That Director ratified in writingthe actions taken by his designee at thatmeeting within a reasonable period oftime after such meeting.

(b) For purposes of this section, aDirector, including an individualserving as Acting Secretary, shalldesignate a representative at a level notbelow that of Assistant Secretary withinhis Department. Such designation shallbe in writing and shall be effective untilwithdrawn or until a date specifiedtherein.

(c) For purposes of this section, aDirector’s approval of the minutes of ameeting of the Board of Directors shallconstitute ratification of the actions ofhis designee at such meeting.

§ 4002.9 Amendments.

These bylaws may be amended ornew bylaws adopted by unanimous voteof the Board.

PART 4003—RULES FORADMINISTRATIVE REVIEW OFAGENCY DECISIONS

Subpart A—General Provisions

Sec.4003.1 Purpose and scope.4003.2 Definitions.4003.3 PBGC assistance in obtaining

information.4003.4 Extension of time.4003.5 Non-timely request for review.4003.6 Representation.4003.7 Exhaustion of administrative

remedies.4003.8 Request for confidential treatment.4003.9 Filing of documents.4003.10 Computation of time.


Subpart B—Initial Determinations

4003.21 Form and contents of initialdeterminations.

4003.22 Effective date of determinations.

Subpart C—Reconsideration of InitialDeterminations

4003.31 Who may request reconsideration.4003.32 When to request reconsideration.4003.33 Where to submit request for

reconsideration.4003.34 Form and contents of request for

reconsideration.4003.35 Final decision on request for

reconsideration.

Subpart D—Administrative Appeals

4003.51 Who may appeal or participate inappeals.

4003.52 When to file.4003.53 Where to file.4003.54 Contents of appeal.4003.55 Opportunity to appear and to

present witnesses.4003.56 Consolidation of appeals.4003.57 Appeals affecting third parties.4003.58 Powers of the Appeals Board.4003.59 Decision by the Appeals Board.4003.60 Referral of appeal to the Executive

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


§ 4003.1 Purpose and scope.(a) Purpose. This part sets forth the

rules governing the issuance of allinitial determinations by the PBGC oncases pending before it involving thematters set forth in paragraph (b) of thissection and the procedures forrequesting and obtaining administrativereview by the PBGC of thosedeterminations. Subpart A containsgeneral provisions. Subpart B sets forthrules governing the issuance of allinitial determinations of the PBGC onmatters covered by this part. Subpart Cestablishes procedures governing thereconsideration by the PBGC of initialdeterminations relating to the mattersset forth in paragraphs (b)(1) through(b)(4). Subpart D establishes proceduresgoverning administrative appeals frominitial determinations relating to thematters set forth in paragraphs (b)(5)through (b)(10).

(b) Scope. This part applies to thefollowing determinations made by thePBGC in cases pending before it and tothe review of those determinations:

(1) Determinations that a plan iscovered under section 4021 of ERISA;

(2) Determinations with respect topremiums, interest and late paymentpenalties pursuant to section 4007 ofERISA;

(3) Determinations with respect tovoluntary terminations under section4041 of ERISA, including—

(i) A determination that a noticerequirement or a certification

requirement under section 4041 ofERISA has not been met,

(ii) A determination that therequirements for demonstrating distressunder section 4041(c)(2)(B) of ERISAhave not been met, and

(iii) A determination with respect tothe sufficiency of plan assets for benefitliabilities or for guaranteed benefits;

(4) Determinations with respect toallocation of assets under section 4044of ERISA, including distribution ofexcess assets under section 4044(d);

(5) Determinations that a plan is notcovered under section 4021 of ERISA;

(6) Determinations under section 4022(a) or (c) or section 4022A(a) of ERISAwith respect to benefit entitlement ofparticipants and beneficiaries undercovered plans and determinations that adomestic relations order is or is not aqualified domestic relations order undersection 206(d)(3) of ERISA and section414(p) of the Code;

(7) Determinations under section 4022(b) or (c), section 4022A (b) through (e),or section 4022B of ERISA of theamount of benefits payable toparticipants and beneficiaries undercovered plans;

(8) Determinations of the amount ofmoney subject to recapture pursuant tosection 4045 of ERISA;

(9) Determinations of the amount ofliability under section 4062(b)(1),section 4063, or section 4064 of ERISA;

(10) Determinations—(i) That the amount of a participant’s

or beneficiary’s benefit under section4050(a)(3) of ERISA has been correctlycomputed based on the designatedbenefit paid to the PBGC under section4050(b)(2) of ERISA, or

(ii) That the designated benefit iscorrect, but only to the extent that thebenefit to be paid does not exceed theparticipant’s or beneficiary’s guaranteedbenefit.

(c) Matters not covered by this part.Nothing in this part limits—

(1) The authority of the PBGC toreview, either upon request or on itsown initiative, a determination to whichthis part does not apply when, in itsdiscretion, the PBGC determines that itwould be appropriate to do so, or

(2) The procedure that the PBGC mayutilize in reviewing any determinationto which this part does not apply.

§ 4003.2 Definitions.The following terms are defined in

§ 4001.2 of this chapter: Code,contributing sponsor, controlled group,ERISA, multiemployer plan, PBGC,person, plan administrator, and single-employer plan.

In addition, for purposes of this part:Aggrieved person means any

participant, beneficiary, plan

administrator, contributing sponsor of asingle-employer plan or member of sucha contributing sponsor’s controlledgroup, plan sponsor of a multiemployerplan, or employer that is adverselyaffected by an initial determination ofthe PBGC with respect to a pension planin which such person has an interest.The term ‘‘beneficiary’’ includes analternate payee (within the meaning ofsection 206(d)(3)(K) of ERISA) under aqualified domestic relations order(within the meaning of section206(d)(3)(B) of ERISA).

Appeals Board means a boardconsisting of three PBGC officials. TheExecutive Director shall appoint asenior PBGC official to serve asChairperson and three or more otherPBGC officials to serve as regularAppeals Board members. TheChairperson shall designate the threeofficials who will constitute the AppealsBoard with respect to a case, providedthat a person may not serve on theAppeals Board with respect to a case inwhich he or she made a decisionregarding the merits of thedetermination being appealed. TheChairperson need not serve on theAppeals Board with respect to all cases.

Appellant means any person filing anappeal under subpart D of this part.

Director means the Director of anydepartment of the PBGC and includesthe Executive Director of the PBGC,Deputy Executive Directors, and theGeneral Counsel.

§ 4003.3 PBGC assistance in obtaininginformation.

A person who lacks information ordocuments necessary to file a request forreview pursuant to subpart C or D ofthis part, or necessary to a decisionwhether to seek review, or necessary toparticipate in an appeal pursuant to§ 4003.57 of this part or necessary to adecision whether to participate, mayrequest the PBGC’s assistance inobtaining information or documents inthe possession of a party other than thePBGC. The request shall state ordescribe the missing information ordocuments, the reason why the personneeds the information or documents,and the reason why the person needsthe assistance of the PBGC in obtainingthe information or documents. Therequest may also include a request foran extension of time to file pursuant to§ 4003.4 of this part.

§ 4003.4 Extension of time.(a) General rule. When a document is

required under this part to be filedwithin a prescribed period of time, anextension of time to file will be grantedonly upon good cause shown and only


when the request for an extension ismade before the expiration of the timeprescribed. The request for an extensionshall be in writing and state whyadditional time is needed and theamount of additional time requested.The filing of a request for an extensionshall stop the running of the prescribedperiod of time. When a request for anextension is granted, the PBGC shallnotify the person requesting theextension, in writing, of the amount ofadditional time granted. When a requestfor an extension is denied, the PBGCshall so notify the requestor in writing,and the prescribed period of time shallresume running from the date of denial.

(b) Disaster relief. When the Presidentof the United States declares that, underthe Disaster Relief Act of 1974, asamended (42 U.S.C. 5121, 5122(2),5141(b)), a major disaster exists, theExecutive Director of the PBGC (or hisor her designee) may, by issuing one ormore notices of disaster relief, extendthe due date for filing a request forreconsideration under § 4003.32 or anappeal under § 4003.52 by up to 180days.

(1) The due date extension orextensions shall be available only to anaggrieved person who is residing in, orwhose principal place of business iswithin, a designated disaster area, orwith respect to whom the office of theservice provider, bank, insurancecompany, or other person maintainingthe information necessary to file therequest for reconsideration or appeal iswithin a designated disaster area; and

(2) The request for reconsideration orappeal shall identify the filing as one forwhich the due date extension isavailable.

§ 4003.5 Non-timely request for review.

The PBGC will process a request forreview of an initial determination thatwas not filed within the prescribedperiod of time for requesting review (see§§ 4003.32 and 4003.52) if—

(a) The person requesting reviewdemonstrates in his or her request thathe or she did not file a timely requestfor review because he or she neitherknew nor, with due diligence, couldhave known of the initial determination;and

(b) The request for review is filedwithin 30 days after the date theaggrieved person, exercising duediligence at all relevant times, firstlearned of the initial determinationwhere the requested review isreconsideration, or within 45 days afterthe date the aggrieved person, exercisingdue diligence at all relevant times, firstlearned of the initial determination

where the request for review is anappeal.

§ 4003.6 Representation.A person may file any document or

make any appearance that is required orpermitted by this part on his or her ownbehalf or he or she may designate arepresentative. When the representativeis not an attorney-at-law, a notarizedpower of attorney, signed by the personmaking the designation, whichauthorizes the representation andspecifies the scope of representationshall be filed with the PBGC inaccordance with § 4003.9(b) of this part.

§ 4003.7 Exhaustion of administrativeremedies.

Except as provided in § 4003.22(b), aperson aggrieved by an initialdetermination of the PBGC covered bythis part, other than a determinationsubject to reconsideration that is issuedby a Department Director, has notexhausted his or her administrativeremedies until he or she has filed arequest for reconsideration undersubpart C of this part or an appeal undersubpart D of this part, whichever isapplicable, and a decision granting ordenying the relief requested has beenissued.

§ 4003.8 Request for confidentialtreatment.

If any person filing a document withthe PBGC believes that some or all of theinformation contained in the documentis exempt from the mandatory publicdisclosure requirements of the Freedomof Information Act, 5 U.S.C. 552, he orshe shall specify the information withrespect to which confidentiality isclaimed and the grounds therefor.

§ 4003.9 Filing of documents.(a) Date of filing. Any document

required or permitted to be filed underthis part is considered filed on the dateof the United States postmark stampedon the cover in which the document ismailed, provided that—

(1) The postmark was made by theUnited States Postal Service; and

(2) The document was mailed postageprepaid, properly packaged andaddressed to the PBGC.

If the conditions stated in bothparagraphs (a)(1) and (a)(2) of thissection are not met, the document isconsidered filed on the date it isreceived by the PBGC. Documentsreceived after regular business hours areconsidered filed on the next regularbusiness day.

(b) Where to file. Any documentrequired or permitted to be filed underthis part in connection with a requestfor reconsideration shall be submitted to

the Director of the department withinthe PBGC that issued the initialdetermination. Any document requiredor permitted to be filed under this partin connection with an appeal shall besubmitted to the Appeals Board,Pension Benefit Guaranty Corporation,1200 K Street NW., Washington, DC20005–4026.

§ 4003.10 Computation of time.

In computing any period of timeprescribed or allowed by this part, theday of the act, event, or default fromwhich the designated period of timebegins to run is not counted. The lastday of the period so computed shall beincluded, unless it is a Saturday,Sunday, or Federal holiday, in whichevent the period runs until the end ofthe next day which is not a Saturday,Sunday, or a Federal holiday.

Subpart B—Initial Determinations

§ 4003.21 Form and contents of initialdeterminations.

All determinations to which thissubpart applies shall be in writing, shallstate the reason for the determination,and, except when effective on the dateof issuance as provided in § 4003.22(b),shall contain notice of the right torequest review of the determinationpursuant to subpart C or subpart D ofthis part, as applicable, and a briefdescription of the procedures forrequesting review.

§ 4003.22 Effective date of determinations.

(a) General Rule. Except as providedin paragraph (b) of this section, aninitial determination covered by thissubpart will not become effective untilthe prescribed period of time for filinga request for reconsideration undersubpart C of this part or an appeal undersubpart D of this part, whichever isapplicable, has elapsed. The filing of arequest for review under subpart C or Dof this part shall automatically stay theeffectiveness of a determination until adecision on the request for review hasbeen issued by the PBGC.

(b) Exception. The PBGC may, in itsdiscretion, order that the initialdetermination in a case is effective onthe date it is issued. When the PBGCmakes such an order, the initialdetermination shall state that thedetermination is effective on the date ofissuance and that there is no obligationto exhaust administrative remedies withrespect to that determination by seekingreview of it by the PBGC.


Subpart C—Reconsideration of InitialDeterminations

§ 4003.31 Who may requestreconsideration.

Any person aggrieved by an initialdetermination of the PBGC to which thissubpart applies may requestreconsideration of the determination.

§ 4003.32 When to requestreconsideration.

Except as provided in §§ 4003.4 and4003.5, a request for reconsiderationmust be filed within 30 days after thedate of the initial determination ofwhich reconsideration is sought or,when administrative review includes aprocedure in § 4903.33 of this chapter,by a date 60 days (or more) thereafterthat is specified in the PBGC’s notice ofthe right to request review.

§ 4003.33 Where to submit request forreconsideration.

A request for reconsideration shall besubmitted to the Director of thedepartment within the PBGC that issuedthe initial determination, except that arequest for reconsideration of adetermination described in§ 4003.1(b)(3)(ii) shall be submitted tothe Executive Director.

§ 4003.34 Form and contents of requestfor reconsideration.

A request for reconsideration shall—(a) Be in writing;(b) Be clearly designated as a request

for reconsideration;(c) Contain a statement of the grounds

for reconsideration and the reliefsought; and

(d) Reference all pertinentinformation already in the possession ofthe PBGC and include any additionalinformation believed to be relevant.

§ 4003.35 Final decision on request forreconsideration.

(a) Except as provided in paragraphs(a)(1) or (a)(2), final decisions onrequests for reconsideration will beissued by the same department of thePBGC that issued the initialdetermination, by an official whoselevel of authority in that department ishigher than that of the person whoissued the initial determination.

(1) When an initial determination isissued by a Department Director, theDepartment Director (or an officialdesignated by the Department Director)will issue the final decision on requestfor reconsideration of a determinationother than one described in§ 4003.1(b)(3)(ii).

(2) The Executive Director (or anofficial designated by the ExecutiveDirector) will issue the final decision on

a request for reconsideration of adetermination described in§ 4003.1(b)(3)(ii).

(b) The final decision on a request forreconsideration shall be in writing,specify the relief granted, if any, statethe reason(s) for the decision, and statethat the person has exhausted his or heradministrative remedies.

Subpart D—Administrative Appeals

§ 4003.51 Who may appeal or participate inappeals.

Any person aggrieved by an initialdetermination to which this subpartapplies may file an appeal. Any personwho may be aggrieved by a decisionunder this subpart granting the reliefrequested in whole or in part mayparticipate in the appeal in the mannerprovided in § 4003.57.

§ 4003.52 When to file.

Except as provided in §§ 4003.4 and4003.5, an appeal under this subpartmust be filed within 45 days after thedate of the initial determination beingappealed or, when administrativereview includes a procedure in§ 4903.33 of this chapter, by a date 60days (or more) thereafter that isspecified in the PBGC’s notice of theright to request review.

§ 4003.53 Where to file.

An appeal or a request for anextension of time to appeal shall besubmitted to the Appeals Board,Pension Benefit Guaranty Corporation,1200 K Street NW., Washington, DC20005–4026.

§ 4003.54 Contents of appeal.

(a) An appeal shall—(1) Be in writing;(2) Be clearly designated as an appeal;(3) Contain a statement of the grounds

upon which it is brought and the reliefsought;

(4) Reference all pertinent informationalready in the possession of the PBGCand include any additional informationbelieved to be relevant;

(5) State whether the appellant desiresto appear in person or through arepresentative before the Appeals Board;and

(6) State whether the appellant desiresto present witnesses to testify before theAppeals Board, and if so, state why thepresence of witnesses will further thedecision-making process.

(b) In any case where the appellantbelieves that another person may beaggrieved if the PBGC grants the reliefsought, the appeal shall also include thename(s) and address(es) (if known) ofsuch other person(s).

§ 4003.55 Opportunity to appear and topresent witnesses.

(a) At the discretion of the AppealsBoard, any appearance permitted underthis subpart may be before a hearingofficer designated by the Appeals Board.

(b) An opportunity to appear beforethe Appeals Board (or a hearing officer)and an opportunity to present witnesseswill be permitted at the discretion of theAppeals Board. In general, anopportunity to appear will be permittedif the Appeals Board determines thatthere is a dispute as to a material fact;an opportunity to present witnesses willbe permitted when the Appeals Boarddetermines that witnesses willcontribute to the resolution of a factualdispute.

(c) Appearances permitted under thissection will take place at the mainoffices of the PBGC, 1200 K Street NW.,Washington, DC 20005–4026, unless theAppeals Board, in its discretion,designates a different location, either onits own initiative or at the request of theappellant or a third party participatingin the appeal.

§ 4003.56 Consolidation of appeals.(a) When consolidation may be

required. Whenever multiple appealsare filed that arise out of the same orsimilar facts and seek the same orsimilar relief, the Appeals Board may, inits discretion, order the consolidation ofall or some of the appeals.

(b) Representation of parties.Whenever the Appeals Board orders theconsolidation of appeals, the appellantsmay designate one (or more) of theirnumber to represent all of them for allpurposes relating to their appeals.

(c) Decision by Appeals Board. Thedecision of the Appeals Board in aconsolidated appeal shall be binding onall appellants whose appeals weresubject to the consolidation.

§ 4003.57 Appeals affecting third parties.(a) Before the Appeals Board issues a

decision granting, in whole or in part,the relief requested in an appeal, it shallmake a reasonable effort to notify thirdpersons who will be aggrieved by thedecision of the following:

(1) The pendency of the appeal;(2) The grounds upon which the

appeal is based;(3) The grounds upon which the

Appeals Board is considering reversingthe initial determination;

(4) The right to submit writtencomments on the appeal;

(5) The right to request an opportunityto appear in person or through arepresentative before the Appeals Boardand to present witnesses; and

(6) That no further opportunity topresent information to the PBGC with


respect to the determination underappeal will be provided.

(b) Written comments and a request toappear before the Appeals Board mustbe filed within 45 days after the date ofthe notice from the Appeals Board.

(c) If more than one third party isinvolved, their participation in theappeal may be consolidated pursuant tothe provisions of § 4003.56.

§ 4003.58 Powers of the Appeals Board.

In addition to the powers specificallydescribed in this part, the AppealsBoard may request the submission ofany information or the appearance ofany person it considers necessary toresolve a matter before it and to enterany order it considers necessary for orappropriate to the disposition of anymatter before it.

§ 4003.59 Decision by the Appeals Board.

(a) In reaching its decision, theAppeals Board shall consider thoseportions of the file relating to the initialdetermination, all material submitted bythe appellant and any third parties inconnection with the appeal, and anyadditional information submitted byPBGC staff.

(b) The decision of the Appeals Boardconstitutes the final agency action bythe PBGC with respect to thedetermination which was the subject ofthe appeal and is binding on all partieswho participated in the appeal and whowere notified pursuant to § 4003.57 oftheir right to participate in the appeal.

(c) The decision of the Appeals Boardshall be in writing, specify the reliefgranted, if any, state the bases for thedecision, including a brief statement ofthe facts or legal conclusions supportingthe decision, and state that the appellanthas exhausted his or her administrativeremedies.

§ 4003.60 Referral of appeal to theExecutive Director.

The Appeals Board may, in itsdiscretion, refer any appeal to theExecutive Director of the PBGC fordecision. In such a case, the ExecutiveDirector shall have all the powers vestedin the Appeals Board by this subpartand the decision of the ExecutiveDirector shall meet the requirements ofand have the effect of a decision issuedunder § 4003.59 of this part.

PART 4006—PREMIUM RATES

Sec.4006.1 Purpose and scope.4006.2 Definitions.4006.3 Premium rate.4006.4 Determination of unfunded vested

benefits.4006.5 Exemptions and special rules.

Authority: 29 U.S.C. 1302(b)(3), 1306,1307.

§ 4006.1 Purpose and scope.This part, which applies to all plans

covered by title IV of ERISA, providesrules for computing the premiumsimposed by sections 4006 and 4007 ofERISA. (See part 4007 of this chapter forrules for the payment of premiums,including due dates and late paymentcharges.)


§ 4001.2 of this chapter: Code,contributing sponsor, ERISA, fair marketvalue, insurer, irrevocable commitment,multiemployer plan, notice of intent toterminate, PBGC, plan administrator,plan, plan year, and single-employerplan.

In addition, for purposes of this part:New plan means a plan that became

effective within the premium paymentyear and includes a plan resulting froma consolidation or spinoff. A plan thatmeets this definition is considered to bea new plan even if the plan constitutesa successor plan within the meaning ofsection 4021(a) of ERISA.

Newly-covered plan means a plan thatis not a new plan and that was notcovered by title IV of ERISAimmediately prior to the premiumpayment year.

Participant means any individual whois included in one of the categoriesbelow:

(a) Active. (1) Any individual who iscurrently in employment covered by theplan and who is earning or retainingcredited service under the plan. Thiscategory includes any individual who isconsidered covered under the plan forpurposes of meeting the minimumcoverage requirements, but because ofoffset or other provisions (includingintegration with Social Securitybenefits), the individual does not haveany accrued benefits.

(2) Any non-vested individual who isnot currently in employment covered bythe plan but who is earning or retainingcredited service under the plan. Thiscategory does not include a non-vestedformer employee who has incurred abreak in service the greater of one yearor the break in service period specifiedin the plan.

(b) Inactive—(1) Inactive receivingbenefits. Any individual who is retiredor separated from employment coveredby the plan and who is receivingbenefits under the plan. This categorydoes not include an individual to whoman insurer has made an irrevocablecommitment to pay all the benefits towhich the individual is entitled underthe plan.

(2) Inactive entitled to future benefits.Any individual who is retired orseparated from employment covered bythe plan and who is entitled to beginreceiving benefits under the plan in thefuture. This category does not includean individual to whom an insurer hasmade an irrevocable commitment to payall the benefits to which the individualis entitled under the plan.

(c) Deceased. Any deceasedindividual who has one or morebeneficiaries who are receiving orentitled to receive benefits under theplan. This category does not include anindividual if an insurer has made anirrevocable commitment to pay all thebenefits to which the beneficiaries ofthat individual are entitled under theplan.

Premium payment year means theplan year for which the premium isbeing paid.

Short plan year means a plan yearthat is less than twelve full months.

§ 4006.3 Premium rate.Subject to the provisions of § 4006.5

(dealing with exemptions and specialrules), the premium paid for basicbenefits guaranteed under section4022(a) of ERISA shall equal the flat-ratepremium under paragraph (a) of thissection plus, in the case of a single-employer plan, the variable-ratepremium under paragraph (b) of thissection.

(a) Flat-rate premium. The flat-ratepremium is equal to the number ofparticipants in the plan on the last dayof the plan year preceding the premiumpayment year, multiplied by—

(1) $19 for a single-employer plan, or(2) $2.60 for a multiemployer plan.(b) Variable-rate premium. The

variable-rate premium is $9 for each$1,000 of a single-employer plan’sunfunded vested benefits, as determinedunder § 4006.4.

§ 4006.4 Determination of unfunded vestedbenefits.

(a) General rule. Except as permittedby paragraph (c) of this section or asprovided in the exemptions and specialrules under § 4006.5, the amount of aplan’s unfunded vested benefits (asdefined in paragraph (b) of this section)shall be determined as of the last day ofthe plan year preceding the premiumpayment year, based on the planprovisions and the plan’s population asof that date. The determination shall bemade in accordance with paragraph(a)(1) or (a)(2), and shall be certified toin accordance with paragraph (a)(4).

(1) The unfunded vested benefits shallbe determined using the actuarialassumptions and methods described in


paragraph (a)(3) for the plan yearpreceding the premium payment year(or, in the case of a new or newly-covered plan, for the premium paymentyear), except to the extent that otheractuarial assumptions or methods arespecifically prescribed by this section orare necessary to reflect the occurrence ofa significant event described inparagraph (d) of this section betweenthe date of the funding valuation andthe last day of the plan year precedingthe premium payment year. (If the plandoes a valuation as of the last day of theplan year preceding the premiumpayment year, no separate adjustmentfor significant events is needed.)

(2) Under this rule, the determinationof the unfunded vested benefits may bebased on a plan valuation done as of thefirst day of the premium payment year,provided that—

(i) The actuarial assumptions andmethods used are those described inparagraph (a)(3) for the premiumpayment year, except to the extent thatother actuarial assumptions or methodsare specifically prescribed by thissection or are required to make theadjustment described in paragraph(a)(2)(ii) of this section; and

(ii) If an enrolled actuary determinesthat there is a material differencebetween the values determined underthe valuation and the values that wouldhave been determined as of the last dayof the preceding plan year, the valuationresults are adjusted to reflectappropriately the values as of the lastday of the preceding plan year. (Thisadjustment need not be made if theunadjusted valuation would result ingreater unfunded vested benefits.)

(3) For purposes of paragraphs (a)(1)and (a)(2), the actuarial assumptionsand methods for a plan year are thoseused by the plan for purposes ofdetermining the additional fundingrequirement under section 302(d) ofERISA and section 412(1) of the Code(or, in the case of a plan that is notrequired to determine such additionalfunding requirement, any assumptionsand methods that would be permittedfor such purpose if the plan were sorequired).

(4) In the case of any plan thatdetermines the amount of its unfundedvested benefits under the general ruledescribed in this paragraph, an enrolledactuary must certify, in accordance withthe PBGC annual Premium PaymentPackage provided for in § 4007.3 of thispart, that the determination was madein a manner consistent with generallyaccepted actuarial principles andpractices.

(b) Unfunded vested benefits. Theamount of a plan’s unfunded vested

benefits under this section shall be theexcess of the plan’s vested benefitsamount (determined under paragraph(b)(1) of this section) over the value ofthe plan’s assets (determined underparagraph (b)(2) of this section).

(1) Vested benefits amount. A plan’svested benefits amount under thissection shall be the plan’s currentliability (within the meaning of section302(d)(7) of ERISA and section 412(1)(7)of the Code) determined by taking intoaccount only vested benefits and byusing an interest rate equal to theapplicable percentage of the annualyield for 30-year Treasury constantmaturities, as reported in FederalReserve Statistical Release G.13 andH.15, for the calendar month precedingthe calendar month in which thepremium payment year begins. If theinterest rate (or rates) used by the planto determine current liability was (orwere all) not greater than the requiredinterest rate, the vested benefits neednot be revalued if an enrolled actuarycertifies that the interest rate (or interestrates) used was (or were all) not greaterthan the required interest rate. Forpurposes of this paragraph (b)(1)(subject to the provisions of § 4006.5(g),dealing with plans of regulated publicutilities), the applicable percentage is—

(i) For a premium payment year thatbegins before July 1997, 80 percent;

(ii) For a premium payment year thatbegins after June 1997 and before thefirst premium payment year to whichthe first tables prescribed under section302(d)(7)(C)(ii)(II) of ERISA and section412(1)(7)(C)(ii)(II) of the Code apply, 85percent; and

(iii) For the first premium paymentyear to which the first tables prescribedunder section 302(d)(7)(C)(ii)(II) ofERISA and section 412(1)(7)(C)(ii)(II) ofthe Code apply and any subsequent planyear, 100 percent.

(2) Value of assets. (i) Actuarial value.For a premium payment year that isdescribed in paragraph (b)(1)(i) or(b)(1)(ii) of this section, the value of theplan’s assets shall be their actuarialvalue determined in accordance withsection 302(c)(2) of ERISA and section412(c)(2) of the Code.

(ii) Fair market value. For a premiumpayment year that is described inparagraph (b)(1)(iii) of this section, thevalue of the plan’s assets shall be theirfair market value.

(iii) Use of credit balance. The valueof the plan’s assets shall not be reducedby a credit balance in the fundingstandard account.

(iv) Contributions. Contributionsowed for any plan year preceding thepremium payment year shall beincluded for plans with 500 or more

participants and may be included forany other plan. Contributions may beincluded only to the extent suchcontributions have been paid into theplan on or before the earlier of the duedate for payment of the variable-rateportion of the premium under § 4007.11or the date that portion is paid.Contributions included that are paidafter the last day of the plan yearpreceding the premium payment yearshall be discounted at the plan assetvaluation rate (on a simple orcompound basis in accordance with theplan’s discounting rules) to such lastday to reflect the date(s) of payment.Contributions for the premium paymentyear may not be included for any plan.

(c) Alternative method for calculatingunfunded vested benefits. In lieu ofdetermining the amount of the plan’sunfunded vested benefits pursuant toparagraph (a) of this section, a planadministrator may calculate the amountof a plan’s unfunded vested benefitsunder this paragraph (c) using the plan’sForm 5500, Schedule B, for the planyear preceding the premium paymentyear. Pursuant to this paragraph (c),unfunded vested benefits shall bedetermined, in accordance with thePremium Payment Package, from valuesfor the plan’s vested benefits and assetsthat are required to be reported on theplan’s Schedule B. The value of thevested benefits shall be adjusted inaccordance with paragraph (c)(1) of thissection to reflect accruals during theplan year preceding the premiumpayment year and with paragraph (c)(2)of this section to reflect the interest rateprescribed in paragraph (b)(1) of thissection, and the value of the assets shallbe adjusted in accordance withparagraph (c)(4) of this section. (If theplan administrator certifies that theinterest rate (or rates) used to determinethe vested benefit values taken from theSchedule B was (or were all) not greaterthan the interest rate prescribed inparagraph (b)(1) of this section, theinterest rate adjustment prescribed inparagraph (c)(2) of this section is notrequired.) The resulting unfundedvested benefits amount shall be adjustedin accordance with paragraph (c)(5) ofthis section to reflect the passage of timefrom the date of the Schedule B data tothe last day of the plan year precedingthe premium payment year.

(1) Vested benefits adjustment foraccruals. The total value of the plan’scurrent liability as of the first day of theplan year preceding the premiumpayment year for vested benefits ofactive and terminated vestedparticipants not in pay status, computedin accordance with section 302(d)(7) ofERISA and section 412(l)(7) of the Code,


shall be adjusted to reflect the increasein vested benefits attributable toaccruals during the plan year precedingthe premium payment year bymultiplying that value by 1.07.

(2) Vested benefits interest rateadjustment. The value of vested benefitsas entered on the Schedule B shall beadjusted in accordance with thefollowing formula (except as providedin paragraph (c)(3) of this section) toreflect the interest rate prescribed inparagraph (b)(1) of this section:VBadj=VBPAY×.94(RIR-BIR)+VBNON-PAY

×.94(RIR-BIR)×((100+BIA)/(100+RIR))(ARA–50);

where—(i) VBadj is the adjusted vested benefits

amount (as of the first day of the planyear preceding the premium paymentyear) under the alternative calculationmethod;

(ii) VBPAY is the plan’s currentliability as of the first day of the planyear preceding the premium paymentyear for vested benefits of participantsand beneficiaries in pay status,computed in accordance with section302(d)(7) of ERISA and section 412(l)(7)of the Code;

(iii) VBNON-PAY is the total of theplan’s current liability as of the first dayof the plan year preceding the premiumpayment year for vested benefits ofactive and terminated vestedparticipants not in pay status, computedin accordance with section 302(d)(7) ofERISA and section 412(l)(7) of the Code,multiplied by 1.07 in accordance withparagraph (c)(1) of this section;

(iv) RIR is the required interest rateprescribed in paragraph (b)(1) of thissection;

(v) BIR is the post-retirement currentliability interest rate used to determinethe pay-status current liability figurereferred to in paragraph (c)(2)(ii) of thissection;

(vi) BIA is the pre-retirement currentliability interest rate used to determinethe pre-pay-status current liabilityfigures referred to in paragraph (c)(2)(iii)of this section; and

(vii) ARA is the plan’s assumedweighted average retirement age.

(3) Optional use of substitutionfactors in interest rate adjustmentformula. In lieu of the term, .94 (RIR-BIR),in the formula prescribed by paragraph(c)(2) of this section, a planadministrator may use the optionalsubstitution factor provided in thePremium Payment Package.

(4) Adjusted value of plan assets. Thevalue of plan assets shall be theactuarial value of plan assets as of thefirst day of the plan year preceding thepremium payment year, determined in

accordance with section 302(c)(2) ofERISA and section 412(c)(2) of the Codewithout reduction for any credit balancein the plan’s funding standard account,unless that amount was determined asof a date other than the first day of theplan year preceding the premiumpayment year or the premium paymentyear is described in § 4006.4(b)(1)(iii). Ineither of those events, the value of planassets shall be the current value ofassets (as reported on Form 5500) as ofthat first day or (if Form 5500–EZ isfiled) as of the last day of the plan yearpreceding the Schedule B year. Thevalue of assets from the Schedule Bshall be adjusted in accordance withparagraph (b)(2) of this section, exceptthat the amount of all contributions thatare included in the value of assets andthat were made after the first day of theplan year preceding the premiumpayment year shall be discounted tosuch first day at the interest rateprescribed in paragraph (b)(1) of thissection for the premium payment year,compounded annually except thatsimple interest may be used for anypartial years.

(5) Adjustment for passage of time.The amount of the plan’s unfundedvested benefits shall be adjusted toreflect the passage of time between thedate of the Schedule B data (the first dayof the plan year preceding the premiumpayment year) and the last day of theplan year preceding the premiumpayment year in accordance with thefollowing formula:UVBadj=(VBadj¥Aadj)×(1+RIR/100)Y;where—

(i) UVBadj is the amount of the plan’sadjusted unfunded vested benefits;

(ii) VBadj is the value of the adjustedvested benefits calculated in accordancewith paragraphs (c)(1) and (c)(2) of thissection;

(iii) Aadj is the adjusted asset amountcalculated in accordance with paragraph(c)(3) of this section; (iv) RIR is therequired interest rate prescribed inparagraph (b)(1) of this section; and

(v) Y is deemed to be equal to 1(unless the plan year preceding thepremium payment year is a short planyear, in which case Y is the number ofyears between the first day and the lastday of the short plan year, expressed asa decimal fraction of 1.0 with two digitsto the right of the decimal point).

(d) Restrictions on alternativecalculation method for large plans.

(1) The alternative calculation methoddescribed in paragraph (c) of thissection may be used for a plan with 500or more participants as of the last dayof the plan year preceding the premiumpayment year only if—

(i) No significant event, as describedin paragraph (d)(2) of this section, hasoccurred between the first day and thelast day of the plan year preceding thepremium payment year, and an enrolledactuary so certifies in accordance withthe Premium Payment Package; or

(ii) An enrolled actuary makes anappropriate adjustment to the value ofunfunded vested benefits to reflect theoccurrence of significant events thathave occurred between those dates andcertifies to that fact in accordance withthe Premium Payment Package.

(2) The significant events described inthis paragraph are—

(i) An increase in the plan’s actuarialcosts (consisting of the plan’s normalcost under section 302(b)(2)(A) of ERISAand section 412(b)(2)(A) of the Code,amortization charges under section302(b)(2)(B) of ERISA and section412(b)(2)(B) of the Code, andamortization credits under section302(b)(3)(B) of ERISA and section412(b)(3)(B) of the Code) attributable toa plan amendment, unless the costincrease attributable to the amendmentis less than 5 percent of the actuarialcosts determined without regard to theamendment;

(ii) The extension of coverage underthe plan to a new group of employeesresulting in an increase of 5 percent ormore in the plan’s liability for accruedbenefits;

(iii) A plan merger, consolidation orspinoff that is not de minimis pursuantto the regulations under section 414(l) ofthe Code;

(iv) The shutdown of any facility,plant, store, etc., that creates immediateeligibility for benefits that would nototherwise be immediately payable forparticipants separating from service;

(v) The offer by the plan for atemporary period to permit participantsto retire at benefit levels greater thanthat to which they would otherwise beentitled;

(vi) A cost-of-living increase forretirees resulting in an increase of 5percent or more in the plan’s liabilityfor accrued benefits; and

(vii) Any other event or trend thatresults in a material increase in thevalue of unfunded vested benefits.

§ 4006.5 Exemptions and special rules.(a) Variable-rate premium

exemptions. A plan described in any ofparagraphs (a)(1)–(a)(5) of this section isnot required to determine its unfundedvested benefits under § 4006.4 and doesnot owe a variable-rate premium under§ 4006.3(b).

(1) Certain fully funded plans. A planis described in this paragraph if the planhad fewer than 500 participants on the


last day of the plan year preceding thepremium payment year, and an enrolledactuary certifies in accordance with thePremium Payment Package that, as ofthat date, the plan had no unfundedvested benefits (valued at the interestrate prescribed in § 4006.4(b)(1)).

(2) Plans without vested benefitliabilities. A plan is described in thisparagraph if it did not have anyparticipants with vested benefits as ofthe last day of the plan year precedingthe premium payment year, and theplan administrator so certifies inaccordance with the Premium PaymentPackage.

(3) Section 412(i) plans. A plan isdescribed in this paragraph if the planwas a plan described in section 412(i) ofthe Code and the regulations thereunderat all times during the plan yearpreceding the premium payment yearand the plan administrator so certifies,in accordance with the PremiumPayment Package. If the plan is a newplan or a newly-covered plan, thecertification under this paragraph shallbe made as of the due date for thepremium under § 4007.11(c) and shallcertify to the plan’s status at all timesduring the premium payment yearthrough such due date.

(4) Plans terminating in standardterminations. The exemption for a plandescribed in this paragraph isconditioned upon the plan’s making afinal distribution of assets in a standardtermination. If a plan is ultimatelyunable to do so, the exemption isrevoked and all variable-rate amountsnot paid pursuant to this exemption aredue retroactive to the applicable duedate(s). A plan is described in thisparagraph if—

(i) The plan administrator has issuednotices of intent to terminate the plan ina standard termination in accordancewith section 4041(a)(2) of ERISA; and

(ii) The proposed termination date setforth in the notice of intent to terminateis on or before the last day of the planyear preceding the premium paymentyear.

(5) Plans at full funding limit. A planis described in this paragraph if, on orbefore the earlier of the due date forpayment of the variable-rate portion ofthe premium under § 4007.11 or thedate that portion is paid, the plan’scontributing sponsor or contributingsponsors made contributions to the planfor the plan year preceding the premiumpayment year in an amount not lessthan the full funding limitation for suchpreceding plan year under section302(c)(7) of ERISA and section 412(c)(7)of the Code (determined in accordancewith paragraphs (a)(5)(i) and (a)(5)(ii) ofthis section). In order for a plan to

qualify for this exemption, an enrolledactuary must certify that the plan hasmet the requirements of this paragraph.

(i) Determination of full fundinglimitation. The determination ofwhether contributions for the precedingplan year were in an amount not lessthan the full funding limitation undersection 302(c)(7) of ERISA and section412(c)(7) of the Code for such precedingplan year shall be based on the methodsof computing the full fundinglimitation, including actuarialassumptions and funding methods, usedby the plan (provided such assumptionsand methods met all requirements,including the requirements forreasonableness, under section 302 ofERISA and section 412 of the Code)with respect to such preceding planyear. Plan assets shall not be reduced bythe amount of any credit balance in theplan’s funding standard account.

(ii) Rounding of de minimis amounts.Any contribution that is rounded downto no less than the next lower multipleof one hundred dollars (in the case offull funding limitations up to onehundred thousand dollars) or to no lessthan the next lower multiple of onethousand dollars (in the case of fullfunding limitations above one hundredthousand dollars) shall be deemed forpurposes of this paragraph to be in anamount equal to the full fundinglimitation.

(b) Special rule for determining vestedbenefits for certain large plans. Withrespect to a plan that had 500 or moreparticipants on the last day of the planyear preceding the premium paymentyear, if an enrolled actuary determinespursuant to § 4006.4(a) that the actuarialvalue of plan assets equals or exceedsthe value of all benefits accrued underthe plan (valued at the interest rateprescribed in § 4006.4(b)(1)), theenrolled actuary need not determine thevalue of the plan’s vested benefits, andmay instead report in the PremiumPayment Package the value of theaccrued benefits.

(c) Special rule for determiningunfunded vested benefits for plansterminating in distress or involuntaryterminations. A plan described in thisparagraph may determine its unfundedvested benefits by using the specialalternative calculation method set forthin this paragraph. A plan is described inthis paragraph if it has issued notices ofintent to terminate in a distresstermination in accordance with section4041(a)(2) of ERISA with a proposedtermination date on or before the lastday of the plan year preceding thepremium payment year, or if the PBGChas instituted proceedings to terminatethe plan in accordance with section

4042 of ERISA and has sought atermination date on or before the lastday of the plan year preceding thepremium payment year. Pursuant to thisparagraph, a plan shall determine itsunfunded vested benefits in accordancewith the alternative calculation methodin § 4006.4(c), except that—

(1) The calculation shall be based onthe Form 5500, Schedule B, for the planyear which includes (in the case of adistress termination) the proposedtermination date or (in the case of aninvoluntary termination) thetermination date sought by the PBGC,or, if no Schedule B is filed for that planyear, on the Schedule B for theimmediately preceding plan year;

(2) All references in § 4006.4(c) and§ 4006.4(d) to the first day of the planyear preceding the premium paymentyear shall be deemed to refer to the firstday of the plan year for which theSchedule B was filed;

(3) The value of the sum of the plan’scurrent liability as of the first day of theplan year preceding the premiumpayment year for vested benefits ofactive and terminated vestedparticipants not in pay status, computedin accordance with section 302(d)(7) ofERISA and section 412(l)(7) of the Code,shall be adjusted (in lieu of theadjustment required by § 4006.4(c)(1))by multiplying that value by the sum of1 plus the product of .07 and thenumber of years (rounded to the nearesthundredth of a year) between the dateof the Schedule B data and (in the caseof a distress termination) the proposedtermination date or (in the case of aninvoluntary termination) thetermination date sought by the PBGC;and

(4) The exponent, ‘‘Y,’’ in the timeadjustment formula of § 4006.4(c)(5)shall be deemed to equal the number ofyears (rounded to the nearest hundredthof a year) between the date of theSchedule B data and the last day of theplan year preceding the premiumpayment year.

(d) Special determination date rule fornew and newly-covered plans. In thecase of a new plan or a newly-coveredplan, all references in §§ 4006.3, 4006.4,and paragraphs (a) and (b) of thissection to the last day of the plan yearpreceding the premium payment yearshall be deemed to refer to the first dayof the premium payment year or, if later,the date on which the plan becameeffective for benefit accruals for futureservice, and for purposes of determiningthe plan’s premium, the number of planparticipants, and (for a single-employerplan) the amount of the plan’s unfundedvested benefits and the applicability ofany exemption or special rule under


paragraph (a) or (b) of this section, shallbe determined as of such first day orlater date.

(e) Special determination date rule forcertain mergers and spinoffs. (1) Withrespect to a plan described in paragraph(e)(2) of this section, all references in§§ 4006.3, 4006.4, and this section, asapplicable, to the last day of the planyear preceding the premium paymentyear shall be deemed to refer to the firstday of the premium payment year.

(2) A plan is described in thisparagraph (e)(2) if—

(i) The plan engages in a merger orspinoff that is not de minimis pursuantto the regulations under section 414(l) ofthe Code (in the case of single-employerplans) or pursuant to part 4231 of thischapter (in the case of multiemployerplans), as applicable;

(ii) The merger or spinoff is effectiveon the first day of the plan’s premiumpayment year; and

(iii) The plan is the transferee plan inthe case of a merger or the transferorplan in the case of a spinoff.

(f) Special refund rule for certainshort plan years. A plan described inthis paragraph (f) is entitled to a refundfor a short plan year. The amount of therefund will be determined by proratingthe premium for the short plan year bythe number of months (treating a part ofa month as a month) in the short planyear. A plan is described in thisparagraph if—

(1) The plan is a new or newly-covered plan that becomes effective forpremium purposes on a date other thanthe first day of its first plan year;

(2) The plan adopts an amendmentchanging its plan year, resulting in ashort plan year;

(3) The plan’s assets are distributedpursuant to the plan’s termination, inwhich case the short plan year forpurposes of computing the amount ofthe refund under this paragraph shall bedeemed to end on the asset distributiondate or, if later (in the case of a single-employer plan), the date 30 days priorto the date the PBGC receives the plan’spost-distribution certification; or

(4) The plan is a single-employer planand a trustee of the plan is appointedpursuant to section 4042 of ERISA, inwhich case the short plan year forpurposes of computing the amount ofthe refund under this paragraph shall bedeemed to end on the date ofappointment.

(g) Special rules for plans of regulatedpublic utilities. (1) This paragraph (g)applies to a premium payment yearbeginning before 1998 of a planmaintained by one or more contributingsponsors at least one of which is aregulated public utility. For this

purpose, a regulated public utility is onethat, as of the beginning of the premiumpayment year, is described in section7701(a)(33)(A)(i) of the Code and hasnot begun to collect from utilitycustomers rates that reflect the costsincurred or projected to be incurred foradditional premiums under section4006(a)(3)(E) of ERISA pursuant to finaland nonappealable determinations byall public utility commissions (or otherauthorities having jurisdiction over therates and terms of service by theregulated public utility) that the costsare just and reasonable and recoverablefrom customers of the regulated publicutility.

(2) Limitation on variable-ratepremium and required interest rate. Ifevery contributing sponsor of a plandescribed in paragraph (a) of thissection is a regulated public utility,then, notwithstanding the provisions of§§ 4006.3(b) and 4006.4(b)(1),—

(i) The variable-rate premium shallnot be greater than $53 multiplied bythe number of participants in the planon the last day of the plan yearpreceding the premium payment year;and

(ii) If the premium payment yearbegins after June 1997, § 4006.4(b)(1)shall be applied as if the applicablepercentage referred to therein were 80percent.

(3) Proportional application oflimitation rules. If a plan is described inparagraph (g)(1) of this section but alsohas a contributing sponsor that is not aregulated public utility and participantswho are not regulated public utilityparticipants (determined under anyreasonable method consistently appliedamong participants and from year toyear), the limitations in paragraph (g)(2)of this section shall be applied inproportion to the number of regulatedpublic utility participants in accordancewith the Premium Payment Package.

(4) Special variable-rate premium rulefor certain small regulated public utilityplans paying maximum variable-ratepremium. A plan whose variable-ratepremium is subject to the limitationdescribed in paragraph (g)(2)(i) of thissection is not required to determine itsunfunded vested benefits under § 4006.4if—

(i) The number of participantsrequired to be taken into account incomputing the plan’s premium for thepremium payment year is fewer than500; and

(ii) The plan pays a variable-ratepremium equal to $53 multiplied by thenumber of participants in the plan onthe last day of the plan year precedingthe premium payment year.

(5) Effect of omitted or inadequateinformation. The variable-rate premiumof a plan described in paragraph (g)(2)of this section may be deemed to be $53multiplied by the number ofparticipants in the plan on the last dayof the plan year preceding the premiumpayment year if—

(i) Any item or items necessary toestablish the correct variable-ratepremium for the plan are omitted fromthe plan’s premium filing; or

(ii) In connection with an audit, theplan’s records fail, in the PBGC’sjudgment, to establish that the plan’sunfunded vested benefits were of theamount reported by the plan for thepremium payment year.

PART 4007—PAYMENT OF PREMIUMS

Sec.4007.1 Purpose and scope.4007.2 Definitions.4007.3 Filing requirement and forms.4007.4 Filing address.4007.5 Date of filing.4007.6 Computation of time.4007.7 Late payment interest charges.4007.8 Late payment penalty charges.4007.9 Coverage for guaranteed basic

benefits.4007.10 Recordkeeping requirements; PBGC

audits.4007.11 Due dates.4007.12 Liability for single-employer

premiums.Authority: 29 U.S.C. 1302(b)(3), 1306,

1307.

§ 4007.1 Purpose and scope.This part, which applies to all plans

that are covered by title IV of ERISA,provides procedures for paying thepremiums imposed by sections 4006and 4007 of ERISA. (See part 4006 ofthis chapter for premium rates andcomputational rules.)

§ 4007.2 Definitions.(a) The following terms are defined in

§ 4001.2 of this chapter: Code,contributing sponsor, ERISA, insurer,IRS, multiemployer plan, notice ofintent to terminate, PBGC, plan, planadministrator, plan year, and single-employer plan.

(b) For purposes of this part, thefollowing terms are defined in § 4006.2of this chapter: new plan, newlycovered plan, participant, premiumpayment year, and short plan year.

§ 4007.3 Filing requirement and forms.The estimation, declaration,

reconciliation and payment ofpremiums shall be made using the formsprescribed by and in accordance withthe instructions in the PBGC annualPremium Payment Package. The planadministrator of each covered plan shall


file the prescribed form or forms, andany premium payments due, no laterthan the applicable due date specifiedin § 4007.11.

§ 4007.4 Filing address.Plan administrators shall file all forms

required to be filed under this part andall payments for premiums, interest, andpenalties required to be made under thispart at the address specified in thePremium Payment Package.

§ 4007.5 Date of filing.(a) Any form required to be filed

under this part and any paymentrequired to be made under this partshall be deemed to have been filed ormade on the date on which it is mailed.

(b) A form or payment shall bepresumed to have been mailed on thedate on which it is postmarked by theUnited States Postal Service, or threedays prior to the date on which it isreceived by the PBGC if it does notcontain a legible United States PostalService postmark.

§ 4007.6 Computation of time.In computing any period of time

prescribed by this part, the day of theact, event, or default from which thedesignated period of time begins to runis not counted. The last day of theperiod so computed shall be included,unless it is a Saturday, Sunday, orfederal holiday, in which event theperiod runs until the end of the next daythat is not a Saturday, Sunday, orfederal holiday. For purposes ofcomputing late payment interest chargesunder § 4007.7 and late paymentpenalty charges under § 4007.8, aSaturday, Sunday or federal holidayreferred to in the previous sentenceshall be included.

§ 4007.7 Late payment interest charges.(a) If any premium payment due

under this part is not paid by the duedate prescribed for such payment by§ 4007.11, an interest charge will accrueon the unpaid amount at the rateimposed under section 6601(a) of theCode for the period from the datepayment is due to the date payment ismade. Late payment interest charges arecompounded daily.

(b) When PBGC issues a bill forpremium payments necessary toreconcile the premiums paid with theactual premium due, interest will beaccrued on the unpaid premium untilthe date of the bill if paid no later than30 days after the date of such bill. If thebill is not paid within the 30-day periodfollowing the date of such bill, interestwill continue to accrue throughout such30-day period and thereafter, until thedate paid.

(c) PBGC bills for interest assessedunder this section will be deemed paidwhen due if paid no later than 30 daysafter the date of such bills. Otherwise,interest will accrue in accordance withparagraph (a) of this section on theamount of the bill from the date of thebill until the date of payment.

§ 4007.8 Late payment penalty charges.

(a) Penalty charge. If any premiumpayment due under this part is not paidby the due date prescribed for suchpayment by § 4007.11, the PBGC will,unless a waiver is granted pursuant toparagraph (b) of this section, assess alate payment charge (not to exceed100% of the unpaid premium) equal tothe greater of—

(i) 5% per month (or fraction thereof)of the unpaid premiums; or

(ii) $25.(b) Waiver of penalty charge. The late

payment penalty charge will be waived,in whole or in part—

(1) With respect to any premiumpayment made within 60 days after thedue date prescribed for such payment in§ 4007.11, if, before such due date, thePBGC grants a waiver upon a showingof substantial hardship arising from thetimely payment of the premium and ashowing that the premium will be paidwithin such 60-day period;

(2) If the PBGC grants a waiver basedon any other demonstration of goodcause;

(3) If the PBGC, on its own motion,waives the application of paragraph (a)of this section;

(4) With respect to any premiumpayment (excluding any variable-ratepremium under § 4006.3(b)), if a planthat is required to make a reconciliationfiling described in § 4007.11(b)(2)(iii)—

(i) Paid at least 90 percent of the flat-rate premium due for the premiumpayment year by the due date specifiedin § 4007.11(b)(2)(i); or

(ii) Paid by the due date specified in§ 4007.11(b)(2)(i) an amount equal to thepremium that would be due for thepremium payment year, computed usingthe flat per capita premium rate for thepremium payment year and theparticipant count upon which the prioryear’s premium was based; and

(iii) Pays 100 percent of the flat-ratepremium due for the premium paymentyear under § 4006.3 on or before the duedate for the reconciliation filing under§ 4007.11(b)(2)(iii); or

(5) With respect to any PBGC bills forthe premium payment necessary toreconcile the premium paid with theactual premium due, if such bills arepaid no later than 30 days after the dateof such bills.

§ 4007.9 Coverage for guaranteed basicbenefits.

(a) The failure by a plan administratorto pay the premiums due under this partwill not result in that plan’s loss ofcoverage for basic benefits guaranteedunder sections 4022(a) or 4022A(a) ofERISA.

(b) The payment of the premiumsimposed by this part will not result incoverage for basic benefits guaranteedunder sections 4022(a) or 4022A(a) ofERISA for plans not covered under titleIV of ERISA.

§ 4007.10 Recordkeeping requirements;PBGC audits.

(a) Retention of records to supportpremium payments. All plan records,including calculations and other dataprepared by an enrolled actuary or, fora plan described in section 412(i) of theCode, by the insurer from which theinsurance contracts are purchased, thatare necessary to support or to validatepremium payments under this part shallbe retained by the plan administrator fora period of six years after the premiumdue date. Records that must be retainedpursuant to this paragraph include, butare not limited to, records that establishthe number of plan participants and thatreconcile the calculation of the plan’sunfunded vested benefits with theactuarial valuation upon which thecalculation was based. Records retainedpursuant to this paragraph shall bemade available to the PBGC uponrequest for inspection andphotocopying.

(b) PBGC audit. Premium paymentsunder this part are subject to audit bythe PBGC. If, upon audit, the PBGCdetermines that a premium due underthis part was underpaid, the latepayment interest charges under § 4007.7and the late payment penalty chargesunder § 4007.8 shall apply to the unpaidbalance from the premium due date tothe date of payment. In determining thepremium due, if, in the judgment of thePBGC, the plan’s records fail to establishthe number of plan participants withrespect to whom premiums wererequired for any premium payment year,the PBGC may rely on data it obtainsfrom other sources (including the IRSand the Department of Labor) forpresumptively establishing the numberof plan participants for premiumcomputation purposes.

§ 4007.11 Due dates.(a) In general. The premium filing due

date for small plans is prescribed inparagraph (a)(1) of this section and thepremium filing due dates for large plansare prescribed in paragraph (a)(2) of thissection.


(1) Plans with fewer than 500participants. If the plan has fewer than500 participants, as determined underparagraph (b) of this section, the duedate is the fifteenth day of the eighthfull calendar month following themonth in which the plan year began.

(2) Plans with 500 or moreparticipants. If the plan has 500 or moreparticipants, as determined underparagraph (b) of this section—

(i) The due date for the flat-ratepremium required by § 4006.3(a) is thelast day of the second full calendarmonth following the close of the planyear preceding the premium paymentyear; and

(ii) The due date for the variable-ratepremium required by § 4006.3(b) forsingle-employer plans is the fifteenthday of the eighth full calendar monthfollowing the month in which thepremium payment year begins.

(iii) If the number of plan participantson the last day of the plan yearpreceding the premium payment year isnot known by the date specified inparagraph (a)(2)(i) of this section, areconciliation filing (on the formprescribed by this part) and anyrequired premium payment or requestfor refund shall be made by the datespecified in paragraph (a)(2)(ii) of thissection.

(3) Plans that change plan years. Forany plan that changes its plan year, thepremium form or forms and payment orpayments for the short plan year shallbe filed by the applicable due date ordates specified in paragraphs (a)(1),(a)(2), or (c) of this section. For the planyear that follows a short plan year, thedue date or dates for the premium formsand payments shall be, with respect toeach such due date, the later of—

(i) The applicable due date or datesspecified in paragraph (a)(1) or (a)(2) ofthis section; or

(ii) 30 days after the date on whichthe amendment changing the plan yearwas adopted.

(b) Participant count rule for purposesof determining filing due dates. Forpurposes of determining underparagraph (a) of this section whether aplan has fewer than 500 participants, or500 or more participants, the planadministrator shall use—

(1) For a single-employer plan, thenumber of participants for whompremiums were payable for the planyear preceding the premium paymentyear, or

(2) For a multiemployer plan,—(i) If the premium payment year is the

plan’s second plan year, the first day ofthe first plan year; or

(ii) If the premium payment year isthe plan’s third or a subsequent plan

year, the last day of the secondpreceding plan year.

(c) Due dates for new and newlycovered plans. Notwithstandingparagraph (a) of this section, thepremium form and all premiumpayments due for the first plan year ofcoverage of any new plan or newlycovered plan shall be filed on or beforethe latest of—

(1) The fifteenth day of the eighth fullcalendar month following the month inwhich the plan year began or, if later, inwhich the plan became effective forbenefit accruals for future service;

(2) 90 days after the date of the plan’sadoption; or

(3) 90 days after the date on which theplan became covered by title IV ofERISA.

(d) Continuing obligation to file. Theobligation to file the form or formsprescribed by this part and to pay anypremiums due continues through theplan year in which all plan assets aredistributed pursuant to a plan’stermination or in which a trustee isappointed under section 4042 of ERISA,whichever occurs earlier. The entirepremium computed under this part isdue, irrespective of whether the plan isentitled to a refund for a short plan yearpursuant to § 4006.5(f).

(e) Improper filings. Any form notfiled in accordance with this part, notfiled in accordance with the instructionsin the Premium Payment Package, notaccompanied by the required premiumpayment, or otherwise incomplete, may,in the discretion of the PBGC, bereturned with any paymentaccompanying the form to the planadministrator, and such payment shallbe treated as not having been made.

§ 4007.12 Liability for single-employerpremiums.

(a) The designation under this part ofthe plan administrator as the personrequired to file the applicable forms andto submit the premium payment for asingle-employer plan is a proceduralrequirement only and does not alter theliability for premium payments imposedby section 4007 of ERISA. Pursuant tosection 4007(e) of ERISA, both the planadministrator and the contributingsponsor of a single-employer plan areliable for premium payments, and, if thecontributing sponsor is a member of acontrolled group, each member of thecontrolled group is jointly and severallyliable for the required premiums. Anyentity that is liable for requiredpremiums is also liable for any interestand penalties assessed with respect tosuch premiums.

(b) For any plan year in which a planadministrator issues (pursuant to

section 4041(a)(2) of ERISA) notices ofintent to terminate in a distresstermination under section 4041(c) ofERISA or the PBGC initiates atermination proceeding under section4042 of ERISA, and for each plan yearthereafter, the obligation to pay thepremiums (and any interest or penaltiesthereon) imposed by ERISA and thispart for a single-employer plan shall bean obligation solely of the contributingsponsor and the members of itscontrolled group, if any.(Approved by the Office of Management andBudget under control number 1212–0009)

PART 4010—ANNUAL FINANCIAL ANDACTUARIAL INFORMATIONREPORTING

Sec.4010.1 Purpose and scope.4010.2 Definitions.4010.3 Filing requirement.4010.4 Filers.4010.5 Information year.4010.6 Information to be filed.4010.7 Identifying information.4010.8 Plan actuarial information.4010.9 Financial information.4010.10 Due date and filing with the PBGC.4010.11 Waivers and extensions.4010.12 Confidentiality of information

submitted.4010.13 Penalties.4010.14 OMB control number.

Authority: 29 U.S.C. 1302(b)(3); 29 U.S.C.1310.


This part prescribes the requirementsfor annual filings with the PBGC undersection 4010 of ERISA. This part appliesto filers for any information year endingon or after December 31, 1995.


The following terms are defined in§ 4001.2 of this chapter: benefitliabilities, Code, contributing sponsor,controlled group, ERISA, fair marketvalue, IRS, PBGC, person, plan, andplan year.

In addition, for purposes of this part:Exempt entity means a person who

does not have to file information andabout whom information does not haveto be filed, as described in § 4010.4(d)of this part.

Exempt plan means a plan aboutwhich actuarial information does nothave to be filed, as described in§ 4010.8(c) of this part.

Fair market value of the plan’s assetsmeans the fair market value of the plan’sassets at the end of the plan year endingwithin the filer’s information year(determined without regard to anycontributions receivable).


Filer means a person who is requiredto file reports, as described in § 4010.4of this part.

Fiscal year means, with respect to aperson, the person’s annual accountingperiod or, if the person has not adopteda closing date, the calendar year.

Information year means the yeardetermined under § 4010.5 of this part.

§ 4010.3 Filing requirement.

(a) In general. Except as provided in§ 4010.8(c) (relating to exempt plans)and except where waivers have beengranted under § 4010.11 of this part,each filer shall submit to the PBGCannually, on or before the due datespecified in § 4010.10, all informationspecified in § 4010.6(a) with respect toall members of a controlled group andall plans maintained by members of acontrolled group.

(b) Single controlled groupsubmission. Any filer or other personmay submit the information specified in§ 4010.6(a) on behalf of one or moremembers of a filer’s controlled group. Ifa person other than a filer submits theinformation, the submission must alsoinclude a written power of attorneysigned by a filer authorizing the personto act on behalf of one or more filers.

§ 4010.4 Filers.

(a) General. A contributing sponsor ofa plan and each member of thecontributing sponsor’s controlled groupis a filer with respect to an informationyear (unless exempted under paragraph(d) of this section) if—

(1) the aggregate unfunded vestedbenefits of all plans (including anyexempt plans) maintained by themembers of the contributing sponsor’scontrolled group exceed $50 million(disregarding those plans with nounfunded vested benefits);

(2) any member of a controlled groupfails to make a required installment orother required payment to a plan and,as a result, the conditions for impositionof a lien described in section 302(f)(1)(A) and (B) of ERISA or section412(n)(1) (A) and (B) of the Code havebeen met during the information year,and the required installment or otherrequired payment is not made withinten days after its due date; or

(3) any plan maintained by a memberof a controlled group has been grantedone or more minimum funding waiversunder section 303 of ERISA or section412(d) of the Code totaling in excess of$1 million that, as of the end of the planyear ending within the information year,are still outstanding (determined inaccordance with paragraph (c) of thissection).

(b) Unfunded vested benefits—(1)General. Except as provided inparagraph (b)(2) of this section, forpurposes of the $50 million test inparagraph (a)(1) of this section, thevalue of a plan’s unfunded vestedbenefits is determined at the end of theplan year ending within the filer’sinformation year in accordance withsection 4006(a)(3)(E)(iii) of ERISA and§ 4006.4 of this chapter (withoutreference to the exemptions and specialrules under § 4006.5).

(2) Optional assumptions. Prior to thefirst information year in which themortality assumptions prescribed undersection 302(d)(7)(C)(ii)(II) of ERISAapply to all of the plans maintained bya controlled group, the value ofunfunded vested benefits for a plan maybe determined by substituting for therespective assumptions used underparagraph (b)(1) of this section (but notusing the alternative calculation methodunder § 4006.4(c) of this chapter) all ofthe following assumptions:

(i) an interest rate equal to 100% ofthe annual yield for 30-year Treasuryconstant maturities (as reported inFederal Reserve Statistical Release G.13and H.15) for the last full calendarmonth in the plan year;

(ii) the fair market value of the plan’sassets; and

(iii) the mortality tables described insection 302(d)(7)(C)(ii)(I) of ERISA orsection 412(l)(7)(C)(ii)(I) of the Code;provided that for any plan year endingon or after the effective date of anamendment changing the mortalityassumptions used to value benefits to bepaid as annuities in trusteed plansunder part 4044 of this chapter, thoseamended mortality assumptions shall beused.

(c) Outstanding waiver. Before the endof the statutory amortization period, aminimum funding waiver for a plan isconsidered outstanding unless—

(1) a credit balance exists in thefunding standard account (described insection 302(b) of ERISA and section412(b) of the Code) that is no less thanthe outstanding balance of all waiversfor the plan;

(2) a waiver condition or contractualobligation requires that a credit balanceas described in paragraph (c)(1)continue to be maintained as of the endof each plan year during the remainderof the statutory amortization period forthe waiver; and

(3) no portion of any credit balancedescribed in paragraph (c)(1) is used tomake any required installment undersection 302(e) of ERISA or section412(m) of the Code for any plan yearduring the remainder of the statutoryamortization period.

(d) Exempt entities. A person is anexempt entity if the person—

(1) is not a contributing sponsor of aplan (other than an exempt plan);

(2) has revenue for its fiscal yearending within the controlled group’snformation year that is five percent orless of the controlled group’s revenuefor the fiscal year(s) ending within theinformation year;

(3) has annual operating income forthe fiscal year ending within thecontrolled group’s information year thatis no more than the greater of—

(i) five percent of the controlledgroup’s annual operating income for thefiscal year(s) ending within theinformation year, or

(ii) $5 million; and(4) has net assets at the end of the

fiscal year ending within the controlledgroup’s information year that is no morethan the greater of—

(i) five percent of the controlledgroup’s net assets at the end of the fiscalyear(s) ending within the informationyear, or

(ii) $5 million.

§ 4010.5 Information year.(a) Determinations based on

information year. An information year isused under this part to determine whichpersons are filers (§ 4010.4), whatinformation a filer must submit(§§ 4010.6–4010.9), whether a plan is anexempt plan (§ 4010.8(c)), and the duedate for submitting the information(§ 4010.10(a)).

(b) General. Except as provided inparagraph (c) of this section, a person’sinformation year shall be the fiscal yearof the person. A filer is not required tochange its fiscal year or the plan year ofa plan, to report financial informationfor any accounting period other than anexisting fiscal year, or to report actuarialinformation for any plan year other thanan existing plan year.

(c) Controlled group members withdifferent fiscal years— (1) Use ofcalendar year. If members of acontrolled group (disregarding anyexempt entity) report financialinformation on the basis of differentfiscal years, the information year shallbe the calendar year.

(2) Example. Filers A and B aremembers of the same controlled group.Filer A has a July 1 fiscal year, and filerB has an October 1 fiscal year. Theinformation year is the calendar year.Filer A’s financial information withrespect to its fiscal year ending June 30,1996, and filer B’s financial informationwith respect to its fiscal year endingSeptember 30, 1996, must be submittedto the PBGC following the end of the1996 calendar year (the calendar year in


which those fiscal years end). If filer Bwere an exempt entity, the informationyear would be filer A’s July 1 fiscal year.

§ 4010.6 Information to be filed.(a) General. A filer must submit the

information specified in § 4010.7(identifying information), § 4010.8 (planactuarial information) and § 4010.9(financial information) of this part withrespect to each member of the filer’scontrolled group and each planmaintained by any member of thecontrolled group.

(b) Additional information. By writtennotification, the PBGC may require anyfiler to submit additional actuarial orfinancial information that is necessaryto determine plan assets and liabilitiesfor any period through the end of thefiler’s information year, or the financialstatus of a filer for any period throughthe end of the filer’s information year.The information must be submittedwithin ten days after the date of thewritten notification or by a differenttime specified therein.

(c) Previous submissions. If anyrequired information has beenpreviously submitted to the PBGC, afiler may incorporate this informationinto the required submission byreferring to the previous submission.

§ 4010.7 Identifying information.(a) Filers. Each filer is required to

provide the following identifyinginformation with respect to eachmember of the controlled group(excluding exempt entities)—

(1) the name, address, and telephonenumber of each member of thecontrolled group and the legalrelationships of each (for example,parent, subsidiary); and

(2) the nine-digit EmployerIdentification Number (EIN) assigned bythe IRS to each member (or if there isno EIN for a member, an explanation).

(b) Plans. Each filer is required toprovide the following identifyinginformation with respect to each plan(including exempt plans) maintained byany member of the controlled group(including exempt entities)—

(1) the name of each plan;(2) the EIN and the three-digit Plan

Number (PN) assigned by thecontributing sponsor to each plan (or ifthere is no EIN or PN for a plan, anexplanation); and

(3) if the EIN or PN of a plan haschanged since the beginning of thefiler’s information year, the previousEIN or PN and an explanation.

§ 4010.8 Plan actuarial information.(a) Required information. For each

plan (other than an exempt plan)

maintained by any member of the filer’scontrolled group, each filer is requiredto provide the following actuarialinformation—

(1) the fair market value of the plan’sassets;

(2) the value of the plan’s benefitliabilities (determined in accordancewith paragraph (d) of this section) at theend of the plan year ending within thefiler’s information year;

(3) a copy of the actuarial valuationreport for the plan year ending withinthe filer’s information year that containsor is supplemented by the followinginformation—

(i) each amortization base and relatedamortization charge or credit to thefunding standard account (as defined insection 302 (b) of ERISA or section 412(b) of the Code) for that plan year(excluding the amount consideredcontributed to the plan as described insection 302(b)(3)(A) of ERISA or section412(b)(3)(A) of the Code),

(ii) the itemized development of theadditional funding charge payable forthat plan year pursuant to section 412(l)of the Code,

(iii) the minimum fundingcontribution and the maximumdeductible contribution for that planyear,

(iv) the actuarial assumptions andmethods used for that plan year forpurposes of section 302(b) and (d) ofERISA or section 412(b) and (l) of theCode (and any change in thoseassumptions and methods since theprevious valuation and justifications forany change), and

(v) a summary of the principaleligibility and benefit provisions onwhich the valuation of the plan wasbased (and any changes to thoseprovisions since the previousvaluation), along with descriptions ofany benefits not included in thevaluation, any significant events thatoccurred during that plan year, and theplan’s early retirement factors; and

(4) a written certification by anenrolled actuary that, to the best of hisor her knowledge and belief, theactuarial information submitted is true,correct, and complete and conforms toall applicable laws and regulations,provided that this certification may bequalified in writing, but only to theextent the qualification(s) are permittedunder 26 CFR § 301.6059–1(d).

(b) Alternative compliance for planactuarial information. If any of theinformation specified in paragraph (a)(3)of this section is not available by thedate specified in § 4010.10(a), a filermay satisfy the requirement to providesuch information by—

(1) including a statement, with thematerial that is submitted to the PBGC,that the filer will file the unavailableinformation by the alternative due datespecified in § 4010.10(b) of this part,and

(2) filing such information (along witha certification by an enrolled actuaryunder paragraph (a)(4) of this section)with the PBGC by that alternative duedate.

(c) Exempt plan. The actuarialinformation specified in this section isnot required with respect to a plan that,as of the end of the plan year endingwithin the filer’s information year, hasfewer than 500 participants or hasbenefit liabilities (determined inaccordance with paragraph (d) of thissection) equal to or less than the fairmarket value of the plan’s assets,provided that the plan—

(1) has received, on or within ten daysafter their due dates, all requiredinstallments or other payments requiredto be made during the information yearunder section 302 of ERISA or section412 of the Code; and

(2) has no minimum funding waiversoutstanding (as described in § 4010.4(c)of this part) as of the end of the planyear ending within the information year.

(d) Value of benefit liabilities. Thevalue of a plan’s benefit liabilities at theend of a plan year shall be determinedusing the plan census data described inparagraph (d)(1) of this section and theactuarial assumptions and methodsdescribed in paragraph (d)(2) or, whereapplicable, (d)(3) of this section.

(1) Census data.(i) Census data period. Plan census

data shall be determined (for all plansfor any information year) either as of theend of the plan year or as of thebeginning of the next plan year.

(ii) Projected census data. If actualplan census data is not available, a planmay use a projection of plan census datafrom a date within the plan year. Theprojection must be consistent withprojections used to measure pensionobligations of the plan for financialstatement purposes and must give aresult appropriate for the end of theplan year for these obligations. Forexample, adjustments to the projectionprocess will be required where there hasbeen a significant event (such as a planamendment or a plant shutdown) thathas not been reflected in the projectiondata.

(2) Actuarial assumptions andmethods. The value of benefit liabilitiesshall be determined using theassumptions and methods applicable tothe valuation of benefits to be paid asannuities in trusteed plans terminatingat the end of the plan year (as prescribed


in §§ 4044.51 through 4044.57 of thischapter).

(3) Special actuarial assumptions forexempt plan determination. Solely forpurposes of determining whether a planis an exempt plan, the value of benefitliabilities may be determined bysubstituting for the retirement ageassumptions in paragraph (d)(2) theretirement age assumptions used by theplan for that plan year for purposes ofsection 302(d) of ERISA or section 412(l)of the Code.

§ 4010.9 Financial information.(a) General. Except as provided in this

section, each filer is required to providethe following financial information foreach controlled group member (otherthan an exempt entity)—

(1) audited financial statements forthe fiscal year ending within theinformation year (including balancesheets, income statements, cash flowstatements, and notes to the financialstatements);

(2) if audited financial statements arenot available by the date specified in§ 4010.10(a), unaudited financialstatements for the fiscal year endingwithin the information year; or

(3) if neither audited nor unauditedfinancial statements are available by thedate specified in § 4010.10(a), copies offederal tax returns for the tax yearending within the information year.

(b) Consolidated financial statements.If the financial information of acontrolled group member is combinedwith the information of other groupmembers in consolidated financialstatements, a filer may provide thefollowing financial information in lieuof the information required in paragraph(a) of this section—

(1) the audited consolidated financialstatements for the filer’s informationyear or, if the audited consolidatedfinancial statements are not available bythe date specified in § 4010.10(a),unaudited consolidated financialstatements for the fiscal year endingwithin the information year; and

(2) for each controlled group memberincluded in the consolidated financialstatements that is a contributing sponsorof a plan (other than an exempt plan),the contributing sponsor’s revenues andoperating income for the informationyear, and net assets at the end of theinformation year.

(c) Subsequent submissions. Ifunaudited financial statements aresubmitted as provided in paragraph(a)(2) or (b)(1) of this section, auditedfinancial statements must thereafter befiled within 15 days after they areprepared. If federal tax returns aresubmitted as provided in paragraph

(a)(3) of this section, audited andunaudited financial statements mustthereafter be filed within 15 days afterthey are prepared.

(d) Submission of public information.If any of the financial informationrequired by paragraphs (a) through (c) ofthis section is publicly available, thefiler, in lieu of submitting suchinformation to the PBGC, may include astatement with the other informationthat is submitted to the PBGC indicatingwhen such financial information wasmade available to the public and wherethe PBGC may obtain it. For example, ifthe controlled group member has filedaudited financial statements with theSecurities and Exchange Commission, itneed not file the financial statementswith PBGC but instead can identify theSEC filing as part of its submissionunder this part.

(e) Inclusion of information aboutnon-filers and exempt entities.Consolidated financial statementsprovided pursuant to paragraph (b)(1) ofthis section may include financialinformation of persons who are notcontrolled group members (e.g., jointventures) or are exempt entities.

§ 4010.10 Due date and filing with thePBGC.

(a) Due date. Except as permittedunder paragraph (b) of this section, afiler shall file the information requiredunder this part with the PBGC on orbefore the 105th day after the close ofthe filer’s information year.

(b) Alternative due date. A filer thatincludes the statement specified in§ 4010.8(b)(1) with its submission to thePBGC by the date specified in paragraph(a) of this section must submit theactuarial information specified in§ 4010.8(b)(2) within 15 days after thedeadline for filing the plan’s annualreport (Form 5500 series) for the planyear ending within the filer’sinformation year (see § 2520.104a–5(a)(2) of this title).

(c) How to file. Requests andinformation may be delivered by mail,by delivery service, by hand, or by anyother method acceptable to the PBGC,to: Corporate Finance and NegotiationsDepartment, Pension Benefit GuarantyCorporation, 1200 K Street, N.W.,Washington, DC 20005–4026.

(d) Date when information filed.Information filed under this part isconsidered filed—

(1) on the date of the United Statespostmark stamped on the cover inwhich the information is mailed, if—

(i) the postmark was made by theUnited States Postal Service; and

(ii) the document was mailed postageprepaid, properly addressed to thePBGC; or

(2) if the conditions stated inparagraph (d)(1) of this section are notmet, on the date it is received by thePBGC. Information received on aweekend or Federal holiday or after 5:00p.m. on a weekday is considered filedon the next regular business day.

(e) Computation of time. In computingany period of time under this part, theday of the act or event from which thedesignated period of time begins to runshall not be included. The last day ofthe period so computed shall beincluded, unless it is a weekend orFederal holiday, in which event theperiod runs until the end of the next daythat is not a weekend or Federalholiday.

§ 4010.11 Waivers and extensions.The PBGC may waive the requirement

to submit information with respect toone or more filers or plans or mayextend the applicable due date or datesspecified in § 4010.10 of this part. ThePBGC will exercise this discretion inappropriate cases where it findsconvincing evidence supporting awaiver or extension; any waiver orextension may be subject to conditions.A request for a waiver or extension mustbe filed in writing with the PBGC at theaddress provided in § 4010.10(c) nolater than 15 days before the applicabledate specified in § 4010.10 of this part,and must state the facts andcircumstances on which the request isbased.

§ 4010.12 Confidentiality of informationsubmitted.

In accordance with § 4901.21(a)(3) ofthis chapter and section 4010(c) ofERISA, any information or documentarymaterial that is not publicly availableand is submitted to the PBGC pursuantto this part shall not be made public,except as may be relevant to anyadministrative or judicial action orproceeding or for disclosures to eitherbody of Congress or to any dulyauthorized committee or subcommitteeof the Congress.

§ 4010.13 Penalties.If all of the information required

under this part is not provided withinthe specified time limit, the PBGC mayassess a separate penalty under section4071 of ERISA against the filer and eachmember of the filer’s controlled group(other than an exempt entity) of up to$1,000 a day for each day that thefailure continues. The PBGC may alsopursue other equitable or legal remediesavailable to it under the law.


§ 4010.14 OMB control number.The collection of information

requirements contained in this part havebeen approved by the Office ofManagement and Budget under OMBControl Number 1212–0049.

PART 4011—DISCLOSURE TOPARTICIPANTS

Sec.4011.1 Purpose and scope.4011.2 Definitions.4011.3 Notice requirement.4011.4 Small plan rules.4011.5 Exemption for new and newly-

covered plans.4011.6 Mergers, consolidations, and

spinoffs.4011.7 Persons entitled to receive notice.4011.8 Time of notice.4011.9 Manner of issuance of notice.4011.10 Form of notice.4011.11 OMB control number.

Appendix A to Part 4011—Model ParticipantNotice. Appendix B to Part 4011—Table ofmaximum Guaranteed Benefits.

Authority: 29 U.S.C. 1302(b)(3), 1311.

§ 4011.1 Purpose and scope.This part prescribes rules and

procedures for complying with therequirements of section 4011 of ERISA.This part applies for any plan yearbeginning on or after January 1, 1995,with respect to any single-employerplan that is covered by section 4021 ofERISA.


§ 4001.2 of this chapter: contributingsponsor, employer, ERISA, normalretirement age, PBGC, person, plan, planadministrator, plan year, and single-employer plan.

In addition, for purposes of this part:Participant has the meaning in

§ 4041.2 of this chapter.Participant Notice means the notice

required pursuant to section 4011 ofERISA and this part.

§ 4011.3 Notice requirement.(a) General. Except as otherwise

provided in this part, the planadministrator of a plan must provide aParticipant Notice for a plan year if avariable rate premium is payable for theplan under section 4006(a)(3)(E) ofERISA and part 4006 of this chapter forthat plan year, unless, for that plan yearor for the prior plan year, the plan meetsthe Deficit Reduction Contribution(‘‘DRC’’) Exception Test in paragraph (b)of this section. The DRC Exception Testmay be applied using the Small PlanDRC Exception Test rules in § 4011.4(b),where applicable.

(b) DRC Exception Test—(1) Basicrule. A plan meets the DRC Exception

Test for a plan year if it is exempt fromthe requirements of section 302(d) ofERISA for that plan year by reason ofsection 302(d)(9), without regard to thesmall plan exemption in section302(d)(6)(A).

(2) 1994 plan year. A plan satisfies theDRC Exception Test for the 1994 planyear if, for any two of the plan yearsbeginning in 1992, 1993, and 1994(whether or not consecutive), the plansatisfies any requirement of section302(d)(9)(D)(i) of ERISA.

(c) Penalties for non-compliance. If aplan administrator fails to provide aParticipant Notice within the specifiedtime limit or omits material informationfrom a Participant Notice, the PBGCmay assess a penalty under section 4071of ERISA of up to $1,000 a day for eachday that the failure continues.

§ 4011.4 Small plan rules.(a) 1995 plan year exemption. A plan

that is exempt from the requirements ofsection 302(d) of ERISA for the 1994 or1995 plan year by reason of section302(d)(6)(A) is exempt from theParticipant Notice requirement for the1995 plan year.

(b) Small Plan DRC Exception Test. Indetermining whether the ParticipantNotice requirement applies for a planyear beginning after 1995, the planadministrator of a plan that is exemptfrom the requirements of section 302(d)of ERISA by reason of section302(d)(6)(A) for the plan year beingtested may use any one or more of thefollowing rules in determining whetherthe plan meets the DRC Exception Testfor that plan year:

(1) Use of Schedule B data. For anyplan year for which the plan is exemptfrom the requirements of section 302(d)of ERISA by reason of section302(d)(6)(A), provided both of thefollowing adjustments are made—

(i) The market value of the plan’sassets as of the beginning of the planyear (as required to be reported on Form5500, Schedule B) may be substitutedfor the actuarial value of the plan’sassets as of the valuation date; and

(ii) The plan’s current liability for allparticipants’ total benefits as of thebeginning of the plan year (as requiredto be reported on Form 5500, ScheduleB) may be substituted for the plan’scurrent liability as of the valuation date.

(2) Pre-1995 plan year 90 percent test.A plan that is exempt from therequirements of section 302(d) of ERISAfor a pre-1995 plan year by reason ofsection 302(d)(6)(A) satisfies therequirements of section 302(d)(9)(D)(i)for that pre-1995 plan year if the ratioof its assets to its current liability forthat plan year is at least 90 percent. For

this purpose, the plan’s assets arevalued without subtracting any creditbalance under section 302(b) of ERISA,and its current liability is determinedusing the highest interest rate allowablefor the plan year under section302(d)(7)(C).

(3) Interest rate adjustment. If theinterest rate used to calculate currentliability for a plan year is less than thehighest rate allowable for the plan yearunder section 302(d)(7)(C) of ERISA, thecurrent liability may be reduced by onepercent for each tenth of a percentagepoint by which the highest rate exceedsthe rate so used.

§ 4011.5 Exemption for new and newly-covered plans.

A plan (other than a plan resultingfrom a consolidation or spinoff) isexempt from the Participant Noticerequirement for the first plan year forwhich the plan must pay premiumsunder parts 4006 and 4007 of thischapter.

§ 4011.6 Mergers, consolidations, andspinoffs.

In the case of a plan involved in amerger, consolidation, or spinofftransaction that becomes effectiveduring a plan year, the planadministrator shall apply therequirements of section 4011 of ERISAand of this part for that plan year in areasonable manner to ensure that theParticipant Notice serves its statutorypurpose.

§ 4011.7 Persons entitled to receive notice.The plan administrator must provide

the Participant Notice to each personwho is a participant, a beneficiary of adeceased participant, an alternate payeeunder an applicable qualified domesticrelations order (as defined in section206(d)(3) of ERISA), or an employeeorganization that represents any groupof participants for purposes of collectivebargaining. To determine who is aperson that must receive the ParticipantNotice for a plan year, the planadministrator may select any dateduring the period beginning with thelast day of the previous plan year andending with the day on which theParticipant Notice for the plan year isdue, provided that a change in the datefrom one plan year to the next does notexclude a substantial number ofparticipants and beneficiaries.

§ 4011.8 Time of notice.The plan administrator must issue the

Participant Notice for a plan year nolater than two months after the deadline(including extensions) for filing theannual report for the previous plan year(see § 2520.104a–5(a)(2) of this title).


The plan administrator may change thedate of issuance from one plan year tothe next, provided that the effect of anychange is not to avoid disclosing aminimum funding waiver under§ 4011.10(b)(5) or a missed contributionunder § 4011.10(b)(6). When thePresident of the United States declaresthat, under the Disaster Relief Act of1974, as amended (42 U.S.C. 5121,5122(2), 5141(b)), a major disasterexists, the PBGC may extend the duedate for providing the Participant Noticeby up to 180 days.

§ 4011.9 Manner of issuance of notice.The Participant Notice shall be issued

by using measures reasonably calculatedto ensure actual receipt by the personsentitled to receive it. It may be issuedtogether with another document, suchas the summary annual report requiredunder section 104(b)(3) of ERISA for theprior plan year, but must be in aseparate document.

§ 4011.10 Form of notice.(a) General. The Participant Notice

(and any additional information underparagraph (d) of this section) shall bereadable and written in a mannercalculated to be understood by theaverage plan participant and not tomislead recipients. The ModelParticipant Notice in Appendix A to thispart (when properly completed) is anexample of a Participant Notice meetingthe requirements of this section.

(b) Content. The Participant Notice fora plan year shall include—

(1) Identifying information (the nameof the plan and the contributingsponsor, the employer identificationnumber of the contributing sponsor, theplan number, the date (at least themonth and year) on which theParticipant Notice is issued, and thename, title, address and telephonenumber of the person(s) who canprovide information about the plan’sfunding);

(2) A statement to the effect that theParticipant Notice is required by law;

(3) The Notice Funding Percentage forthe plan year, determined in accordancewith paragraph (c) of this section, andthe date as of which the Notice FundingPercentage is determined;

(4) A statement to the effect that—(i) To pay pension benefits, the

employer is required to contributemoney to the plan over a period ofyears;

(ii) A plan’s funding percentage doesnot take into consideration the financialstrength of the employer; and

(iii) The employer, by law, must payfor all pension benefits, but benefitsmay be at risk if the employer faces a

severe financial crisis or is inbankruptcy;

(5) If, for any of the five plan yearsimmediately preceding the plan year,the plan has been granted a minimumfunding waiver under section 303 ofERISA that has not (as of the end of theprior plan year) been fully repaid, astatement identifying each such planyear and an explanation of a minimumfunding waiver;

(6) For any payment subject to therequirements of this paragraph, astatement identifying the due date forthe payment and noting that thepayment has or has not been made and(if made) the date of the payment. Onceparticipants have been notified (underthis part or Title I of ERISA) of a missedcontribution that is subject to therequirements of this paragraph, thedelinquency need not be reported in aParticipant Notice for a subsequent planyear if the missed contribution has beenpaid in full by the time the subsequentParticipant Notice is issued. Thepayments subject to the requirements ofthis paragraph are—

(i) Any minimum funding paymentnecessary to satisfy the minimumfunding standard under section 302(a)of ERISA for any plan year beginning onor after January 1, 1994, if not paid bythe earlier of the due date for thatpayment (the latest date allowed undersection 302(c)(10)) or the date ofissuance of the Participant Notice; and

(ii) An installment or other paymentrequired by section 302 of ERISA for aplan year beginning on or after January1, 1995, that was not paid by the 60thday after the due date for that payment;

(7) A statement to the effect that if aplan terminates before all pensionbenefits are fully funded, the PBGC paysmost persons all pension benefits, butsome persons may lose certain benefitsthat are not guaranteed;

(8) A summary of plan benefitsguaranteed by the PBGC, with anexplanation of the limitations on suchguarantee; and

(9) A statement that furtherinformation about the PBGC’s guaranteemay be obtained by requesting a freecopy of the booklet ‘‘Your GuaranteedPension’’ from Consumer InformationCenter, Dept. YGP, Pueblo, Colorado81009. The Participant Notice mayinclude a statement that the booklet maybe obtained through electronic accessvia the World Wide Web from the PBGCHomepage at http://www.pbgc.gov/ygp.htm.

(c) Notice Funding Percentage—(1) General Rule. The Notice Funding

Percentage that must be included in theParticipant Notice for a plan year is the‘‘funded current liability percentage’’ (as

that term is defined in section302(d)(9)(C) of ERISA) for that plan yearor the prior plan year.

(2) Small plans. A plan that is exemptfrom the requirements of section 302(d)of ERISA for a plan year by reason ofsection 302(d)(6)(A) may determine itsfunded current liability percentage forthat plan year using the Small Plan DRCException Test rules in § 4011.4(b).

(d) Additional information. The planadministrator may include with theParticipant Notice any information notdescribed in paragraph (b) of thissection only if it is in a separatedocument.

(e) Foreign languages. In the case ofa plan that (as of the date selected under§ 4011.7) covers the numbers orpercentages specified in § 2520.104b–10(e) of this title of participants literateonly in the same non-English language,the plan administrator shall providethose participants either—

(1) An English-language ParticipantNotice that prominently displays alegend, in their common non-Englishlanguage, offering them assistance inthat language, and clearly setting forthany procedures participants must followto obtain such assistance, or

(2) A Participant Notice in thatlanguage.

§ 4011.11 OMB control number.

The collections of informationcontained in this part have beenapproved by the Office of Managementand Budget under OMB control number1212–0050.

Appendix A to Part 4011—ModelParticipant Notice

The following is an example of aParticipant Notice that satisfies therequirements of § 4011.10 when the requiredinformation is filled in (subject to§§ 4011.10(d)–(e), where applicable).

Notice to Participants of [Plan Name]The law requires that you receive

information on the funding level of yourdefined benefit pension plan and the benefitsguaranteed by the Pension Benefit GuarantyCorporation (PBGC), a federal insuranceagency. YOUR PLAN’S FUNDING

As of [DATE], your plan had [INSERTNOTICE FUNDING PERCENTAGE(DETERMINED IN ACCORDANCE WITH§ 4011.10(c))] percent of the money needed topay benefits promised to employees andretirees.

To pay pension benefits, your employer isrequired to contribute money to the pensionplan over a period of years. A plan’s fundingpercentage does not take into considerationthe financial strength of the employer. Youremployer, by law, must pay for all pensionbenefits, but your benefits may be at risk ifyour employer faces a severe financial crisisor is in bankruptcy.


[INCLUDE THE FOLLOWINGPARAGRAPH ONLY IF, FOR ANY OF THEPREVIOUS FIVE PLAN YEARS, THE PLANHAS BEEN GRANTED AND HAS NOTFULLY REPAID A FUNDING WAIVER.]

Your plan received a funding waiver for[LIST ANY OF THE FIVE PREVIOUS PLANYEARS FOR WHICH A FUNDING WAIVERWAS GRANTED AND HAS NOT BEENFULLY REPAID]. If a company isexperiencing temporary financial hardship,the Internal Revenue Service may grant afunding waiver that permits the company todelay contributions that fund the pensionplan.

[INCLUDE THE FOLLOWING WITHRESPECT TO ANY UNPAID OR LATEPAYMENT THAT MUST BE DISCLOSEDUNDER § 4011.10(b)(6):]

Your plan was required to receive apayment from the employer on [LISTAPPLICABLE DUE DATE(S)]. That payment[has not been made] [was made on [LISTAPPLICABLE PAYMENT DATE(S)]].PBGC GUARANTEES

When a pension plan ends without enoughmoney to pay all benefits, the PBGC steps into pay pension benefits. The PBGC pays mostpeople all pension benefits, but some peoplemay lose certain benefits that are notguaranteed.

The PBGC pays pension benefits up tocertain maximum limits.

• The maximum guaranteed benefit is[INSERT FROM TABLE IN APPENDIX B] permonth or [INSERT FROM TABLE INAPPENDIX B] per year for a 65-year-oldperson in a plan that terminates in [INSERTAPPLICABLE YEAR].

• The maximum benefit may be reducedfor an individual who is younger than age 65.For example, it is [INSERT FROM TABLE INAPPENDIX B] per month or [INSERT FROMTABLE IN APPENDIX B] per year for anindividual who starts receiving benefits atage 55. [IN LIEU OF AGE 55, YOU MAY ADDOR SUBSTITUTE ANY AGE(S) RELEVANTUNDER THE PLAN. FOR EXAMPLE, YOUMAY ADD OR SUBSTITUTE THEMAXIMUM BENEFIT FOR AGES 62 OR 60FROM THE TABLE IN APPENDIX B. IF THEPLAN PROVIDES FOR NORMALRETIREMENT BEFORE AGE 65, YOU MUSTINCLUDE THE NORMAL RETIREMENTAGE.]

[IF THE PLAN DOES NOT PROVIDEFOR COMMENCEMENT OF BENEFITSBEFORE AGE 65, YOU MAY OMITTHIS PARAGRAPH.]

• The maximum benefit will also bereduced when a benefit is provided for asurvivor.

The PBGC does not guarantee certain typesof benefits.

[INCLUDE THE FOLLOWINGGUARANTEE LIMITS THAT APPLY TO THEBENEFITS AVAILABLE UNDER YOURPLAN.]

• The PBGC does not guarantee benefitsfor which you do not have a vested rightwhen a plan ends, usually because you havenot worked enough years for the company.

• The PBGC does not guarantee benefitsfor which you have not met all age, service,or other requirements at the time the planends.

• Benefit increases and new benefits thathave been in place for less than a year are

not guaranteed. Those that have been inplace for less than 5 years are only partlyguaranteed.

• Early retirement payments that aregreater than payments at normal retirementage may not be guaranteed. For example, asupplemental benefit that stops when youbecome eligible for Social Security may notbe guaranteed.

• Benefits other than pension benefits,such as health insurance, life insurance,death benefits, vacation pay, or severancepay, are not guaranteed.

• The PBGC does not pay lump sumsexceeding $3,500.

WHERE TO GET MORE INFORMATION

Your plan, [EIN–PN], is sponsored by[CONTRIBUTING SPONSOR(S)]. If youwould like more information about thefunding of your plan, contact [INSERTNAME, TITLE, BUSINESS ADDRESS ANDPHONE NUMBER OF INDIVIDUAL ORENTITY].

For more information about the PBGC andthe benefits it guarantees, you may request afree copy of ‘‘Your Guaranteed Pension’’ bywriting to Consumer Information Center,Dept. YGP, Pueblo, Colorado 81009.

[THE FOLLOWING SENTENCE MAY BEINCLUDED:] ‘‘Your Guaranteed Pension’’ isalso available from the PBGC Homepage onthe World Wide Web at http://www.pbgc.gov/ygp.htm.

Issued: [INSERT AT LEAST MONTH ANDYEAR]

Appendix B to Part 4011—Table ofMaximum Guaranteed Benefits

If a plan terminates in—

The maximum guaranteed benefit for an individual starting to receive benefits at the age listed below is theamount (monthly or annual) listed below:

Age 65 Age 62 Age 60 Age 55

Monthly Annual Monthly Annual Monthly Annual Monthly Annual

1995 ................................... $2,573.86 $30,886.32 $2,033.35 $24,400.20 $1,673.01 $20,076.12 $1,158.24 $13,898.881996 ................................... $2,642.05 $31,704.60 $2,087.22 $25,046.64 $1,717.33 $20,607.96 $1,188.92 $14,267.04

The maximum guaranteed benefit for anindividual starting to receive benefits at agesother than those listed above can bedetermined by applying the PBGC’sregulation on computation of maximumguaranteeable benefits (29 CFR 4022.22).

PART 4022—BENEFITS PAYABLE INTERMINATED SINGLE-EMPLOYERPLANS

Subpart A—General Provisions;Guaranteed Benefits

Sec.4022.1 Purpose and scope.4022.2 Definitions.4022.3 Guaranteed benefits.4022.4 Entitlement to a benefit.4022.5 Determination of nonforfeitable

benefits.4022.6 Annuity payable for total disability.4022.7 Benefits payable in a single

installment.

Subpart B—Limitations on GuaranteedBenefits

4022.21 Limitations; in general.4022.22 Maximum guaranteeable benefit.4022.23 Computation of maximum

guaranteeable benefits.4022.24 Benefit increases.4022.25 Five-year phase-in of benefit

guarantee for participants other thansubstantial owners.

4022.26 Phase-in of benefit guarantee forparticipants who are substantial owners.

4022.27 Effect of tax disqualification.

Subpart C—Calculation and Payment ofUnfunded Nonguaranteed Benefits[Reserved]

Subpart D—Benefit Reductions inTerminating Plans

4022.61 Limitations on benefit payments byplan administrator.

4022.62 Estimated guaranteed benefit.4022.63 Estimated title IV benefit.

Subpart E—PBGC Recoupment andReimbursement of Benefit Overpaymentsand Underpayments

4022.81 General rules.4022.82 Method of recoupment.4022.83 PBGC reimbursement of benefit

underpayments.

Appendix A to Part 4022—MaximumGuaranteeable Monthly Benefit

Authority: 29 U.S.C. 1302, 1322, 1322b,1341(c)(3)(D), and 1344.

Subpart A—General Provisions;Guaranteed Benefits


The purpose of this part is toprescribe rules governing thecalculation and payment of benefitspayable in terminated single-employerplans under section 4022 of ERISA.Subpart A, which applies to each plan


providing benefits guaranteed undertitle IV of ERISA, contains definitionsapplicable to all subparts, and describesbasic-type benefits that are guaranteedby the PBGC subject to the limitationsset forth in Subpart B. Subpart C isreserved for rules relating to thecalculation and payment of unfundednonguaranteed benefits under section4022(c) of ERISA. Subpart D prescribesprocedures that minimize theoverpayment of benefits by planadministrators after initiating distressterminations of single-employer plansthat are not expected to be sufficient forguaranteed benefits. Subpart E sets forththe method of recoupment of benefitpayments in excess of the amountspermitted under sections 4022, 4022B,and 4044 of ERISA from participantsand beneficiaries in PBGC-trusteedplans, and provides for reimbursementof benefit underpayments. (Theprovisions of this part have not beenamended to take account of changesmade in section 4022 of ERISA bysections 766 and 777 of the RetirementProtection Act of 1994.)


§ 4001.2 of this chapter: annuity, Code,employer, ERISA, guaranteed benefit,mandatory employee contributions,nonforfeitable benefit, normalretirement age, notice of intent toterminate, PBGC, person, plan, planadministrator, plan year, proposedtermination date, substantial owner, andtitle IV benefit.

In addition, for purposes of this part(unless otherwise required by thecontext):

Accumulated mandatory employeecontributions means mandatoryemployee contributions plus interestcredited on those contributions underthe plan, or, if greater, interest requiredby section 204(c) of ERISA.

Benefit in pay status means that oneor more benefit payments have beenmade or would have been made exceptfor administrative delay.

Benefit increase means any benefitarising from the adoption of a new planor an increase in the value of benefitspayable arising from an amendment toan existing plan. Such increasesinclude, but are not limited to, ascheduled increase in benefits under aplan or plan amendment, such as a cost-of-living increase, and any change inplan provisions which advances aparticipant’s or beneficiary’s entitlementto a benefit, such as liberalizedparticipation requirements or vestingschedules, reductions in the normal orearly retirement age under a plan, andchanges in the form of benefit payments.

In the case of a plan under which theamount of benefits depends on theparticipant’s salary and the participantreceives a salary increase the resultingincrease in benefits to which theparticipant becomes entitled will not,for the purpose of this part, be treatedas a benefit increase. Similarly, in thecase of a plan under which the amountof benefits depends on the participant’sage or service, and the participantbecomes entitled to increased benefitssolely because of advancement in age orservice, the increased benefits to whichthe participant becomes entitled willnot, for the purpose of this part, betreated as a benefit increase.

Covered employment meansemployment with respect to whichbenefits accrue under a plan.

Pension benefit means a benefitpayable as an annuity, or one or morepayments related thereto, to aparticipant who permanently leaves orhas permanently left coveredemployment, or to a survivingbeneficiary, which payments bythemselves or in combination withSocial Security, Railroad Retirement, orworkmen’s compensation benefitsprovide a substantially level income tothe recipient.

Straight life annuity means a series oflevel periodic payments payable for thelife of the recipient, but does notinclude any combined annuity form,including an annuity payable for a termcertain and life.

§ 4022.3 Guaranteed benefits.Except as otherwise provided in this

part, the PBGC will guarantee theamount, as of the termination date, of abenefit provided under a plan to theextent that the benefit does not exceedthe limitations in ERISA and in subpartB, if—

(a) The benefit is a nonforfeitablebenefit;

(b) The benefit qualifies as a pensionbenefit as defined in § 4022.2; and

(c) The participant is entitled to thebenefit under § 4022.4.

§ 4022.4 Entitlement to a benefit.(a) A participant or his surviving

beneficiary is entitled to a benefit ifunder the provisions of a plan:

(1) The benefit was in pay status onthe date of the termination of the plan.

(2) A benefit payable at normalretirement age is an optional form ofpayment to the benefit otherwisepayable at such age and the participantelected the benefit before thetermination date of the plan.

(3) Except for a benefit described inparagraph (a)(2) of this section, beforethe termination date the participant had

satisfied the conditions of the plannecessary to establish the right toreceive the benefit prior to such dateother than application for the benefit,satisfaction of a waiting perioddescribed in the plan, or retirement; or

(4) Absent an election by theparticipant, the benefit would bepayable upon retirement.

(5) In the case of a benefit that returnsall or a portion of a participant’saccumulated mandatory employeecontributions upon death, theparticipant (or beneficiary) had satisfiedthe conditions of the plan necessary toestablish the right to the benefit otherthan death or designation of abeneficiary.

(b) If none of the conditions set forthin paragraph (a) of this section is met,the PBGC will determine whether theparticipant is entitled to a benefit on thebasis of the provisions of the plan andthe circumstances of the case.

§ 4022.5 Determination of nonforfeitablebenefits.

(a) A guaranteed benefit payable to asurviving beneficiary is not consideredto be forfeitable solely because the planprovides that the benefit will ceaseupon the remarriage of such beneficiaryor his attaining a specified age.However, the PBGC will observe theprovisions of the plan relating to theeffect of such remarriage or attainmentof such specified age on the survivingbeneficiary’s eligibility to continue toreceive benefit payments.

(b) Any other provision in a plan thatthe right to a benefit in pay status willcease or be suspended upon theoccurrence of any specified conditiondoes not automatically make that benefitforfeitable. In each such case the PBGCwill determine whether the benefit isforfeitable.

(c) A benefit guaranteed under§ 4022.6 shall not be consideredforfeitable solely because the planprovides that upon recovery of theparticipant the benefit will cease.

§ 4022.6 Annuity payable for totaldisability.

(a) Except as provided in paragraph(b) of this section, an annuity which ispayable (or would be payable after awaiting period described in the plan,whether or not the participant is inreceipt of other benefits during suchwaiting period), under the terms of aplan on account of the total andpermanent disability of a participantwhich is expected to last for the life ofthe participant and which began beforethe termination date is considered to bea pension benefit.

(b) In any case in which the PBGCdetermines that the standards for


determining such total and permanentdisability under a plan wereunreasonable, or were modified inanticipation of termination of the plan,the disability benefits payable to aparticipant under such standard shallnot be guaranteed unless the participantmeets the standards of the SocialSecurity Act and the regulationspromulgated thereunder for determiningtotal disability.

(c) For the purpose of this section, aparticipant may be required, upon therequest of the PBGC, to submit to anexamination or to submit proof ofcontinued total and permanentdisability. If the PBGC finds that aparticipant is no longer so disabled, itmay suspend, modify, or discontinuethe payment of the disability benefit.

§ 4022.7 Benefits payable in a singleinstallment.

(a) Alternative benefit. If a benefit thatis guaranteed under this part is payablein a single installment or substantiallyso under the terms of the plan, or anoption elected under the plan by theparticipant, the benefit will not beguaranteed or paid as such, but thePBGC will guarantee the alternativebenefit, if any, in the plan whichprovides for the payment of equalperiodic installments for the life of therecipient. If the plan provides more thanone such annuity, the recipient maywithin 30 days after notification of theproposed termination of the plan electto receive one of those annuities. If theplan does not provide such an annuity,the PBGC will guarantee an actuariallyequivalent life annuity.

(b)(1) Payment in single installments.Notwithstanding paragraph (a) of thissection, in any case in which the valueof a guaranteed benefit payable by thePBGC is $3,500 or less, the total valueof the guaranteed benefit may be paid ina single payment. For purposes ofdetermining the value of the guaranteedbenefit, subtract from the value of theguaranteed benefit, any amounts that arereturned under paragraph (b)(2) of thissection, but only to the extent suchamounts do not exceed the value of theportion of an individual’s benefitderived from mandatory employeecontributions that is guaranteed.

(2) Return of employeecontributions—

(i) General. Notwithstanding anyother provision of this part, the PBGCmay pay in a single installment (or aseries of installments) instead of as anannuity, the value of the portion of anindividual’s basic-type benefit derivedfrom mandatory employeecontributions, if:

(A) The individual elects payment ina single installment (or a series ofinstallments) before the sixty-first (61st)day after the date he or she receivesnotice that such an election is available;and

(B) Payment in a single installment (ora series of installments) is consistentwith the plan’s provisions. For purposesof this part, the portion of anindividual’s basic-type benefit derivedfrom mandatory employee contributionsis determined under § 4044.12 (prioritycategory 2 benefits) of this chapter, andthe value of that portion is computedunder the applicable rules contained inpart 4044, subpart B, of this chapter.

(ii) Set-off for distributions aftertermination. The amount to be returnedunder paragraph (b)(2)(i) of this sectionis reduced by the set-off amount. Theset-off amount is the amount by whichdistributions made to the individualafter the termination date exceed theamount that would have beendistributed, exclusive of mandatoryemployee contributions, if theindividual had withdrawn themandatory employee contributions onthe termination date.

Example: Participant A is receiving abenefit of $600 per month when theplan terminates, $200 of which isderived from mandatory employeecontributions. If the participant hadwithdrawn his contributions on thetermination date, his benefit would havebeen reduced to $400 per month. Theparticipant receives two monthlypayments after the termination date.The set-off amount is $400. (The $600actual payment minus the $400 theparticipant would have received if hehad withdrawn his contributionsmultiplied by the two months for whichhe received the extra payment.)

(c) Death benefits—(1) General. Notwithstanding

paragraph (a) of this section, a benefitthat would otherwise be guaranteedunder the provisions of this subpart,except for the fact that it is payablesolely in a single installment (orsubstantially so) upon the death of aparticipant, shall be paid by the PBGCas an annuity that has the same value asthe single installment. The PBGC will ineach case determine the amount andduration of the annuity based on all thefacts and circumstances.

(2) Exception. Upon the death of aparticipant the PBGC may pay in asingle installment (or a series ofinstallments) that portion of theparticipant’s accumulated mandatoryemployee contributions that is payableunder the plan in a single installment(or a series of installments) upon theparticipant’s death.

Subpart B—Limitations on GuaranteedBenefits

§ 4022.21 Limitations; in general.

(a)(1) Subject to paragraphs (b), (c)and (d) of this section, the PBGC willnot guarantee that part of an installmentpayment that exceeds the dollar amountpayable as a straight life annuitycommencing at normal retirement age,or thereafter, to which a participantwould have been entitled under theprovisions of the plan in effect on thetermination date, on the basis of hiscredited service to such date. If the plandoes not provide a straight life annuityeither as its normal form of retirementbenefit or as an option to the normalform, the PBGC will for purposes of thisparagraph convert the plan’s normalform benefit to a straight life annuity ofequal actuarial value as determined bythe PBGC.

(2) The limitation of paragraph (a)(1)of this section shall not apply to:

(i) A survivor’s benefit payable as anannuity on account of the death of aparticipant that occurred before the planterminates and before the participantretired;

(ii) A disability pension described insection 4022.6 of this part; or

(iii) A benefit payable in non-levelinstallments that in combination withSocial Security, Railroad Retirement, orworkman’s compensation benefitsyields a substantially level income if theprojected income from the plan benefitover the expected life of the recipientdoes not exceed the value of the straightlife annuity described in paragraph(a)(1) of this section.

(b) The PBGC will not guarantee thepayment of that part of any benefit thatexceeds the limitations in section4022(b) of ERISA and this subpart B.

(c)(1) Except as provided in paragraph(c)(2) of this section, the PBGC does notguarantee a benefit payable in a singleinstallment (or substantially so) uponthe death of a participant or hissurviving beneficiary unless that benefitis substantially derived from a reductionin the pension benefit payable to theparticipant or surviving beneficiary.

(2) Paragraphs (a) and (c)(1) of thissection do not apply to that portion ofaccumulated mandatory employeecontributions payable under a planupon the death of a participant, andsuch a benefit is a pension benefit forpurposes of this part.

(d) The PBGC will not guarantee abenefit payable to other than naturalpersons, or a trust or estate for thebenefit of one or more natural persons.


§ 4022.22 Maximum guaranteeable benefit.Subject to section 4022B of ERISA

and part 4022B of this chapter, benefitspayable with respect to a participantunder a plan shall be guaranteed only tothe extent that such benefits do notexceed the actuarial value of a benefit inthe form of a life annuity payable inmonthly installments, commencing atage 65 equal to the lesser of the amountscomputed in paragraphs (a) and (b) ofthis section.

(a) One-twelfth of the participant’saverage annual gross income from hisemployer during either his highest-paidfive consecutive calendar years inwhich he was an active participantunder the plan, or if he was not anactive participant throughout the entiresuch period, the lesser number ofcalendar years within that period inwhich he was an active participantunder the plan.

(1) As used in this paragraph, ‘‘grossincome’’ means ‘‘earned income’’ asdefined in section 911(b) of the Code,determined without regard to anycommunity property laws.

(2) For the purposes of this paragraph,if the plan is one to which more thanone employer contributes, and duringany calendar year the participantreceived gross income from more thanone such contributing employer, thenthe amounts so received shall beaggregated in determining theparticipant’s gross income for thecalendar year.

(b) $750 multiplied by the fraction x/$13,200 where ‘‘x’’ is the Social Securitycontribution and benefit basedetermined under section 230 of theSocial Security Act in effect at thetermination date of the plan.

§ 4022.23 Computation of maximumguaranteeable benefits.

(a) General. Where a benefit ispayable in any manner other than as amonthly benefit payable for lifecommencing at age 65, the maximumguaranteeable monthly amount of suchbenefit shall be computed by applyingthe applicable factor or factors set forthin paragraphs (c)–(e) of this section tothe monthly amount computed under§ 4022.22. In the case of a step-down lifeannuity, the maximum guaranteeablemonthly amount of such benefit shall becomputed in accordance with paragraph(f) of this section.

(b) Application of adjustment factorsto monthly amount computed under§ 4022.22. (1) Each percentage increaseor decrease computed under paragraphs(c), (d), and (e) of this section shall beadded to or subtracted from a base of1.00, and the resulting amounts shall bemultiplied.

(2) The monthly amount computedunder § 4022.22 shall be multiplied bythe product computed pursuant toparagraph (b)(1) of this section in orderto determine the participant’s and/orbeneficiary’s maximum benefitguaranteeable.

(c) Annuitant’s age factor. If aparticipant or the beneficiary of adeceased participant is entitled to andchooses to receive his benefit at an ageyounger than 65, the monthly amountcomputed under § 4022.22 shall bereduced by the following amounts foreach month up to the number of wholemonths below age 65 that correspondsto the later of the participant’s age at thetermination date or his age at the timehe begins to receive the benefit: Foreach of the 60 months immediatelypreceding the 65th birthday, thereduction shall be 7⁄12 of 1%; For eachof the 60 months immediately precedingthe 60th birthday, the reduction shall be4⁄12 of 1%; For each of the 120 monthsimmediately preceding the 55thbirthday, the reduction shall be 2⁄12 of1%; and For each succeeding 120months period, the monthly percentagereduction shall be 1⁄2 of that used for thepreceding 120 month period.

(d) Factor for benefit payable in aform other than as a life annuity. Whena benefit is in a form other than a lifeannuity payable in monthlyinstallments, the monthly amountcomputed under § 4022.22 shall beadjusted by the appropriate factors on acase-by-case basis by PBGC. Thisparagraph sets forth the adjustmentfactors to be used for several commonbenefit forms payable in monthlyinstallments.

(1) Period certain and continuousannuity. A period certain andcontinuous annuity means an annuitywhich is payable in periodicinstallments for the participant’s life,but for not less than a specified periodof time whether or not the participantdies during that period. The monthlyamount of a period certain andcontinuous annuity computed under§ 4022.22 shall be reduced by thefollowing amounts for each month ofthe period certain subsequent to thetermination date:

For each month up to 60 monthsdeduct 1⁄24 of 1%;

For each month beyond 60 monthsdeduct 1⁄12 of 1%.

(i) A cash refund annuity means anannuity under which if the participantdies prior to the time when he hasreceived pension payments equal to afixed sum specified in the plan, then thebalance is paid as a lump-sum deathbenefit. A cash refund annuity shall betreated as a benefit payable for a period

certain and continuous. The period ofcertainty shall be computed by dividingthe amount of the lump-sum refund bythe monthly amount to which theparticipant is entitled under the terms ofthe plan.

(ii) An installment refund annuitymeans an annuity under which if theparticipant dies prior to the time he hasreceived pension payments equal to afixed sum specified in the plan, then thebalance is paid as a death benefit inperiodic installments equal in amountto the participant’s periodic benefit. Aninstallment refund annuity shall betreated as a benefit payable for a periodcertain and continuous. The period ofcertainty shall be computed by dividingthe amount of the remaining refund bythe monthly amount to which theparticipant is entitled under the terms ofthe plan.

(2) Joint and survivor annuity(contingent basis). A joint and survivorannuity (contingent basis) means anannuity which is payable in periodicinstallments to a participant for his lifeand upon his death is payable to hisbeneficiary for the beneficiary’s life inthe same or in a reduced amount. Themonthly amount of a joint and survivorannuity (contingent basis) computedunder § 4022.22 shall be reduced by anamount equal to 10% plus 2⁄10 of 1% foreach percentage point in excess of 50%of the participant’s benefit that willcontinue to be paid to the beneficiary.If the benefit payable to the beneficiaryis less than 50 percent of theparticipant’s benefit, PBGC shallprovide the adjustment factors to beused.

(3) Joint and survivor annuity (jointbasis). A joint and survivor annuity(joint basis) means an annuity which ispayable in periodic installments to aparticipant and upon his death or thedeath of his beneficiary is payable to thesurvivor for the survivor’s life in thesame or in a reduced amount. Themonthly amount of a joint and survivorannuity (joint basis) computed under§ 4022.22 shall be reduced by anamount equal to 4⁄10 of 1% for eachpercentage point in excess of 50% of theparticipant’s original benefit that willcontinue to be paid to the survivor. Ifthe benefit payable to the survivor isless than 50 percent of the participant’soriginal benefit, PBGC shall provide theadjustment factors to be used.

(e) When a benefit is payable in aform described in paragraph (d) (2) or(3) of this section, and the beneficiary’sage is different from the participant’sage, by 15 years or less, the monthlyamount computed under § 4022.22 shallbe adjusted by the following amounts: Ifthe beneficiary is younger than the


participant, deduct 1% for each year ofthe age difference; If the beneficiary isolder than the participant, add 1⁄2 of 1%for each year of the age difference. Incomputing the difference in ages, yearsover 65 years of age shall not becounted. If the difference in age betweenthe beneficiary and the participant isgreater than 15 years, PBGC shallprovide the adjustment factors to beused.

(f) Step-down life annuity. A step-down life annuity means an annuitypayable in a certain amount for the lifeof the participant plus a temporaryadditional amount payable until theparticipant attains an age specified inthe plan.

(1) The temporary additional amountpayable under a step-down life annuityshall be converted to a life annuitypayable in monthly installments bymultiplying the appropriate factor based

on the participant’s age and the numberof remaining years of the temporaryadditional benefit by the amount of thetemporary additional benefit. Thefactors to be used are set forth in thetable below. The amount of the monthlybenefit so calculated shall be added tothe level amount of the monthly benefitpayable for life to determine the level-life annuity that is equivalent to thestep-down life annuity.

FACTORS FOR CONVERTING TEMPORARY ADDITIONAL BENEFIT UNDER STEP-DOWN LIFE ANNUITY

Age of participant 1 at the later of the date the temporaryadditional benefit commences or the date of plan termi-

nation

Number of years temporary additional benefit is payable under the plan as of thedate of plan termination 2

1 2 3 4 5 6 7 8 9 10

45 ........................................................................................... 0.060 0.117 0.170 0.220 0.268 0.315 0.355 0.395 0.435 0.47546 ........................................................................................... .061 .119 .173 .224 .273 .321 .362 .403 .444 .48547 ........................................................................................... .062 .121 .176 .228 .278 .327 .369 .411 .453 .49548 ........................................................................................... .063 .123 .179 .232 .283 .333 .376 .419 .462 .50549 ........................................................................................... .064 .125 .182 .236 .288 .339 .383 .427 .471 .51550 ........................................................................................... .065 .127 .185 .240 .293 .345 .390 .435 .480 .52551 ........................................................................................... .066 .129 .188 .244 .298 .351 .397 .443 .489 .53552 ........................................................................................... .068 .133 .194 .252 .308 .363 .411 .459 .507 .55553 ........................................................................................... .067 .131 .191 .248 .303 .357 .404 .451 .498 .54554 ........................................................................................... .069 .135 .197 .256 .313 .369 .418 .467 .516 .56555 ........................................................................................... .070 .137 .200 .260 .318 .375 .425 .475 .525 .57556 ........................................................................................... .072 .141 .206 .268 .328 .387 .439 .491 .543 ..........57 ........................................................................................... .074 .145 .212 .276 .338 .399 .453 .507 .......... ..........58 ........................................................................................... .076 .149 .218 .284 .348 .411 .467 .......... .......... ..........59 ........................................................................................... .078 153 .224 .292 .358 .423 .......... .......... .......... ..........60 ........................................................................................... .080 .157 .230 .300 .368 .......... .......... .......... .......... ..........61 ........................................................................................... .082 .161 .236 .308 .......... .......... .......... .......... .......... ..........62 ........................................................................................... .084 .165 .242 .......... .......... .......... .......... .......... .......... ..........63 ........................................................................................... .086 .169 .......... .......... .......... .......... .......... .......... .......... ..........64 ........................................................................................... .088 .......... .......... .......... .......... .......... .......... .......... .......... ..........

1 Age of participant is his age at his last birthday.2 If the benefit is payable for less than 1 yr, the appropriate factor is obtained by multiplying the factor for 1 yr by a fraction, the numerator of

which is the number of months the benefit is payable, and the denominator of which is 12. If the benefit is payable for 1 or more whole years,plus an additional number of months less than 12, the appropriate factor is obtained by linear interpolation between the factor for the number ofwhole years the benefit is payable and the factor for the next year.

(2) If a participant is entitled to andchooses to receive a step-down lifeannuity at an age younger than 65, themonthly amount computed under§ 4022.22 shall be adjusted by applyingthe factors set forth in paragraph (c) ofthis section in the manner described inparagraph (b) of this section.

(3) If the level-life monthly benefitcalculated pursuant to paragraph (f)(1)of this section exceeds the monthlyamount calculated pursuant toparagraph (f)(2) of this section, then themonthly maximum benefitguaranteeable shall be a step-down lifeannuity under which the monthlyamount of the temporary additionalbenefit and the amount of the monthlybenefit payable for life, respectively,shall bear the same ratio to the monthlyamount of the temporary additionalbenefit and the monthly benefit payablefor life provided under the plan,respectively, as the monthly benefitcalculated pursuant to paragraph (f)(2)

of this section bears to the monthlybenefit calculated pursuant to paragraph(f)(1) of this section.

§ 4022.24 Benefit increases.

(a) Scope. This section applies:(1) To all benefit increases, as defined

in § 4022.2, payable with respect to aparticipant other than a substantialowner, which have been in effect forless than five years preceding thetermination date; and

(2) To all benefit increases payablewith respect to a substantial owner,which have been in effect for less than30 years preceding the termination date.

(b) General rule. Benefit increasesdescribed in paragraph (a) of thissection shall be guaranteed only to theextent provided in § 4022.25 withrespect to a participant other than asubstantial owner and in § 4022.26 withrespect to a participant who is asubstantial owner.

(c) Computation of guaranteeablebenefit increases. Except as provided inparagraph (d) of this section pertainingto multiple benefit increases, theamount of a guaranteeable benefitincrease shall be the amount, if any, bywhich the monthly benefit calculatedpursuant to paragraph (c)(1) of thissection (the monthly benefit providedunder the terms of the plan as of thetermination date, as limited by§ 4022.22) exceeds the monthly benefitcalculated pursuant to paragraph (c)(4)of this section (the monthly benefitwhich would have been payable on thetermination date if the benefit providedsubsequent to the increase wereequivalent, as of the date of the increase,to the benefit provided prior to theincrease).

(1) Determine the amount of themonthly benefit payable on thetermination date (or, in the case of adeferred benefit, the monthly benefitwhich will become payable thereafter)


under the terms of the plan subsequentto the increase, using service credited tothe participant as of the terminationdate, that is guaranteeable pursuant to§ 4022.22;

(2) Determine, as of the date of thebenefit increase, in accordance with theprovisions of § 4022.23, the factorswhich would be used to calculate themonthly maximum benefitguaranteeable (i) under the terms of theplan prior to the increase and (ii) underthe terms of the plan subsequent to theincrease. However, when the benefitreferred to in paragraph (c)(2)(ii) of thissection is a joint and survivor benefitdeferred as of the termination date andthere is no beneficiary on that date, thefactors computed in paragraph (c)(2)(ii)of this section shall be determined as ifthe benefit were payable only to theparticipant. Each set of factorsdetermined under this paragraph shallbe stated in the manner set forth in§ 4022.23(b)(1);

(3) Multiply the monthly benefitwhich would have been payable (or, inthe case of a deferred benefit, wouldhave become payable) under the termsof the plan prior to the increase basedon service credited to the participant asof the termination date by a fraction, thenumerator of which is the product of thefactors computed pursuant to paragraph(c)(2)(ii) of this section and thedenominator of which is the product ofthe factors computed pursuant toparagraph (c)(2)(i) of this section.

(4) Calculate the amount of themonthly benefit which would bepayable on the termination date if themonthly benefit computed in paragraph(c)(3) of this section had been payablecommencing on the date of the benefitincrease (or, in the case of a deferredbenefit, would have become payablethereafter.) In the case of a benefitwhich does not become payable untilsubsequent to the termination date, theamount of the monthly benefitdetermined pursuant to this paragraphis the same as the amount of themonthly benefit calculated pursuant toparagraph (c)(3) of this section.

(d) Multiple benefit increases. (1)Where there has been more than onebenefit increase described in paragraph(a) of this section, the amounts ofguaranteeable benefit increases shall becalculated beginning with the earliestincrease, and each such amount (exceptfor the amount resulting from the finalbenefit increase) shall be multiplied bya fraction, the numerator of which is theproduct of the factors, stated in themanner set forth in § 4022.23(b)(1), usedto calculate the monthly maximumguaranteeable benefit under § 4022.22and the denominator of which is the

product of the factors used in thecalculation under paragraph (c)(2)(i) ofthis section.

(2) Each benefit increase shall betreated separately for the purposes of§ 4022.25, except as otherwise providedin paragraph (d) of that section, and forthe purposes of § 4022.26, asappropriate.

(e) For the purposes of this subpart, abenefit increase is deemed to be in effectcommencing on the later of its adoptiondate or its effective date.

§ 4022.25 Five-year phase-in of benefitguarantee for participants other thansubstantial owners.

(a) Scope. This section applies to theguarantee of benefit increases whichhave been in effect for less than fiveyears with respect to participants otherthan substantial owners.

(b) Phase-in formula. The amount ofa benefit increase computed pursuant to§ 4022.24 shall be guaranteed to theextent provided in the followingformula: the number of years the benefitincrease has been in effect, not toexceed five, multiplied by the greater of(1) 20 percent of the amount computedpursuant to § 4022.24; or (2) $20 permonth.

(c) Computation of years. Incomputing the number of years a benefitincrease has been in effect, eachcomplete 12-month period prior to thetermination date during which suchbenefit increase was in effect shallconstitute one year.

(d) Multiple benefit increases. Inapplying the formula contained inparagraph (b) of this section, multiplebenefit increases within any 12-monthperiod prior to the termination date andcalculated from that date shall beaggregated and treated as one benefitincrease.

(e) Notwithstanding the provisions ofparagraph (b) of this section, a benefitincrease described in paragraph (a) ofthis section shall be guaranteed only ifPBGC determines that the plan wasterminated for a reasonable businesspurpose and not for the purpose ofobtaining the payment of benefits byPBGC.

§ 4022.26 Phase-in of benefit guarantee forparticipants who are substantial owners.

(a) Scope. This section shall apply tothe guarantee of all benefits described insubpart A with respect to participantswho are substantial owners at thetermination date or who weresubstantial owners at any time withinthe 5-year period preceding that date.

(b) Phase-in formula when there havebeen no benefit increases. Benefitsprovided by a plan under which there

has been no benefit increase, other thanthe adoption of the plan, shall beguaranteed to the extent provided in thefollowing formula: The monthly amountcomputed under § 4022.22 multipliedby a fraction not to exceed 1, thenumerator of which is the number offull years prior to the termination datethat the substantial owner was an activeparticipant under the plan, and thedenominator of which is 30. Activeparticipation under a plan commencesat the later of the date on which the planis adopted or becomes effective.

(c) Phase-in formula when there havebeen benefit increases. If there has beena benefit increase under the plan, otherthan the adoption of the plan, benefitsprovided by each such increase shall beguaranteed to the extent provided in thefollowing formula: The amount of theguaranteeable benefit increasecomputed under § 4022.24 multipliedby a fraction not to exceed 1, thenumerator of which is the number offull years prior to the termination datethat the benefit increase was in effectand during which the substantial ownerwas an active participant under theplan, and the denominator of which is30. However, in no event shall the totalbenefits guaranteed under all suchbenefit increases exceed the benefitswhich are guaranteed under paragraph(b) of this section with respect to a plandescribed therein.

(d) For the purpose of computing thebenefits guaranteed under this section,in the case of a substantial owner whobecomes an active participant under aplan after a benefit increase (other thanthe adoption of the plan) has been putinto effect, the plan as it exists at thetime he commences his participationshall be deemed to be the original planwith respect to him.

§ 4022.27 Effect of tax disqualification.

(a) General rule. Except as provided inparagraph (b) of this section, benefitsaccrued under a plan after the date onwhich the Secretary of the Treasury orhis delegate issues a notice that anytrust which is part of the plan no longermeets the requirements of section 401(a)of the Code or that the plan no longermeets the requirements of section 404(a)of the Code or after the date of adoptionof a plan amendment that causes theissuance of such a notice shall not beguaranteed under this part.

(b) Exceptions. The restriction on theguarantee of benefits set forth inparagraph (a) of this section shall notapply if:

(1) The Secretary of the Treasury orhis delegate issues a notice stating thatthe original notice referred to in


paragraph (a) of this section waserroneous;

(2) The Secretary of the Treasury orhis delegate finds that, subsequent tothe issuance of the notice referred to inparagraph (a) of this section, appropriateaction has been taken with respect tothe trust or plan to cause it to meet therequirements of sections 401(a) or404(a)(2) of the Code, respectively, andissues a subsequent notice stating thatthe trust or plan meets suchrequirements; or

(3) The plan amendment is revokedretroactively to its original effectivedate.

Subpart C—Calculation and Paymentof Unfunded Nonguaranteed Benefits[Reserved]

Subpart D—Benefit Reductions inTerminating Plans

§ 4022.61 Limitations on benefit paymentsby plan administrator.

(a) General. When section 4041.4 ofthis chapter requires a planadministrator to reduce benefits, theplan administrator shall limit benefitpayments in accordance with thissection.

(b) Accrued benefit at normalretirement. Except to the extentpermitted by paragraph (d) of thissection, a plan administrator may notpay that portion of a monthly benefitpayable with respect to any participantthat exceeds the participant’s accruedbenefit payable at normal retirement ageunder the plan. For the purpose ofapplying this limitation, post-retirementbenefit increases, such as cost-of-livingadjustments, are not considered toincrease a participant’s benefit beyondhis or her accrued benefit payable atnormal retirement age.

(c) Maximum guaranteeable benefit.Except to the extent permitted byparagraph (d) of this section, a planadministrator may not pay that portionof a monthly benefit payable withrespect to any participant, as limited byparagraph (b) of this section, thatexceeds the maximum guaranteeablebenefit under section 4022(b)(3)(B) ofERISA and § 4022.22(b) of this part,adjusted for age and benefit form, for theyear of the proposed termination date.

(d) Estimated benefit payments. Aplan administrator shall pay themonthly benefit payable with respect toeach participant as determined under§ 4022.62 or § 4022.63, whicheverproduces the higher benefit.

(e) PBGC authority to modifyprocedures. In order to avoid abuse ofthe plan termination insurance system,inequitable treatment of participants

and beneficiaries, or the imposition ofunreasonable burdens on terminatingplans, the PBGC may authorize or directthe use of alternative procedures fordetermining benefit reductions.

(f) Examples. This section isillustrated by the following examples:

Example 1—Facts. On October 10, 1992, aplan administrator files with the PBGC anotice of intent to terminate in a distresstermination that includes December 31, 1992,as the proposed termination date. Aparticipant who is in pay status on December31, 1992, has been receiving his accruedbenefit of $2,500 per month under the plan.The benefit is in the form of a joint andsurvivor annuity (contingent basis) that willpay 50 percent of the participant’s benefitamount (i.e., $1,250 per month) to hissurviving spouse following the death of theparticipant. On December 31, 1992, theparticipant is age 66, and his wife is age 56.

Benefit reductions. Paragraph (b) of thissection requires the plan administrator tocease paying benefits in excess of the accruedbenefit payable at normal retirement age.Because the participant is receiving only hisaccrued benefit, no reduction is requiredunder paragraph (b).

Paragraph (c) of this section requires theplan administrator to cease paying benefits inexcess of the maximum guaranteeablebenefit, adjusted for age and benefit form inaccordance with the provisions of subpart B.The maximum guaranteeable benefit forplans terminating in 1992, the year of theproposed termination date, is $2,352.27 permonth, payable in the form of a single lifeannuity at age 65. Because the participant isolder than age 65, no adjustment is requiredunder § 4022.23(c) based on the annuitant’sage factor. The benefit form is a joint andsurvivor annuity (contingent basis), asdefined in § 4022.23(d)(2). The requiredbenefit reduction for this benefit form under§ 4022.23(d) is 10 percent. The correspondingadjustment factor is 0.90 (1.00–0.10). Thebenefit reduction factor to adjust for the agedifference between the participant and thebeneficiary is computed under § 4022.23(e).In computing the difference in ages, yearsover 65 years of age are not taken intoaccount. Therefore, the age difference is 9years (65–56). The required percentagereduction when the beneficiary is 9 yearsyounger than the participant is 9 percent.The corresponding adjustment factor is 0.91(1.00–0.09).

The maximum guaranteeable benefitadjusted for age and benefit form is $1,926.51($2,352.27×0.90×0.91) per month. Therefore,the plan administrator must reduce theparticipant’s benefit payment from $2,500 to$1,926.51. If the participant dies afterDecember 31, 1992, the plan administratorwill pay his spouse $963.26 (0.50×$1,926.51)per month.

Example 2—Facts. The benefit of aparticipant who retired under a plan at age60 is a reduced single life annuity of $400 permonth plus a temporary supplement of $400per month payable until age 62 (i.e., a step-down benefit). The participant’s accruedbenefit under the plan is $450 per month,payable from the plan’s normal retirement

age. On the proposed termination date, June30, 1992, the participant is 61 years old.

The maximum guaranteeable benefitadjusted for age under § 4022.23(c) of thischapter is $1,693.63 ($2,352.27 × 0.72) permonth. Since the benefit is payable as asingle life annuity, no adjustment is requiredunder § 4022.23(d) for benefit form.

Benefit reductions. The plan benefit of$800 per month payable until age 62 exceedsthe participant’s accrued benefit at normalrequirement age of $450 per month.Paragraph (b) of this section requires that,except to the extent permitted by paragraph(d), the plan benefit must be reduced to $450per month. Since the levelized benefit of$404.10 ((0.082 × 50) + $400) per month,determined under § 4022.23(f), is less thanthe adjusted maximum guaranteeable benefitof $1,693.63 per month, no further reductionin the $450 per month benefit payment isrequired under paragraph (c) of this section.The plan administrator next woulddetermine the amount of the participant’sestimated benefit under paragraph (d).

Example 3—Facts. A retired participant isreceiving a reduced early retirement benefitof $1,100 per month plus a temporarysupplement of $700 per month payable untilage 62. The benefit is in the form of a singlelife annuity. On the proposed terminationdate, November 30, 1992, the participant is56 years old.

The participant’s accrued benefit at normalretirement age under the plan is $1,200 permonth. The maximum guaranteeable benefitadjusted for age is $1,152.61 ($2,352.27 ×0.49) per month. A form adjustment is notrequired.

Benefit reductions. The plan benefit of$1,800 per month payable from age 56 to age62 exceeds the participant’s accrued benefitat normal retirement age of $1,200 permonth. Therefore, under paragraph (b) of thissection, the plan administrator must reducethe temporary supplement to $100 permonth.

For the purpose of determining whetherthe reduced benefit, i.e., a level-life annuityof $1,100 per month and a temporary annuitysupplement of $100 per month to age 62,exceeds the maximum guaranteeable benefitadjusted for age, the temporary annuitysupplement of $100 per month is convertedto a level-life annuity equivalent inaccordance with § 4022.23(f) of this chapter.The level-life annuity equivalent is $38.70($100 × 0.387). This, added to the life annuityof $1,100 per month, equals $1,138.70. Sincethe maximum guaranteeable benefit of$1,152.61 per month exceeds $1,138.70 permonth, no further reduction is requiredunder paragraph (c) of this section.

The plan administrator next woulddetermine the participant’s estimated benefitunder paragraph (d). Assume that theestimated benefit under paragraph (d) is $780per month until age 62 and $715 per monththereafter. The plan administrator would paythe participant $780 per month, reduced to$715 per month at age 62, subject to the finalbenefit determination made under title IV.

Example 4—Facts. A retired participant isreceiving a reduced early retirement benefitof $2,650 per month plus a temporarysupplement of $800 per month payable until


age 62. The benefit is in the form of a jointand survivor annuity (contingent basis) thatwill pay 50 percent of the participant’sbenefit amount to his surviving spousefollowing the death of the participant. On theproposed termination date, December 20,1992, the participant and his spouse are each56 years old.

The participant’s accrued benefit at normalretirement age under the plan is $3,000 permonth. The maximum guaranteeable benefitadjusted for age and the joint and survivorannuity (contingent basis) annuity form is$1,037.35 per month. An adjustment for agedifference is not required because theparticipant and his spouse are the same age.

Benefit reductions. The plan benefit of$3,450 per month payable from age 56 to age62 exceeds the participant’s accrued benefitat normal retirement age, which is $3,000 permonth. Therefore, under paragraph (b) of thissection, the plan administrator must reducethe participant’s benefit so that it does notexceed $3,000 per month.

The level-life equivalent of theparticipant’s reduced benefit, determinedusing the § 4022.23(f) adjustment factor, is$2,785.45 (($350 × 0.387) + $2,650) permonth. Since this benefit exceeds theparticipant’s maximum guaranteeable benefitof $1,037.35 per month, the planadministrator must reduce the participant’sbenefit payment so that it does not exceedthe maximum guaranteeable benefit.

The ratio of (i) the participant’s maximumguaranteeable benefit to (ii) the level-lifeequivalent of the participant’s reducedbenefit (computed under the ‘‘accrued fornormal retirement age’’ limitation) is used inconverting the level-life maximumguaranteeable benefit to the step-downbenefit form. The level-life equivalent of thereduced benefit computed under the‘‘accrued for normal retirement age’’limitation is 37.24 percent ($1,037.35/$2,785.45). Thus, the plan administratormust reduce the participant’s level-lifebenefit of $2,650 per month to $986.86($2,650 × 0.3724) and must further reduce thereduced temporary benefit of $350 per monthto $130.34 ($350 × 0.3724). Under paragraph(c) of this section, therefore, the participant’smaximum guaranteeable benefit is $1,117.20($986.86 + $130.34) per month to age 62 and$986.86 per month thereafter, subject to anyadjustment under paragraph (d) of thissection.

Assume that the estimated benefit underparagraph (d) is $1,005.48 per month to age62 and $888.17 per month thereafter. Theplan administrator would reduce theparticipant’s benefit from $3,450 per monthto $1,005.48 per month and pay this amountuntil age 62, at which time the benefitpayment would be reduced to $888.17 permonth, subject to the final benefitdetermination made under title IV.

§ 4022.62 Estimated guaranteed benefit.(a) General. The estimated guaranteed

benefit payable with respect to eachparticipant who is not a substantialowner is computed under paragraph (c)of this section. The estimatedguaranteed benefit payable with respectto each participant who is a substantial

owner is computed under paragraph (d)of this section.

(b) Rules for determining benefits. Forthe purposes of determining entitlementto a benefit and the amount of theestimated benefit under this section, thefollowing rules apply:

(1) Participants in pay status on theproposed termination date. For benefitspayable with respect to a participantwho is in pay status on or before theproposed termination date, the planadministrator shall use the participant’sage and benefit payable under the planas of the proposed termination date.

(2) Participants who enter pay statusafter the proposed termination date. Forbenefits payable with respect to aparticipant who enters pay status afterthe proposed termination date, the planadministrator shall use the participant’sage as of the benefit commencementdate and his or her service andcompensation as of the proposedtermination date.

(3) Participants with new benefits orbenefit improvements. For the purposeof determining the estimated guaranteedbenefit under paragraph (c) of thissection, only new benefits and benefitimprovements that affect the benefit ofthe participant or beneficiary for whomthe determination is made are taken intoaccount.

(4) Limitations on estimatedguaranteed benefits. For the purpose ofdetermining the estimated guaranteedbenefit under paragraph (c) or (d) of thissection, the benefit determined underparagraph (b)(1) or (b)(2) of this sectionis subject to the limitations set forth in§ 4022.61 (b) and (c).

(c) Estimated guaranteed benefitpayable with respect to a participantwho is not a substantial owner. Forbenefits payable with respect to aparticipant who is not a substantialowner, the estimated guaranteed benefitis determined under paragraph (c)(1) ofthis section, if no portion of the benefitis subject to the phase-in of plantermination insurance guarantees setforth in section 4022(b)(1) of ERISA. Inany other case, the estimated guaranteedbenefit is determined under paragraph(c)(2). ‘‘Benefit subject to phase-in’’means a benefit that is subject to thephase-in of plan termination insuranceguarantees set forth in section 4022(b)(1)of ERISA, determined without regard tosection 4022(b)(7) of ERISA.

(1) Participants with no benefitssubject to phase-in. In the case of aparticipant or beneficiary with nobenefit improvement (as defined inparagraph (c)(2)(ii)) or new benefit (asdefined in paragraph (c)(2)(i)) in the fiveyears preceding the proposedtermination date, the estimated

guaranteed benefit is the benefit towhich he or she is entitled under therules in paragraph (b) of this section.

(2) Participants with benefits subjectto phase-in. In the case of a participantor beneficiary with a benefitimprovement or new benefit in the fiveyears preceding the proposedtermination date, the estimatedguaranteed benefit is the benefit towhich he or she is entitled under therules in paragraph (b) of this section,multiplied by the multiplier determinedaccording to paragraphs (i), (ii), and (iii),but not less than the benefit to which heor she would have been entitled if thebenefit improvement or new benefit hadnot been adopted.

(i) From column (a) of Table I, selectthe line that applies according to thenumber of full years before the proposedtermination date since the plan was lastamended to provide for a new benefit(or the number of full years since theplan was established, if it has neverbeen amended to provide for a newbenefit). ‘‘New benefit’’ means a changein the terms of the plan that results in(a) a participant’s or a beneficiary’seligibility for a benefit that was notpreviously available or to which he orshe was not entitled (excluding a benefitthat is actuarially equivalent to thenormal retirement benefit to which theparticipant was previously entitled) or(b) an increase of more than twentypercent in the benefit to which aparticipant is entitled upon entering paystatus before his or her normalretirement age under the plan. ‘‘Newbenefits’’ result from liberalizedparticipation or vesting requirements,reductions in the age or servicerequirements for receiving unreducedbenefits, additions of actuariallysubsidized benefits, and increases inactuarial subsidies. The establishmentof a plan creates a new benefit as of theeffective date of the plan. A change inthe amount of a benefit is not deemedto be a ‘‘new benefit’’ if it results solelyfrom a benefit improvement. ‘‘Newbenefit’’ and ‘‘benefit improvement’’ aremutually exclusive terms.

(ii) If there was no benefitimprovement under the plan during theone-year period ending on the proposedtermination date, use the multiplier setforth in column (b) of Table I on the lineselected from column (a). ‘‘Benefitimprovement’’ means a change in theterms of the plan that results in (a) anincrease in the benefit to which aparticipant is entitled at his or hernormal retirement age under the plan or(b) an increase in the benefit to whicha participant or beneficiary in pay statusis entitled.


(iii) If there was any benefitimprovement during the one-yearperiod ending on the proposedtermination date, use the multiplier setforth in column (c) of Table I on the lineselected from column (a).

TABLE I.—APPLICABLE MULTIPLIERIF—

Full years sincelast new benefit

No benefitimprove-

ment duringlast year

Benefit im-provementduring last

year

(a) (b) (c)

Five or more ...... .90 .80Four ................... .80 .70Three ................. .65 .55Two ................... .50 .45Fewer than two .35 .30

Note: The foregoing method of estimatingguaranteed benefits is based upon thePBGC’s experience with a wide range of plansand may not provide accurate estimates incertain circumstances. In accordance with§ 4022.61(e), a plan administrator may use adifferent method of estimation if he or shedemonstrates to the PBGC that his proposedmethod will be more equitable to participantsand beneficiaries. The PBGC may require theuse of a different method in certain cases.

(d) Estimated guaranteed benefitpayable with respect to a substantialowner. For benefits payable with respectto each participant who is a substantialowner and who commencedparticipation under the plan fewer thanfive full years before the proposedtermination date, the estimatedguaranteed benefit is determined underparagraph (d)(1). With respect to anyother substantial owner, the estimatedguaranteed benefit is determined underparagraph (d)(2).

(1) Fewer than five years ofparticipation. The estimated guaranteedbenefit under this paragraph is thebenefit to which the substantial owneris entitled, as determined underparagraph (b) of this section, multipliedby a fraction, not to exceed one, thenumerator of which is the number offull years prior to the proposedtermination date that the substantialowner was an active participant underthe plan and the denominator of whichis thirty.

(2) Five or more years of participation.The estimated guaranteed benefit underthis paragraph is the lesser of—

(i) the estimated guaranteed benefitcalculated under paragraph (d)(1) of thissection; or

(ii) the benefit to which thesubstantial owner would have beenentitled as of the proposed terminationdate (or benefit commencement date inthe case of a substantial owner whosebenefit commences after the proposed

termination date) under the terms of theplan in effect when he or she first beganparticipation, as limited by § 4022.61 (b)and (c), multiplied by a fraction, not toexceed one, the numerator of which istwo times the number of full years of hisor her active participation under theplan prior to the proposed terminationdate and the denominator of which isthirty.

(e) Examples. This section isillustrated by the following examples:

Example 1—Facts. A participant who isnot a substantial owner retired on December31, 1991, at age 60 and began receiving abenefit of $600 per month. On January 1,1989, the plan had been amended to allowparticipants to retire with unreduced benefitsat age 60. Previously, a participant whoretired before age 65 was subject to areduction of 1⁄15 for each year by which hisor her actual retirement age preceded age 65.On January 1, 1992, the plan’s benefitformula was amended to increase benefits forparticipants who retired before January 1,1992. As a result, the participant’s benefitwas increased to $750 per month. There havebeen no other pertinent amendments. Theproposed termination date is December 15,1992.

Estimated guaranteed benefit. Noreduction is required under § 4022.61 (b) or(c) because the participant’s benefit does notexceed either the participant’s accruedbenefit at normal retirement age or themaximum guaranteeable benefit. (Post-retirement benefit increases are notconsidered as increasing accrued benefitspayable at normal retirement age.)

The amendment as of January 1, 1989,resulted in a ‘‘new benefit’’ because thereduction in the age at which the participantcould receive unreduced benefits increasedthe participant’s benefit entitlement at actualretirement age by 5⁄15, which is more than a20 percent increase. The amendment ofJanuary 1, 1992, which increased theparticipant’s benefit to $750 per month, is a‘‘benefit improvement’’ because it is anincrease in the amount of benefit for personsin pay status. (No percentage test applies indetermining whether such an increase is abenefit improvement.)

The multiplier for computing the amountof the estimated guaranteed benefit is takenfrom the third row of Table I (because the lastnew benefit had been in effect for 3 full yearsas of the proposed termination date) andcolumn (c) (because there was a benefitimprovement within the 1-year periodpreceding the proposed termination date).This multiplier is 0.55. Therefore, theamount of the participant’s estimatedguaranteed benefit is $412.50 (0.55×$750) permonth.

Example 2—Facts. A participant who isnot a substantial owner terminatedemployment on December 31, 1990. OnJanuary 1, 1992, she reached age 65 andbegan receiving a benefit or $250 per month.She had completed 3 years of service at hertermination of employment and was fullyvested in her accrued benefit. The plan’svesting schedule had been amended on July

1, 1988. Under the schedule in effect beforethe amendment, a participant with 5 years ofservice was 100 percent vested. There havebeen no other pertinent amendments. Theproposed termination date is December 31,1992.

Estimated guaranteed benefit. Noreduction is required under § 4022.61 (b) or(c) because the participant’s benefit does notexceed either her accrued benefit at normalretirement age or the maximumguaranteeable benefit. The plan’s change ofvesting schedule created a new benefit for theparticipant. Because the amendment was ineffect for 4 full years before the proposedtermination date, the second row of Table Iis used to determine the applicablemultiplier for estimating the amount of theparticipant’s guaranteed benefit. Because theparticipant did not receive any benefitimprovement during the 12-month periodending on the proposed termination date,column (b) of the table is used. Therefore, themultiplier is 0.80, and the amount of theparticipant’s estimated guaranteed benefit is$200 (0.80×$250) per month.

Example 3—Facts. A participant who is asubstantial owner retired prior to theproposed termination date after 51⁄2 years ofactive participation in the plan. The benefitunder the terms of the plan when he firstbegan active participation was $800 permonth. On the proposed termination date ofApril 30, 1992, he was entitled to receive abenefit of $2000 per month. No reduction ofthis benefit is required under § 4022.61 (b) or(c).

Estimated guaranteed benefit. Paragraph(d)(2) of this section is used to compute theamount of the estimated guaranteed benefitof substantial owners with 5 or more yearsof active participation prior to the proposedtermination date. Consequently, the amountof this participant’s estimated guaranteedbenefit is the lesser of—

(i) the amount calculated as if he had beenan active participant in the plan for fewerthan 5 full years on the proposed terminationdate, or $333.33 ($2000×5⁄30) per month, or

(ii) the amount to which he would havebeen entitled as of the proposed terminationdate under the terms of the plan when hefirst began participation, as limited by§ 4022.61 (b) and (c), multiplied by 2 timesthe number of years of active participationand divided by 30, or $266.67 ($800×2 ×5⁄30)per month. Therefore, the amount of theparticipant’s estimated guaranteed benefit is$266.67 per month.

§ 4022.63 Estimated title IV benefit.(a) General. If the conditions specified

in paragraph (b) exist, the planadministrator shall determine eachparticipant’s estimated title IV benefit.The estimated title IV benefit payablewith respect to each participant who isnot a substantial owner is computedunder paragraph (c) of this section. Theestimated title IV benefit payable withrespect to each participant who is asubstantial owner is computed underparagraph (d) of this section.

(b) Conditions for use of this section.The conditions set forth in this


paragraph must be satisfied in order tomake use of the procedures set forth inthis section. If the specified conditionsexist, estimated title IV benefits must bedetermined in accordance with theseprocedures (or in accordance withalternative procedures authorized by thePBGC under § 4022.61(f)) for eachparticipant and beneficiary whosebenefit under the plan exceeds thelimitations contained in § 4022.61(b) or(c) or who is a substantial owner or thebeneficiary of a substantial owner. If thespecified conditions do not exist, titleIV benefits may be estimated by the planadministrator in accordance withprocedures authorized by the PBGC, butno such estimate is required. Theconditions are as follows:

(1) An actuarial valuation of the planhas been performed for a plan yearbeginning not more than eighteenmonths before the proposed terminationdate. If the interest rate used to valueplan liabilities in this valuationexceeded the applicable valuationinterest rates and factors underappendix B to part 4044 of this chapterin effect on the proposed terminationdate, the value of benefits in pay statusand the value of vested benefits not inpay status on the valuation date must beconverted to the PBGC’s valuation ratesand factors.

(2) The plan has been in effect for atleast five full years before the proposedtermination date, and the most recentactuarial valuation demonstrates thatthe value of plan assets, reduced byemployee contributions remaining inthe plan and interest credited thereonunder the terms of the plan, exceeds thepresent value, adjusted as requiredunder paragraph (b)(1), of all planbenefits in pay status on the valuationdate.

(c) Estimated title IV benefit payablewith respect to a participant who is nota substantial owner. For benefitspayable with respect to a participantwho is not a substantial owner, theestimated title IV benefit is theestimated priority category 3 benefitcomputed under this paragraph. Prioritycategory 3 benefits are payable withrespect to participants who were, orcould have been, in pay status three fullyears prior to the proposed terminationdate. The estimated priority category 3benefit is computed by multiplying thebenefit payable with respect to theparticipant under § 4022.62 (b)(1) and(b)(2) by a fraction, not to exceed one—

(1) The numerator of which is thebenefit that would be payable withrespect to the participant at normalretirement age under the provisions ofthe plan in effect on the date five fullyears before the proposed termination

date, based on the participant’s age,service, and compensation as of theearlier of the participant’s benefitcommencement date or the proposedtermination date, and

(2) The denominator of which is thebenefit that would be payable withrespect to the participant at normalretirement age under the provisions ofthe plan in effect on the proposedtermination date, based on theparticipant’s age, service, andcompensation as of the earlier of theparticipant’s benefit commencementdate or the proposed termination date.

(d) Estimated title IV benefit payablewith respect to a substantial owner. Forbenefits payable with respect to aparticipant who is a substantial owner,the estimated title IV benefit is thehigher of the benefit computed underparagraph (c) of this section or thebenefit computed under this paragraph.

(1) The plan administrator shall firstcalculate the estimated guaranteedbenefit payable with respect to thesubstantial owner as if he or she werenot a substantial owner, using themethod set forth in § 4022.62(c).

(2) The benefit computed underparagraph (d)(1) shall be multiplied bythe priority category 4 funding ratio.The category 4 funding ratio is the ratioof x to y, not to exceed one, where—

(i) in a plan with priority category 3benefits, x equals plan assets minusemployee contributions remaining inthe plan on the valuation date, withinterest credited thereon under theterms of the plan, and the present valueof benefits in pay status, and y equalsthe present value of all vested benefitsnot in pay status minus such employeecontributions and interest; or

(ii) in a plan with no priority category3 benefits, x equals plan assets minusemployee contributions remaining inthe plan on the valuation date, withinterest credited thereon under theterms of the plan, and y equals thepresent value of all vested benefitsminus such employee contributions andinterest.

(e) Examples. This section isillustrated by the following examples:

Example 1—Facts. A participant who isnot a substantial owner was eligible to retire31⁄2 years before the proposed terminationdate. The participant retired 2 years beforethe proposed termination date with 20 yearsof service. Her final 5 years’ average salarywas $45,000, and she was entitled to anunreduced early retirement benefit of $1,500per month payable as a single life annuity.This retirement benefit does not exceed thelimitation in § 4022.61 (b) or (c).

On the participant’s benefitcommencement date, the plan provided for anormal retirement benefit of 2 percent of thefinal 5 years’ salary times the number of

years of service. Five years before theproposed termination date, the percentagewas 11⁄2 percent. The amendments improvingbenefits were put into effect 31⁄2 years priorto the proposed termination date. There wereno other amendments during the 5-yearperiod.

The participant’s estimated guaranteedbenefit computed under § 4022.62(c) is$1,500 per month times 0.90 (the factor fromcolumn (b) of Table I in § 4022.62(c)(2)), or$1,350 per month. It is assumed that the planmeets the conditions set forth in paragraph(b) of this section, and the plan administratoris therefore required to estimate the title IVbenefit.

Estimated title IV benefit. For a participantwho is not a substantial owner, the amountof the estimated title IV benefit is theestimated priority category 3 benefitcomputed under paragraph (c) of this section.This amount is computed by multiplying theparticipant’s benefit under the plan as of thelater of the proposed termination date or thebenefit commencement date by the ratio of (i)the normal retirement benefit under theprovisions of the plan in effect 5 years beforethe proposed termination date and (ii) thenormal retirement benefit under the planprovisions in effect on the proposedtermination date.

Thus, the numerator of the ratio is thebenefit that would be payable to theparticipant under the normal retirementprovisions of the plan 5 years before theproposed termination date, based on her age,service, and compensation on her benefitcommencement date. The denominator of theratio is the benefit that would be payable tothe participant under the normal retirementprovisions of the plan in effect on theproposed termination date, based on her age,service, and compensation as of the earlier ofher benefit commencement date or theproposed termination date. Since the onlydifferent factor in the numerator anddenominator is the salary percentage, theamount of the estimated title IV benefit is$1,125 (0.015/0.020 × $1,500) per month.This amount is less than the estimatedguaranteed benefit of $1,350 per month.Therefore, in accordance with § 4022.61(d),the benefit payable to the participant is$1,350 per month.

Example 2—Facts. A participant who is asubstantial owner retires at the plan’s normalretirement age, having completed 5 years ofactive participation in the plan, on October31, 1992, which is the proposed terminationdate. Under provisions of the plan in effect5 years prior to the proposed terminationdate, the participant is entitled to a single lifeannuity of $500 per month. Under the mostrecent plan amendments, which were putinto effect 11⁄2 years prior to the proposedtermination date, the participant is entitled toa single life annuity of $1,000 per month. Theparticipant’s estimated guaranteed benefitcomputed under § 4022.62(d)(2) is $166.67per month.

It is assumed that all of the conditions inparagraph (b) of this section have been met.Plan assets equal $2 million. The presentvalue of all benefits in pay status is $1.5million based on applicable PBGC interestrates. There are no employee contributions


and the present value of all vested benefitsthat are not in pay status is $0.75 millionbased on applicable PBGC interest rates.

Estimated title IV benefit. Paragraph (d) ofthis section provides that the amount of theestimated title IV benefit payable withrespect to a participant who is a substantialowner is the higher of the estimated prioritycategory 3 benefit computed under paragraph(c) of this section or the estimated prioritycategory 4 benefit computed under paragraph(d) of this section.

Under paragraph (c), the participant’sestimated priority category 3 benefit is $500($1,000 × $500/$1000) per month.

Under paragraph (d), the participant’sestimated priority category 4 benefit is theestimated guaranteed benefit computedunder § 4022.62(c) (i.e., as if the participantwere not a substantial owner) multiplied bythe priority category 4 funding ratio. Sincethe plan has priority category 3 benefits, theratio is determined under paragraph (d)(2)(i).The numerator of the ratio is plan assetsminus the present value of benefits in paystatus. The denominator of the ratio is thepresent value of all vested benefits that arenot in pay status. The participant’s estimatedguaranteed benefit under § 4022.62(c) is$1,000 per month times 0.90 (the factor fromcolumn (b) of Table I in § 4022.62(c)(2)), or$900 per month. Multiplying $900 by thecategory 4 funding ratio of 2⁄3 (($2 million—$1.5 million)/$0.75 million) produces anestimated category 4 benefit of $600 permonth.

Because the estimated category 4 benefit socomputed is greater than the estimatedcategory 3 benefit so computed, the estimatedcategory 4 benefit is the estimated title IVbenefit. Because the estimated category 4benefit so computed is greater than theestimated guaranteed benefit of $166.67 permonth, in accordance with § 4022.61(d), thebenefit payable to the participant is theestimated category 4 benefit of $600 permonth.

Subpart E—PBGC Recoupment andReimbursement of BenefitOverpayments and Underpayments

§ 4022.81 General rules.(a) Recoupment of benefit

overpayments. If at any time the PBGCdetermines that net benefits paid withrespect to any participant in a PBGC-trusteed plan exceed the total amount towhich the participant or his or herbeneficiary is entitled up to that timeunder title IV of ERISA, and theparticipant or beneficiary is entitled toreceive future benefit payments, thePBGC shall recoup the overpayment inaccordance with paragraph (c) of thissection and § 4022.82. Notwithstandingthe previous sentence, the PBGC may, inits discretion, recover overpayments bymethods other than recouping inaccordance with the rules in thissubpart. The PBGC will not normallyexercise this right unless net benefitspaid after the termination date exceedthose to which a participant or

beneficiary is entitled under the termsof the plan before any reductions undersubpart D.

(b) Reimbursement of benefitunderpayments. If at any time the PBGCdetermines that net benefits paid withrespect to a participant in a PBGC-trusteed plan are less than the amountto which the participant or his or herbeneficiary is entitled up to that timeunder title IV of ERISA, the PBGC shallreimburse the participant or beneficiaryfor the net underpayment in accordancewith paragraphs (c) and (d) of thissection and § 4022.83.

(c) Payments subject to recoupment orreimbursement. The PBGC shall recoupnet overpayments and reimburse netunderpayments made on or after thelatest of the proposed termination date,the termination date, or, if no notice ofintent to terminate was issued, the dateon which proceedings to terminate theplan are instituted pursuant to section4042 of ERISA.

(d) Interest. The PBGC will computeinterest on overpayments andunderpayments using the interest rateestablished for valuing immediateannuities as set forth in part 4044,appendix B, of this chapter according tothe following rules:

(1) Overpayments before recoupmentbegins. Except as provided in paragraph(d)(2), no interest is charged onoverpayments from the date of thepayment to the date on whichrecoupment begins.

(2) Receipt of both overpayments andunderpayments. If both benefitoverpayments and benefitunderpayments are made with respectto a participant, the PBGC willdetermine the amount of the netoverpayment or underpayment bycharging or crediting interest on eachpayment from the first day of the monthafter the date of payment to the first dayof the month in which recoupmentbegins. If the net overpayment thuscomputed is greater than the sum of theactual overpayments (unadjusted forinterest to the date on whichrecoupment begins), computationsunder § 4022.82 will be based upon thesum of the actual overpayments.

§ 4022.82 Method of recoupment.

(a) Future benefit reductions. Unless aparticipant or beneficiary electsotherwise under paragraph (b) of thissection, the PBGC shall recoupoverpayments of benefits in accordancewith this paragraph. The benefitreduction under this paragraph shall bean amount equal to the fractiondetermined under paragraphs (a)(1) and(a)(2) of this section, multiplied by each

future benefit payment to which theparticipant or beneficiary is entitled.

(1) Computation. The PBGC shalldetermine the fractional multiplier bydividing the amount of the benefitoverpayment by the present value of thebenefit payable with respect to theparticipant under title IV of ERISA. ThePBGC shall determine the present valueof the benefit to which a participant orbeneficiary is entitled under title IV ofERISA as of the termination date, usingthe PBGC interest rates and factors ineffect on that date. The PBGC may,however, utilize a different date ofdetermination if warranted by the factsand circumstances of a particular case.

(2) Limitation on benefit reduction.Except as provided in paragraph (a)(1)of this section, the PBGC shall reducebenefits with respect to a participant orbeneficiary by no more than the greaterof (i) ten percent per month or (ii) theamount of benefit per month in excessof the maximum guaranteeable benefitpayable under section 4022(b)(3)(B) ofERISA, determined without adjustmentfor age and benefit form.

(3) PBGC notice to participant orbeneficiary. Before effecting a benefitreduction pursuant to this paragraph,the PBGC shall notify the participant orbeneficiary in writing of the amount ofthe benefit overpayment and of theamount of the reduced benefitcomputed under this section. The noticewill advise the participant orbeneficiary of the repayment option setforth in paragraph (b) of this section andinform him or her that the PBGC willproceed to recover the benefitoverpayment in accordance with thisparagraph unless an election to repay ina lump sum is made in accordance withparagraph (b).

(b) Lump sum repayment. Aparticipant or beneficiary who hasreceived a net benefit overpayment mayelect to repay the excess in a singlepayment on or before a date agreed toby the participant or beneficiary and thePBGC. If the full payment is not madeby the agreed upon date or a date is notagreed upon, the PBGC may proceed torecover the overpayment in accordancewith paragraph (a) of this section.

§ 4022.83 PBGC reimbursement of benefitunderpayments.

When the PBGC determines that therehas been a net benefit underpaymentmade with respect to a participant, itshall pay the participant or beneficiarythe amount of the net underpayment,determined in accordance with§ 4022.81(d), in a single payment.


Appendix to Part 4022—MaximumGuaranteeable Monthly Benefit

The following table lists by year themaximum guaranteeable monthly benefitpayable in the form of a life annuitycommencing at age 65 as described by§ 4022.22(b) to a participant in a plan thatterminated in that year:

Year

Maximumguaranteeable

monthlybenefit

1974 ...................................... $750.001975 ...................................... 801.141976 ...................................... 869.321977 ...................................... 937.501978 ...................................... 1,005.681979 ...................................... 1,073.861980 ...................................... 1,159.091981 ...................................... 1,261.361982 ...................................... 1,380.681983 ...................................... 1,517.051984 ...................................... 1,602.271985 ...................................... 1,687.501986 ...................................... 1,789.771987 ...................................... 1,857.951988 ...................................... 1,909.091989 ...................................... 2,028.411990 ...................................... 2,164.771991 ...................................... 2,250.001992 ...................................... 2,352.271993 ...................................... 2,437.501994 ...................................... 2,556.821995 ...................................... 2,573.861996 ...................................... 2,642.05

PART 4022B—AGGREGATE LIMITSON GUARANTEED BENEFITS

§ 4022B.1 Aggregate payments limitation.If a person is entitled to benefits

under two or more plans or with respectto two or more participants, or if morethan one person is entitled to benefitspayable with respect to one participant,the aggregate benefits payable by PBGCfrom its funds shall be limited to theextent set forth in § 4022.22 computedwithout regard to the provisions of§ 4022.22(a). The limitation containedin § 4022.22 shall be applied separatelyto each plan at the date of itstermination, and the amounts payableby PBGC under each plan shall beaggregated up to the limitationcontained in this section.

PART 4041—TERMINATION OFSINGLE-EMPLOYER PLANS


Sec.4041.1 Purpose and scope.4041.2 Definitions.4041.3 Requirements for a standard

termination or a distress termination.4041.4 Administration of plan during

pendency of termination proceedings.4041.5 Challenges to plan termination

under collective bargaining agreement.4041.6 Annuity requirements.

4041.7 Facilitating plan sufficiency in astandard termination.

4041.8 Disaster relief.4041.9 Filing with the PBGC.4041.10 Computation of time.4041.11 Maintenance of plan records.4041.12 Information collection.

Subpart B—Standard Termination Process

4041.21 Notice of intent to terminate.4041.22 Issuance of notices of plan benefits.4041.23 Form and contents of notices of

plan benefits.4041.24 Standard termination notice.4041.25 PBGC action upon filing of

standard termination notice.4041.26 Notice of noncompliance.4041.27 Closeout of plan.

Subpart C—Distress Termination Process

4041.41 Notice of intent to terminate.4041.42 PBGC review of notice of intent to

terminate.4041.43 Distress termination notice.4041.44 PBGC determination of compliance

with requirements for distresstermination.

4041.45 PBGC determination of plansufficiency/insufficiency.

4041.46 Notices of benefit distribution.4041.47 Verification of plan sufficiency

prior to closeout.4041.48 Closeout of plan.

Appendix to Part 4041—Agreement forCommitment to Make Plan Sufficient forBenefit Liabilities

Authority: 29 U.S.C. 1302(b)(3), 1341,1344, 1350.



This part sets forth the rules andprocedures for terminating a single-employer pension plan in a standardtermination or in a distress terminationunder ERISA. Subpart A containsvarious general rules that apply to bothstandard terminations and distressterminations. Subpart B sets forth thespecific steps that a plan administratormust follow in order to terminate a planin a standard termination. Subpart Csets forth the specific steps that a planadministrator must follow in order toterminate a plan in a distresstermination. This part applies to thetermination of any single-employer plancovered under section 4021(a) of ERISAand not excluded by section 4021(b).This part does not reflect theamendments to sections 4041(b)(2)(C)(i)(relating to the PBGC’s authority not tonullify a termination if nullificationwould be inconsistent with the interestsof participants and beneficiaries) or4041(c)(2)(B)(i)(I) (relating to theliquidation criteria for a distresstermination) that were contained in theRetirement Protection Act of 1994 (Pub.L. 103–465, section 778 (a) and (b)).


§ 4001.2 of this chapter: affected party,annuity, benefit liabilities, Code,contributing sponsor, controlled group,distress termination, distribution date,employer, ERISA, guaranteed benefit,insurer, irrevocable commitment, IRS,mandatory employee contributions,normal retirement age, notice of intentto terminate, PBGC, person, plan, planadministrator, plan year, single-employer plan, standard termination,termination date, and title IV benefit.

In addition, for purposes of this part:Distress termination notice means the

notice filed with the PBGC pursuant tosection 4041(c)(2)(A) of ERISA and§ 4041.43. PBGC Form 601 (includingSchedule EA–D) is the distresstermination notice.

Distribution notice means the noticeissued to the plan administrator by thePBGC pursuant to § 4041.45(c) of thispart upon the PBGC’s determinationthat the plan has sufficient assets to payat least guaranteed benefits.

Existing collective bargainingagreement means a collective bargainingagreement that—

(1) By its terms, either has not expiredor is extended beyond its statedexpiration date because neither of thecollective bargaining parties took therequired action to terminate it, and

(2) Has not been made inoperative bya judicial ruling. When a collectivebargaining agreement no longer meetsthese conditions, it ceases to be an‘‘existing collective bargainingagreement,’’ whether or not any or all ofits terms may continue to apply byoperation of law.

Majority owner means, with respect toa contributing sponsor of a single-employer plan, an individual whoowns, directly or indirectly, 50 percentor more of—

(1) An unincorporated trade orbusiness,

(2) The capital interest or the profitsinterest in a partnership, or

(3) Either the voting stock of acorporation or the value of all of thestock of a corporation. For this purpose,the constructive ownership rules ofsection 414 (b) and (c) of the Code shallapply.

Notice of benefit distribution meansthe notice to each participant andbeneficiary required by § 4041.46 of thispart describing the benefit to bedistributed to him or her.

Notice of noncompliance means anotice issued to a plan administrator bythe PBGC pursuant to section4041(b)(2)(C) of ERISA and § 4041.26 ofthis part advising the plan administratorthat the requirements for a standard


termination have not been satisfied andthat the plan is an ongoing plan.

Notice of plan benefits means thenotice to each participant andbeneficiary required by section4041(b)(2)(B) of ERISA and §§ 4041.22and 4041.23 of this part describing hisor her plan benefits.

Participant means—(1) Any individual who is currently in

employment covered by the plan andwho is earning or retaining creditedservice under the plan, including anyindividual who is considered coveredunder the plan for purposes of meetingthe minimum participationrequirements but who, because of offsetor similar provisions, does not have anyaccrued benefits;

(2) Any nonvested individual who isnot currently in employment covered bythe plan but who is earning or retainingcredited service under the plan; and

(3) Any individual who is retired orseparated from employment covered bythe plan and who is receiving benefitsunder the plan or is entitled to beginreceiving benefits under the plan in thefuture, excluding any such individual towhom an insurer has made anirrevocable commitment to pay all thebenefits to which the individual isentitled under the plan.

Plan benefits means the benefits towhich a participant is, or may become,entitled under the plan’s provisions ineffect as of the termination date, basedon the participant’s accrued benefitunder the plan as of that date. Eachparticipant’s ‘‘plan benefits’’ equals thatparticipant’s ‘‘benefit liabilities,’’ andthe sum of all ‘‘plan benefits’’ equals theplan’s ‘‘benefit liabilities.’’

Proposed distribution date means thedate chosen by the plan administrator asthe tentative date for the distribution ofplan assets pursuant to a standardtermination. A proposed distributiondate may not be earlier than the 61stday, nor later than the 240th day,following the day on which the planadministrator files a standardtermination notice with the PBGC.

Proposed termination date means thedate specified as such by the planadministrator in the notice of intent toterminate or, if later, in the standardtermination notice or the distresstermination notice. A proposedtermination date specified in the noticeof intent to terminate may not be earlierthan the 60th day, nor later than the90th day, after the issuance of the noticeof intent to terminate. A proposedtermination date becomes the’termination date’ if a plan terminates ina standard termination. A proposedtermination date specified in thedistress termination notice may not be

earlier than the proposed terminationdate specified in the notice of intent toterminate, or (except with PBGCapproval) later than the 90th day afterthe issuance of the notice of intent toterminate.

Residual assets means the plan assetsremaining after all benefit liabilities andother liabilities of the plan have beensatisfied.

Standard termination notice meansthe notice filed with the PBGC pursuantto section 4041(b)(2)(A) of ERISA and§ 4041.24 of this part advising the PBGCof a proposed standard termination.PBGC Form 500 (including ScheduleEA–S) is the standard terminationnotice.

§ 4041.3 Requirements for a standardtermination or a distress termination.

(a) Exclusive means of voluntary plantermination. A plan may be voluntarilyterminated by the plan administratoronly if all of the requirements for astandard termination set forth inparagraph (b) of this section are satisfiedor all of the requirements for a distresstermination set forth in paragraph (c) ofthis section are satisfied.

(b) Requirements for a standardtermination. A plan may be terminatedin a standard termination only if—

(1) The plan administrator issues anotice of intent to terminate to eachaffected party in accordance with§ 4041.21 at least 60 days and not morethan 90 days before the proposedtermination date;

(2) The plan administrator files astandard termination notice with thePBGC in accordance with § 4041.24 nolater than 120 days after the proposedtermination date or, if applicable, nolater than the due date established in anextension notice issued under § 4041.8;

(3) The plan administrator issuesnotices of plan benefits to planparticipants and beneficiaries inaccordance with §§ 4041.22 and 4041.23no later than the date that the standardtermination notice is filed with thePBGC;

(4) The PBGC does not issue a noticeof noncompliance to the planadministrator pursuant to § 4041.26; and

(5) The plan administrator distributesplan assets in accordance with§ 4041.27(c) within the 180-day (orextended) distribution period under§ 4041.27(a), (e), and (f) (or, whereapplicable, within the time prescribedin part 4050 of this chapter), insatisfaction of all benefit liabilitiesunder the plan.

(c) Requirements for a distresstermination. A plan may be terminatedin a distress termination only if—

(1) The plan administrator issues anotice of intent to terminate to eachaffected party in accordance with§ 4041.41 at least 60 days and not morethan 90 days before the proposedtermination date;

(2) The plan administrator files adistress termination notice with thePBGC in accordance with § 4041.43 nolater than 120 days after the proposedtermination date or, if applicable, nolater than the due date established in anextension notice issued under § 4041.8;and

(3) The PBGC determines that eachcontributing sponsor and each memberof its controlled group satisfy one of thedistress criteria set forth in paragraph (e)of this section.

(d) Effect of failure to satisfyrequirements. (1) If the planadministrator does not satisfy all of therequirements of paragraph (b) of thissection for a standard termination or,except as provided in paragraph (d)(2)(i)of this section, all of the requirementsof paragraph (c) of this section for adistress termination, any action taken toeffect the plan termination shall be nulland void, and the plan shall be anongoing plan. A plan administrator whostill desires to terminate the plan shallinitiate the termination process again,starting with the issuance of a newnotice of intent to terminate.

(2)(i) The PBGC may, upon its ownmotion, waive any requirement withrespect to notices to be filed with thePBGC under paragraph (c)(1) or (c)(2) ofthis section if the PBGC believes that itwill be less costly or administrativelyburdensome to the PBGC to do so. ThePBGC will not entertain requests forwaivers under this paragraph.

(ii) Notwithstanding any otherprovision of this part, the PBGC retainsthe authority in any case to initiate aplan termination in accordance with theprovisions of section 4042 of ERISA.

(e) Distress criteria. In a distresstermination, each contributing sponsorand each member of its controlled groupshall satisfy at least one (but notnecessarily the same one) of thefollowing criteria in order for a distresstermination to occur:

(1) Liquidation. This criterion is metif, as of the proposed termination date—

(i) A person has filed or had filedagainst it a petition seeking liquidationin a case under title 11, United StatesCode, or under a similar federal law orlaw of a State or political subdivision ofa State, or a case described in paragraph(e)(2) of this section has been convertedto such a case; and

(ii) The case has not been dismissed.(2) Reorganization. This criterion is

met if—


(i) As of the proposed terminationdate, a person has filed or had filedagainst it a petition seekingreorganization in a case under title 11,United States Code, or under a similarlaw of a state or a political subdivisionof a state, or a case described inparagraph (e)(1) of this section has beenconverted to such a case;

(ii) As of the proposed terminationdate, the case has not been dismissed;

(iii) The person notifies the PBGC ofany request to the bankruptcy court (orother appropriate court in a case undersuch similar law of a state or a politicalsubdivision of a state) for approval ofthe plan termination by concurrentlyfiling with the PBGC a copy of themotion requesting court approval,including any documents submitted insupport of the request; and

(iv) The bankruptcy court or otherappropriate court determines that,unless the plan is terminated, suchperson will be unable to pay all its debtspursuant to a plan of reorganization andwill be unable to continue in businessoutside the reorganization process andapproves the plan termination.

(3) Inability to continue in business.This criterion is met if a persondemonstrates to the satisfaction of thePBGC that, unless a distress terminationoccurs, the person will be unable to payits debts when due and to continue inbusiness.

(4) Unreasonably burdensomepension costs. This criterion is met if aperson demonstrates to the satisfactionof the PBGC that the person’s costs ofproviding pension coverage havebecome unreasonably burdensomesolely as a result of declining coveredemployment under all single-employerplans for which that person is acontributing sponsor.

(f) Non-duplicative efforts. (1) If aperson requests approval of the plantermination by a court, as described inparagraph (e)(2) of this section, thePBGC—

(i) Will normally enter an appearanceto request that the court make specificfindings as to whether the contributingsponsor or controlled group membermeets the distress test in paragraph(e)(3) of this section, or state that it isunable to make such findings;

(ii) Will provide the court with anyinformation it has that may be germaneto the court’s ruling;

(iii) Will, if the person has requested,or later requests, a determination by thePBGC under paragraph (e)(3) of thissection, defer action on the request untilthe court makes its determination; and

(iv) Will be bound by a final and non-appealable order of the court.

(2) If a person requests adetermination by the PBGC underparagraph (e)(3) of this section, thePBGC determines that the distresscriterion is not met, and the personthereafter requests approval of the plantermination by a court, as described inparagraph (e)(2) of this section, thePBGC will advise the court of itsdetermination and make itsadministrative record available to thecourt.

(g) Non-recognition of certain actions.If the PBGC finds that a personundertook any action or failed to act forthe principal purpose of satisfying anyof the distress criteria contained inparagraph (e) of this section, rather thanfor a reasonable business purpose, thePBGC shall disregard such act or failureto act in determining whether theperson has satisfied any of thosecriteria.

§ 4041.4 Administration of plan duringpendency of termination proceedings.

(a) General rule. Except to the extentspecifically prohibited by this section,during the pendency of terminationproceedings the plan administrator shallcontinue to carry out the normaloperations of the plan, such as puttingparticipants into pay status, collectingcontributions due the plan, investingplan assets, and, during the pendency ofa standard termination, making loans toparticipants, in accordance with planprovisions and applicable law andregulations.

(b) Prohibitions after issuance ofnotice of intent to terminate in astandard termination. Except asprovided in paragraph (d) of thissection, during the period beginning onthe first day the plan administratorissues a notice of intent to terminate andending on the last day of the PBGC’s 60-day (or extended) review period, asdescribed in § 4041.25(a), the planadministrator shall not—

(1) Distribute plan assets pursuant toor in furtherance of the termination ofthe plan;

(2) Pay benefits attributable toemployer contributions, other thandeath benefits, in any form other than asan annuity; or

(3) Purchase irrevocable commitmentsto provide benefits from an insurer.

(c) Prohibitions after issuing notice ofintent to terminate in a distresstermination. The plan administratorshall not make loans to planparticipants beginning on the first dayhe or she issues a notice of intent toterminate, and from that date until adistribution is permitted pursuant to§ 4041.48, the plan administrator shallnot—

(1) Distribute plan assets pursuant to,or (except as required by this part) takeany other actions to implement, thetermination of the plan;

(2) Pay benefits attributable toemployer contributions, other thandeath benefits, in any form other than asan annuity; or

(3) Purchase irrevocable commitmentsto provide benefits from an insurer.

(d) Exceptions in a standardtermination. During the period set forthin paragraph (b) of this section, the planadministrator may pay benefitsattributable to employer contributionseither through the purchase ofirrevocable commitments from aninsurer or in a form other than anannuity if—

(1) The participant has separated fromactive employment;

(2) The distribution is consistent withprior plan practice; and

(3) The distribution is not reasonablyexpected to jeopardize the plan’ssufficiency for benefit liabilities.

(e) Effect of notice of noncompliancein a standard termination. If the PBGCissues a notice of noncompliancepursuant to § 4041.26, the prohibitionsdescribed in paragraphs (b)(2) and (b)(3)of this section shall cease to apply—

(1) Upon expiration of the periodduring which reconsideration may berequested under § 4041.26(c) or, ifearlier, at the time the planadministrator decides not to requestreconsideration; or

(2) If reconsideration is requested,upon PBGC issuance of its decision onreconsideration.

(f) Limitation on benefit payments onor after proposed termination date in adistress termination. Beginning on theproposed termination date, the planadministrator shall reduce benefits tothe level determined under part 4022,subpart D, of this chapter.

(g) Failure to qualify for distresstermination. In any case where thePBGC determines, pursuant to§ 4041.42(c) or § 4041.44(c)(1), that therequirements for a distress terminationare not satisfied—

(1) The prohibitions in paragraph (c)of this section, other than those inparagraph (c)(1), shall cease to apply—

(i) Upon expiration of the periodduring which reconsideration may berequested under §§ 4041.42(e) and4041.44(d) or, if earlier, at the time theplan administrator decides not torequest reconsideration; or

(ii) If reconsideration is requested,upon PBGC issuance of its decision onreconsideration.

(2) Any benefits that were not paidpursuant to paragraph (f) of this sectionshall be due and payable as of the


effective date of the PBGC’sdetermination, together with interestfrom the date (or dates) on which theunpaid amounts were originally dueuntil the date on which they are paid infull at the rate or rates prescribed under§ 4022.81(d) of this chapter.

(h) Effect of subsequent insufficiency.If the plan administrator makes afinding of subsequent insufficiency forguaranteed benefits pursuant to§ 4041.47(b), or the PBGC notifies theplan administrator that it has made afinding of subsequent insufficiency forguaranteed benefits pursuant to§ 4041.47(d), the prohibitions inparagraph (c) of this section shall applyin accordance with § 4041.47(e).

§ 4041.5 Challenges to plan terminationunder collective bargaining agreement.

(a) Suspension upon formal challengeto termination. (1)(i) If the PBGC isadvised, before the 60-day (or extended)period specified in § 4041.25 ends (in astandard termination) or before issuanceof a notice of inability to determinesufficiency or a distribution noticepursuant to § 4041.45(b) or (c) (in adistress termination), that a formalchallenge to the termination (asdescribed in paragraph (b) of thissection) has been initiated, the PBGCshall suspend the terminationproceeding and shall so advise the planadministrator in writing.

(ii) If the PBGC is advised of achallenge described in paragraph(a)(1)(i) of this section after the 60-day(or extended) period specified in§ 4041.25 ends (in a standardtermination) or after issuance of a noticeof inability to determine sufficiency ora distribution notice pursuant to§ 4041.45(b) or (c) (in a distresstermination) but before the terminationprocedure is concluded pursuant to thispart, the PBGC may suspend thetermination proceeding and, if it does,shall so advise the plan administrator inwriting.

(2) The rules in paragraphs (a)(3) or(a)(4) (as appropriate) shall apply duringa period of suspension beginning on thedate of the PBGC’s written notificationto the plan administrator and endingwith the final resolution of thechallenge to the termination:

(3) In a standard termination—(i) The running of all time periods

specified in ERISA or this part relevantto the termination shall be suspended;and

(ii) The plan administrator shallcomply with the prohibitions in§ 4041.4.

(4) In a distress termination—(i) The suspension shall stay the

issuance by the PBGC of any notice of

inability to determine sufficiency ordistribution notice or, if any such noticewas previously issued, shall stay itseffectiveness;

(ii) The plan administrator shallcomply with the prohibitions in§ 4041.4; and

(iii) The plan administrator shall filea distress termination notice with thePBGC in the manner and within thetime specified in § 4041.43.

(b) Formal challenge to termination.For purposes of this section, a formalchallenge to a plan termination isinitiated when any of the followingactions is taken, asserting that thetermination would violate the terms andconditions of an existing collectivebargaining agreement:

(1) The commencement of anyprocedure specified in the collectivebargaining agreement for resolvingdisputes under the agreement; or

(2) The commencement of any actionbefore an arbitrator, administrativeagency or board, or court underapplicable labor-management relationslaw.

(c) Resolution of challenge.Immediately upon the final resolution(as described in paragraph (d) of thissection) of the formal challenge to thetermination, the plan administratorshall notify the PBGC in writing of theoutcome of the challenge, and shallprovide the PBGC with a copy of theaward or order, if any. If the validity ofthe proposed termination has beenupheld, the plan administrator alsoshall advise the PBGC whether the planadministrator wishes to continue theproposed termination.

(1) Challenge sustained. If thearbitrator, agency, board, or court hasdetermined (or the parties have agreed)that the proposed termination violatesan existing collective bargainingagreement, the PBGC shall dismiss thetermination proceeding, all actionstaken to effect the plan termination shallbe null and void, and the plan shall bean ongoing plan. In this event, in adistress termination, § 4041.4(g) shallapply as of the date of the dismissal bythe PBGC.

(2) Termination sustained. If thearbitrator, agency, board, or court hasdetermined (or the parties have agreed)that the proposed termination does notviolate an existing collective bargainingagreement and the plan administratorwishes to proceed with the termination,the PBGC shall reactivate thetermination proceeding by sending awritten notice thereof to the planadministrator, and the following rulesshall apply:

(i) The termination proceeding shallcontinue from the point where it wassuspended;

(ii) All actions taken to effect thetermination before the suspension shallbe effective;

(iii) Any time periods that weresuspended shall resume running fromthe date of the PBGC’s notice of thereactivation of the proceeding;

(iv) Any time periods that had fewerthan 15 days remaining shall beextended to the 15th day after the dateof the PBGC’s notice, or such later dateas the PBGC may specify, and

(v) In a distress termination, the PBGCshall proceed to issue a notice ofinability to determine sufficiency or adistribution notice (or reactivate anysuch notice stayed under paragraph(a)(3) of this section), either with orwithout first requesting updatedinformation from the plan administratorpursuant to § 4041.43(c).

(d) Final resolution of challenge. Forpurposes of this section, a formalchallenge to a proposed termination isfinally resolved when—

(1) The parties involved in thechallenge enter into a settlement thatresolves the challenge;

(2) A final award, administrativedecision, or court order is issued that isnot subject to review or appeal; or

(3) A final award, administrativedecision, or court order is issued that isnot appealed, or review or enforcementof which is not sought, within the timefor filing an appeal or requesting reviewor enforcement.

(e) Involuntary termination by thePBGC. Notwithstanding any otherprovision of this section, the PBGCretains the authority in any case toinitiate a plan termination inaccordance with the provisions ofsection 4042 of ERISA.

§ 4041.6 Annuity requirements.(a) General rule. Except as provided in

paragraphs (b) and (d) of this section (or,where applicable, in part 4050 of thischapter), when a plan is closed outunder § 4041.27 (in a standardtermination) or § 4041.48 (in a distresstermination), any benefit that is payableas an annuity under the provisions ofthe plan must be provided in annuityform through the purchase from aninsurer of a single premium,nonparticipating, nonsurrenderableannuity contract that constitutes anirrevocable commitment by the insurerto provide the benefits purchased.

(b) Exceptions to annuity requirement.A benefit that is payable as an annuityunder the provisions of a plan need notbe provided in annuity form if the planprovides for an alternative form of


distribution and either paragraph (b)(1)or (b)(2) of this section applies:

(1) The participant is not in pay statusas of the distribution date, and thepresent value of the participant’s totalbenefit under the plan, includingamounts previously distributed to theparticipant, is $3,500 or less,determined in accordance with sections411(a)(11) and 417(e)(3) of the Code andthe regulations thereunder. The presentvalue of such benefits shall bedetermined using the interest rate orrates as of—

(i) The date set forth in the plan forsuch purpose, provided that the planprovision is in accord with section417(e)(3) of the Code and the regulationsthereunder (substituting ‘‘distributiondate’’ for ‘‘annuity starting date’’wherever used in the plan); or

(ii) If the plan does not provide forsuch a date, the distribution date.

(2) The participant elected thealternative form of distribution inwriting, with the written consent of hisor her spouse, in accordance with therequirements of sections 401(a)(11),411(a)(11), and 417 of the Code and theregulations thereunder.

(c) Optional benefit forms. Except aspermitted by sections 401(a)(11),411(d)(6), and 417 of the Code and theregulations thereunder, an annuitycontract purchased to satisfy theannuity requirement shall preserve allapplicable benefit options providedunder the plan as of the terminationdate.

(d) Participating annuities. (1)General rule. Notwithstanding therequirement of paragraph (a) of thissection that an annuity contract benonparticipating, a participatingannuity contract may be purchased tosatisfy the annuity requirement if theplan can provide for all benefitliabilities and—

(i) All benefit liabilities will beguaranteed under the annuity contractas the unconditional, irrevocable, andnoncancellable obligation of the insurer;

(ii) In no event, including unfavorableinvestment or actuarial experience, canthe amounts payable to participantsunder the annuity contract decreaseexcept to correct mistakes; and

(iii) As provided in paragraph (d)(2) ofthis section, no amount of residualassets to which participants are entitledwill be used to pay for the participationfeature.

(2) Plans with residual assets. If all ora portion of the residual assets of a planwill be distributed to participants—

(i) The additional premium for theparticipation feature must be paid fromthe contributing sponsor’s share, if any,

of the residual assets or from assets ofthe contributing sponsor; and

(ii) If the plan provided for mandatoryemployee contributions, the amount ofresidual assets must be determinedusing the price of the annuities for allbenefit liabilities without theparticipation feature.

§ 4041.7 Facilitating plan sufficiency in astandard termination.

(a) Commitment to make plansufficient—(1) General rule. At any timebefore a standard termination notice isfiled with the PBGC, in order to enablethe plan to terminate in that standardtermination, a contributing sponsor or amember of a controlled group of acontributing sponsor may make acommitment to contribute anyadditional sums necessary to make theplan sufficient for all benefit liabilities.Any such commitment shall be treatedas a plan asset for all purposes underthis part. A sample commitment isincluded in the appendix to this part.

(2) Requirements for validcommitment. A commitment to make aplan sufficient for all benefit liabilitiesshall be valid for purposes of this partonly if the commitment—

(i) Is made to the plan;(ii) Is in writing, signed by the

contributing sponsor and/or controlledgroup member(s); and

(iii) If the contributing sponsor orcontrolled group member is the subjectof a bankruptcy liquidation orreorganization proceeding, as describedin § 4041.3(e)(1) or (e)(2) of this part, isapproved by the court before which theliquidation or reorganization proceedingis pending or is unconditionallyguaranteed, by a person not inbankruptcy, to be met at or before thetime distribution of assets is required inthe standard termination.

(b) Alternative treatment of majorityowner’s benefit—(1) General rule. Inorder to facilitate the termination of theplan and distribution of assets in astandard termination, a majority ownermay agree to forego receipt of all or partof his or her benefit until the benefitliabilities of all other plan participantshave been satisfied.

(2) Requirements for valid agreement.Any agreement by a majority owner toan alternative treatment of his or herbenefit is valid only if—

(i) The agreement is in writing;(ii) In any case in which the total

value of the benefit (determined inaccordance with § 4041.6(b) of this part)is greater than $3,500, the spouse, ifany, of the majority owner consents, inwriting, to the alternative treatment ofthe benefit; and

(iii) The agreement is not inconsistentwith a qualified domestic relationsorder (as defined in section 206(d)(3) ofERISA).

§ 4041.8 Disaster relief.(a) Notwithstanding any other

provision in this part, when thePresident of the United States declaresthat, under the Disaster Relief Act of1974, as amended (42 U.S.C. 5121,5122(2), 5141(b)), a major disasterexists, the Executive Director of thePBGC (or his or her designee) may, byissuing one or more notices of disasterrelief, extend by up to 180 days the duedate for—

(1) Filing the standard terminationnotice under § 4041.24;

(2) Completing the distribution ofplan assets in a standard terminationunder § 4041.27;

(3) Filing the distress terminationnotice pursuant to § 4041.43;

(4) Issuing the notices of benefitdistribution in a distress terminationpursuant to § 4041.46(a)(1); or

(5) Completing the distribution ofplan assets in a distress terminationpursuant to § 4041.48.

(b) The due date extension orextensions described in paragraph (a) ofthis section shall apply only to planterminations with respect to which theprincipal place of business of thecontributing sponsor or the planadministrator, or the office of the serviceprovider, bank, insurance company, orother person maintaining theinformation necessary to file thestandard or distress termination notice,issue notices of plan benefits or benefitdistribution, or complete thedistribution of plan assets (asapplicable), is within a designateddisaster area.

(c) The standard or distresstermination notice or the post-distribution certification shall identifythe termination as being qualified forthe due date extension.

§ 4041.9 Filing with the PBGC.(a) Date of filing. Any document

required or permitted to be filed withthe PBGC under this part shall bedeemed filed on the date that it isreceived at the PBGC, providing it isreceived no later than 4:00 p.m. on aday other than Saturday, Sunday, or aFederal holiday. Documents receivedafter 4:00 p.m. or on Saturday, Sunday,or a Federal holiday shall be deemedfiled on the next regular business day.

(b) How to file. Except as mayotherwise be provided in applicableforms and instructions, any document tobe filed under this part may bedelivered by mail or by hand to: Reports


Processing, Insurance OperationsDepartment, Pension Benefit GuarantyCorporation, 1200 K Street NW.,Washington, DC 20005–4026


prescribed or allowed by this part, theday of the act or event from which thedesignated period of time begins to runis not counted. The last day of theperiod so computed shall be included,unless it is a Saturday, Sunday, orFederal holiday, in which event theperiod runs until the end of the next daythat is not a Saturday, Sunday, orFederal holiday. Notwithstanding thepreceding sentence, a proposedtermination date may be any day,including a Saturday, Sunday, orFederal holiday.

§ 4041.11 Maintenance of plan records.Either the contributing sponsor or the

plan administrator of a plan terminatingin a standard termination or a planterminating in a distress terminationthat closes out in accordance with§ 4041.48 pursuant to a distributionnotice issued under § 4041.45(c) shallmaintain and preserve all records usedto compute benefits with respect to eachindividual who is a plan participant ora beneficiary of a deceased participantas of the termination date in accordancewith the following rules:

(a) The records to be maintained andpreserved are those used to compute thebenefit for purposes of distribution toeach individual in accordance with§ 4041.27(c) (in a standard termination)or § 4041.48 (in a distress termination)and include, but are not limited to, theplan documents and all underlying data,including worksheets prepared by or atthe direction of the enrolled actuary,used in determining the amount, form,and value of benefits.

(b) All records subject to this sectionshall be preserved for six years after thedate the post-distribution certificationrequired under § 4041.27(h) (in astandard termination) or § 4041.48(b) (ina distress termination) is filed with thePBGC.

(c) The contributing sponsor or planadministrator, as appropriate, shallmake records subject to this sectionavailable to the PBGC upon request forinspection and photocopying, and shallsubmit such records to the PBGC within30 days after receipt of the PBGC’swritten request therefor (or such otherperiod as may be specified in suchwritten request).

§ 4041.12 Information collection.The information collection

requirements contained in this part have

been approved by the Office ofManagement and Budget under controlnumber 1212–0036.

Subpart B—Standard TerminationProcess

§ 4041.21 Notice of intent to terminate.(a) General rule. At least 60 days and

no more than 90 days before theproposed termination date, the planadministrator shall issue to each personwho is (as of the proposed terminationdate) an affected party (other than thePBGC) a written notice of intent toterminate containing all of theinformation specified in paragraph (d)of this section. Failure to comply withthe requirements of this section shallnullify the proposed termination.

(b) Discovery of other affected parties.Notwithstanding the provisions ofparagraph (a) of this section, if the planadministrator discovers additionalaffected parties after the expiration ofthe time period specified in paragraph(a) of this section, the failure to issue thenotice of intent to terminate to suchparties within the specified time periodwill not cause the notice to be untimelyunder paragraph (a) of this section if theplan administrator could not reasonablyhave been expected to know of theadditional affected parties and if he orshe promptly issues the notice to eachadditional affected party.

(c) Issuance—(1) Method. The planadministrator shall issue the notice ofintent to terminate to each affected party(other than the PBGC) individuallyeither by hand delivery or by first-classmail or courier service directed to theaffected party’s last known address.

(2) When issued. The notice of intentto terminate is deemed issued to eachaffected party on the date on which itis handed to the affected party ordeposited with a mail or courier service(as evidenced by a postmark or writtenreceipt).

(d) Contents of notice. The planadministrator shall include in the noticeof intent to terminate all of thefollowing information:

(1) The name of the plan and of thecontributing sponsor;

(2) The employer identificationnumber (‘‘EIN’’) of the contributingsponsor and the plan number (‘‘PN’’); ifthere is no EIN or PN, the notice shallso state;

(3) The name, address, and telephonenumber of the person who may becontacted by an affected party withquestions concerning the plan’stermination;

(4) A statement that the planadministrator expects to terminate theplan in a standard termination on a

proposed termination date that iseither—

(i) A specific date set forth in thenotice, or

(ii) A date to be determined that isdependent on the occurrence of somefuture event;

(5) If the proposed termination date isdependent on the occurrence of a futureevent, the nature of the event (such asthe merger of the contributing sponsorwith another entity), generally when theevent is expected to occur, and whenthe termination will occur in relation tothe other event;

(6) A statement that benefit andservice accruals will continue until thetermination date or, if applicable, thatbenefit accruals were or will be frozenas of a specific date in accordance withsection 204(h) of ERISA;

(7) A statement that, in order toterminate in a standard termination,plan assets must be sufficient to provideall benefit liabilities under the plan withrespect to each participant and eachbeneficiary of a deceased participant;

(8) A statement that, after plan assetshave been distributed to provide allbenefit liabilities with respect to aparticipant or a beneficiary of adeceased participant, either by thepurchase of an irrevocable commitmentor commitments from an insurer toprovide benefits or by an alternativeform of distribution provided for underthe plan, the PBGC’s guarantee withrespect to that participant’s orbeneficiary’s benefit ends;

(9) If distribution of benefits under theplan may be wholly or partially by thepurchase of irrevocable commitmentsfrom an insurer—

(i) The name and address of theinsurer or insurers from whom, or (if notthen known) the insurers from amongwhom, the plan administrator intends topurchase the irrevocable commitments;or

(ii) If the plan administrator has notidentified an insurer or insurers at thetime the notice of intent to terminate isissued, a statement that—

(A) Irrevocable commitments may bepurchased from an insurer to providesome or all of the benefits under theplan,

(B) The insurer or insurers have notyet been identified, and

(C) Affected parties (other than thePBGC) will be notified at a later date(but no later than 45 days before thedistribution date) of the name andaddress of the insurer or insurers fromwhom, or (if not then known) theinsurers from among whom, the planadministrator intends to purchase theirrevocable commitments;


(10) A statement that if thetermination does not occur, the planadministrator will notify the affectedparties (other than the PBGC) in writingof that fact;

(11) A statement that each affectedparty, other than the PBGC or anyemployee organization, will receive awritten notification of the benefits thatthe person will receive; and

(12) For retirees only, a statement thattheir monthly (or other periodic) benefitamounts will not be affected by theplan’s termination.

(e) Supplemental notice requirements.(1) The plan administrator shall issue asupplemental notice (or notices) ofintent to terminate to each affected party(other than the PBGC) in accordancewith the rules in paragraph (e)(2) of thissection if—

(i) The plan administrator has not yetidentified an insurer or insurers at thetime the notice of intent to terminate isissued; or

(ii) The plan administrator notifiesaffected parties (other than the PBGC) ofthe insurer or insurers from whom (orfrom among whom) he or she intends topurchase the irrevocable commitments,either in the notice of intent toterminate or in a later notice, butsubsequently decides to select adifferent insurer.

(2) The plan administrator shall issueeach supplemental notice in the mannerprovided in paragraph (c) of this sectionno later than 45 days before thedistribution date and shall include thename and address of the insurer orinsurers from whom, or (if not thenknown) the insurers from among whom,the plan administrator intends topurchase the irrevocable commitments.

(3) Any supplemental notice ornotices meeting the requirements ofparagraph (e)(2) of this section shall bedeemed a part of the notice of intent toterminate.

(f) Spin-off/termination transactions.In the case of a spin-off/terminationtransaction, the plan administrator shallprovide all participants in the originalplan who are covered by the ongoingplan (as of the proposed terminationdate) with a notice describing thetransaction no later than the date onwhich the plan administrator completesthe issuance of notices of intent toterminate under this section. A spin-off/termination is a transaction in which asingle defined benefit plan is split intotwo or more plans, in conjunction withthe termination of one or more of theplans, resulting in a reversion ofresidual assets to the employer.

§ 4041.22 Issuance of notices of planbenefits.

(a) General rule. No later than the dateon which the plan administrator filesthe standard termination notice with thePBGC, as required by § 4041.24, the planadministrator shall issue to each persondescribed in paragraph (b) of thissection a notice of that individual’s planbenefits. The notice shall be in the formand contain the information specified in§ 4041.23. Failure to comply with therequirements of this section shall nullifythe proposed termination.

(b) Persons entitled to notice. Theplan administrator shall issue a noticeof plan benefits to each person (otherthan the PBGC or any employeeorganization) who is an affected party asof the proposed termination date (and,in the case of a spin-off/terminationtransaction as described in § 4043.21(f),each person who is, as of the proposedtermination date, a participant in theoriginal plan who is covered by theongoing plan).

(c) Discovery of other affected parties.Notwithstanding the provisions ofparagraph (a) of this section, if the planadministrator discovers additionalpersons entitled to a notice of planbenefits after the expiration of the timeperiod specified in paragraph (a) of thissection, the failure to issue a notice ofplan benefits to such persons within thespecified time period will not causesuch notices to be untimely underparagraph (a) of this section if the planadministrator could not reasonably havebeen expected to know of the additionalpersons and if he or she promptlyissues, to each such additional person,a notice of plan benefits in the form andcontaining the information specified in§ 4041.23.

(d) Issuance—(1) Method. The planadministrator shall issue a notice ofplan benefits individually to eachperson described in paragraph (b) of thissection, either by hand-delivery or byfirst-class mail or courier servicedirected to the person’s last knownaddress.

(2) When issued. A notice of planbenefits is deemed issued to eachperson on the date it is handed to theperson or deposited with a mail orcourier service (as evidenced by apostmark or written receipt).

§ 4041.23 Form and contents of notices ofplan benefits.

(a) Form of notices. The planadministrator shall provide notices ofplan benefits written in plain, non-technical English that is likely to beunderstood by the average participant orbeneficiary. If technical terms must be

used, their meaning shall be explainedin non-technical language.

(b) Foreign languages. The planadministrator of a plan described in thisparagraph shall comply with paragraph(a) of this section and also shall includein the notices a statement, prominentlydisplayed, in the foreign language (orlanguages) common to the non-Englishspeaking plan participants advisingthem of how they may obtain assistancein understanding the notice. Theassistance need not involve writtenmaterials, but shall be adequate toreasonably ensure that the participantsand beneficiaries understand theinformation contained in their noticesand shall be provided through mediaand at times and places that arereasonably accessible to the participantsand beneficiaries. A plan is described inthis paragraph if, as of the proposedtermination date, the plan either—

(1) Covers fewer than 100 participantsand at least 25 percent of thoseparticipants speak only the same non-English language or

(2) Covers 100 or more participantsand at least the lesser of 500 or 10percent of those participants speak thesame non-English language.

(c) Contents of notice. In addition tothe information described in paragraph(d), (e), or (f) of this section, asapplicable, the plan administrator shallinclude in each notice of plan benefitsthe following information:

(1) The name of the plan, theemployer identification number (‘‘EIN’’)of the contributing sponsor, and theplan number (‘‘PN’’); if there is no EINor PN, the notice shall so state;

(2) The name, address, and telephonenumber of the person who may becontacted to answer questionsconcerning a participant’s orbeneficiary’s benefit;

(3) The proposed termination dateand, if applicable, a statement that thisdate is later than the proposedtermination date given in the notice ofintent to terminate; and

(4) If the amount of the plan benefitsset forth in a notice is an estimate, astatement that the amount is an estimateand that benefits paid may be greaterthan or less than the estimate.

(d) Benefits of persons in pay status.The plan administrator shall include inthe notice of plan benefits for aparticipant or beneficiary in pay statusas of the proposed termination date thefollowing information:

(1) The amount and form of theparticipant’s plan benefits payable as ofthe proposed termination date;

(2) The amount and form of benefit,if any, payable to a beneficiary upon the


participant’s death and the name of thebeneficiary;

(3) The amount and date of anyincrease or decrease in the benefitscheduled to occur after the proposedtermination date (or that has alreadyoccurred) and an explanation of theincrease or decrease, including, whereapplicable, a reference to the pertinentplan provision; and

(4) For benefits of participants orbeneficiaries in pay status for one yearor less as of the proposed terminationdate, the specific personal data used tocalculate the plan benefits described inparagraphs (d)(1) and (d)(2) of thissection, e.g., participant’s age atretirement, spouse’s age, participant’slength of service, and including, forSocial Security offset benefits, theparticipant’s actual or, if unknown,estimated Social Security benefit and,for an estimated benefit, theassumptions used for the participant’searnings history.

(e) Benefits of participants not in paystatus but form and starting date known.The plan administrator shall include inthe notice of plan benefits for aparticipant who is not in pay status asof the proposed termination date, butwho has, as of that date, elected to retireand has elected a form and starting date,or with respect to whom the planadministrator has determined a lumpsum distribution will be made, thefollowing information:

(1) The amount and form of theparticipant’s plan benefits payable as ofthe projected benefit starting date, andwhat that date is;

(2) The amount and form of benefit,if any, payable to a beneficiary upon theparticipant’s death and the name of thebeneficiary;

(3) The amount and date of anyincrease or decrease in the benefitscheduled to occur after the proposedtermination date (or that has alreadyoccurred) and an explanation of theincrease or decrease, including, whereapplicable, a reference to the pertinentplan provision; and

(4) If the age at which, or form inwhich, the plan benefits will be paiddiffers from the age or form in which theparticipant’s accrued benefit at normalretirement age is stated in the plan, theage or form stated in the plan and theage or form adjustment factors,including, in the case of a lump sumbenefit, the interest rate used to convertto the lump sum benefit described inparagraph (e)(1) of this section and areference to the pertinent planprovision;

(5) The specific personal data, asdescribed in paragraph (d)(4) of thissection, used to calculate the plan

benefits (other than a lump sum benefit)described in paragraphs (e)(1) and (e)(2)of this section and, with respect to abenefit payable as a lump sum, thepersonal data used to calculate theunderlying annuity; and

(6) If the plan benefits will be paid ina lump sum, an explanation of how theinterest rate is used to calculate thelump sum; a statement that the higherthe interest rate used, the smaller thelump sum amount; and, if applicable, astatement that the lump sum amountgiven is an estimate because theapplicable interest rate may changebefore the distribution date.

(f) Benefits of all other participantsnot in pay status. The planadministrator shall include in the noticeof plan benefits for any participant notdescribed in paragraph (d) or (e) of thissection, the following information:

(1) The amount and form of theparticipant’s plan benefits payable atnormal retirement age in any formpermitted under the plan;

(2) The availability of any alternativebenefit forms, including those payableto a beneficiary upon the participant’sdeath either before or after retirement,and, for any benefits to which theparticipant is or may become entitledthat would be payable before normalretirement age, the earliest benefitcommencement date, the amountpayable on and after such date, andwhether the benefit would be subject tofuture reduction;

(3) The specific personal data, asdescribed in paragraph (d)(4) of thissection, used to calculate the planbenefits described in paragraph (f)(1) ofthis section and, with respect to abenefit that may be paid in a lump sum,the personal data used to calculate theunderlying annuity; and

(4) If the plan benefits may be paid ina lump sum, an explanation of when alump sum may be paid without aparticipant’s consent; an explanation ofhow the interest rate is used to calculatethe lump sum; and a statement that thehigher the interest rate used, the smallerthe lump sum amount.

§ 4041.24 Standard termination notice.

(a) Form. The plan administrator shallfile with the PBGC a PBGC Form 500,Standard Termination Notice, Single-Employer Plan Termination, withSchedule EA–S, Standard TerminationCertification of Sufficiency, that hasbeen completed in accordance with theinstructions thereto. Except as providedin § 4041.8, the plan administrator shallfile the standard termination notice onor before the 120th day after theproposed termination date.

(b) Supplemental notice requirement.If any of the benefits of the terminatingplan may be provided in annuity formthrough the purchase of irrevocablecommitments from an insurer and eitherof the conditions in paragraph (b)(1) ofthis section is met, the planadministrator shall file a supplementalnotice (or notices) with the PBGC inaccordance with the provisions inparagraph (b)(2) of this section.

(1) The plan administrator shall filewith the PBGC a supplemental notice(or notices) if—

(i) The insurer or insurers from whomthe plan administrator intends topurchase irrevocable commitments isnot identified in the standardtermination notice filed with the PBGC,or

(ii) The plan administrator hasnotified the PBGC of the insurer orinsurers from whom he or she intendsto purchase irrevocable commitments,either in the standard termination noticeor in a later notice pursuant toparagraph (b)(2) of this section, andsubsequently decides to select adifferent insurer.

(2) The supplemental notice (ornotices) may be filed at any time afterthe filing of the standard terminationnotice, but no later than 45 days beforethe distribution date, and shall—

(i) Be in writing addressed to: ReportsProcessing, Insurance OperationsDepartment, Pension Benefit GuarantyCorporation, 1200 K Street NW.,Washington, DC 20005–4026.

(ii) Give information identifying thecontributing sponsor and the plan byname, address, employer identificationand plan numbers (‘‘EIN/PN’’), andPBGC case number (if applicable); and

(iii) Give the name and address of theinsurer or insurers from whom, or (if notthen known) the insurers from amongwhom, the plan administrator intends topurchase the irrevocable commitments.

§ 4041.25 PBGC action upon filing ofstandard termination notice.

(a) Review period upon filing ofstandard termination notice—(1)General rule. After a complete standardtermination notice has been filed inaccordance with § 4041.9, the PBGC has60 days to review the notice, determinewhether to issue a notice ofnoncompliance pursuant to § 4041.26,and issue any such notice. The 60-dayreview period begins on the dayfollowing the filing of a completestandard termination notice andincludes the 60th day. If the PBGC doesnot issue a notice of noncompliance bythe last day of this 60-day period, theplan administrator shall proceed to


close out the plan in accordance with§ 4041.27.

(2) Extension of review period. The60-day review period may be extendedaccording to the following rules:

(i) The PBGC and the planadministrator may agree in writing,before the expiration of the 60-dayreview period, to extend the period forup to an additional 60 days;

(ii) More than one such extension maybe made; and

(iii) Any extension may be made uponwhatever terms and conditions areagreed to by the PBGC and the planadministrator.

(3) Suspension of review period. The60-day review period shall besuspended in accordance withparagraph (d) of this section if the PBGCrequests supplemental information.

(b) Acknowledgment of completestandard termination notice. The PBGCshall notify the plan administrator inwriting of the date on which a completestandard termination notice was filed,so that the plan administrator maydetermine when the 60-day reviewperiod will expire.

(c) Return of incomplete standardtermination notice. The PBGC shallreturn an incomplete standardtermination notice and advise the planadministrator in writing of the missingitem(s) of information and that thecomplete standard termination noticemust be filed no later than the 120th dayafter the proposed termination date orthe 20th day after the date of the PBGCnotice, whichever is later.

(d) Authority to request supplementalinformation. Whenever the PBGC hasreason to believe that any of therequirements of §§ 4041.21 through4041.24 of this part were not compliedwith, or in any proposed terminationthat will result in a reversion of residualassets to the contributing sponsor, thePBGC may require the submission ofinformation supplementing thatfurnished pursuant to § 4041.24. Arequest for additional information underthis paragraph shall be in writing andshall suspend the running of the 60-day(or extended) review period describedin paragraph (a) of this section. Thatperiod shall begin running again on theday following the filing of the requiredinformation. If a plan administrator orcontributing sponsor fails to submitinformation required under thisparagraph within the period specified inthe PBGC’s request, the PBGC may issuea notice of noncompliance inaccordance with § 4041.26 or take otherappropriate action to enforce therequirements of Title IV of ERISA.

(e) Authority to suspend or nullifyproposed termination. Notwithstanding

any other provision of this part, thePBGC may, by written notice to the planadministrator, suspend or nullify aproposed termination after expiration ofthe 60-day (or extended) review periodin any case in which it determines thatsuch action is necessary to carry out thepurposes of Title IV of ERISA.

§ 4041.26 Notice of noncompliance.(a) General. (1) The PBGC shall issue

to the plan administrator a writtennotice of noncompliance, within theperiod prescribed by § 4041.25,whenever it makes one of the followingdeterminations:

(i) A determination that the planadministrator failed to issue the noticeof intent to terminate in accordancewith § 4041.21.

(ii) A determination that the planadministrator failed to issue notices ofplan benefits in accordance with§§ 4041.22 and 4041.23.

(iii) A determination that the standardtermination notice, or any supplementalnotice, was not filed in accordance with§ 4041.24.

(iv) A determination that, as of theproposed distribution date, plan assetswill not be sufficient to satisfy allbenefit liabilities under the plan.

(2) The PBGC shall base anydetermination described in paragraph(a)(1) of this section on the informationcontained in the standard terminationnotice, including any supplementalsubmission under § 4041.25(d) and anysupplemental notice under § 4041.24(b),or on information provided by anyaffected party or otherwise obtained bythe PBGC.

(b) Effect of notice of noncompliance.A notice of noncompliance ends thestandard termination proceeding,nullifies all actions taken to terminatethe plan, and renders the plan anongoing plan. The notice ofnoncompliance is effective upon theexpiration of the period within whichthe plan administrator may requestreconsideration pursuant to paragraph(c) of this section but, once a notice isissued, the plan administrator shall takeno further action to terminate the plan(except by initiation of a newtermination) unless and until the noticeis revoked pursuant to a decision by thePBGC on reconsideration.

(c) Reconsideration of notice ofnoncompliance. A plan administratormay request reconsideration of a noticeof noncompliance in accordance withthe rules prescribed in part 4003,subpart C, of this chapter. Any requestfor reconsideration automatically staysthe effectiveness of the notice ofnoncompliance until the PBGC issuesits decision on reconsideration.

(d) Notice to affected parties—(1)General rule. Upon a decision by thePBGC on reconsideration affirming theissuance of a notice of noncompliance(or, if earlier, upon the planadministrator’s decision not to requestreconsideration), the plan administratorshall notify the affected parties (otherthan the PBGC), and any persons whowere provided notice under§ 4041.21(f)), in writing that the plan isnot going to terminate or, if applicable,that the termination was invalid but thata new notice of intent to terminate isbeing issued.

(2) Method of issuance. The noticesshall be delivered by first-class mail orby hand to each person described inparagraph (d)(1) who is an employeeorganization or a participant orbeneficiary who is then in pay status.The notices to other participants andbeneficiaries shall be provided in anymanner reasonably calculated to reachthose participants and beneficiaries.Reasonable methods of notificationinclude, but are not limited to, postingthe notice at participants’ worksites orpublishing the notice in an employeeorganization newsletter or newspaper ofgeneral circulation in the area or areaswhere participants and beneficiariesreside.

§ 4041.27 Closeout of plan.(a) General rules—(1) Distribution.

Except as provided in paragraphs (b),(e), and (f) of this section and § 4041.8of this part, if the PBGC does not issuea notice of noncompliance within theperiod specified in § 4041.25 or, if anotice of noncompliance is issued andlater revoked after reconsiderationunder § 4041.26(c), the planadministrator shall complete thedistribution of plan assets in accordancewith paragraph (c) of this section within180 days after the expiration of thereview period specified in § 4041.25 (or,if applicable, the date on which thePBGC revokes the notice ofnoncompliance) or, if applicable, withinthe time prescribed in part 4050 of thischapter.

(2) Post-distribution requirements.The plan administrator shall file withthe PBGC a post-distributioncertification in accordance withparagraph (h) of this section and, if anyof the plan’s benefit liabilities payableto a participant or beneficiary have beendistributed through the purchase ofirrevocable commitments, the planadministrator also shall provide suchparticipant or beneficiary with a notice,contract, or certificate in accordancewith paragraph (g) of this section.

(b) Assets insufficient to satisfybenefit liabilities. Before distributing


plan assets to close out the plan, theplan administrator shall determine thatplan assets are, in fact, sufficient tosatisfy all benefit liabilities. Indetermining if plan assets are sufficient,the plan administrator shall subtract allliabilities (other than the future benefitliabilities that will be provided whenassets are distributed), e.g., benefitpayments due before the distributiondate; PBGC premiums for all plan yearsthrough and including the plan year inwhich assets are distributed; expenses,fees, and other administrative costs. Ifplan assets are not sufficient to satisfyall benefit liabilities, the planadministrator shall not make anydistribution of assets to effect the plan’stermination. In the event of aninsufficiency, the plan administratorshall promptly notify the PBGC.

(c) Method of distribution. The planadministrator shall distribute planassets in accordance with § 4041.6 bypurchasing irrevocable commitmentsfrom an insurer in satisfaction of allbenefit liabilities that must be providedin annuity form, and by otherwiseproviding all benefit liabilities that neednot be provided in annuity form. Theplan administrator shall comply withpart 4050 of this chapter (dealing withmissing participants), if applicable.

(d) Failure to distribute within 180-day period. Except as provided inparagraphs (e) and (f) of this section,failure to distribute assets in accordancewith paragraph (c) of this section withinthe 180-day distribution period set forthin paragraph (a)(1) of this section,because of an insufficiency of planassets as described in paragraph (b) ofthis section or for any other reason,shall nullify the termination. All actionstaken to effect the plan’s terminationshall be null and void, and the planshall be an ongoing plan. In this event,the plan administrator shall notifyaffected parties (other than the PBGC) inwriting, in accordance with§ 4041.26(d), that the plan is not goingto terminate or, if applicable, that thetermination was invalid but that a newnotice of intent to terminate is beingissued.

(e) Automatic extension of time fordistribution. (1) Requirements forautomatic extension. The planadministrator shall be entitled to anautomatic extension of the 180-dayperiod in which to complete thedistribution of plan assets if the planadministrator—

(i) Submits to the IRS a completerequest for a determination with respectto the plan’s tax-qualification statusupon termination (‘‘determinationletter’’) on or before the date that the

plan administrator files the standardtermination notice with the PBGC;

(ii) Does not receive a determinationletter at least 60 days before theexpiration of the 180-day period; and

(iii) On or before the expiration of the180-day period, notifies the PBGC inwriting that an extension of thedistribution deadline is required andcertifies that the conditions in thisparagraph have been met.

(2) Extension period. If therequirements in paragraph (e)(1) of thissection are met, the time within whichthe plan administrator shall completethe distribution of plan assets isautomatically extended until the 60thday after receipt of a favorabledetermination letter from the IRS.

(f) Discretionary extension of time fordistribution. If the plan administratorwill be unable to complete thedistribution of plan assets within the180-day (or extended) period for anyreason other than an insufficiencydescribed in paragraph (b) of thissection, the plan administrator mayrequest, and the PBGC shall grant ordeny, in its discretion, an extension oftime within which to complete thedistribution according to the followingrules:

(1) The plan administrator shall file awritten request for a discretionaryextension with the PBGC at least 30days before the expiration of the 180-day (or extended) distribution period,explain the reason(s) for the request,and provide a date certain by which thedistribution will be made if theextension is granted.

(2) The PBGC will not grant adiscretionary extension based on failureto meet the requirements for anautomatic extension under paragraph (e)of this section or failure to locate allparticipants or beneficiaries.

(3) The PBGC will grant adiscretionary extension, in whole or inpart, only if it is satisfied that the delayin making the distribution is not due tothe action or inaction of the planadministrator or the contributingsponsor and that the distribution can infact be completed by the date requested.

(g) Notice of annuity contract. In thecase of the distribution of benefitliabilities through the purchase ofirrevocable commitments—

(1) Either the plan administrator orthe insurer shall, as soon as practicable,provide each participant and beneficiarywith a copy of the annuity contract orcertificate showing the insurer’s nameand address and clearly reflecting theinsurer’s obligation to provide theparticipant’s or beneficiary’s benefit; (2)If such a contract or certificate is notavailable on or before the date on which

the post-distribution certificate isrequired to be filed pursuant toparagraph (h) of this section, the planadministrator shall, no later than suchdate, provide each participant andbeneficiary with a written noticestating—

(i) That the obligation for providingthe participant’s or beneficiary’s planbenefits has transferred to the insurer;

(ii) The name and address of theinsurer;

(iii) The name, address, and telephonenumber of the person designated by theinsurer to answer questions concerningthe annuity; and

(iv) That the participant or beneficiarywill receive from the plan administratoror insurer a copy of the annuity contractor a certificate showing the insurer’sname and address and clearly reflectingthe insurer’s obligation to provide theparticipant’s or beneficiary’s benefit;and

(3) The plan administrator shallcertify to the PBGC, as part of the post-distribution certification required underparagraph (h) of this section, that therequirements in paragraph (g)(1) or(g)(2) of this section have been satisfied.

(h) Post-distribution certification.Within 30 days after the last distributiondate, the plan administrator shall filewith the PBGC a PBGC Form 501, Post-Distribution Certification for StandardTermination, that has been completed inaccordance with the instructionsthereto. This requirement shall beconsidered satisfied if, in accordancewith § 4050.6(a)(2) and (a)(3) of thischapter, the plan administrator files apreliminary post-distributioncertification within 30 days after the lastdistribution date and, in addition,timely files an amended post-distribution certification that otherwisesatisfies all applicable requirements.

Subpart C—Distress TerminationProcess

§ 4041.41 Notice of intent to terminate.

(a) General rules. (1) At least 60 daysand no more than 90 days before theproposed termination date, the planadministrator shall issue to each personwho is (as of the proposed terminationdate) an affected party a written noticeof intent to terminate.

(2) The plan administrator shall issuethe notice of intent to terminate to allaffected parties other than the PBGC ator before the time he or she files thenotice with the PBGC.

(3) The notice to affected parties otherthan the PBGC shall contain all of theinformation specified in paragraph (d)of this section.


(4) The notice to the PBGC shall befiled on PBGC Form 600, DistressTermination, Notice of Intent toTerminate, completed in accordancewith the instructions thereto.

(b) Discovery of other affected parties.Notwithstanding the provisions ofparagraphs (a)(1) and (a)(2) of thissection, if the plan administratordiscovers additional affected partiesafter the expiration of the time periodspecified in paragraphs (a)(1) or (a)(2) ofthis section, the failure to issue thenotice of intent to terminate to suchparties within the specified time periodswill not cause the notice to be untimelyunder paragraph (a) of this section if theplan administrator could not reasonablyhave been expected to know of theadditional affected parties and if he orshe promptly issues the notice to eachadditional affected party.

(c) Issuance—(1) Method. The planadministrator shall issue the notice ofintent to terminate individually to eachaffected party. The notice to the PBGCshall be filed in accordance with§ 4041.9. The notice to each of the otheraffected parties shall be either handdelivered or delivered by first-class mailor courier service directed to theaffected party’s last known address.

(2) When issued. The notice of intentto terminate is deemed issued to thePBGC on the date on which it is filedand to any other affected party on thedate on which it is handed to theaffected party or deposited with a mailor courier service (as evidenced by apostmark or written receipt).

(d) Contents of notice to affectedparties other than the PBGC. The planadministrator shall include in the noticeof intent to terminate to each affectedparty other than the PBGC all of thefollowing information:

(1) The name of the plan and of thecontributing sponsor;

(2) The employer identificationnumber (‘‘EIN’’) of the contributingsponsor and the plan number (‘‘PN’’); ifthere is no EIN or PN, the notice shallso state;

(3) The name, address, and telephonenumber of the person who may becontacted by an affected party withquestions concerning the plan’stermination;

(4) A statement that the planadministrator expects to terminate theplan in a distress termination on aspecified proposed termination date.

(5) A statement that benefit andservice accruals will continue until thetermination date or, if applicable, thatbenefit accruals were or will be frozenas of a specific date in accordance withsection 204(h) of ERISA;

(6) A statement of whether plan assetsare sufficient to pay all guaranteedbenefits or all benefit liabilities;

(7) A brief description of whatbenefits are guaranteed by the PBGC(e.g., if only a portion of the benefits areguaranteed because of the phase-in rule,this should be explained), and astatement that participants andbeneficiaries also may receive a portionof the benefits to which each is entitledunder the terms of the plan in excess ofguaranteed benefits; and

(8) A statement, if applicable, thatbenefits may be subject to reductionbecause of the limitations on theamounts guaranteed by the PBGC orbecause plan assets are insufficient topay for full benefits (pursuant to part4022, subparts B and D, of this chapter)and that payments in excess of theamount guaranteed by the PBGC may berecouped by the PBGC (pursuant to part4022, subpart E, of this chapter).

(e) Spin-off/termination transactions.In the case of a spin-off/terminationtransaction (as described in§ 4041.21(f)), the plan administratorshall provide all participants andbeneficiaries in the original plan whoare also participants or beneficiaries inthe ongoing plan (as of the proposedtermination date) with a noticedescribing the transaction no later thanthe date on which the planadministrator completes the issuance ofnotices of intent to terminate under thissection.

§ 4041.42 PBGC review of notice of intentto terminate.

(a) General. When a notice of intent toterminate is filed with it, the PBGC—

(1) Shall determine whether thenotice was issued in compliance with§ 4041.41; and

(2) Shall advise the plan administratorof its determination, in accordance withparagraph (b) or (c) of this section, nolater than the proposed termination datespecified in the notice.

(b) Tentative finding of compliance. Ifthe PBGC determines that the issuanceof the notice of intent to terminateappears to be in compliance with§ 4041.41, it shall notify the planadministrator in writing that—

(1) The PBGC has made a tentativedetermination of compliance;

(2) The distress terminationproceeding may continue; and

(3) After reviewing the distresstermination notice filed pursuant to§ 4041.43, the PBGC will make final, orreverse, this tentative determination.

(c) Finding of noncompliance. If thePBGC determines that the issuance ofthe notice of intent to terminate was notin compliance with § 4041.41 (except

for requirements that the PBGC elects towaive under § 4041.3(d)(2)(i) withrespect to the notice filed with thePBGC), the PBGC shall notify the planadministrator in writing—

(1) That the PBGC has determinedthat the notice of intent to terminate wasnot properly issued; and

(2) That the proposed distresstermination is null and void and theplan is an ongoing plan.

(d) Information on need to institutesection 4042 proceedings. The PBGCmay require the plan administrator tosubmit, within 20 days after the planadministrator’s receipt of the PBGC’swritten request (or such other period asmay be specified in such writtenrequest), any information that the PBGCdetermines it needs in order to decidewhether to institute termination ortrusteeship proceedings pursuant tosection 4042 of ERISA, whenever—

(1) A notice of intent to terminateindicates that benefits currently in paystatus (or that should be in pay status)are not being paid or that this is likelyto occur within the 180-day periodfollowing the issuance of the notice ofintent to terminate;

(2) The PBGC issues a determinationunder paragraph (c) of this section; or

(3) The PBGC has any reason tobelieve that it may be necessary orappropriate to institute proceedingsunder section 4042 of ERISA.

(e) Reconsideration of finding ofnoncompliance. A plan administratormay request reconsideration of thePBGC’s determination ofnoncompliance under paragraph (c) ofthis section in accordance with the rulesprescribed in part 4003, subpart C, ofthis chapter. Any request forreconsideration automatically stays theeffectiveness of the determination untilthe PBGC issues its decision onreconsideration, but does not stay thetime period within which informationmust be submitted to the PBGC inresponse to a request under paragraph(d) of this section.

(f) Notice to affected parties. Upon adecision by the PBGC affirming afinding of noncompliance or upon theexpiration of the period within whichthe plan administrator may requestreconsideration of a finding ofnoncompliance (or, if earlier, upon theplan administrator’s decision not torequest reconsideration), the planadministrator shall notify the affectedparties (and any persons who wereprovided notice under § 4041.41(e)) inwriting that the plan is not going toterminate or, if applicable, that thetermination is invalid but that a newnotice of intent to terminate is beingissued. The notice required by this


paragraph shall be provided in themanner described in § 4041.26(d)(2).

§ 4041.43 Distress termination notice.(a) General rule. The plan

administrator shall file with the PBGC aPBGC Form 601, Distress TerminationNotice, Single-Employer PlanTermination, with Schedule EA–D,Distress Termination Enrolled ActuaryCertification, that has been completed inaccordance with the instructionsthereto, on or before the 120th day afterthe proposed termination date or, ifapplicable, no later than the due dateestablished in an extension noticeissued under § 4041.8.

(b) Participant and benefitinformation. (1) Plan insufficient forguaranteed benefits. Unless the enrolledactuary certifies, in the Schedule EA–Dfiled in accordance with paragraph (a) ofthis section, that the plan is sufficienteither for guaranteed benefits or forbenefit liabilities, the plan administratorshall file with the PBGC the participantand benefit information described inPBGC Form 601 and the instructionsthereto by the later of—

(i) 120 days after the proposedtermination date, or

(ii) 30 days after receipt of the PBGC’sdetermination, pursuant to § 4041.44(b),that the requirements for a distresstermination have been satisfied.

(2) Plan sufficient for guaranteedbenefits or benefit liabilities. If theenrolled actuary certifies that the plan issufficient either for guaranteed benefitsor for benefit liabilities, the planadministrator need not submit theparticipant and benefit informationdescribed in PBGC Form 601 and theinstructions thereto unless requested todo so pursuant to paragraph (c) of thissection.

(3) Effect of failure to provideinformation. The PBGC may void thedistress termination if the planadministrator fails to provide completeparticipant and benefit information inaccordance with this section.

(c) Additional information. The PBGCmay in any case require the submissionof any additional information that itneeds to make the determinations that itis required to make under this part orto pay benefits pursuant to section 4061or 4022(c) of ERISA. The planadministrator shall submit anyinformation requested under thisparagraph within 30 days after receivingthe PBGC’s written request (or suchother period as may be specified in suchwritten request).

(d) Due date extension.Notwithstanding the provisions ofparagraphs (a), (b), and (c) of thissection, the due date for filing PBGC

Form 601 or other information requiredunder this section may be extended bya notice issued under § 4041.8.

§ 4041.44 PBGC determination ofcompliance with requirements for distresstermination.

(a) General. Based on the informationcontained in and submitted with thePBGC Form 600 and the PBGC Form601, with Schedule EA–D, and on anyinformation submitted by an affectedparty or otherwise obtained by thePBGC, the PBGC shall determinewhether the requirements for a distresstermination set forth in § 4041.3(c) havebeen met and shall notify the planadministrator in writing of itsdetermination, in accordance withparagraph (b) or (c) of this section.

(b) Qualifying termination. If thePBGC determines that all of therequirements of § 4041.3(c) have beensatisfied, it shall so advise the planadministrator and shall also advise theplan administrator of whetherparticipant and benefit informationmust be submitted in accordance with§ 4041.43(b).

(c) Non-qualifying termination. (1)Except as provided in paragraph (c)(2)of this section, if the PBGC determinesthat any of the requirements of§ 4041.3(c) has not been met, it shallnotify the plan administrator of itsdetermination, the basis therefor, andthe effect thereof (as provided in§ 4041.3(d)).

(2) If the only basis for the PBGC’sdetermination described in paragraph(c)(1) of this section is that the distresstermination notice is incomplete, thePBGC shall advise the planadministrator of the missing item(s) ofinformation and that the informationmust be filed with the PBGC no laterthan the 120th day after the proposedtermination date or the 30th day afterthe date of the PBGC’s notice of itsdetermination, whichever is later, or, ifapplicable, no later than the due dateestablished in an extension noticeissued under § 4041.8.

(d) Reconsideration of determinationof non-qualification. A planadministrator may requestreconsideration of the PBGC’sdetermination under paragraph (c)(1) ofthis section in accordance with the rulesprescribed in part 4003, subpart C, ofthis chapter. The filing of a request forreconsideration automatically stays theeffectiveness of the determination untilthe PBGC issues its decision onreconsideration.

(e) Notice to affected parties. Upon adecision by the PBGC affirming adetermination of non-qualification orupon the expiration of the period within

which the plan administrator mayrequest reconsideration of adetermination of non-qualification (or, ifearlier, upon the plan administrator’sdecision not to request reconsideration),the plan administrator shall notify theaffected parties (and any persons whowere provided notice under§ 4041.41(e)) in writing that the plan isnot going to terminate or, if applicable,that the termination is invalid but thata new notice of intent to terminate isbeing issued. The notice required bythis paragraph shall be provided in themanner described in § 4041.26(d)(2).

§ 4041.45 PBGC determination of plansufficiency/insufficiency.

(a) General. Upon receipt ofparticipant and benefit information filedpursuant to § 4041.43 (b)(1) or (c), thePBGC shall determine the degree towhich the plan is sufficient and notifythe plan administrator in writing of itsdetermination in accordance withparagraph (b) or (c) of this section.

(b) Insufficiency for guaranteedbenefits. If the PBGC finds that it isunable to determine that a plan issufficient for guaranteed benefits, itshall issue a ‘‘notice of inability todetermine sufficiency’’ notifying theplan administrator of this finding andadvising the plan administrator that—

(1) The plan administrator shallcontinue to administer the plan underthe restrictions imposed by § 4041.4;and

(2) The termination shall becompleted under section 4042 of ERISA.

(c) Sufficiency for guaranteed benefitsor benefit liabilities. If the PBGCdetermines that a plan is sufficient forguaranteed benefits but not for benefitliabilities or is sufficient for benefitliabilities, the PBGC shall issue to theplan administrator a distribution noticeadvising the plan administrator—

(1) To issue notices of benefitdistribution in accordance with§ 4041.46;

(2) To close out the plan inaccordance with § 4041.48;

(3) To file a timely post-distributioncertification with the PBGC inaccordance with § 4041.48(b); and

(4) That either the plan administratoror the contributing sponsor mustpreserve and maintain plan records inaccordance with § 4041.11.

§ 4041.46 Notices of benefit distribution.(a) General rules. When a distribution

notice is issued by the PBGC pursuantto § 4041.45(c), the plan administratorshall—

(1) No later than 60 days afterreceiving the distribution notice or, ifapplicable, no later than the due date


established in an extension noticeissued under § 4041.8, issue a notice ofbenefit distribution in accordance withthe rules described in paragraphs (c)and (d) of this section to each person(other than any employee organizationor the PBGC) who is an affected partyas of the termination date (and, in thecase of a spin-off/terminationtransaction as described in § 4041.21(f),each person who is, as of thetermination date, a participant in theoriginal plan and covered by theongoing plan); and

(2) No later than 15 days after the dateon which the plan administratorcompletes the issuance of the notices ofbenefit distribution, file with the PBGCa certification that the notices were soissued in accordance with therequirements of this section.

(b) Discovery of other affected parties.Notwithstanding the provisions ofparagraph (a) of this section, if the planadministrator discovers additionalpersons entitled to a notice of benefitdistribution after the expiration of thetime period specified in paragraph (a)(1)of this section, the failure to issue thenotices of benefit distribution to suchpersons within the specified time periodwill not cause such notices to beuntimely under paragraph (a) of thissection if the plan administrator couldnot reasonably have been expected toknow of the additional persons and if heor she promptly issues, to each suchadditional person, a notice of benefitdistribution in the form and containingthe information specified in paragraph(d) of this section.

(c) Issuance—(1) Method. The planadministrator shall issue a notice ofbenefit distribution individually to eachperson, either by hand-delivery or byfirst-class mail or courier servicedirected to the person’s last knownaddress.

(2) When issued. A notice of benefitdistribution is deemed issued to eachperson on the date it is handed to theperson or deposited with a mail orcourier service (as evidenced by apostmark or written receipt).

(d) Form and content of notices. Theplan administrator shall provide noticesof benefit distribution in the formdescribed in § 4041.23 (a) and (b) of thispart and shall include in each—

(1) The information described in§ 4041.23(c) of this part;

(2) The information described in§ 4041.23 (d), (e), or (f) of this part, asapplicable (replacing the term ‘‘planbenefits’’ with ‘‘Title IV benefits’’ and‘‘proposed termination date’’ with‘‘termination date’’.

(3) A statement that, after plan assetshave been distributed to provide all of

the Title IV benefits payable withrespect to a participant or a beneficiaryof a deceased participant, either by thepurchase of an irrevocable commitmentor commitments from an insurer toprovide benefits or by an alternativeform of distribution provided for underthe plan, the PBGC’s guarantee withrespect to that participant’s orbeneficiary’s benefit ends; and

(4) If distribution of benefits under theplan may be wholly or partially by thepurchase of irrevocable commitmentsfrom an insurer—

(i) The name and address of theinsurer or insurers from whom, or (if notthen known) the insurers from amongwhom, the plan administrator intends topurchase the irrevocable commitments;or

(ii) If the plan administrator has notidentified an insurer or insurers at thetime the notice of distribution is issued,a statement that the affected party towhom the notice is directed will benotified at a later date (but no later than45 days before the distribution date) ofthe name and address of the insurer orinsurers from whom, or (if not thenknown) the insurers from among whom,irrevocable commitments may bepurchased.

(e) Supplemental notice requirements.(1) The plan administrator shall issue asupplemental notice (or notices) ofdistribution to each person inaccordance with the rules in paragraph(e)(2) of this section if—

(i) The plan administrator has not yetidentified an insurer or insurers at thetime the notice of distribution is issued;or

(ii) The plan administrator includedin the notice of distribution the name ornames of the insurer or insurers fromwhom (or from among whom) he or sheintends to purchase the irrevocablecommitments, but subsequently decidesto select a different insurer.

(2) The plan administrator shall issueeach supplemental notice in the mannerprovided in paragraph (c) of this sectionno later than 45 days before thedistribution date and shall include thename and address of the insurer orinsurers from whom, or (if not thenknown) the insurers from among whom,the plan administrator intends topurchase the irrevocable commitments.

§ 4041.47 Verification of plan sufficiencyprior to closeout.

(a) General rule. Before distributingplan assets pursuant to a closeout under§ 4041.48, the plan administrator shallverify whether the plan’s assets are stillsufficient to provide for benefits at thelevel determined by the PBGC, i.e.,guaranteed benefits or benefit liabilities.

If the plan administrator finds that theplan is no longer able to provide forbenefits at the level determined by thePBGC, then paragraph (b) or (c) of thissection, as appropriate, shall apply.

(b) Subsequent insufficiency forguaranteed benefits. When a planadministrator finds that a plan is nolonger sufficient for guaranteed benefits,the plan administrator shall promptlynotify the PBGC in writing of that factand shall take no further action toimplement the plan termination,pending the PBGC’s determination andnotice pursuant to paragraph (b)(1) or(b)(2) of this section.

(1) PBGC concurrence with finding. Ifthe PBGC concurs with the planadministrator’s finding, the distributionnotice shall be void, and the PBGCshall—

(i) Issue the plan administrator anotice of inability to determinesufficiency in accordance with§ 4041.45(b); and

(ii) Require the plan administrator tosubmit a new valuation, certified to byan enrolled actuary, of the benefitliabilities and guaranteed benefits underthe plan, valued in accordance with§§ 4044.41 through 4044.57 of thischapter as of the date of the planadministrator’s notice to the PBGC.

(2) PBGC non-concurrence withfinding. If the PBGC does not concurwith the plan administrator’s finding, itshall so notify the plan administrator inwriting, and the distribution notice shallremain in effect.

(c) Subsequent insufficiency forbenefit liabilities. When a planadministrator finds that a plan issufficient for guaranteed benefits but isno longer sufficient for benefitliabilities, the plan administrator shallimmediately notify the PBGC in writingof this fact, but shall continue with thedistribution of assets in accordance with§ 4041.48.

(d) Finding by PBGC of subsequentinsufficiency. In any case in which thePBGC finds on its own initiative that asubsequent insufficiency for guaranteedbenefits has occurred, paragraph (b)(1)of this section shall apply, except thatthe guaranteed benefits shall berevalued as of the date of the PBGC’sfinding.

(e) Restrictions upon finding ofsubsequent insufficiency. When the planadministrator makes the findingdescribed in paragraph (b) of thissection or receives notice that the PBGChas made the finding described inparagraph (d) of this section, the planadministrator shall (except to the extentthe PBGC otherwise directs) be subjectto the prohibitions in § 4041.4(c).


§ 4041.48 Closeout of plan.

(a) General rules—(1) Distribution. If aplan administrator receives adistribution notice from the PBGCpursuant to § 4041.45(c) and neither theplan administrator nor the PBGC makesthe finding described in § 4041.47 (b) or(d), the plan administrator shalldistribute plan assets in accordancewith §§ 4041.6 and 4041.27(c) of thispart no earlier than the 61st day and(except as provided in § 4041.8 or4041.27 (e) or (f)) no later than the 180thday following the day on which the planadministrator completes the issuance ofthe notices of benefit distributionpursuant to § 4041.46(a), or, whereapplicable, within the time prescribedin part 4050 of this chapter. Forpurposes of applying § 4041.27(e)(1)(i),the phrase ‘‘the date that the planadministrator files the standardtermination notice with the PBGC’’ shallbe replaced by ‘‘the date that the planadministrator completes issuance of thenotices of benefit distribution.’’

(2) Notice of annuity contract. If anyof the plan’s benefit liabilities payableto a participant or beneficiary have beendistributed through the purchase ofirrevocable commitments, the planadministrator shall provide suchparticipant or beneficiary with a notice,contract, or certificate in accordancewith § 4041.27(g).

(b) Post-distribution certification.Within 30 days after the last distributiondate, the plan administrator shall filewith the PBGC a PBGC Form 602, Post-Distribution Certification for DistressTermination, that has been completed inaccordance with the instructionsthereto. This requirement shall beconsidered satisfied if, in accordancewith § 4050.6 (a)(2) and (a)(3) of thischapter, the plan administrator files apreliminary post-distributioncertification within 30 days after the lastdistribution date and, in addition,timely files an amended post-distribution certification that otherwisesatisfies all applicable requirements.

Appendix to Part 4041—Agreement forCommitment To Make Plan Sufficientfor Benefit Liabilities

This agreement, by and between [name ofcompany] XXXXXXXXXX (the ‘‘Company’’)and [name of plan] XXXXXXXXXX (the‘‘Plan’’) shall be effective as of the last dateexecuted.

Whereas, the Plan is an employee pensionbenefit plan as described in section 3(2)(A)of the Employee Retirement Income SecurityAct 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 contributingsponsor of the Plan, or a member of thecontributing sponsor’s controlled group, asdescribed in section 4001(a) (13) and (14) ofERISA, 29 U.S.C. 1301(2) (13) and (14); and

Whereas, the Plan is covered by thetermination insurance provisions of Title IVof ERISA, 29 U.S.C. 1301–1461; and

Whereas, the Plan administrator has issuedor intends to issue to each affected party anotice of intent to terminate the Plan,pursuant to section 4041(a)(2) of ERISA, 29U.S.C. 1341(a)(2); and

Whereas, the Company wishes the Plan tobe sufficient for benefit liabilities, asdescribed in section 4001(a)(16) of ERISA, 29U.S.C. 1301(a)(16); and

Whereas, the parties understand that if thePlan is not able to satisfy all its obligationsfor benefit liabilities, it will not be able toterminate in a standard termination undersection 4041(b) of ERISA, 29 U.S.C. 1341(b);and

Whereas, the Company is not a debtor ina bankruptcy or other insolvency proceeding.[Alternative Paragraph]

Whereas, the Company is a debtor in abankruptcy or other insolvency proceedingand the court before which the proceeding ispending approves this commitment.

Whereas, the Company is a debtor in abankruptcy or other insolvency proceedingand this commitment is unconditionallyguaranteed, by an entity or person not inbankruptcy, to be met at or before the timedistribution is required in this standardtermination.

Now Therefore, the parties hereto agree asfollows:

1. The Company promises to pay to thePlan, on or before the date prescribed fordistribution of Plan assets by the planadministrator, the amount necessary, if any,to ensure that, on the date the planadministrator distributes the assets of thePlan, the Plan is able to provide all benefitliabilities.

2. For the sole purpose of determiningwhether the Plan is sufficient to provide allbenefit liabilities, an amount equal to theamount described in paragraph 1 shall bedeemed a Plan asset available for allocationamong the participants and beneficiaries ofthe Plan, in accordance with section 4044 ofERISA, 29 U.S.C. 1344.

3. This Agreement shall in no way relievethe Company of its obligations to paycontributions under the Plan.Date:By:Company:By:Plan:

PART 4041A—TERMINATION OFMULTIEMPLOYER PLANS

Subpart A—General ProvisionsSec.4041A.1 Purpose and scope.4041A.2 Definitions.4041A.3 Submission of documents.

Subpart B—Notice of Termination4041A.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.


§ 4041A.1 Purpose and scope.The purpose of this part is to establish

rules for notifying the PBGC of thetermination of a multiemployer planand rules for the administration ofmultiemployer plans that haveterminated by mass withdrawal. SubpartB prescribes the contents of andprocedures for filing a Notice ofTermination for a multiemployer plan.Subpart C prescribes basic duties ofplan sponsors of mass-withdrawal-terminated plans. (Other duties areprescribed in part 4281 of this chapter.)Subpart D contains procedures forclosing out sufficient plans. This partapplies to terminated multiemployerplans covered by title IV of ERISA but,in the case of subparts C and D, only toplans terminated by mass withdrawalunder section 4041A(a)(2) of ERISA(including plans created by partitionpursuant to section 4233 of ERISA).

§ 4041A.2 Definitions.The following terms are defined in

§ 4001.l of this chapter: annuity, ERISA,insurer, IRS, mass withdrawal,multiemployer plan, nonforfeitablebenefit, PBGC, plan, and plan year.

In addition, for purposes of this part:Available resources means, for a plan

year, available resources as described insection 4245(b)(3) of ERISA.

Benefits subject to reduction meansthose benefits accrued under planamendments (or plans) adopted afterMarch 26, 1980, or under collectivebargaining agreements entered into afterMarch 26, 1980, that are not eligible forthe PBGC’s guarantee under section4022A(b) of ERISA.

Financial assistance means financialassistance from the PBGC under section4261 of ERISA.

Insolvency benefit level means thegreater of the resource benefit level orthe benefit level guaranteed by the


PBGC for each participant andbeneficiary in pay status.

Insolvency year means insolvencyyear as described in section 4245(b)(4)of ERISA.

Insolvent means that a plan is unableto pay benefits when due during theplan year. A plan terminated by masswithdrawal is not insolvent unless it hasbeen amended to eliminate all benefitsthat are subject to reduction undersection 4281(c) of ERISA, or, in theabsence of an amendment, no benefitsunder the plan are subject to reductionunder section 4281(c) of ERISA.

Nonguaranteed benefits means thosebenefits that are eligible for the PBGC’sguarantee under section 4022A(b) ofERISA, but exceed the guarantee limitsunder section 4022A(c).

Resource benefit level means resourcebenefit level as described in section4245(b)(2) of ERISA.

§ 4041A.3 Submission of documents.(a) Filing date. Any notice, document,

or information required to be filed withthe PBGC under this part shall bedeemed filed on the date of thepostmark stamped on the cover inwhich the notice, document, orinformation is mailed, provided that thepostmark was made by the United StatesPostal Service and the document wasmailed postage prepaid, properlypackaged and addressed to the PBGC. Ifthese conditions are not met, thedocument is considered filed on thedate it is received by the PBGC.Documents received after regularbusiness hours are considered filed onthe next regular business day.

(b) Address. Any notice, document, orinformation required to be filed with thePBGC under this part shall be sent bymail or submitted by hand duringnormal working hours to ReportsProcessing, Insurance OperationsDepartment, Pension Benefit GuarantyCorporation, 1200 K Street NW.,Washington, DC 20005–4026.

Subpart B—Notice of Termination

§ 4041A.11 Requirement of notice.(a) General. A Notice of Termination

shall be filed with the PBGC by amultiemployer plan when the plan hasterminated as described in section4041A(a) of ERISA.

(b) Who shall file. The plan sponsoror a duly authorized representativeacting on behalf of the plan sponsorshall sign and file the Notice.

(c) When to file. (1) For a terminationpursuant to a plan amendment, theNotice shall be filed with the PBGCwithin thirty days after the amendmentis adopted or effective, whichever islater.

(2) For a termination that results froma mass withdrawal, the Notice shall befiled with the PBGC within thirty daysafter the last employer withdrew fromthe plan or thirty days after the first dayof the first plan year for which noemployer contributions were requiredunder the plan, whichever is earlier.(Approved by the Office of Management andBudget under control number 1212–0020)

§ 4041A.12 Contents of notice.(a) Information to be contained in

notice. Except to the extent provided inparagraph (d), each Notice shall contain:

(1) The name of the plan;(2) The name, address and telephone

number of the plan sponsor and of theplan sponsor’s duly authorizedrepresentative, if any;

(3) The name, address, and telephonenumber of the person that willadminister the plan after the date oftermination, if other than the plansponsor;

(4) A copy of the plan’s most recentForm 5500 (Annual Report Form),including schedules; and

(5) The date of termination of theplan.

(b) Information to be contained in anotice involving a mass withdrawal. Inaddition to the information contained inparagraph (a) and except as provided inparagraph (d), the following informationshall be contained in a Notice filed bya plan that has terminated by masswithdrawal:

(1) A copy of the plan document ineffect 5 years prior to the date oftermination and copies of anyamendments adopted after that date.

(2) A copy (or copies) of the trustagreement (or agreements), if any,authorizing the plan sponsor to controland manage the operation andadministration of the plan.

(3) A copy of the most recent actuarialstatement and opinion (if any) relatingto the plan.

(4) A statement of any material changein the assets or liabilities of the planoccurring after either the date of theactuarial statement referred to in item(5) or the date of the plan’s Form 5500submitted as part of the Notice.

(5) Complete copies of any letters ofdetermination issued by the IRS relatingto the establishment of the plan, anyletters of determination relating to thedisqualification of the plan and anysubsequent requalification, and anyletters of determination relating to thetermination of the plan.

(6) A statement whether the planassets will be sufficient to pay allbenefits in pay status during the 12-month period following the date oftermination.

(7) If plan assets on hand aresufficient to satisfy all nonforfeitablebenefits under the plan, and if the plansponsor intends to distribute suchassets, a brief description of theproposed method of distributing theplan assets.

(8) If plan assets on hand are notsufficient to satisfy all nonforfeitablebenefits under the plan, the name andaddress of any employer whocontributed to the plan within 3 planyears prior to the date of termination.

(c) Certification. As part of the Notice,the plan sponsor or duly authorizedrepresentatives shall certify that allinformation and documents submittedpursuant to this section are true andcorrect to the best of the plan sponsor’sor representative’s knowledge andbelief.

(d) Avoiding duplication. Informationdescribed in paragraphs (a) and (b) ofthis section need not be supplied if itduplicates information contained inForm 5500, or a schedule thereof, thata plan submits as part of the Notice.

(e) Additional information. Inaddition to the information described inparagraphs (a) and (b) of this section,the PBGC may require the submission ofany other information which the PBGCdetermines is necessary for review of aNotice of Termination.

Subpart C—Plan Sponsor Duties

§ 4041A.21 General rule.The plan sponsor of a multiemployer

plan that terminates by masswithdrawal shall continue to administerthe plan in accordance with applicablestatutory provisions, regulations, andplan provisions until a trustee isappointed under section 4042 of ERISAor until plan assets are distributed inaccordance with subpart D of this part.In addition, the plan sponsor shall beresponsible for the specific dutiesdescribed in this subpart.

§ 4041A.22 Payment of benefits.(a) Except as provided in paragraph

(b), the plan sponsor shall pay anybenefit attributable to employercontributions, other than a deathbenefit, only in the form of an annuity.

(b) The plan sponsor may pay abenefit in a form other than an annuityif—

(1) The plan distributes plan assets inaccordance with subpart D of this part;

(2) The PBGC approves the paymentof the benefit in an alternative formpursuant to § 4041A.27; or

(3) The value of the entirenonforfeitable benefit does not exceed$1,750.

(c) Except to the extent provided inthe next sentence, the plan sponsor


shall not pay benefits in excess of theamount that is nonforfeitable under theplan as of the date of termination,unless authorized to do so by the PBGCpursuant to § 4041A.27. Subject to therestriction stated in paragraph (d) of thissection, however, the plan sponsor maypay a qualified preretirement survivorannuity with respect to a participantwho died after the date of termination.

(d) The payment of benefits subject toreduction shall be discontinued to theextent provided in § 4281.31 if the plansponsor determines, in accordance with§ 4041A.24, that the plan’s assets areinsufficient to provide all nonforfeitablebenefits.

(e) The plan sponsor shall, to theextent provided in § 4281.41, suspendthe payment of nonguaranteed benefitsif the plan sponsor determines, inaccordance with § 4041A.25, that theplan is insolvent.

(f) The plan sponsor shall, to theextent required by § 4281.42, makeretroactive payments of suspendedbenefits if it determines under thatsection that the level of the plan’savailable resources requires suchpayments.

§ 4041A.23 Imposition and collection ofwithdrawal liability.

Until plan assets are distributed inaccordance with subpart D of this part,or until the end of the plan year as ofwhich the PBGC determines that planassets (exclusive of claims forwithdrawal liability) are sufficient tosatisfy all nonforfeitable benefits underthe plan, the plan sponsor shall beresponsible for determining, imposingand collecting withdrawal liability(including the liability arising as a resultof the mass withdrawal), in accordancewith part 4219, subpart C, of thischapter and sections 4201 through 4225of ERISA.

§ 4041A.24 Annual plan valuations andmonitoring.

(a) Annual valuation. Not later than150 days after the end of the plan year,the plan sponsor shall determine orcause to be determined in writing thevalue of nonforfeitable benefits underthe plan and the value of the plan’sassets, in accordance with part 4281,subpart B. This valuation shall be doneas of the end of the plan year in whichthe plan terminates and each plan yearthereafter (exclusive of a plan year forwhich the plan receives financialassistance from the PBGC under section4261 of ERISA) up to but not includingthe plan year in which the plan isclosed out in accordance with subpart Dof this part.

(b) Plan monitoring. Upon receipt ofthe annual valuation described inparagraph (a) of this section, the plansponsor shall determine whether thevalue of nonforfeitable benefits exceedsthe value of the plan’s assets, includingclaims for withdrawal liability owed tothe plan. When benefits do exceedassets, the plan sponsor shall—

(1) If the plan provides benefitssubject to reduction, amend the plan toreduce those benefits in accordancewith the procedures in part 4281,subpart C, of this chapter to the extentnecessary to ensure that the plan’sassets are sufficient to discharge whendue all of the plan’s obligations withrespect to nonforfeitable benefits; or

(2) If the plan provides no benefitssubject to reduction, make periodicdeterminations of plan solvency inaccordance with § 4041A.25.

(c) Notices of benefit reductions. Theplan sponsor of a plan that has beenamended to reduce benefits shallprovide participants and beneficiariesand the PBGC notice of the benefitreduction in accordance with § 4281.32.

§ 4041A.25 Periodic determinations of plansolvency.

(a) Annual insolvency determination.The plan sponsor of a plan that has beenamended to eliminate all benefits thatare subject to reduction under section4281(c) of ERISA shall determine inwriting whether the plan is expected tobe insolvent for the first plan yearbeginning after the effective date of theamendment and for each plan yearthereafter. In the event that a planadopts more than one amendmentreducing benefits under section 4281(c)of ERISA, the initial determination shallbe made for the first plan year beginningafter the effective date of theamendment that effects the eliminationof all such benefits, and a determinationshall be made for each plan yearthereafter. The plan sponsor of a planunder which no benefits are subject toreduction under section 4281(c) ofERISA as of the date the plan terminatedshall determine in writing whether theplan is expected to be insolvent. Theinitial determination shall be made forthe second plan year beginning after thefirst plan year for which it is determinedunder section 4281(b) of ERISA that thevalue of nonforfeitable benefits underthe plan exceeds the value of the plan’sassets. The plan sponsor shall also makea solvency determination for each planyear thereafter. A determinationrequired under this paragraph shall bemade no later than six months beforethe beginning of the plan year to whichit applies.

(b) Other determination of insolvency.Whether or not a prior determination ofplan solvency has been made underparagraph (a) of this section (or undersection 4245 of ERISA), a plan sponsorthat has reason to believe, taking intoaccount the plan’s recent andanticipated financial experience, thatthe plan is or may be insolvent for thecurrent or next plan year shalldetermine in writing whether the planis expected to be insolvent for that planyear.

(c) Benefit suspensions. If the plansponsor determines that the plan is, oris expected to be, insolvent for a planyear, it shall suspend benefits inaccordance with § 4281.41.

(d) Insolvency notices. If the plansponsor determines that the plan is, oris expected to be, insolvent for a planyear, it shall issue notices of insolvencyor annual updates and notices ofinsolvency benefit level of the PBGCand to plan participants andbeneficiaries in accordance with part4281, subpart D.

§ 4041A.26 Financial assistance.

A plan sponsor that determines aresource benefit level under section4245(b)(2) of ERISA that is below thelevel of guaranteed benefits or thatdetermines that the plan will be unableto pay guaranteed benefits for anymonth during an insolvency year shallapply for financial assistance from thePBGC in accordance with § 4281.47.

§ 4041A.27 PBGC approval to pay benefitsnot otherwise permitted.

Upon written application by the plansponsor, the PBGC may authorize theplan to pay benefits other thannonforfeitable benefits or to pay benefitsvalued at more than $1,750 in a formother than an annuity. The PBGC willapprove such payments if it determinesthat the plan sponsor has demonstratedthat the payments are not adverse to theinterests of the plan’s participants andbeneficiaries generally and do notunreasonably increase the PBGC’s riskof loss with respect to the plan.

Subpart D—Closeout of SufficientPlans

§ 4041A.41 General rule.

If a plan’s assets, excluding any claimof the plan for unpaid withdrawalliability, are sufficient to satisfy allobligations for nonforfeitable benefitsprovided under the plan, the plansponsor may close out the plan inaccordance with this subpart bydistributing plan assets in fullsatisfaction of all nonforfeitable benefitsunder the plan.


§ 4041A.42 Method of distribution.The plan sponsor shall distribute plan

assets by purchasing from an insurercontracts to provide all benefits requiredby § 4041A.43 to be provided in annuityform and by paying in a lump sum (orother alternative elected by theparticipant) all other benefits.

§ 4041A.43 Benefit forms.(a) General rule. Except as provided in

paragraph (b) of this section, thesponsor of a plan that is closed out shallprovide for the payment of any benefitattributable to employer contributionsonly in the form of an annuity.

(b) Exceptions. The plan sponsor maypay a benefit attributable to employercontributions in a form other than anannuity if:

(1) The present value of theparticipant’s entire nonforfeitablebenefit, determined using the interestassumption under §§ 4044.41 through4044.57, does not exceed $3,500.

(2) The payment is for death benefitsprovided under the plan.

(3) The participant elects analternative form of distribution underparagraph (c) of this section.

(c) Alternative forms of distribution.The plan sponsor may allowparticipants to elect alternative forms ofdistribution in accordance with thisparagraph. When a form of distributionis offered as an alternative to the normalform, the plan sponsor shall notify eachparticipant, in writing, of the form andestimated amount of the participant’snormal form of distribution. Thenotification shall also describe any risksattendant to the alternative form.Participants’ elections of alternativeforms shall be in writing.

§ 4041A.44 Cessation of withdrawalliability.

The obligation of an employer tomake payments of initial withdrawalliability and mass withdrawal liabilityshall cease on the date on which theplan’s assets are distributed in fullsatisfaction of all nonforfeitable benefitsprovided by the plan.

PART 4043—REPORTABLE EVENTSAND CERTAIN OTHER NOTIFICATIONREQUIREMENTS

Subpart A—Reportable Events; InGeneral

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 fundingwaiver.

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 ofTitle I.

4043.21 Bankruptcy, insolvency, or similarsettlements.

4043.22 Liquidation or dissolution.4043.23 Transaction involving a change in

contributing sponsor or controlled group.

Subpart B—Section 302(f); Notice of Failureto Make Required Contributions4043.31 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; InGeneral

§ 4043.1 Purpose and scope.(a) Subpart A of this part contains

definitions applicable to this part andprescribes specific requirements fornotification of the reportable events insection 4043 of ERISA, including thereportable events specified in section4043 (c)(1) through (c)(8) and otherevents that the PBGC has determined,under section 4043(c)(13) (formerlysection 4043(b)(9)), may be indicative ofa need to terminate the plan. It alsoimplements the PBGC’s authority towaive the requirement that planadministrators notify the PBGC withrespect to certain reportable events andwith respect to certain plans. (The PBGChas waived the requirements of section4043 with respect to multiemployerplans.) However, it does not includerules based on the amendments made tosection 4043 by the RetirementProtection Act of 1994 (Pub. L. 103–465,section 771). Subpart B contains rulesfor notifying the PBGC of a failure tomake certain required contributionsunder section 302(f)(4) of ERISA orsection 412(n)(4) of the Code.

(b) This subpart applies with respectto any single-employer plan which iscovered by section 4021 of ERISA andfor which either no notice of intent toterminate has been issued or, if such anotice has been issued, until theproposed termination date specifiedunder section 4041 (b) or (c) of ERISAand part 4041 of this chapter; provided,that, if a termination proceeding issuspended pursuant to § 4041.5 of thischapter, this subpart continues to apply

unless and until the PBGC reactivatesthe termination proceeding. Thecollection of information requirementscontained in this subpart have beenapproved by the Office of Managementand Budget under control number 1212–0013.


§ 4001.2 of this chapter: Code,contributing sponsor, controlled group,ERISA, fair market value, insurer,irrevocable commitment, IRS,multiemployer plan, nonforfeitablebenefit, 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 indirectbenefit payment made in any form by aplan to a participant, including but notlimited to, a monthly annuity payment,a lump-sum payment or a direct transferof a plan asset other than cash. A cashpayment made by an insurer pursuant toan irrevocable commitment shall not beconsidered a distribution.

Nonforfeitable benefits which are notfunded means nonforfeitable benefits, asprovided in § 4022.5 of this chapter, inexcess of plan assets.

Parent means the parent of a parent-subsidiary controlled group ofcorporations or group of trades orbusinesses under common control(within the meaning of subsection (b) or(c) of section 414 of the Code and theregulations thereunder). Where there ismore than one parent in a parent-subsidiary group, the term parent (forpurposes of subpart B) refers to theparent at the highest level in the chainof corporations and/or otherorganizations comprising the group.

Participant has the same meaning asin § 4007.2 of this chapter.

Retirement benefit means a benefitpayable upon late, normal, early, ordisability retirement, other than awelfare benefit described in section 3(1)of ERISA, to a participant who leaves orhas left covered employment.

§ 4043.3 Requirement of notice.(a) Obligation to file. Except where the

requirement is expressly waived by thissubpart, the plan administrator, or aduly authorized representative, shall filewith the PBGC a notice of all reportableevents described in this subpart no laterthan 30 days after the planadministrator knows or has reason toknow a reportable event has occurred.When a notice is submitted by a planadministrator’s duly authorizedrepresentative, other than an attorney at


law, it shall be accompanied by anotarized power of attorney, signed bythe plan administrator, whichauthorizes the representative to sign andsubmit a notice and, if desired, alsoauthorizes the representative to act onbehalf of the plan administrator inconnection with the notice.

(b) Contents of notice. The planadministrator shall include theinformation listed in this paragraph, andwhen applicable, the informationspecified in paragraph (c) of thissection, in a notice required to besubmitted under this section. The planadministrator shall submit the mostrecent information available. The planadministrator shall identify the responseto each numbered item in this paragraphby item number. If any requestedinformation is included in an IRS formor submission attached to the notice,instead, the information may beincorporated by reference to thenumber, date, and page(s) of the IRSform or submission where it appears.Any required documentation previouslyfiled with the PBGC need not be refiled,but may be incorporated by reference tothe previous submission. The planadministrator shall include thefollowing 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 theplan administrator is a corporate body,the name of an individual that shouldbe contacted;

(4) The nine-digit EmployerIdentification Number (EIN) assigned bythe IRS to the contributing sponsor andthe three-digit Plan Number (PN)assigned by the contributing sponsor tothe plan, and, if different, also state theEIN–PN last filed with the PBGC. If anEIN–PN has not been assigned, soindicate;

(5) A brief statement of the pertinentfacts relating to the reportable event;

(6) A copy of the plan documentcurrently in effect, i.e., a copy of the lastrestatement of the plan and allsubsequent amendments;

(7) A copy of the most recent actuarialstatement and opinion (if any) relatingto the plan;

(8) A statement of any material changein the assets or liabilities of the planoccurring after the date of the mostrecent actuarial statement and opinionrelating to the plan; and

(9) A copy of the most recentdetermination letter issued by the IRS (ifany) relating to the plan.

(c) Additional information. Withrespect to the following reportableevents, the information specified below

must be submitted in addition to thatlisted in paragraph (b) of this section:

(1) For an event described in§ 4043.14(a) (relating to an activeparticipant reduction): The number ofparticipants and the number of activeparticipants as of the beginning of theimmediately preceding and the currentplan year and as of the date of the event;the number of active participants withfully vested rights, the number of suchparticipants with partially vested rights,and the number of such participantswithout vested rights, as of the date ofthe event or, if this information is notavailable as of this date, as of thebeginning of the current plan year; thenumber of retired participants receivingbenefits as of the date of the event or,if this information is not available as ofthis date, as of the beginning of thecurrent plan year; the number of formeremployees with vested rights and thenumber of deceased participants whosebeneficiaries are receiving or entitled toreceive benefits as of the date of theevent or, if this information is notavailable as of this date, the beginningof the current plan year. (For thoseplans determining the number of activeparticipants as of the end of a plan year,instead of at the beginning of a planyear, in accordance with § 4043.14(c),the information required by thisparagraph as of the beginning of a planyear shall be provided as of the end ofthe previous plan year.)

(2) For an event described in§ 4043.16(a) (relating to a minimumfunding violation):

A statement of the current fundingstandard account, or its alternative,showing the balance at the beginning ofthe plan year and the charges andcredits to the account for the plan yearthat are required under section 302 ofERISA and section 412 of the Code; inthe case of a plan maintained by onecontributing sponsor or by two or morecontributing sponsors that are membersof the same controlled group, a copy ofthe most recent audited (or if notavailable, unaudited) financialstatements, and the most recent interimfinancial statements, of the contributingsponsor (individually or where financialstatements are only available on aconsolidated basis with other membersof the same controlled group, on aconsolidated basis), including balancesheets, income statements, statements ofchanges in financial position andannual reports.

(3) For an event described in§ 4043.17(a) (relating to an inability topay benefits when due):

The reason(s) why the plan is unableto pay benefits, including a statement ofhow long this inability is likely to

continue; the amount of the benefits dueduring the current payment period andthe amount of assets available to paythose benefits; the normal date ofbenefit payment; the amount and date ofthe last benefit payment.

(4) For an event described in§ 4043.18(a) (relating to a distribution toa substantial owner):

The amount and form of thedistribution; a statement of whether anindemnity agreement has been enteredinto between the participant receivingthe distribution and the plan trusteeconcerning lump-sum distributions tothe 25 highest paid employees of thebenefits subject to the early terminationrestrictions of Treas. Reg. § 1.401–4(c).

(5) For an event described in§ 4043.21(a) (relating to a bankruptcy,insolvency, or similar settlement):

A copy of all papers filed in therelevant proceedings, including but notlimited to, petitions and supportingschedules; the last date for filing claims,if known; the name, address andtelephone number of any trustee orreceiver of the contributing sponsor.

(6) For an event described in§ 4043.23(a) (relating to a transactioninvolving a change in the samecontrolled group as a contributingsponsor):

The name, address, and telephonenumber of the new contributing sponsoror of the person no longer undercommon control with the contributingsponsor, as applicable; a copy of themost recent audited (or if not available,unaudited) financial statements, and themost recent interim financialstatements, of the contributing sponsorbefore and after the transaction and ofthe person no longer under commoncontrol with the contributing sponsor(individually or where financialstatements are only available on aconsolidated basis with other membersof the same controlled group, on aconsolidated basis), including balancesheets, income statements, statements ofchanges in financial position andannual reports.

(d) Requests for additionalinformation. The PBGC may, in anycase, require the submission ofadditional information.

(e) How and where to file. A noticeand information required to be filedwith the PBGC by this subpart may besent by mail or submitted by handduring normal working hours to:Reports Processing, InsuranceOperations Department, Pension BenefitGuaranty Corporation, 1200 K StreetNW., Washington, DC 20005–4026.

(f) Optional consolidated filing. Aplan administrator may file a singlenotice with respect to the occurrence of


more than one reportable event, or twoor more plan administrators may file asingle notice with respect to one ormore reportable events when—

(1) More than one event for which anotice is required by this section hasoccurred and the plan administrator isable to give the PBGC simultaneoustimely notification of the events; or

(2) An event described in§§ 4043.21(a), 4043.22(a), or 4043.23(a)has occurred, and all planadministrators who are required to filea notice pursuant to this section sign thesame notice.

(g) Effect of failure to file. Failure tofile a notice required by this section orfailure to include all informationrequired in the notice constitutes aviolation of title IV of ERISA.

§ 4043.4 Reporting of reportable events onannual report.

The requirement that the planadministrator report the occurrence of areportable event described in thissubpart in the annual report filedpursuant to part 4065 of this chapter iswaived pursuant to the provisions ofsection 4065 of ERISA.

§ 4043.5 Obligation of contributingsponsor.

Whenever a contributing sponsorunder a plan covered by section 4021 ofERISA, knows or has reason to knowthat a reportable event has occurred, itshall notify the plan administratorimmediately.

§ 4043.6 Date of filing.(a) Any notice or document required

to be filed under this subpart isconsidered filed on the date of theUnited States postmark stamped on thecover in which the document is mailed,if—


(2) The document was mailed postageprepaid, properly packaged andaddressed to the PBGC. If the conditionsstated in both paragraphs (a)(1) and(a)(2) are not met, the notice ordocument is considered filed on thedate it is received by the PBGC. Noticesor documents received after regularbusiness hours are considered filed onthe next regular business day.


prescribed or allowed by the rules ofthis subpart, the day of the act or eventfrom which the designated period oftime begins to run shall not be included.The last day of the period so computedshall be included, unless it is aSaturday, Sunday, or Federal holiday, inwhich event the period runs until the

end of the next day that is not aSaturday, Sunday, or Federal holiday.

§ 4043.11 Tax disqualification.(a) Reportable event. A reportable

event occurs when the Secretary of theTreasury issues a notice that a plan hasceased to be a plan described in section4021(a)(2) of ERISA.

(b) Waiver. The 30-day noticerequirement contained in § 4043.3(a) iswaived for the event described in thissection.

§ 4043.12 Title I non-compliance.(a) Reportable event. A reportable

event occurs when the Secretary ofLabor determines that a plan is not incompliance with title I of ERISA.


§ 4043.13 Amendment decreasing benefitspayable.

(a) Reportable event. A reportableevent occurs when an amendment to aplan is adopted under which theretirement benefit payable fromemployer contributions with respect toany participant may be decreased.


§ 4043.14 Active participant reduction.(a) Reportable event. A reportable

event occurs when the number of activeparticipants under a plan is less than 80percent of the number of activeparticipants at the beginning of the planyear, or is less than 75 percent of thenumber of active plan participants at thebeginning of the previous plan year.

(b) Waiver. The 30-day noticerequirement contained in § 4043.3(a) iswaived for the event described in thissection, if the conditions in paragraph(b)(1), (b)(2), or (b)(3) of this sectionexist.

(1) The plan has less than 100participants as of the beginning of eitherthe current or the previous plan year.

(2) With respect to a plan maintainedby one contributing sponsor or by twoor more contributing sponsors that aremembers of the same controlled group,as of the date of the event, the totalnumber of active participants coveredby all the plans covered by this part thatare maintained by a contributingsponsor and all members of the samecontrolled group, if any, either is notless than 80 percent of the total numberof active participants in all such plansdetermined as of the beginning of eachsuch plan’s current plan year, or is notless than 75 percent of the total number

of active participants in all such plansdetermined as of the beginning of eachsuch plan’s previous plan year.

(3) The present value of unfundedvested benefits under the plan (asreported 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 ofactive participants. (1) The number ofactive participants as of the beginning ofa plan year may be determined as of theend of the previous plan year.

(2) For purposes of this section andinformation submitted pursuant to§ 4043.3(c)(1), with respect to a planmaintained by one contributing sponsoror by two or more contributing sponsorsthat are members of the same controlledgroup, include as ‘‘active’’ only aparticipant who—

(i) Is receiving compensation for workperformed;

(ii) Is on paid or unpaid leave grantedfor a reason other than a layoff;

(iii) Is laid off from work for a periodof time that has lasted less than 30 days;or

(iv) Is absent from work due to arecurring reduction in employment thatoccurs at least annually.

§ 4043.15 Termination or partialtermination.

(a) Reportable event. A reportableevent occurs when the Secretary of theTreasury determines that there has beena termination or partial termination of aplan within the meaning of section411(d)(3) of the Code.

(b) Waiver. The 30-day noticerequirement contained in § 4043.3(a) iswaived for the events described in thissection.

§ 4043.16 Failure to meet minimumfunding standards and granting of fundingwaiver.

(a) Reportable event. A reportableevent occurs when a plan fails to meetthe minimum funding standards or isgranted a minimum funding waiverunder section 412 of the Code or section302 of ERISA.

(b) Waiver. The 30-day noticerequirement contained in § 4043.3(a) iswaived for the event described in thissection, unless a plan fails to meetminimum funding standards or isgranted a minimum funding waiver andthe present value of unfunded vestedbenefits under the plan (as reported onthe most recently filed IRS/DOL/PBGCForm 5500 or Form 5500–C/R) equals orexceeds $250,000. In addition, the 30-day notice requirement contained in§ 4043.3(a) is waived for the eventdescribed in this section if, with respectto the same failure, Form 200 has been


completed and submitted (including allrequired documentation and otherinformation) in accordance with subpartB of this part.

§ 4043.17 Inability to pay benefits whendue.

(a) Reportable event. A reportableevent occurs when a plan is unable topay benefits when due. Except asprovided in paragraph (c) of thissection, a plan is unable to pay benefitswhen due if the plan does not pay anyparticipant, who is then entitled tobenefit payments, the full promisedbenefits to which he or she is entitledin the form prescribed under the termsof the plan.

(b) Waiver. The 30-day noticerequirement in § 4043.3(a) is not waivedfor the event described in this section.

(c) Administrative delays. A planshall not be treated as being unable topay benefits when due if its failure topay benefits is caused solely by: (1) Theneed to verify any participant’seligibility for benefits; (2) the inabilityto locate any participant; or (3) anyother administrative delay if such delaylasts less than the shorter of two monthsor two full benefit payment periods.

§ 4043.18 Distribution to a substantialowner.

(a) Reportable event. A reportableevent occurs when there is adistribution or distributions under theplan to a participant who is asubstantial owner if—

(1) The total of all distributions to thesubstantial owner within a 24-monthperiod has a value of $10,000 or more;

(2) The distribution or distributionswere not made by reason of the deathof the participant; and

(3) Immediately after the distributionor the last distribution in a series, theplan has nonforfeitable benefits whichare not funded.

(b) Waiver. The 30-day noticerequirement contained in § 4043.3 iswaived for the event described in thissection, unless—

(1) A plan makes a distribution ordistributions within a 12-month periodto a substantial owner having a totalvalue of $10,000 or more; and

(2) The amount of the distribution ordistributions exceeds the amount of themaximum guaranteeable benefit for thesubstantial owner, determined under§ 4022.27 of this chapter, for the year inwhich the distribution or the lastdistribution in a series was made.

(c) Valuation of distribution. Thevalue of a distribution described inparagraph (a) or (b) of this section isdetermined in accordance with theprovisions of this paragraph.

(1) The value of a distribution, otherthan an irrevocable commitment, equalsthe sum of the cash amounts actuallyreceived by the participant and the fairmarket value of any assets distributed ina form other than cash, determined as ofthe distribution date.

(2) The value of an irrevocablecommitment is the purchase price of theirrevocable commitment, or the value,determined in accordance withreasonable actuarial assumptions, of thebenefits payable pursuant to thatirrevocable commitment. For thispurpose, reasonable actuarialassumptions are the actuarialassumptions used by the PBGC undersubpart B of part 4044 of this chapter,or the actuarial assumptions used by theplan for purposes of section 302 ofERISA and section 412 of the Code.

(d) Date of substantial ownerdistribution. The date of distribution toa substantial owner of an irrevocablecommitment is the date on which theobligation to provide benefits passesfrom the plan to the insurer. The dateof distribution to a substantial owner ofa cash distribution shall be the date itis received by the participant. The dateof all other distributions to a substantialowner shall be the date when the planrelinquishes control over the assetstransferred directly or indirectly to theparticipant.

(e) Determination date. Thedetermination of whether a participantis a substantial owner, or has been inthe preceding 60 months, is made on thedate when there has been a distributionor distributions with a total value of$10,000 or more.

(f) Valuation of assets and benefits.For purposes of paragraph (a)(3) of thissection, in determining whether a planhas nonforfeitable benefits which arenot funded—

(1) Assets are valued at fair marketvalue; and

(2) Benefits are valued in accordancewith reasonable actuarial assumptions.For this purpose, reasonable actuarialassumptions are the actuarialassumptions used by the PBGC undersubpart B of part 4044 of this chapter,or the actuarial assumptions used by theplan for purposes of section 302 ofERISA and section 412 of the Code.

§ 4043.19 Plan merger, consolidation ortransfer.

(a) Reportable event. A reportableevent occurs when a plan merges,consolidates, or transfers its assets orliabilities under section 208 of ERISA orsection 414(1) of the Code.

(b) Waiver. The 30-day noticerequirement contained in § 4043.3(a) is

waived for the events described in thissection.

§ 4043.20 Alternative compliance withreporting and disclosure requirements ofTitle I.

(a) Reportable event. A reportableevent occurs when an alternativemethod of compliance (not of generalapplicability) is prescribed for a plan bythe Secretary of Labor under section 110of ERISA.


§ 4043.21 Bankruptcy, insolvency, orsimilar settlements.

(a) Reportable event. A reportableevent occurs with respect to a planmaintained by one contributing sponsoror by two or more contributing sponsorsthat are members of the same controlledgroup when a contributing sponsor—

(1) Commences a bankruptcy case(under Title 11, U.S.C.), or has abankruptcy case commenced against it;

(2) Commences or has commencedagainst it, any other type of insolvencyproceeding (including, but not limitedto the appointment of a receiver);

(3) Commences, or has commencedagainst it, a proceeding to effect acomposition, extension or settlementwith creditors;

(4) Executes a general assignment forthe benefit of creditors; or

(5) Undertakes to effect any other non-judicial composition, extension orsettlement with substantially all itscreditors.

(b) Waiver. The 30-day noticerequirement contained in § 4043.3(a) isnot waived for the event described inthis section.

§ 4043.22 Liquidation or dissolution.

(a) Reportable event. Except asprovided in paragraph (c) of thissection, a reportable event occurs withrespect to a plan maintained by onecontributing sponsor or by two or morecontributing sponsors that are membersof the same controlled group when acontributing sponsor—

(1) Is involved in any transaction toimplement its complete liquidation; or

(2) Institutes or has instituted againstit a proceeding to be dissolved, or isdissolved, whichever occurs first.


(c) Reorganizations described insection 4069(b). This section does notcover any of the reoganizationsdescribed in section 4069(b) of ERISA.


§ 4043.23 Transaction involving a changein contributing sponsor or controlled group.

(a) Reportable event. Except asprovided in paragraph (c) of thissection, a reportable event occurs withrespect to a plan maintained by onecontributing sponsor or by two or morecontributing sponsors that are membersof the same controlled group withnonforfeitable benefits which are notfunded of $1 million or more when—

(1) As a result of a transactioninvolving a transfer of assets of or anownership interest in a contributingsponsor—

(i) There is or will be a newcontributing sponsor that is not amember of the controlled group of theprevious contributing sponsor;

(ii) The contributing sponsor leaves orwill leave the controlled group; or

(iii) The contributing sponsorbecomes or will become a member of adifferent controlled group, except wherethe new controlled group is or will bethe same, but for the addition of anotherperson, as the contributing sponsor’scontrolled group before the transaction;or

(2) As a result of a transactioninvolving a transfer by a contributingsponsor of assets of or an ownershipinterest in another person, thecontributing sponsor and that person areor will be no longer part of the samecontrolled group.


(c) Certain reorganizations. Thissection does not apply to—

(1) A reorganization involving a merechange in identity, form or place oforganization, however effected;

(2) A reorganization involving aliquidation into a parent corporation;and

(3) A reorganization involving amerger, consolidation, or division solelybetween (or among) members of thesame controlled group as thecontributing sponsor.

(d) Definition of transaction. Forpurposes of this section, the termtransaction includes, but is not limitedto, a legally binding agreement, whetheror not written, to transfer, and a changein ownership that occurs as a matter oflaw or through the exercise or lapse ofpre-existing rights.

(e) Valuation of assets and benefits.For purposes of paragraph (a) of thissection, in determining whether a planhas nonforfeitable benefits which arenot funded of $1 million or more—

(1) Assets are valued at fair marketvalue; and

(2) Benefits are valued in accordancewith reasonable actuarial assumptions.For this purpose, reasonable actuarialassumptions are the actuarialassumptions used by the PBGC undersubpart B of part 4044 of this chapter,or the actuarial assumptions used by theplan for purposes of section 302 ofERISA and section 412 of the Code.

Subpart B—Section 302(f); Notice ofFailure To Make RequiredContributions

§ 4043.31 PBGC Form 200, notice of failureto make required contributions;supplementary information.

(a) General rules. To comply with thenotification requirement in section302(f)(4) of ERISA and section 412(n)(4)of the Code, a contributing sponsor of asingle-employer plan that is coveredunder section 4021 of ERISA and, if thatcontributing sponsor is a member of aparent-subsidiary controlled group, theparent must complete and submit aproperly certified Form 200 thatincludes all required documentationand other information, as described inthe related filing instructions, inaccordance with this section. Notice offailure to make required contributions isrequired whenever the unpaid balanceof a required installment or any otherpayment required under section 302 ofERISA and section 412 of the Code(including interest), when added to theaggregate unpaid balance of allpreceding such installments or otherpayments for which payment was notmade when due (including interest),exceeds $1 million.

(1) Form 200 must be filed with thePBGC no later than 10 days after the duedate for any required payment for whichpayment was not made when due.

(i) The 10-day period for filing Form200 is computed in accordance with§ 4043.7 of this chapter.

(ii) The filing date for Form 200 is thedate on which it is received by thePBGC office specified in the instructionsif it is received no later than 4 p.m. ona weekday other than a Federal holiday.If it is received after 4 p.m. or on aweekend or Federal holiday, the Form200 is deemed to be filed on the nextregular business day.

(2) If a contributing sponsor or theparent completes and submits Form 200in accordance with this section, thePBGC will deem the other person tohave so filed and it will consider thenotification requirement in section302(f)(4) of ERISA and section 412(n)(4)of the Code to be satisfied by allmembers of a controlled group of whichthe person who has filed Form 200 is amember.

(b) Supplementary information. If,upon review of a Form 200, the PBGCconcludes that it needs additionalinformation in order to make decisionsregarding enforcement of a lien imposedby section 302(f) of ERISA and section412(n) of the Code, the PBGC, by writtennotification, may require anycontributing sponsor or member of acontrolled group of which acontributing sponsor is a member tosupplement the Form 200. Suchadditional information must be filedwith the PBGC office specified within 7days after the date of the writtennotification, as determined inaccordance with §§ 4043.6 and 4043.7 ofthis chapter, or by a different timespecified therein.

PART 4044—ALLOCATION OFASSETS IN SINGLE-EMPLOYERPLANS


General Provisions

Sec.4044.1 Purpose and scope.4044.2 Definitions.4044.3 General rule.4044.4 Violations.

Allocation of Assets to Benefit Categories4044.10 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 Assets4044.30 [Reserved.]

Subpart B—Valuation of Benefits andAssets

General Provisions4044.41 General valuation rules.

Trusteed Plans4044.51 Benefits to be valued.4044.52 Valuation of benefits.4044.53 Mortality assumptions—in general.4044.54 Mortality assumptions—lump

sums.

Expected Retirement Age4044.55 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 Plans4044.71 Valuation of annuity benefits.4044.72 Form of annuity to be valued.4044.73 Lump sums and other alternative

forms of distribution in lieu of annuities.4044.74 Withdrawal of employee

contributions.4044.75 Other lump sum benefits.


Appendix A to Part 4044—Mortality RateTables

Appendix B to Part 4044—Interest RatesUsed to Value

Annuities and Lump Sums

Appendix C to Part 4044—LoadingAssumptions

Appendix D to Part 4044—Tables Used ToDetermine Expected Retirement Age

Authority: 29 U.S.C. 1301(a), 1302(b)(3),1341, 1344, 1362.

Note: Certain provisions of part 4044 havebeen superseded by legislative changes. Forexample, there are references to provisionsformerly codified in 29 CFR part 2617,subpart C (and to the Notice of Sufficiencyprovided for thereunder) that no longer existbecause of changes in the PBGC’s plantermination regulations in response to theSingle-Employer Pension Plan AmendmentsAct of 1986 and the Pension Protection Actof 1987. The PBGC intends to amend part4044 at a later date to conform it to currentstatutory provisions.


General Provisions

§ 4044.1 Purpose and scope.This part implements section 4044 of

ERISA, which contains rules forallocating a plan’s assets when the planterminates. These rules have been ineffect since September 2, 1974, the dateof enactment of ERISA. This partapplies to any single-employer plancovered by title IV of ERISA thatsubmits a notice of intent to terminate,or for which PBGC commences anaction to terminate the plan undersection 4042 of ERISA.

(a) Subpart A. Sections 4044.1through 4044.4 set forth general rulesfor applying §§ 4044.10 through4044.17. Sections 4044.10 through4044.17 interpret the rules and describeprocedures for allocating plan assets topriority categories 1 through 6.

(b) Subpart B. The purpose of subpartB is to establish the method ofdetermining the value of benefits andassets under terminating single-employer pension plans covered by titleIV of ERISA. This valuation is neededfor both plans trusteed under title IVand plans which are not trusteed. Forthe former, the valuation is needed toallocate plan assets in accordance withsubpart A of this part and to determinethe amount of any plan assetinsufficiency. For the latter, thevaluation is needed to allocate assets inaccordance with subpart A and todistribute the assets in accordance withsubpart B of part 4041 of this chapter.

(1) Section 4044.41 sets forth thegeneral provisions of subpart B andapplies to all terminating single-

employer plans. Sections 4044.51through 4044.57 prescribe the benefitvaluation rules for plans that receive orthat expect to receive a Notice ofInability to Determine Sufficiency fromPBGC and are placed into trusteeship byPBGC, including (in §§ 4044.55 through4044.57) the rules and procedures aplan administrator shall follow todetermine the expected retirement age(XRA) for a plan participant entitled toearly retirement benefits for whom theannuity starting date is not known as ofthe valuation date. This applies to alltrusteed plans which have such earlyretirement benefits. The planadministrator shall determine an XRAunder § 4044.55, § 4044.56 or § 4044.57,as appropriate, for each activeparticipant or participant with adeferred vested benefit who is entitledto an early retirement benefit and whoas of the valuation date has not selectedan annuity starting date. [See Note atbeginning of part 4044.]

(2) Sections 4044.71 through 4044.75prescribe the benefit valuation rules forcalculating the value of a benefit to bepaid a participant or beneficiary undera terminating pension plan that isdistributing assets where the plan hasreceived a Notice of Sufficiency issuedby PBGC pursuant to part 2617 of thischapter and has not been placed intotrusteeship by PBGC. [See Note atbeginning of part 4044.]


§ 4001.2 of this chapter: annuity, basic-type benefit, Code, distribution date,ERISA, fair market value, guaranteedbenefit, insurer, IRS, irrevocablecommitment, mandatory employeecontributions, nonbasic-type benefit,nonforfeitable benefit, normalretirement age, notice of intent toterminate, PBGC, person, plan, planadministrator, single-employer plan,substantial owner, termination date, andvoluntary employee contributions.

(b) For purposes of this part:Deferred annuity means an annuity

under which the specified date or age atwhich payments are to begin occursafter the valuation date.

Earliest retirement age at valuationdate means the later of (a) aparticipant’s age on his or her birthdaynearest to the valuation date, or (b) theearliest age at which the participant canretire under the terms of the plan.

Early retirement benefit means anannuity benefit payable under the termsof the plan, under which the participantis entitled to begin receiving paymentsbefore his or her normal retirement ageand which is not payable on account ofthe disability of the participant. It may

be reduced according to the terms of theplan.

Expected retirement age (XRA) meansthe age, determined in accordance with§§ 4044.55 through 4044.57, at which aparticipant is expected to beginreceiving benefits when the participanthas not elected, before the allocationdate, an annuity starting date. This isthe age to which a participant’s benefitpayment is assumed to be deferred forvaluation purposes. An XRA is equal toor greater than the participant’s earliestretirement age at valuation date but lessthan his or her normal retirement age.

Non-trusteed plan means a single-employer plan which receives a Noticeof Sufficiency from PBGC and is able toclose out by purchasing annuities in theprivate sector in accordance with part2617 of this chapter. [See Note atbeginning of part 4044.]

Notice of Sufficiency means a noticeissued by the PBGC that it hasdetermined that plan assets aresufficient to discharge when due allobligations of the plan with respect tobenefits in priority categories 1 through4 after plan assets have been allocatedto benefits in accordance with section4044 of ERISA and this subpart. [SeeNote at beginning of part 4044.]

Priority category means one of thecategories contained in sections 4044(a)(1) through (a)(6) of ERISA thatestablish the order in which plan assetsare to be allocated.

Trusteed plan means a single-employer plan which has been placedinto trusteeship by PBGC.

Unreduced retirement age (URA)means the earlier of the normalretirement age specified in the plan orthe age at which an unreduced benefitis first payable.

Valuation date means (1) for non-trusteed plans, the date of distributionand (2) for trusteed plans, the date oftermination.

(c) For purposes of subpart B of thispart (unless otherwise required by thecontext):

Age means the participant’s age at hisor her nearest birthday and isdetermined by rounding theindividual’s exact age to the nearestwhole year. Half years are rounded tothe next highest year. This is alsoknown as the ‘‘insurance age.’’

(d) For purposes of §§ 4044.55through 4044.57:

Monthly benefit means the guaranteedbenefit payable by PBGC.

(e) For purposes of §§ 4044.71 through4044.75:

Lump sum payable in lieu of anannuity means a benefit that is payablein a single installment and is derivedfrom an annuity payable under the plan.


Other lump sum benefit means abenefit 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 ofthe plan, and that is not derived from anannuity payable under the plan. Thebenefit may be a severance pay benefit,a death benefit or other singleinstallment benefit.

Qualifying bid means a bid obtainedfrom an insurer in accordance with§ 2617.14(b) of this chapter. [See Note atbeginning of part 4044.]

§ 4044.3 General rule.(a) Asset allocation. Upon the

termination of a single-employer plan,the plan administrator shall allocate theplan assets available to pay for benefitsunder the plan in the manner prescribedby this subpart. Plan assets available topay for benefits include all plan assets(valued according to § 4044.41(b))remaining after the subtraction of allliabilities, other than liabilities forfuture benefit payments, paid or payablefrom plan assets under the provisions ofthe plan. Liabilities include expenses,fees and other administrative costs, andbenefit payments due before theallocation date. Except as provided in§ 4044.4(b), an irrevocable commitmentby an insurer to pay a benefit, whichcommitment is in effect on the date ofthe asset allocation, is not considered aplan asset, and a benefit payable undersuch a commitment is excluded fromthe allocation process.

(b) Allocation date. For plans thatclose out pursuant to a Notice ofSufficiency under the provisions ofsubpart C of part 2617 of this chapter,assets shall be allocated as of the dateplan assets are to be distributed. Forother plans, assets shall be allocated asof the termination date. [See Note atbeginning of part 4044.]

§ 4044.4 Violations.(a) General. A plan administrator

violates ERISA if plan assets areallocated or distributed upon plantermination in a manner other than thatprescribed in section 4044 of ERISA andthis subpart, except as may be requiredto prevent disqualification of the planunder the Code and regulationsthereunder.

(b) Distributions in anticipation oftermination. A distribution, transfer, orallocation of assets to a participant or toan insurance company for the benefit ofa participant, made in anticipation ofplan termination, is considered to be anallocation of plan assets upontermination, and is covered byparagraph (a) of this section. Indetermining whether a distribution,

transfer, or allocation of assets has beenmade in anticipation of plantermination PBGC will consider all ofthe facts and circumstances including—

(1) Any change in funding oroperation procedures;

(2) Past practice with regard toemployee requests for forms ofdistribution;

(3) Whether the distribution isconsistent with plan provisions; and

(4) Whether an annuity contract thatprovides for a cutback based on theguarantee limits in subpart B of part4022 of this chapter could have beenpurchased from an insurance company.

Allocation of Assets to BenefitCategories

§ 4044.10 Manner of allocation.(a) General. The plan administrator

shall allocate plan assets available topay for benefits under the plan using therules and procedures set forth inparagraphs (b) through (f) of thissection, or any other procedure thatresults in each participant (orbeneficiary) receiving the same benefitshe or she would receive if theprocedures in paragraphs (b) through (f)were followed.

(b) Assigning benefits. The basic-typeand nonbasic-type benefits payable withrespect to each participant in aterminated plan shall be assigned to oneor more priority categories inaccordance with §§ 4044.11 through4044.16. Benefits derived fromvoluntary employee contributions,which are assigned only to prioritycategory 1, are treated, under section204(c)(4) of ERISA and section 411(d)(5)of the Code, as benefits under a separateplan. The amount of a benefit payablewith respect to each participant shall bedetermined as of the termination date.

(c) Valuing benefits. The value of aparticipant’s benefit or benefits assignedto each priority category shall bedetermined, as of the allocation date, inaccordance with the provisions ofsubpart B of this part. The value of eachparticipant’s basic-type benefit orbenefits in a priority category shall bereduced by the value of the participant’sbenefit of the same type that is assignedto a higher priority category. Except asprovided in the next two sentences, thesame procedure shall be followed fornonbasic-type benefits. The value of aparticipant’s nonbasic-type benefits inpriority categories 3, 5, and 6 shall notbe reduced by the value of theparticipant’s nonbasic-type benefitassigned to priority category 2. Benefitsin priority category 1 shall neither beincluded in nor subtracted from lowerpriority categories. In no event shall a

benefit assigned to a priority category bevalued at less than zero.

(d) Allocating assets to prioritycategories. Plan assets available to payfor benefits under the plan shall beallocated to each priority category insuccession, beginning with prioritycategory 1. If the plan has sufficientassets to pay for all benefits in a prioritycategory, the remaining assets shall thenbe allocated to the next lower prioritycategory. This process shall be repeateduntil all benefits in priority categories 1through 6 have been provided or untilall available plan assets have beenallocated.

(e) Allocating assets within prioritycategories. Except for priority category5, if the plan assets available forallocation to any priority category areinsufficient to pay for all benefits in thatpriority category, those assets shall bedistributed among the participantsaccording to the ratio that the value ofeach participant’s benefit or benefits inthat priority category bears to the totalvalue of all benefits in that prioritycategory. If the plan assets available forallocation to priority category 5 areinsufficient to pay for all benefits in thatcategory, the assets shall be allocated,first, to the value of each participant’snonforfeitable benefits that would beassigned to priority category 5 under§ 4044.15 after reduction for the value ofbenefits assigned to higher prioritycategories, based only on the provisionsof the plan in effect at the beginning ofthe 5-year period immediatelypreceding the termination date. If assetsavailable for allocation to prioritycategory 5 are sufficient to fully satisfythe value of those benefits, assets shallthen be allocated to the value of thebenefit increase under the oldestamendment during the 5-year periodimmediately preceding the terminationdate, reduced by the value of benefitsassigned to higher priority categories(including higher subcategories inpriority category 5). This allocationprocedure shall be repeated for eachsucceeding plan amendment within the5-year period until all plan assetsavailable for allocation have beenexhausted. If an amendment decreasedbenefits, amounts previously allocatedwith respect to each participant inexcess of the value of the reducedbenefit shall be reduced accordingly. Inthe subcategory in which assets areexhausted, the assets shall bedistributed among the participantsaccording to the ratio that the value ofeach participant’s benefit or benefits inthat subcategory bears to the total valueof all benefits in that subcategory.

(f) Applying assets to basic-type ornonbasic-type benefits within priority


categories. The assets allocated to aparticipant’s benefit or benefits withineach priority category shall first beapplied to pay for the participant’sbasic-type benefit or benefits assigned tothat priority category. Any assetsallocated on behalf of that participantremaining after satisfying theparticipant’s basic-type benefit orbenefits in that priority category shallthen be applied to pay for theparticipant’s nonbasic-type benefit orbenefits assigned to that prioritycategory. If the assets allocable to aparticipant’s basic-type benefit orbenefits in all priority categories areinsufficient to pay for all of theparticipant’s guaranteed benefits, theassets allocated to that participant’sbenefit in priority category 4 shall beapplied, first, to the guaranteed portionof the participant’s benefit in prioritycategory 4. The remaining assetsallocated to that participant’s benefit inpriority category 4, if any, shall beapplied to the nonguaranteed portion ofthe participant’s benefit.

(g) Allocation to establishedsubclasses. Notwithstanding paragraphs(e) and (f) of this section, the assets ofa plan that has established subclasseswithin any priority category may beallocated to the plan’s subclasses inaccordance with the rules set forth in§ 4044.17.

§ 4044.11 Priority category 1 benefits.

(a) Definition. The benefits in prioritycategory 1 are participants’ accruedbenefits derived from voluntaryemployee contributions.

(b) Assigning benefits. Absent anelection described in the next sentence,the benefit assigned to priority category1 with respect to each participant is thebalance of the separate accountmaintained for the participant’svoluntary contributions. If a participanthas elected to receive an annuity in lieuof his or her account balance, the benefitassigned to priority category 1 withrespect to that participant is the presentvalue of that annuity.


(a) Definition. The benefits in prioritycategory 2 are participants’ accruedbenefits derived from mandatoryemployee contributions, whether to bepaid as an annuity benefit with a pre-retirement death benefit that returnsmandatory employee contributions or, ifa participant so elects under the termsof the plan and subpart A of part 4022of this chapter, as a lump sum benefit.Benefits are primarily basic-typebenefits although nonbasic-type benefitsmay also be included as follows:

(1) Basic-type benefits. The basic-typebenefit in priority category 2 withrespect to each participant is the sum ofthe values of the annuity benefit and thepre-retirement death benefit determinedunder the provisions of paragraph (c)(1)of this section.

(2) Nonbasic-type benefits. If aparticipant elects to receive a lump sumbenefit and if the value of the lump sumbenefit exceeds the value of the basic-type benefit in priority category 2determined with respect to theparticipant, the excess is a nonbasic-type benefit. There is no nonbasic-typebenefit in priority category 2 for aparticipant who does not elect to receivea lump sum benefit.

(b) Conversion of mandatoryemployee contributions to an annuitybenefit. Subject to the limitation setforth in paragraph (b)(3) of this section,a participant’s accumulated mandatoryemployee contributions shall beconverted to an annuity form of benefitpayable at the normal retirement age or,if the plan provides for early retirement,at the expected retirement age. Theconversion shall be made using theinterest rates and factors specified inparagraph (b)(2) of this section. Theform of the annuity benefit (e.g., straightlife annuity, joint and survivor annuity,cash refund annuity, etc.) is the formthat the participant or beneficiary isentitled to on the termination date. Ifthe participant does not have anonforfeitable right to a benefit, otherthan the return of his or her mandatorycontributions in a lump sum, theannuity form of benefit is the form theparticipant would be entitled to if theparticipant had a nonforfeitable right toan annuity benefit under the plan on thetermination date.

(1) Accumulated mandatory employeecontributions. Subject to any additionfor the cost of ancillary benefits plusinterest, as provided in the followingsentence, the amount of theaccumulated mandatory employeecontributions for each participant is theparticipant’s total nonforfeitablemandatory employee contributionsremaining in the plan on thetermination date plus interest, if any,under the plan provisions. Mandatoryemployee contributions, if any, usedafter the effective date of the minimumvesting standards in section 203 ofERISA and section 411 of the Code forcosts or to provide ancillary benefitssuch as life insurance or healthinsurance, plus interest under the planprovisions, shall be added to thecontributions that remain in the plan todetermine the accumulated mandatoryemployee contributions.

(2) Interest rates and conversionfactors. The interest rates andconversion factors used in theadministration of the plan shall be usedto convert a participant’s accumulatedmandatory contributions to the annuityform of benefit. In the absence of planrules and factors, the interest rates andconversion factors established by theIRS for allocation of accrued benefitsbetween employer and employeecontributions under the provisions ofsection 204(c) of ERISA and section411(c) of the Code shall be used.

(3) Minimum accrued benefit. Theannuity benefit derived from mandatoryemployee contributions may not be lessthan the minimum accrued benefitunder the provisions of section 204(c) ofERISA and section 411(c) of the Code.

(c) Assigning benefits. If a participantor beneficiary elects to receive a lumpsum benefit, his or her benefit shall bedetermined under paragraph (c)(2) ofthis section. Otherwise, the benefitswith respect to a participant shall bedetermined under paragraph (c)(1) ofthis section.

(1) Annuity benefit and pre-retirementdeath benefit. The annuity benefit andthe pre-retirement death benefitassigned to priority category 2 withrespect to a participant are determinedas follows:

(i) The annuity benefit is the benefitcomputed under paragraph (b) of thissection.

(ii) Except for adjustments necessaryto meet the minimum lump sumrequirements as hereafter provided, thepre-retirement death benefit is thebenefit under the plan that returns all ora portion of the participant’s mandatoryemployee contributions upon the deathof the participant before retirement. Abenefit that became payable in a singleinstallment (or substantially so) becausethe participant died before thetermination date is a liability of the planwithin the meaning of § 4044.3(a) andshould not be assigned to prioritycategory 2. A benefit payable upon aparticipant’s death that is included inthe annuity form of the benefit derivedfrom mandatory employee contributions(e.g., the survivor’s portion of a jointand survivor annuity or the cash refundportion of a cash refund annuity) isassigned to priority category 2 as part ofthe annuity benefit under paragraph(c)(1)(i) of this section and is notassigned as a death benefit. The pre-retirement death benefit may not be lessthan the minimum lump sum requiredupon withdrawal of mandatoryemployee contributions by the IRSunder section 204(c) of ERISA andsection 411(c) of the Code.


(2) Lump sum benefit. Except foradjustments necessary to meet theminimum lump sum requirements ashereafter provided, if a participantelects to receive a lump sum benefitunder the provisions of the plan, theamount of the benefit that is assigned topriority category 2 with respect to theparticipant is—

(i) The combined value of the annuitybenefit and the pre-retirement deathbenefit determined according toparagraph (c)(1) (which constitutes thebasic-type benefit) plus

(ii) The amount, if any, of theparticipant’s accumulated mandatoryemployee contributions that exceeds thecombined value of the annuity benefitand the pre-retirement death benefit(which constitutes the nonbasic-typebenefit), but not more than

(iii) The amount of the participant’saccumulated mandatory contributions.

(3) For purposes of paragraph (c)(2) ofthis section, accumulated mandatorycontributions means the contributionswith interest, if any, payable under planprovisions to the participant orbeneficiary on termination of the planor, in the absence of such provisions,the amount that is payable if theparticipant withdrew his or hercontributions on the termination date.The lump sum benefit may not be lessthan the minimum lump required by theIRS under section 204(c) of ERISA andsection 411(c) of the Code uponwithdrawal of mandatory employeecontributions.

§ 4044.13 Priority category 3 benefits.(a) Definition. The benefits in priority

category 3 are those annuity benefitsthat were in pay status before thebeginning of the 3-year period endingon the termination date, and thoseannuity benefits that could have been inpay status for participants who wereeligible to receive annuity benefitsbefore the beginning of the 3-year periodending on the termination date. Benefitincreases that became effective beforethe beginning of the 5-year periodending on the termination date,including automatic benefit increasesafter that date to the extent provided inparagraph (b)(5) of this section, shall beincluded in determining the prioritycategory 3 benefit. Benefits are primarilybasic-type benefits, although nonbasic-type benefits will be included if anyportion of a participant’s prioritycategory 3 benefit is not guaranteeableunder the provisions of subpart A ofpart 4022 of this chapter.

(b) Assigning benefits. The annuitybenefit that is assigned to prioritycategory 3 with respect to eachparticipant is the lowest annuity that

was paid or payable under the rules inparagraphs (b)(2) through (b)(6) of thissection.

(1) Eligibility of participants andbeneficiaries. A participant orbeneficiary is eligible for a prioritycategory 3 benefit if either of thefollowing applies:

(i) The participant’s (or beneficiary’s)benefit was in pay status before thebeginning of the 3-year period endingon the termination date.

(ii) The participant was eligible for anannuity and his or her benefit couldhave been in pay status before thebeginning of the 3-year period endingon the termination date. Whether aparticipant was eligible to receive anannuity before the beginning of the 3-year period shall be determined usingthe plan provisions in effect on the daybefore the beginning of the 3-yearperiod.

(iii) If a participant described in eitherof the preceding two paragraphs diedduring the 3-year period ending on thedate of the plan termination and his orher beneficiary is entitled to an annuity,the beneficiary is eligible for a prioritycategory 3 benefit.

(2) Plan provisions governingdetermination of benefit. In determiningthe amount of the priority category 3annuity with respect to a participant,the plan administrator shall use theparticipant’s age, service, actual orexpected retirement age, and otherrelevant facts as of the following dates:

(i) Except as provided in the nextsentence, for a participant or beneficiarywhose benefit was in pay status beforethe beginning of the 3-year periodending on the termination date, thepriority category 3 benefit shall bedetermined according to plan provisionsin effect on the date the benefitcommenced. Benefit increases thatbecame effective before the beginning ofthe 5-year period ending on the date ofplan termination, including automaticbenefit increases after that date to theextent provided in paragraph (b)(5) ofthis section, shall be included indetermining the priority category 3benefit. The form of annuity elected bya retiree is considered the normal formof annuity for that participant.

(ii) For a participant who was eligibleto receive an annuity before thebeginning of the 3-year period endingon the termination date but whosebenefit was not in pay status, thepriority category 3 benefit and thenormal form of annuity shall bedetermined according to plan provisionsin effect on the day before the beginningof the 3-year period ending on thetermination date as if the benefit hadcommenced at that time.

(3) General benefit limitations. Thegeneral benefit limitation is determinedas follows:

(i) If a participant’s benefit was in paystatus before the beginning of the 3-yearperiod, the benefit assigned to prioritycategory 3 with respect to thatparticipant is limited to the lesser of thelowest annuity benefit in pay statusduring the 3-year period ending on thetermination date and the lowest annuitybenefit payable under the planprovisions at any time during the 5-yearperiod ending on the termination date.

(ii) Unless a benefit was in pay statusbefore the beginning of the 3-year periodending on the termination date, thebenefit assigned to priority category 3with respect to a participant is limitedto the lowest annuity benefit payableunder the plan provisions, includingany reduction for early retirement, atany time during the 5-year periodending on the termination date. If theannuity form of benefit under a formulathat appears to produce the lowestbenefit differs from the normal annuityform for the participant under paragraph(b)(2)(ii) of this section, the benefitsshall be compared after the differingform is converted to the normal annuityform, using plan factors. In the absenceof plan factors, the factors in subpart Bof part 4022 of this chapter shall beused.

(iii) For purposes of this paragraph, ifa terminating plan has been in effectless than five years on the terminationdate, computed in accordance withparagraph (b)(6) of this section, thelowest annuity benefit under the planduring the 5-year period ending on thetermination date is zero. If the plan isa successor to a previously establisheddefined benefit plan within the meaningof section 4021(a) of ERISA, the time ithas been in effect will include the timethe predecessor plan was in effect.

(4) Determination of beneficiary’sbenefit. If a beneficiary is eligible for apriority category 3 benefit because of thedeath of a participant during the 3-yearperiod ending on the termination date,the benefit assigned to priority category3 for the beneficiary shall be determinedas if the participant had died the daybefore the 3-year period began.

(5) Automatic benefit increases. Ifplan provisions adopted and effectivebefore the beginning of the 5-year periodending on the termination date providedfor automatic increases in the benefitformula for both active participants andthose in pay status or for participants inpay status only, the lowest annuitybenefit payable during the 5-year periodending on the termination datedetermined under paragraph (b)(3) ofthis section includes the automatic


increases scheduled during the fourthand fifth years preceding termination,subject to the restriction that benefitincreases for active participants inexcess of the increases for retirees shallnot be taken into account.

(6) Computation of time periods. Forpurposes of this section, a plan oramendment is ‘‘in effect’’ on the later ofthe date on which it is adopted or thedate it becomes effective.


The benefits assigned to prioritycategory 4 with respect to eachparticipant are the participant’s basic-type benefits that do not exceed theguarantee limits set forth in subpart B ofpart 4022 of this chapter, except asprovided in the next sentence. Thebenefit assigned to priority category 4with respect to a participant is notlimited by the aggregate benefitslimitations set forth in § 4022B.1 of thischapter for individuals who areparticipants in more than one plan or bythe phase-in limitation applicable tosubstantial owners set forth in§ 4022.26.


The benefits assigned to prioritycategory 5 with respect to eachparticipant are all of the participant’snonforfeitable benefits under the plan.


The benefits assigned to prioritycategory 6 with respect to eachparticipant are all of the participant’sbenefits under the plan, whetherforfeitable or nonforfeitable.

§ 4044.17 Subclasses.

(a) General rule. A plan may establishone or more subclasses within anypriority category, other than prioritycategories 1 and 2, which subclasseswill govern the allocation of assetswithin that priority category. Thesubclasses may be based only on aparticipant’s longer service, older age, ordisability, or any combination thereof.

(b) Limitation. Except as provided inparagraph (c) of this section, wheneverthe allocation within a priority categoryon the basis of the subclassesestablished by the plan increases ordecreases the cumulative amount ofassets that otherwise would be allocatedto guaranteed benefits, the assets soshifted shall be reallocated to otherparticipants’ benefits within the prioritycategory in accordance with thesubclasses.

(c) Exception for subclasses in effecton September 2, 1974. A planadministrator may allocate assets tosubclasses within any priority category,

other than priority categories 1 and 2,without regard to the limitation inparagraph (b) of this section if, onSeptember 2, 1974, the plan providedfor allocation of plan assets upontermination of the plan based on aparticipant’s longer service, older age, ordisability, or any combination thereof,and—

(1) Such provisions are still in effect;or

(2) The plan, if subsequently amendedto modify or remove those subclasses, isre-amended to re-establish the samesubclasses on or before July 28, 1981.

(d) Discrimination under Code.Notwithstanding the provisions ofparagraphs (a) through (c) of thissection, allocation of assets tosubclasses established under thissection is permitted only to the extentthat the allocation does not result indiscrimination prohibited under theCode and regulations thereunder.

Allocation of Residual Assets

§ 4044.30 [Reserved.]

Subpart B—Valuation of Benefits andAssets

General Provisions

§ 4044.41 General valuation rules.

(a) Valuation of benefits—(1) Trusteedplans. The plan administrator of a planthat has been or will be placed intotrusteeship by the PBGC shall valueplan benefits in accordance with§§ 4044.51 through 4044.57.

(2) Non-trusteed plans. The planadministrator of a non-trusteed planshall value plan benefits in accordancewith § 4044.71 through 4044.75. If aplan with respect to which PBGC hasissued a Notice of Sufficiency is unableto satisfy all benefits assigned to prioritycategories 1 through 4 on thedistribution date, the PBGC will place itinto trusteeship and the planadministrator shall re-value the benefitsin accordance with §§ 4044.51 through4044.57. [See Note at beginning of part4044.]

(b) Valuation of assets. Plan assetsshall be valued at their fair marketvalue, based on the method of valuationthat most accurately reflects such fairmarket value.

Trusteed Plans

§ 4044.51 Benefits to be valued.

(a) Form of benefit. The planadministrator shall determine the formof each benefit to be valued inaccordance with the following rules:

(1) If a benefit is in pay status as ofthe valuation date, the plan

administrator shall value the form of thebenefit being paid.

(2) If a benefit is not in pay status asof the valuation date but a valid electionwith respect to the form of benefit hasbeen made on or before the valuationdate, the plan administrator shall valuethe form of benefit so elected.

(3) If a benefit is not in pay status asof the valuation date and no validelection with respect to the form ofbenefit has been made on or before thevaluation date, the plan administratorshall value the form of benefit that,under the terms of the plan, is payablein the absence of a valid election.

(b) Timing of benefit. The planadministrator shall value benefits whosestarting date is subject to election usingthe assumption specified in paragraph(b)(1) or (b)(2) of this section.

(1) Where election made. If a validelection of the starting date of a benefithas been made on or before thevaluation date, the plan administratorshall assume that the starting date of thebenefit is the starting date so elected.

(2) Where no election made. If novalid election of the starting date of abenefit has been made on or before thevaluation date, the plan administratorshall assume that the starting date of thebenefit is the later of—

(i) The expected retirement age, asdetermined under §§ 4044.55 through4044.57, of the participant with respectto whom the benefit is payable, or

(ii) The valuation date.

§ 4044.52 Valuation of benefits.(a) General rule. Except as otherwise

provided in paragraph (b) of this section(regarding the valuation of benefitspayable as lump sums), the planadministrator shall value annuitybenefits as of the valuation date by—

(1) Using the mortality assumptionsprescribed by § 4044.53 and the interestassumptions prescribed by Table I ofappendix B to this part;

(2) Using interpolation methods,where necessary, at least as accurate aslinear interpolation;

(3) Using valuation formulas thataccord with generally accepted actuarialprinciples and practices;

(4) Taking mortality into accountduring the deferral period of a deferredjoint and survivor benefit only withrespect to the participant (or otherprincipal annuitant), if upon the deathof the beneficiary the participant mayelect an actuarially increased single lifeannuity or if a new beneficiary maysucceed to the survivor portion of thebenefit; and

(5) Adjusting the values to reflect theloading for expenses in accordance withappendix C to this part.


(b) Benefits payable as lump sums.For valuing benefits payable as lumpsums (including the return ofaccumulated employee contributionsupon death), and for determiningwhether the lump sum value of a benefitexceeds $3,500, the plan administratorshall value benefits in the same manneras benefits to be paid as annuitiesexcept that—

(1) The mortality assumptionsprescribed in § 4044.54 and the interestassumptions set forth in Table II ofappendix B to this part shall apply,

(2) There shall be no adjustment toreflect the loading for expenses, and

(3) Beneficiary mortality during thedeferral period shall be disregarded asprovided in paragraph (a)(4) of thissection without regard to whether theparticipant may elect an actuariallyincreased single life annuity upon thedeath of the beneficiary or whether anew beneficiary may succeed to thesurvivor portion of the benefit.

§ 4044.53 Mortality assumptions—ingeneral.

(a) General rule. Subject to paragraph(b) of this section (regarding certaindeath benefits), the plan administratorshall use the mortality factorsprescribed in paragraphs (c), (d), and (e)of this section to value benefits under§ 4044.52(a).

(b) Certain death benefits. If anannuity for one person is in pay statuson the valuation date, and if thepayment of a death benefit after thevaluation date to another person, whoneed not be identifiable on the valuationdate, depends in whole or in part on thedeath of the pay status annuitant, thenthe plan administrator shall value thedeath benefit using—

(1) the mortality rates that areapplicable to the annuity in pay statusunder this section to represent themortality of the pay status annuitant;and

(2) the mortality rates applicable toannuities not in pay status and todeferred benefits other than annuities,under paragraph (c) of this section, torepresent the mortality of the deathbeneficiary.

(c) Mortality rates for healthy lives.The mortality rates applicable toannuities in pay status on the valuationdate that are not being received asdisability benefits, to annuities not inpay status on the valuation date, and todeferred benefits other than annuities,are—

(1) For male participants, the rates inTable 1 of appendix A to this part, and

(2) For female participants, the ratesin 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 toannuities in pay status on the valuationdate that are being received as disabilitybenefits and for which neither eligibilityfor, nor receipt of, Social Securitydisability benefits is a prerequisite,are—

(1) For male participants, the rates inTable 1 of appendix A to this part, setforward 3 years, and

(2) For female participants, the ratesin Table 1 of appendix A to this part,set back 3 years.

(e) Mortality rates for disabled lives(Social Security disability). Themortality rates applicable to annuities inpay status on the valuation date that arebeing received as disability benefits andfor which either eligibility for, or receiptof, Social Security disability benefits isa prerequisite, are the rates in Tables 2–M and 2–F of appendix A to this part.

§ 4044.54 Mortality assumptions—lumpsums.

For determining whether the value ofa benefit is $3,500 or less under§ 4022.7(b)(1) of this chapter and forcalculating the amount of a lump sumbenefit, the PBGC will use the mortalityrates in Table 3 of appendix A to thispart.

Expected Retirement Age

§ 4044.55 XRA when a participant mustretire to receive a benefit.

(a) Applicability. Except as providedin § 4044.57, the plan administratorshall determine the XRA under thissection when plan provisions orestablished plan practice require aparticipant to retire from his or her jobto begin receiving an early retirementbenefit.

(b) Data needed. The planadministrator shall determine for eachparticipant who is entitled to an earlyretirement benefit—

(1) The amount of the participant’smonthly benefit payable at unreducedretirement age in the normal formpayable under the terms of the plan orin the form validly elected by theparticipant before the termination date;

(2) The calendar year in which theparticipant reaches unreducedretirement 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 aparticipant is in the high, medium orlow retirement rate category using theapplicable Selection of Retirement RateCategory Table in appendix D, based onthe participant’s benefit determined

under paragraph (b)(1) of this sectionand the year in which the participantreaches URA.

(2) Based on the retirement ratecategory determined under paragraph(c)(1), the plan administrator shalldetermine the XRA from Table II–A, II–B or II–C, as appropriate, by using theparticipant’s URA and earliestretirement age at valuation date.

§ 4044.56 XRA when a participant need notretire to receive a benefit.

(a) Applicability. Except as providedin § 4044.57, the plan administratorshall determine the XRA under thissection when plan provisions orestablished plan practice do not requirea participant to retire from his or her jobto begin receiving his or her earlyretirement benefit.

(b) Data needed. The planadministrator shall determine for eachparticipant—

(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 highretirement rate category and thereforethe plan administrator shall use TableII–C of appendix D to determine theXRA. The plan administrator shalldetermine the XRA from Table II–C byusing the participant’s URA and earliestretirement age at termination date.

§ 4044.57 Special rule for facility closing.(a) Applicability. The plan

administrator shall determine the XRAunder this section, rather than § 4044.55or § 4044.56, when both the conditionsset forth in paragraphs (a)(1) and (a)(2)of this section exist.

(1) The facility at which theparticipant is or was employedpermanently closed within one yearbefore the valuation date, or is in theprocess of being permanently closed onthe valuation date.

(2) The participant left employment atthe facility less than one year before thevaluation date or was still employed atthe facility on the valuation date.

(b) XRA. The XRA is equal to theearliest retirement age at valuation date.

Non-Trusteed Plans

§ 4044.71 Valuation of annuity benefits.The value of a benefit which is to be

paid as an annuity is the cost ofpurchasing the annuity on the date ofdistribution from an insurer under thequalifying bid.

§ 4044.72 Form of annuity to be valued.(a) When both the participant and

beneficiary are alive on the date ofdistribution, the form of annuity to bevalued is—


(1) For a participant or beneficiaryalready receiving a monthly benefit, thatform which is being received, or

(2) For a participant or beneficiary notreceiving a monthly benefit, the normalannuity form payable under the plan orthe optional form for which theparticipant has made a valid electionpursuant to § 2617.4(c) of this chapter.[See Note at beginning of part 4044.]

(b) When the participant dies after thedate of plan termination but before thedate of distribution, the form of annuityto be valued is determined underparagraph (b)(1) or (b)(2) of this section:

(1) For a participant who was entitledto a deferred annuity—

(i) If the form was a single or joint lifeannuity, no benefit shall be valued; or

(ii) If the participant had made a validelection of a lump sum benefit before heor she died, the form to be valued is thelump sum.

(2) For a participant who was eligiblefor immediate retirement, and for aparticipant who was in pay status at thedate of termination—

(i) If the form was a single lifeannuity, no benefit shall be valued;

(ii) If the form was an annuity for aperiod certain and life thereafter, theform to be valued is an annuity for thecertain period;

(iii) If the form was a joint andsurvivor annuity, the form to be valuedis a single life annuity payable to thebeneficiary, unless the beneficiary hasalso died, in which case no benefit shallbe valued;

(iv) If the form was an annuity for aperiod certain and joint and survivorthereafter, the form to be valued is anannuity for the certain period and thelife of the beneficiary thereafter, unlessthe beneficiary has also died, in whichcase the form to be valued is an annuityfor the certain period;

(v) If the form was a cash refundannuity, the form to be valued is theremaining lump sum death benefit; or

(vi) If the participant had elected alump sum benefit before he or she died,the form to be valued is the lump sum.

(c) When the participant is still livingand the named beneficiary or spousedies after the date of termination butbefore the date of distribution, the formof annuity to be valued is determinedunder paragraph (c)(1) or (c)(2) of thissection:

(1) For a participant entitled to adeferred annuity—

(i) If the form was a joint and survivorannuity, the form to be valued is asingle life annuity payable to theparticipant; or

(ii) If the form was an annuity for aperiod certain and joint and survivorthereafter, the form to be valued is an

annuity for the certain period and thelife of the participant thereafter.

(2) For a participant eligible forimmediate retirement and for aparticipant in pay status at the date oftermination—

(i) If the form was a joint and survivorannuity, the form to be valued is asingle life annuity payable to theparticipant; or

(ii) If the form was an annuity for aperiod certain and joint survivorthereafter annuity, the form to be valuedis an annuity for the certain period andfor the life of the participant thereafter.

§ 4044.73 Lump sums and otheralternative forms of distribution in lieu ofannuities.

(a) Valuation. (1) The value of thelump sum or other alternative form ofdistribution is the present value of thenormal form of benefit provided by theplan payable at normal retirement age,determined as of the date of distributionusing reasonable actuarial assumptionsas to interest and mortality.

(2) If the participant dies before thedate of distribution, but had elected alump sum benefit, the present valueshall be determined as if the participantwere alive on the date of distribution.

(b) Actuarial assumptions. The planadministrator shall specify the actuarialassumptions used to determine thevalue calculated under paragraph (a) ofthis section when the plan administratorsubmits the benefit valuation data to thePBGC pursuant to § 2617.12 of part 2617of this chapter. The same actuarialassumptions shall be used for all suchcalculations. The PBGC reserves theright to review the actuarialassumptions used and to re-value thebenefits determined by the planadministrator if the actuarialassumptions are found to beunreasonable.

[See Note at beginning of part 4044.]

§ 4044.74 Withdrawal of employeecontributions.

(a) If a participant has not started toreceive monthly benefit payments onthe date of distribution, the value of thelump sum which returns mandatoryemployee contributions is equal to thetotal amount of contributions made bythe participant, plus interest that ispayable to the participant under theterms of the plan, plus interest on thattotal amount from the date oftermination to the date of distribution.The rate of interest credited onemployee contributions up to the date oftermination shall be the greater of theinterest rate provided under the terms ofthe plan or the interest rate requiredunder section 204(c) of ERISA or section411(c) of the IRC.

(b) If a participant has started toreceive monthly benefit payments onthe date of distribution, part of whichare attributable to his or hercontributions, the value of the lumpsum which returns employeecontributions is equal to the excess ofthe amount described in paragraph(b)(1) of this section over the amountcomputed in paragraph (b)(2) of thissection.

(1) The amount of accumulatedmandatory employee contributionsremaining in the plan as of the date oftermination plus interest from the dateof termination to the date ofdistribution.

(2) The excess of benefit paymentsmade from the plan between date ofplan termination and the date ofdistribution, over the amount ofpayments that would have been made ifthe employee contributions had beenpaid as a lump sum on the date of plantermination, with interest accumulatedon the excess from the date of paymentto the date of distribution.

(c) Interest assumptions. The interestrate used under this section to creditinterest between the date of terminationto the date of distribution shall be areasonable rate and shall be the same forboth paragraphs (a) and (b).

§ 4044.75 Other lump sum benefits.The value of a lump sum benefit

which is not covered under § 4044.73 or§ 4044.74 is equal to—

(a) The value under the qualifyingbid, if an insurer provides the benefit;or

(b) The present value of the benefit asof the date of distribution, determinedusing reasonable actuarial assumptions,if the benefit is to be distributed otherthan by the purchase of the benefit froman insurer. The PBGC reserves the rightto review the actuarial assumptions asto reasonableness and re-value thebenefit if the actuarial assumptions areunreasonable.

[See Note at beginning of part 4044.]

Appendix A to Part 4044—MortalityRate Tables

The tables in this appendix set forth foreach age x the probability qX that anindividual aged x will not survive to attainage x+1.

TABLE 1.—MORTALITY TABLE FORHEALTHY MALE PARTICIPANTS

Age x qx

5 .................................................... 0.0003426 .................................................... 0.0003187 .................................................... 0.0003028 .................................................... 0.0002949 .................................................... 0.000292


TABLE 1.—MORTALITY TABLE FORHEALTHY MALE PARTICIPANTS—Con-tinued

Age x qx

10 .................................................. 0.00029311 .................................................. 0.00029812 .................................................. 0.00030413 .................................................. 0.00031014 .................................................. 0.00031715 .................................................. 0.00032516 .................................................. 0.00033317 .................................................. 0.00034318 .................................................. 0.00035319 .................................................. 0.00036520 .................................................. 0.00037721 .................................................. 0.00039222 .................................................. 0.00040823 .................................................. 0.00042424 .................................................. 0.00044425 .................................................. 0.00046426 .................................................. 0.00048827 .................................................. 0.00051328 .................................................. 0.00054229 .................................................. 0.00057230 .................................................. 0.00060731 .................................................. 0.00064532 .................................................. 0.00068733 .................................................. 0.00073434 .................................................. 0.00078535 .................................................. 0.00086036 .................................................. 0.00090737 .................................................. 0.00096638 .................................................. 0.00103939 .................................................. 0.00112840 .................................................. 0.00123841 .................................................. 0.00137042 .................................................. 0.00152743 .................................................. 0.00171544 .................................................. 0.00193245 .................................................. 0.00218346 .................................................. 0.00247147 .................................................. 0.00279048 .................................................. 0.00313849 .................................................. 0.00351350 .................................................. 0.00390951 .................................................. 0.00432452 .................................................. 0.00475553 .................................................. 0.00520054 .................................................. 0.00566055 .................................................. 0.00613156 .................................................. 0.00661857 .................................................. 0.00713958 .................................................. 0.00771959 .................................................. 0.00838460 .................................................. 0.00915861 .................................................. 0.01006462 .................................................. 0.01113363 .................................................. 0.01239164 .................................................. 0.01386865 .................................................. 0.01559266 .................................................. 0.01757967 .................................................. 0.01980468 .................................................. 0.02222969 .................................................. 0.02481770 .................................................. 0.02753071 .................................................. 0.03035472 .................................................. 0.03337073 .................................................. 0.03668074 .................................................. 0.04038875 .................................................. 0.04459776 .................................................. 0.04938877 .................................................. 0.05475878 .................................................. 0.06067879 .................................................. 0.067125

TABLE 1.—MORTALITY TABLE FORHEALTHY MALE PARTICIPANTS—Con-tinued

Age x qx

80 .................................................. 0.07407081 .................................................. 0.08148482 .................................................. 0.08932083 .................................................. 0.09752584 .................................................. 0.10604785 .................................................. 0.11483686 .................................................. 0.12417087 .................................................. 0.13387088 .................................................. 0.14407389 .................................................. 0.15485990 .................................................. 0.16630791 .................................................. 0.17821492 .................................................. 0.19046093 .................................................. 0.20300794 .................................................. 0.21790495 .................................................. 0.23408696 .................................................. 0.24843697 .................................................. 0.26395498 .................................................. 0.28080399 .................................................. 0.299154100 ................................................ 0.319185101 ................................................ 0.341086102 ................................................ 0.365052103 ................................................ 0.393102104 ................................................ 0.427255105 ................................................ 0.469531106 ................................................ 0.521945107 ................................................ 0.586518108 ................................................ 0.665268109 ................................................ 0.760215110 ................................................ 1.000000

TABLE 2–M.—MORTALITY TABLE FORDISABLED MALE PARTICIPANTS RE-CEIVING SOCIAL SECURITY DISABIL-ITY BENEFIT PAYMENTS

Age x T2x

5 ............................................ 0.0000006 ............................................ 0.0000007 ............................................ 0.0000008 ............................................ 0.0000009 ............................................ 0.00000010 .......................................... 0.00000011 .......................................... 0.00000012 .......................................... 0.00000013 .......................................... 0.00000014 .......................................... 0.00000015 .......................................... 0.00000016 .......................................... 0.00000017 .......................................... 0.00000018 .......................................... 0.00000019 .......................................... 0.00000020 .......................................... 0.04830021 .......................................... 0.04830022 .......................................... 0.04830023 .......................................... 0.04830024 .......................................... 0.04830025 .......................................... 0.04830026 .......................................... 0.04610027 .......................................... 0.04360028 .......................................... 0.04110029 .......................................... 0.03860030 .......................................... 0.03620031 .......................................... 0.03390032 .......................................... 0.03200033 .......................................... 0.032000

TABLE 2–M.—MORTALITY TABLE FORDISABLED MALE PARTICIPANTS RE-CEIVING SOCIAL SECURITY DISABIL-ITY BENEFIT PAYMENTS—Continued

Age x T2x

34 .......................................... 0.02880035 .......................................... 0.02780036 .......................................... 0.02720037 .......................................... 0.02710038 .......................................... 0.02730039 .......................................... 0.02760040 .......................................... 0.02820041 .......................................... 0.02880042 .......................................... 0.02970043 .......................................... 0.03050044 .......................................... 0.03140045 .......................................... 0.03220046 .......................................... 0.03300047 .......................................... 0.03400048 .......................................... 0.03530049 .......................................... 0.03670050 .......................................... 0.03830051 .......................................... 0.04010052 .......................................... 0.04200053 .......................................... 0.04390054 .......................................... 0.04600055 .......................................... 0.04820056 .......................................... 0.05060057 .......................................... 0.05310058 .......................................... 0.05550059 .......................................... 0.05810060 .......................................... 0.06030061 .......................................... 0.06240062 .......................................... 0.06430063 .......................................... 0.06570064 .......................................... 0.06680065 .......................................... 0.06922566 .......................................... 0.07181367 .......................................... 0.07452668 .......................................... 0.07735069 .......................................... 0.08036670 .......................................... 0.08367671 .......................................... 0.08738472 .......................................... 0.09159373 .......................................... 0.09638474 .......................................... 0.10175475 .......................................... 0.10767476 .......................................... 0.11412177 .......................................... 0.12106678 .......................................... 0.12848079 .......................................... 0.13631680 .......................................... 0.14452181 .......................................... 0.15304382 .......................................... 0.16183283 .......................................... 0.17116684 .......................................... 0.18086685 .......................................... 0.19106986 .......................................... 0.20185587 .......................................... 0.21330388 .......................................... 0.22521089 .......................................... 0.23745690 .......................................... 0.25000391 .......................................... 0.26490092 .......................................... 0.28108293 .......................................... 0.29543294 .......................................... 0.31095095 .......................................... 0.32779996 .......................................... 0.34615097 .......................................... 0.36618198 .......................................... 0.38808299 .......................................... 0.412048100 ........................................ 0.440098101 ........................................ 0.474251


TABLE 2–M.—MORTALITY TABLE FORDISABLED MALE PARTICIPANTS RE-CEIVING SOCIAL SECURITY DISABIL-ITY BENEFIT PAYMENTS—Continued

Age x T2x

102 ........................................ 0.516527103 ........................................ 0.568941104 ........................................ 0.633514105 ........................................ 0.712264106 ........................................ 0.807211107 ........................................ 1.000000

TABLE 2–F.—MORTALITY TABLE FORDISABLED FEMALE PARTICIPANTSRECEIVING SOCIAL SECURITY DIS-ABILITY BENEFIT PAYMENTS

Age x qx

5 .................................................... 0.0000006 .................................................... 0.0000007 .................................................... 0.0000008 .................................................... 0.0000009 .................................................... 0.00000010 .................................................. 0.00000011 .................................................. 0.00000012 .................................................. 0.00000013 .................................................. 0.00000014 .................................................. 0.00000015 .................................................. 0.00000016 .................................................. 0.00000017 .................................................. 0.00000018 .................................................. 0.00000019 .................................................. 0.00000020 .................................................. 0.02630021 .................................................. 0.02630022 .................................................. 0.02630023 .................................................. 0.02630024 .................................................. 0.02630025 .................................................. 0.02630026 .................................................. 0.02570027 .................................................. 0.02530028 .................................................. 0.02470029 .................................................. 0.02420030 .................................................. 0.02370031 .................................................. 0.02320032 .................................................. 0.02270033 .................................................. 0.02220034 .................................................. 0.02180035 .................................................. 0.02140036 .................................................. 0.02120037 .................................................. 0.02100038 .................................................. 0.02080039 .................................................. 0.02080040 .................................................. 0.02090041 .................................................. 0.02100042 .................................................. 0.02130043 .................................................. 0.02160044 .................................................. 0.02190045 .................................................. 0.02240046 .................................................. 0.02290047 .................................................. 0.02350048 .................................................. 0.02420049 .................................................. 0.02490050 .................................................. 0.02570051 .................................................. 0.02640052 .................................................. 0.02720053 .................................................. 0.02810054 .................................................. 0.02880055 .................................................. 0.02950056 .................................................. 0.03010057 .................................................. 0.030700

TABLE 2–F.—MORTALITY TABLE FORDISABLED FEMALE PARTICIPANTSRECEIVING SOCIAL SECURITY DIS-ABILITY BENEFIT PAYMENTS—Contin-ued

Age x qx

58 .................................................. 0.03150059 .................................................. 0.03230060 .................................................. 0.03310061 .................................................. 0.03390062 .................................................. 0.03470063 .................................................. 0.03550064 .................................................. 0.03620065 .................................................. 0.03726966 .................................................. 0.03852767 .................................................. 0.04000468 .................................................. 0.04172869 .................................................. 0.04371570 .................................................. 0.04594071 .................................................. 0.04836572 .................................................. 0.05095373 .................................................. 0.05366674 .................................................. 0.05649075 .................................................. 0.05950676 .................................................. 0.06281677 .................................................. 0.06652478 .................................................. 0.07073379 .................................................. 0.05752480 .................................................. 0.08089481 .................................................. 0.08681482 .................................................. 0.09326183 .................................................. 0.10020684 .................................................. 0.10762085 .................................................. 0.11545686 .................................................. 0.12366187 .................................................. 0.13218388 .................................................. 0.14097289 .................................................. 0.15030690 .................................................. 0.16000691 .................................................. 0.17020992 .................................................. 0.18099593 .................................................. 0.19244394 .................................................. 0.20435095 .................................................. 0.21659696 .................................................. 0.22914397 .................................................. 0.24404098 .................................................. 0.26022299 .................................................. 0.274572100 ................................................ 0.290090101 ................................................ 0.306939102 ................................................ 0.325290103 ................................................ 0.345321104 ................................................ 0.367222105 ................................................ 0.391188106 ................................................ 0.419238107 ................................................ 0.453391108 ................................................ 0.495667109 ................................................ 0.548081110 ................................................ 0.612654111 ................................................ 0.691404112 ................................................ 0.786351113 ................................................ 1.000000

TABLE 3.—LUMP SUM MORTALITYTABLE

Age qx

12 .................................................. 0.00000013 .................................................. 0.00000014 .................................................. 0.00000015 .................................................. 0.000000

TABLE 3.—LUMP SUM MORTALITYTABLE—Continued

Age qx

16 .................................................. 0.00143717 .................................................. 0.00141418 .................................................. 0.00138519 .................................................. 0.00135120 .................................................. 0.00131121 .................................................. 0.00126722 .................................................. 0.00121923 .................................................. 0.00116724 .................................................. 0.00114925 .................................................. 0.00112926 .................................................. 0.00110727 .................................................. 0.00108328 .................................................. 0.00105829 .................................................. 0.00108330 .................................................. 0.00111131 .................................................. 0.00114132 .................................................. 0.00117333 .................................................. 0.00120834 .................................................. 0.00129735 .................................................. 0.00139836 .................................................. 0.00151337 .................................................. 0.00164338 .................................................. 0.00179239 .................................................. 0.00194840 .................................................. 0.00212541 .................................................. 0.00232742 .................................................. 0.00255643 .................................................. 0.00281844 .................................................. 0.00309545 .................................................. 0.00341046 .................................................. 0.00376947 .................................................. 0.00418048 .................................................. 0.00463549 .................................................. 0.00510350 .................................................. 0.00561651 .................................................. 0.00619652 .................................................. 0.00685353 .................................................. 0.00754354 .................................................. 0.00827855 .................................................. 0.00903356 .................................................. 0.00987557 .................................................. 0.01081458 .................................................. 0.01186359 .................................................. 0.01295260 .................................................. 0.01416261 .................................................. 0.01550962 .................................................. 0.01701063 .................................................. 0.01868564 .................................................. 0.02051765 .................................................. 0.02256266 .................................................. 0.02484767 .................................................. 0.02723268 .................................................. 0.02963469 .................................................. 0.03207370 .................................................. 0.03474371 .................................................. 0.03766772 .................................................. 0.04087173 .................................................. 0.04450474 .................................................. 0.04850475 .................................................. 0.05291376 .................................................. 0.05777577 .................................................. 0.06314278 .................................................. 0.06862879 .................................................. 0.07464880 .................................................. 0.08125681 .................................................. 0.08851882 .................................................. 0.09621883 .................................................. 0.10431084 .................................................. 0.11281685 .................................................. 0.12207986 .................................................. 0.132174



Age qx

87 .................................................. 0.14317988 .................................................. 0.15514789 .................................................. 0.16820890 .................................................. 0.18246191 .................................................. 0.19803092 .................................................. 0.21503593 .................................................. 0.23298394 .................................................. 0.25254595 .................................................. 0.273878


Age qx

96 .................................................. 0.29715297 .................................................. 0.32255398 .................................................. 0.34950599 .................................................. 0.378865100 ................................................ 0.410875101 ................................................ 0.445768102 ................................................ 0.483830103 ................................................ 0.524301104 ................................................ 0.568365


Age qx

105 ................................................ 0.616382106 ................................................ 0.668696107 ................................................ 0.725745108 ................................................ 0.786495109 ................................................ 0.852659110 ................................................ 0.924666111 ................................................ 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 thecolumns adjacent to the rates. The last listed rate is assumed to be in effect after the last listed anniversary date.]

For valuation dates occurring in the month—The values of i1 are:

i1 for t= i1 for t= i1 for t=

November 1993 ............................................................................................................................ .0560 1–25 .0525 >25 N/A N/ADecember 1993 ............................................................................................................................ .0560 1–25 .0525 >25 N/A N/AJanuary 1994 ................................................................................................................................ .0590 1–25 .0525 >25 N/A N/AFebruary 1994 ............................................................................................................................... .0590 1–25 .0525 >25 N/A N/AMarch 1994 ................................................................................................................................... .0580 1–25 .0525 >25 N/A N/AApril 1994 ...................................................................................................................................... .0620 1–25 .0525 >25 N/A N/AMay 1994 ...................................................................................................................................... .0650 1–25 .0525 >25 N/A N/AJune 1994 ..................................................................................................................................... .0670 1–25 .0525 >25 N/A N/AJuly 1994 ....................................................................................................................................... .0690 1–25 0.525 >25 N/A N/AAugust 1994 .................................................................................................................................. .0700 1–25 .0525 >25 N/A N/ASeptember 1994 ........................................................................................................................... .0690 1–25 .0525 >25 N/A N/AOctober 1994 ................................................................................................................................ .0700 1–25 .0525 >25 N/A N/ANovember 1994 ............................................................................................................................ .0730 1–25 .0525 >25 N/A N/ADecember 1994 ............................................................................................................................ .0750 1–25 .0525 >25 N/A N/AJanuary 1995 ................................................................................................................................ .0750 1–20 .0575 >20 N/A N/AFebruary 1995 ............................................................................................................................... .0730 1–20 .0575 >20 N/A N/AMarch 1995 ................................................................................................................................... .0730 1–20 .0575 >20 N/A N/AApril 1995 ...................................................................................................................................... .0710 1–20 .0575 >20 N/A N/AMay 1995 ...................................................................................................................................... .0690 1–20 .0575 >20 N/A N/AJune 1995 ..................................................................................................................................... .0680 1–20 .0575 >20 N/A N/AJuly 1995 ....................................................................................................................................... .0630 1–20 .0575 >20 N/A N/AAugust 1995 .................................................................................................................................. .0620 1–20 .0575 >20 N/A N/ASeptember 1995 ........................................................................................................................... .0640 1–20 .0575 >20 N/A N/AOctober 1995 ................................................................................................................................ .0630 1–20 .0575 >20 N/A N/ANovember 1995 ............................................................................................................................ .0620 1–20 .0575 >20 N/A N/ADecember 1995 ............................................................................................................................ .0600 1–20 .0575 >20 N/A N/AJanuary 1996 ................................................................................................................................ .0560 1–20 .0475 >20 N/A N/AFebruary 1996 ............................................................................................................................... .0540 1–20 .0475 >20 N/A N/AMarch 1996 ................................................................................................................................... .0550 1–20 .0475 >20 N/A N/AApril 1996 ...................................................................................................................................... .0580 1–20 .0475 >20 N/A N/AMay 1996 ...................................................................................................................................... .0600 1–20 .0475 >20 N/A N/AJune 1996 ..................................................................................................................................... .0620 1–20 .0475 >20 N/A N/AJuly 1996 ....................................................................................................................................... .0620 1–20 .0475 >20 N/A N/A


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 an-

nuity 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 shallapply from the valuation date for a period of y years; thereafter the immediate annuity rate shall apply; (3) For benefits for which the deferralperiod 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 deferralperiod 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 annuityrate shall apply.]

Rate set

For plans with avaluation date Immediate

annuity rate(percent)

Deferred annuities (percent)

On orafter Before i1 i2 i3 n1 n2

1 ................................................................................................... 11–1–93 12–1–93 4.25 4.00 4.00 4.00 7 82 ................................................................................................... 12–1–93 1–1–94 4.25 4.00 4.00 4.00 7 83 ................................................................................................... 1–1–94 2–1–94 4.50 4.00 4.00 4.00 7 84 ................................................................................................... 2–1–94 3–1–94 4.50 4.00 4.00 4.00 7 85 ................................................................................................... 3–1–94 4–1–94 4.50 4.00 4.00 4.00 7 86 ................................................................................................... 4–1–94 5–1–94 4.75 4.00 4.00 4.00 7 87 ................................................................................................... 5–1–94 6–1–94 5.25 4.50 4.00 4.00 7 88 ................................................................................................... 6–1–94 7–1–94 5.25 4.50 4.00 4.00 7 89 ................................................................................................... 7–1–94 8–1–94 5.50 4.75 4.00 4.00 7 810 ................................................................................................. 8–1–94 9–1–94 5.75 5.00 4.00 4.00 7 811 ................................................................................................. 9–1–94 10–1–94 5.50 4.75 4.00 4.00 7 812 ................................................................................................. 10–1–94 11–1–94 5.50 4.75 4.00 4.00 7 813 ................................................................................................. 11–1–94 12–1–94 6.00 5.25 4.00 4.00 7 814 ................................................................................................. 12–1–94 1–1–95 6.25 5.50 4.25 4.00 7 815 ................................................................................................. 1–1–95 2–1–95 6.00 5.25 4.00 4.00 7 816 ................................................................................................. 2–1–95 3–1–95 6.00 5.25 4.00 4.00 7 817 ................................................................................................. 3–1–95 4–1–95 6.00 5.25 4.00 4.00 7 818 ................................................................................................. 4–1–95 5–1–95 5.75 5.00 4.00 4.00 7 819 ................................................................................................. 5–1–95 6–1–95 5.50 4.75 4.00 4.00 7 820 ................................................................................................. 6–1–95 7–1–95 5.50 4.75 4.00 4.00 7 821 ................................................................................................. 7–1–95 8–1–95 4.75 4.00 4.00 4.00 7 822 ................................................................................................. 8–1–95 9–1–95 4.75 4.00 4.00 4.00 7 823 ................................................................................................. 9–1–95 10–1–95 5.00 4.25 4.00 4.00 7 824 ................................................................................................. 10–1–95 11–1–95 4.75 4.00 4.00 4.00 7 825 ................................................................................................. 11–1–95 12–1–95 4.75 4.00 4.00 4.00 7 826 ................................................................................................. 12–1–95 1–1–96 4.50 4.00 4.00 4.00 7 827 ................................................................................................. 1–1–96 2–1–96 4.50 4.00 4.00 4.00 7 828 ................................................................................................. 2–1–96 3–1–96 4.25 4.00 4.00 4.00 7 829 ................................................................................................. 3–1–96 4–1–96 4.25 4.00 4.00 4.00 7 830 ................................................................................................. 4–1–96 5–1–96 4.75 4.00 4.00 4.00 7 831 ................................................................................................. 5–1–96 6–1–96 5.00 4.25 4.00 4.00 7 832 ................................................................................................. 6–1–96 7–1–96 5.00 4.25 4.00 4.00 7 833 ................................................................................................. 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 in29 U.S.C. § 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 TableI of appendix B for the valuation of annuities.


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 reaches NRA in year—

Participant’s retirement rate category is—

Low 1 ifmonthly

benefit atNRA is less

than—

Medium 2 if monthly benefitat NRA is

High 3 ifmonthly

benefit atNRA isgreaterthan—From To

1997 .................................................................................................................................. 400 400 1,684 1,6841998 .................................................................................................................................. 413 413 1,738 1,7381999 .................................................................................................................................. 426 426 1,794 1,7942000 .................................................................................................................................. 440 440 1,850 1,8502001 .................................................................................................................................. 453 453 1,907 1,9072002 .................................................................................................................................. 467 467 1,966 1,9662003 .................................................................................................................................. 482 482 2,027 2,0272004 .................................................................................................................................. 497 497 2,090 2,0902005 .................................................................................................................................. 512 512 2,155 2,1552006 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

Participant’s earliest retirement age at valuation date.Normal retirement age

60 61 62 63 64 65 66 67 68 69 70

42 ................................................................................................... 53 53 53 54 54 54 54 54 54 54 5443 ................................................................................................... 53 54 54 54 55 55 55 55 55 55 5544 ................................................................................................... 54 54 55 55 55 55 55 56 56 56 5645 ................................................................................................... 54 55 55 56 56 56 56 56 56 56 5646 ................................................................................................... 55 55 56 56 56 57 57 57 57 57 5747 ................................................................................................... 56 56 56 57 57 57 57 57 57 57 5748 ................................................................................................... 56 57 57 57 58 58 58 58 58 58 5849 ................................................................................................... 56 57 58 58 58 58 59 59 59 59 5950 ................................................................................................... 57 57 58 58 59 59 59 59 59 59 5951 ................................................................................................... 57 58 58 59 59 60 60 60 60 60 6052 ................................................................................................... 58 58 59 59 60 60 60 60 60 60 6053 ................................................................................................... 58 59 59 60 60 61 61 61 61 61 6154 ................................................................................................... 58 59 60 60 61 61 61 61 61 61 6155 ................................................................................................... 59 59 60 61 61 61 62 62 62 62 6256 ................................................................................................... 59 60 60 61 61 62 62 62 62 62 6257 ................................................................................................... 59 60 61 61 62 62 62 62 62 62 6258 ................................................................................................... 59 60 61 61 62 62 63 63 63 63 6359 ................................................................................................... 59 60 61 62 62 63 63 63 63 63 6360 ................................................................................................... 60 60 61 62 62 63 63 63 63 63 6361 ................................................................................................... ........ 61 61 62 63 63 63 63 64 64 6462 ................................................................................................... ........ ........ 62 62 63 63 63 64 64 64 6463 ................................................................................................... ........ ........ ........ 63 63 64 64 64 65 65 6564 ................................................................................................... ........ ........ ........ ........ 64 64 65 65 65 65 6565 ................................................................................................... ........ ........ ........ ........ ........ 65 65 65 65 65 6566 ................................................................................................... ........ ........ ........ ........ ........ ........ 66 66 66 66 6667 ................................................................................................... ........ ........ ........ ........ ........ ........ ........ 67 67 67 6768 ................................................................................................... ........ ........ ........ ........ ........ ........ ........ ........ 68 68 6869 ................................................................................................... ........ ........ ........ ........ ........ ........ ........ ........ ........ 69 6970 ................................................................................................... ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ 70

TABLE II–B.—EXPECTED RETIREMENT AGES FOR INDIVIDUALS IN THE MEDIUM CATEGORY

Participant’s earliest retirement age at valuation dateNormal retirement age

60 61 62 63 64 65 66 67 68 69 70

42 ................................................................................................... 49 49 49 49 49 49 49 49 49 49 4943 ................................................................................................... 50 50 50 50 50 50 50 50 50 50 5044 ................................................................................................... 50 51 51 51 51 51 51 51 51 51 5145 ................................................................................................... 51 51 52 52 52 52 52 52 52 52 5246 ................................................................................................... 52 52 52 53 53 53 53 53 53 53 53


TABLE II–B.—EXPECTED RETIREMENT AGES FOR INDIVIDUALS IN THE MEDIUM CATEGORY—Continued

Participant’s earliest retirement age at valuation dateNormal retirement age

60 61 62 63 64 65 66 67 68 69 70

47 ................................................................................................... 53 53 53 53 53 54 54 54 54 54 5448 ................................................................................................... 54 54 54 54 54 54 54 54 54 54 5449 ................................................................................................... 54 55 55 55 55 55 55 55 55 55 5550 ................................................................................................... 55 55 56 56 56 56 56 56 56 56 5651 ................................................................................................... 56 56 56 57 57 57 57 57 57 57 5752 ................................................................................................... 56 57 57 57 57 58 58 58 58 58 5853 ................................................................................................... 57 57 58 58 58 58 58 58 58 58 5854 ................................................................................................... 57 58 58 59 59 59 59 59 59 59 5955 ................................................................................................... 58 58 59 59 59 60 60 60 60 60 6056 ................................................................................................... 58 59 59 60 60 60 60 60 60 60 6057 ................................................................................................... 59 59 60 60 61 61 61 61 61 61 6158 ................................................................................................... 59 60 60 61 61 61 61 61 61 61 6159 ................................................................................................... 59 60 61 61 62 62 62 62 62 62 6260 ................................................................................................... 60 60 61 62 62 62 62 62 62 62 6261 ................................................................................................... ........ 61 61 62 62 63 63 63 63 63 6362 ................................................................................................... ........ ........ 62 62 62 63 63 63 63 63 6363 ................................................................................................... ........ ........ ........ 63 63 64 64 64 64 64 6464 ................................................................................................... ........ ........ ........ ........ 64 64 64 64 64 64 6465 ................................................................................................... ........ ........ ........ ........ ........ 65 65 65 65 65 6566 ................................................................................................... ........ ........ ........ ........ ........ ........ 66 66 66 66 6667 ................................................................................................... ........ ........ ........ ........ ........ ........ ........ 67 67 67 6768 ................................................................................................... ........ ........ ........ ........ ........ ........ ........ ........ 68 68 6869 ................................................................................................... ........ ........ ........ ........ ........ ........ ........ ........ ........ 69 6970 ................................................................................................... ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ 70

TABLE II–C.—EXPECTED RETIREMENT AGES FOR INDIVIDUALS IN THE HIGH CATEGORY

Participant’s earliest retirement age at valuation date.Normal retirement age

60 61 62 63 64 65 66 67 68 69 70

42 ................................................................................................... 46 46 46 46 46 47 47 47 47 47 4743 ................................................................................................... 47 47 47 47 47 47 47 47 47 47 4744 ................................................................................................... 48 48 48 48 48 48 48 48 48 48 4845 ................................................................................................... 49 49 49 49 49 49 49 49 49 49 4946 ................................................................................................... 50 50 50 50 50 50 50 50 50 50 5047 ................................................................................................... 51 51 51 51 51 51 51 51 51 51 5148 ................................................................................................... 52 52 52 52 52 52 52 52 52 52 5249 ................................................................................................... 53 53 53 53 53 53 53 53 53 53 5350 ................................................................................................... 54 54 54 54 54 54 54 54 54 54 5451 ................................................................................................... 54 55 55 55 55 55 55 55 55 55 5552 ................................................................................................... 55 55 56 56 56 56 56 56 56 56 5653 ................................................................................................... 56 56 56 57 57 57 57 57 57 57 5754 ................................................................................................... 57 57 57 57 57 58 58 58 58 58 5855 ................................................................................................... 57 58 58 58 58 58 58 58 58 58 5856 ................................................................................................... 58 58 59 59 59 59 59 59 59 59 5957 ................................................................................................... 58 59 59 60 60 60 60 60 60 60 6058 ................................................................................................... 59 59 60 60 60 60 61 61 61 61 6159 ................................................................................................... 59 60 60 61 61 61 61 61 61 61 6160 ................................................................................................... 60 60 61 61 61 62 62 62 62 62 6261 ................................................................................................... ........ 61 61 62 62 62 62 62 62 62 6262 ................................................................................................... ........ ........ 62 62 62 62 62 62 62 62 6263 ................................................................................................... ........ ........ ........ 63 63 63 64 64 64 64 6464 ................................................................................................... ........ ........ ........ ........ 64 64 64 64 64 64 6465 ................................................................................................... ........ ........ ........ ........ ........ 65 65 65 65 65 6566 ................................................................................................... ........ ........ ........ ........ ........ ........ 66 66 66 66 6667 ................................................................................................... ........ ........ ........ ........ ........ ........ ........ 67 67 67 6768 ................................................................................................... ........ ........ ........ ........ ........ ........ ........ ........ 68 68 6869 ................................................................................................... ........ ........ ........ ........ ........ ........ ........ ........ ........ 69 6970 ................................................................................................... ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ 70


PART 4047—RESTORATION OFTERMINATING AND TERMINATEDPLANS

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


§ 4047.1 Purpose and scope.Section 4047 of ERISA gives the PBGC

broad authority to take any necessaryactions in furtherance of a planrestoration order issued pursuant tosection 4047. This part (along withTreasury regulation 26 CFR 1.412(c)(1)–3) describes certain legal obligationsthat arise incidental to a plan restorationunder section 4047. This part alsoestablishes procedures with respect tothese obligations that are intended tofacilitate the orderly transition of arestored plan from terminated (orterminating) status to ongoing status,and to help ensure that the restored planwill continue to be ongoing consistentwith the best interests of the plan’sparticipants and beneficiaries and thesingle-employer insurance program.This part applies to terminated andterminating single-employer plans(except for plans terminated andterminating under ERISA section4041(b)) with respect to which thePBGC has issued or is issuing a planrestoration order pursuant to ERISAsection 4047.


§ 4001.2 of this chapter: controlledgroup, ERISA, IRS, PBGC, plan, planadministrator, plan year, and single-employer plan.

§ 4047.3 Funding of restored plan.(a) General. Whenever the PBGC

issues or has issued a plan restorationorder under ERISA section 4047, it shallissue to the plan sponsor a restorationpayment schedule order in accordancewith the rules of this section. PBGC,through its Executive Director, shall alsoissue a certification to its Board ofDirectors and the IRS, as described inparagraph (c) of this section. If morethan one plan is or has been restored,the PBGC shall issue a separaterestoration payment schedule order andseparate certification with respect toeach restored plan.

(b) Restoration payment scheduleorder. A restoration payment scheduleorder shall set forth a schedule ofpayments sufficient to amortize theinitial restoration amortization base

described in paragraph (b) of 26 CFR1.412(c)(1)–3 over a period extending nomore than 30 years after the initial post-restoration valuation date, as defined inparagraph (a)(1) of 26 CFR 1.412(c)(1)–3. The restoration payment scheduleshall be consistent with therequirements of 26 CFR 1.412(c)(1)–3and may require payments at intervalsof less than one year, as determined bythe PBGC. The PBGC may, in itsdiscretion, amend the restorationpayment schedule at any time,consistent with the requirements of 26CFR 1.412(c)(1)–3.

(c) Certification. The ExecutiveDirector’s certification to the Board ofDirectors and the IRS pursuant toparagraph (a) of this section shall statethat the PBGC has reviewed the fundingof the plan, the financial condition ofthe plan sponsor and its controlledgroup members, the payments requiredunder the restoration payment schedule(taking into account the availability ofdeferrals as permitted under paragraph(c)(4) of 26 CFR 1.412(c)(1)–3) and anyother factor that the PBGC deemsrelevant, and, based on that review,determines that it is in the best interestsof the plan’s participants andbeneficiaries and the single-employerinsurance program that the restoredplan not be reterminated.

(d) Periodic PBGC review. As long asa restoration payment schedule orderissued under this section is in effect, thePBGC shall review annually the fundingstatus of the plan with respect to whichthe order applies. As part of this review,the PBGC, through its ExecutiveDirector, shall issue a certification in theform described in paragraph (c) of thissection. As a result of its fundingreview, PBGC may amend therestoration payment schedule,consistent with the requirements ofparagraph (c)(2) of 26 CFR 1.412(c)(1)–3.

§ 4047.4 Payment of premiums.

(a) General. Upon restoration of a planpursuant to ERISA section 4047, theobligation to pay PBGC premiumspursuant to ERISA section 4007 isreinstated as of the date on which theplan was trusteed under section 4042 ofERISA. Except as otherwise specificallyprovided in paragraphs (b) and (c) ofthis section, the amount of theoutstanding premiums owed shall becomputed and paid by the planadministrator in accordance with part4006 of this chapter (Premium Rates)and the forms and instructions issuedpursuant thereto, as in effect for theplan years for which premiums areowed.

(b) Notification of premiums owed.Whenever the PBGC issues or has issueda plan restoration order, it shall send awritten notice to the plan administratorof the restored plan advising the planadministrator of the plan year(s) forwhich premiums are owed. PBGC willinclude with the notice the necessarypremium payment forms andinstructions. The notice shall prescribethe payment due dates for theoutstanding premiums.

(c) Methods for determining variablerate portion of the premium. In general,the variable rate portion of theoutstanding premiums shall bedetermined in accordance with thepremium regulation and forms, asprovided in paragraph (a) of thissection, except that for any plan yearfollowing a plan year for which Form5500, Schedule B was not filed becausethe plan was terminated, the alternativecalculation method in § 4006.4(c) of thischapter may not be used.

§ 4047.5 Repayment of PBGC payments ofguaranteed benefits.

(a) General. Upon restoration of a planpursuant to ERISA section 4047,amounts paid by the PBGC from itssingle-employer insurance fund (thefund established pursuant to ERISAsection 4005(a)) to pay guaranteedbenefits and related expenses under theplan while it was terminated are a debtof the restored plan. The terms andconditions for payment of this debt shallbe determined by the PBGC.

(b) Repayment terms. The PBGC shallprescribe reasonable terms andconditions for payment of the debtdescribed in paragraph (a) of thissection, including the number, amountand commencement date of thepayments. In establishing the terms,PBGC will consider the cash needs ofthe plan, the timing and amount ofcontributions owed to the plan, theliquidity of plan assets, the interests ofthe single-employer insurance program,and any other factors PBGC deemsrelevant. PBGC may, in its discretion,revise any of the payment terms andconditions, upon written notice to theplan administrator in accordance withparagraph (c) of this section.

(c) Notification to plan administrator.Whenever the PBGC issues or has issueda plan restoration order, it shall send awritten notice to the plan administratorof the restored plan advising the planadministrator of the amount owed thePBGC pursuant to paragraph (a) of thissection. The notice shall also includethe terms and conditions for payment ofthis debt, as established underparagraph (b) of this section.


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 missingparticipant.

4050.11 Limitations.4050.12 Special rules.4050.13 OMB control number.

Appendix A to Part 4050—Examples ofDesignated Benefit Determinations forMissing Participants Under § 4050.5

Appendix B to Part 4050—Examples ofBenefit Payments for Missing participantsUnder §§ 4050.8 Through 4050.10

§ 4050.1 Purpose and scope.This part prescribes rules for

distributing benefits under a terminatingsingle-employer plan for any individualwhom the plan administrator has notlocated when distributing benefitsunder § 4041.27(c) of this chapter. Thispart applies to a plan if the plan’sdeemed distribution date (or the date ofa payment made in accordance with§ 4050.12) is in a plan year beginning onor after January 1, 1996.


§ 4001.2 of this chapter: annuity, benefitliabilities, Code, ERISA, insurer,irrevocable commitment, mandatoryemployee contributions, normalretirement age, PBGC, person, plan, planadministrator, plan year and title IVbenefit.

In addition, for purposes of this part:Deemed distribution date means the

last day of the period in whichdistribution may be made (determinedwithout regard to the provisions of thispart) under § 4041.27(a) or § 4041.48(a)of this chapter (whichever applies) orsuch earlier date as may be selected bythe plan administrator of a terminatingplan that is on or after the date when allbenefit distributions have been madeunder the plan except for distributionsto—

(1) Late-discovered participants,(2) Missing participants (including

recently-missing participants) whosedesignated benefits are paid to thePBGC, and

(3) Recently-missing participantswhose benefits are distributed by

purchasing an irrevocable commitmentfrom an insurer.

Designated benefit means the amountpayable to the PBGC for a missingparticipant pursuant to § 4050.5.

Designated benefit interest rate meansthe rate of interest applicable tounderpayments of guaranteed benefitsby the PBGC under § 4022.81(d) of thischapter.

Guaranteed benefit form means, withrespect to a benefit, the form in whichthe PBGC would pay a guaranteedbenefit to a participant or beneficiary inthe PBGC’s program for trusteed plansunder subparts A and B of part 4022 ofthis chapter (treating the deemeddistribution date as the termination datefor this purpose).

Late-discovered participant means aparticipant or beneficiary entitled to adistribution under a terminating planwhom the plan administrator locatesbefore the plan administrator pays theindividual’s designated benefit to thePBGC (or distributes the individual’sbenefit by purchasing an irrevocablecommitment from an insurer) and notmore than 90 days before the deemeddistribution date.

Missing participant means aparticipant or beneficiary entitled to adistribution under a terminating planwhom the plan administrator has notlocated as of the date when the planadministrator pays the individual’sdesignated benefit to the PBGC (ordistributes the individual’s benefit bypurchasing an irrevocable commitmentfrom an insurer). In the absence of proofof death, individuals not located arepresumed living.

Missing participant annuityassumptions means the interest rateassumptions and actuarial methods(using the interest rates for annuityvaluations in Table I of appendix B topart 4044 of this chapter) for valuing abenefit to be paid by the PBGC as anannuity under subpart B of part 4044,applied—

(1) As if the deemed distribution datewere the termination date;

(2) Using unisex mortality rates thatare a fixed blend of 50 percent of themale mortality rates and 50 percent ofthe female mortality rates from the 1983Group Annuity Mortality Table asprescribed in Rev. Rul. 95–6, 1995–1C.B. 80 (Cumulative Bulletins areavailable from the Superintendent ofDocuments, Government PrintingOffice, Washington, DC 20402);

(3) Without using the expectedretirement age assumptions in§§ 4044.55 through 4044.57 of thischapter;

(4) Without making the adjustment forexpenses provided for in § 4044.52(a)(5)of this chapter; and

(5) By adding $300, as an adjustment(loading) for expenses, for each missingparticipant whose designated benefitwithout such adjustment would begreater than $3,500.

Missing participant forms andinstructions means PBGC Forms 501and 602, Schedule MP thereto, andrelated forms, and their instructions.

Missing participant lump sumassumptions means the interest rateassumptions and actuarial methods(using the interest rates for lump sumvaluations in Table II of appendix B topart 4044 of this chapter) for valuing abenefit to be paid by the PBGC as alump sum under subpart B of part 4044of this chapter, applied—

(1) As if the deemed distribution datewere the termination date;

(2) Using mortality assumptions fromTable 3 of appendix A to part 4044 ofthis chapter; and

(3) Without using the expectedretirement age assumptions in§§ 4044.55 through 4044.57 of thischapter.

Pay status means, with respect to abenefit under a plan, that the planadministrator has made or (except foradministrative delay or a waitingperiod) would have made one or morebenefit payments.

Post-distribution certification meansthe post-distribution certificationrequired by § 4041.27(h) or § 4041.48(b)of this chapter.

Recently-missing participant means aparticipant or beneficiary whom theplan administrator discovers to be amissing participant on or after the 90thday before the deemed distribution date.

Unloaded designated benefit meansthe designated benefit reduced by $300;except that the reduction shall not applyin the case of a designated benefitdetermined using the missingparticipant annuity assumptionswithout adding the $300 load describedin paragraph (5) of the definition of‘‘missing participant annuityassumptions.’’

§ 4050.3 Method of distribution for missingparticipants.

The plan administrator of aterminating plan shall distributebenefits for each missing participantby—

(a) purchasing from an insurer anirrevocable commitment that satisfiesthe requirements of § 4041.27(c) or§ 4041.48(a)(1) of this chapter(whichever is applicable); or

(b) paying the PBGC a designatedbenefit in accordance with §§ 4050.4


through 4050.6 (subject to the specialrules in § 4050.12).

§ 4050.4 Diligent search.(a) Search required. A diligent search

shall be made for each missingparticipant whose designated benefit (orvoluntary employee contributions under§ 4050.12(d)(2)) is paid to the PBGC.The search shall be made before thepayment is made.

(b) Diligence. A search is a diligentsearch only if the search—

(1) Begins not more than 6 monthsbefore notices of intent to terminate areissued and is carried on in such amanner that if the individual is found,distribution to the individual canreasonably be expected to be made onor before the deemed distribution date(or, in the case of a recently-missingparticipant, on or before the 90th dayafter the deemed distribution date);

(2) Includes inquiry of any planbeneficiaries (including alternatepayees) of the missing participantwhose names and addresses are knownto the plan administrator; and

(3) Includes use of a commerciallocator service to search for the missingparticipant (without charge to themissing participant or reduction of themissing participant’s plan benefit).

§ 4050.5 Designated benefit.(a) Amount of designated benefit. The

amount of the designated benefit shallbe the amount determined underparagraph (a)(1), (a)(2), (a)(3), or (a)(4) ofthis section (whichever is applicable) or,if less, the maximum amount that couldbe provided under the plan to themissing participant in the form of asingle sum in accordance with section415 of the Code.

(1) Mandatory lump sum. Thedesignated benefit of a missingparticipant required under a plan toreceive a mandatory lump sum as of thedeemed distribution date shall be thelump sum payment that the planadministrator would have distributed tothe missing participant as of the deemeddistribution date.

(2) De minimis lump sum. Thedesignated benefit of a missingparticipant not described in paragraph(a)(1) of this section whose benefit is notin pay status as of the deemeddistribution date and whose benefit hasa de minimis actuarial present value($3,500 or less) as of the deemeddistribution date under the missingparticipant lump sum assumptions shallbe such value.

(3) No lump sum. The designatedbenefit of a missing participant notdescribed in paragraph (a)(1) or (a)(2) ofthis section who, as of the deemed

distribution date, cannot elect animmediate lump sum under the planshall be the actuarial present value ofthe missing participant’s benefit as ofthe deemed distribution date under themissing participant annuityassumptions.

(4) Elective lump sum. The designatedbenefit of a missing participant notdescribed in paragraph (a)(1), (a)(2), or(a)(3) of this section shall be the greaterof the amounts determined under themethodologies of paragraph (a)(1) or(a)(3) of this section.

(b) Assumptions. When the planadministrator uses the missingparticipant annuity assumptions or themissing participant lump sumassumptions for purposes ofdetermining the designated benefitunder paragraph (a) of this section, theplan administrator shall value the mostvaluable benefit, as determined underparagraph (b)(1) of this section, usingthe assumptions described in paragraph(b)(2) or (b)(3) of this section (whicheveris applicable).

(1) Most valuable benefit. For amissing participant whose benefit is inpay status as of the deemed distributiondate, the most valuable benefit is thepay status benefit. For a missingparticipant whose benefit is not in paystatus as of the deemed distributiondate, the most valuable benefit is thebenefit payable at the age on or after thedeemed distribution date (beginningwith the participant’s earliest earlyretirement age and ending with theparticipant’s normal retirement age) forwhich the present value as of thedeemed distribution date is the greatest.The present value as of the deemeddistribution date with respect to any ageis determined by multiplying:

(i) the monthly (or other periodic)benefit payable under the plan; by

(ii) the present value (determined asof the deemed distribution date usingthe missing participant annuityassumptions) of a $1 monthly (or otherperiodic) annuity beginning at theapplicable age.

(2) Participant. A missing participantwho is a participant, and whose benefitis not in pay status as of the deemeddistribution date, is assumed to bemarried to a spouse the same age, andthe form of benefit that must be valuedis the qualified joint and survivorannuity benefit that would be payableunder the plan. If the participant’sbenefit is in pay status as of the deemeddistribution date, the form andbeneficiary of the participant’s benefitare the form of benefit and beneficiaryof the pay status benefit.

(3) Beneficiary. A missing participantwho is a beneficiary, and whose benefit

is not in pay status as of the deemeddistribution date, is assumed not to bemarried, and the form of benefit thatmust be valued is the survivor benefitthat would be payable under the plan.If the beneficiary’s benefit is in paystatus as of the deemed distributiondate, the form and beneficiary of thebeneficiary’s benefit are the form ofbenefit and beneficiary of the pay statusbenefit.

(4) Examples. See Appendix A to thispart for examples illustrating theprovisions of this section.

(c) Missed payments. In determiningthe designated benefit, the planadministrator shall include the value ofany payments that were due before thedeemed distribution date but that werenot made.

(d) Payment of designated benefits.Payment of designated benefits shall bemade in accordance with § 4050.6 andshall be deemed made on the deemeddistribution date.

§ 4050.6 Payment and requireddocumentation.

(a) Time of payment and filing—(1)General rule. The plan administratorshall pay designated benefits, and filethe information and certifications (of theplan administrator and the plan’senrolled actuary) specified in themissing participant forms andinstructions, by the time the post-distribution certification is due(determined in accordance with§ 4041.9 of this chapter). Except asotherwise provided in the missingparticipant forms and instructions, theplan administrator shall submit thedesignated benefits, information, andcertifications with the post-distributioncertification.

(2) Recently-missing participants. Fora recently-missing participant, the planadministrator shall either purchase anirrevocable commitment from an insurernot later than 90 days after the deemeddistribution date or pay a designatedbenefit to the PBGC by the time theamended post-distribution certificationis due under paragraph (a)(2)(ii) of thissection. Except as otherwise provided inthe missing participant forms andinstructions—

(i) Payment. The plan administratorshall submit the designated benefit withthe amended post-distributioncertification described in paragraph(a)(2)(ii) of this section; and

(ii) Filing. If (in the case of a recently-missing participant for whom adesignated benefit is to be paid to thePBGC) a diligent search has not beencompleted or (in the case of any otherrecently-missing participant) anirrevocable commitment has not been


purchased when the plan administratorsubmits the filing described inparagraph (a)(1) of this section, the planadministrator shall so indicate in thatfiling and submit an amended filing(including an amended post-distributioncertification) within 120 days after thedeemed distribution date (subject toextension under § 4050.12(h)) inaccordance with the missing participantforms and instructions.

(3) Late-discovered participants.When it is impracticable for the planadministrator to include complete andaccurate final information on a late-discovered participant in a timely post-distribution certification, the planadministrator shall submit an amendedpost-distribution certification within120 days after the deemed distributiondate (subject to extension under§ 4050.12(h)) in accordance with themissing participant forms andinstructions.

(b) Interest on late payments. If theplan administrator does not pay adesignated benefit by the time specifiedin paragraph (a) of this section, the planadministrator shall pay interest asassessed by the PBGC for the periodbeginning on the deemed distributiondate and ending on the date when thepayment is received by the PBGC.Interest will be assessed at the rateprovided for late premium payments in§ 4007.7 of this chapter. Interestassessed under this paragraph shall bedeemed paid in full if payment of theamount assessed is received by thePBGC within 30 days after the date ofa PBGC bill for such amount.

(c) Supplemental information. Within30 days after the date of a writtenrequest from the PBGC, a planadministrator required to provide theinformation and certifications describedin paragraph (a) of this section shall filesupplemental information, as requested,for the purpose of verifying designatedbenefits, determining benefits to be paidby the PBGC under this part, andsubstantiating diligent searches.

(1) Information mailed. Supplementalinformation filed under this paragraph(c) is considered filed on the date of theUnited States postmark stamped on thecover in which the information ismailed, if—

(i) The postmark was made by theUnited States Postal Service; and

(ii) The information was mailedpostage prepaid, properly addressed tothe PBGC.

(2) Information delivered. When theplan administrator sends or transmitsthe information to the PBGC by meansother than the United States PostalService, the information is consideredfiled on the date it is received by the

PBGC. Information received on aweekend or Federal holiday or after 5:00p.m. on a weekday is considered filedon the next regular business day.

§ 4050.7 Benefits of missing participants—in general.

(a) If annuity purchased. If a planadministrator distributes a missingparticipant’s benefit by purchasing anirrevocable commitment from aninsurer, and the missing participant (orhis or her beneficiary or estate) latercontacts the PBGC, the PBGC willinform the person of the identity of theinsurer and the relevant policy number.

(b) If designated benefit paid. If thePBGC locates or is contacted by amissing participant (or his or herbeneficiary or estate) for whom a planadministrator paid a designated benefitto the PBGC, the PBGC will pay benefitsin accordance with §§ 4050.8 through4050.10 (subject to the limitations andspecial rules in §§ 4050.11 and 4050.12).

(c) Examples. See Appendix B to thispart for examples illustrating theprovisions of §§ 4050.8 through 4050.10.

§ 4050.8 Automatic lump sum.This section applies to a missing

participant whose designated benefitwas determined under § 4050.5(a)(1)(mandatory lump sum) or § 4050.5(a)(2)(de minimis lump sum).

(a) General rule—(1) Benefit paid. ThePBGC will pay a single sum benefitequal to the designated benefit plusinterest at the designated benefit interestrate from the deemed distribution dateto the date on which the PBGC pays thebenefit.

(2) Payee. Payment shall be made—(i) To the missing participant, if

located;(ii) If the missing participant died

before the deemed distribution date, andif the plan so provides, to the missingparticipant’s beneficiary or estate; or

(iii) If the missing participant dies onor after the deemed distribution date, tothe missing participant’s estate.

(b) De minimis annuity alternative. Ifthe guaranteed benefit form for amissing participant whose designatedbenefit was determined under§ 4050.5(a)(2) (de minimis lump sum)(or the guaranteed benefit form for abeneficiary of such a missingparticipant) would provide for theelection of an annuity, the missingparticipant (or the beneficiary) mayelect to receive an annuity. If such anelection is made—

(1) The PBGC will pay the benefit inthe elected guaranteed benefit form,beginning on the annuity starting dateelected by the missing participant (orthe beneficiary), which shall not be

before the later of the date of theelection or the earliest date on whichthe missing participant (or thebeneficiary) could have begun receivingbenefits under the plan; and

(2) The benefit paid will be actuariallyequivalent to the designated benefit, i.e.,each monthly (or other periodic) benefitpayment will equal the designatedbenefit divided by the present value(determined as of the deemeddistribution date under the missingparticipant lump sum assumptions) of a$1 monthly (or other periodic) annuitybeginning on the annuity starting date.

§ 4050.9 Annuity or elective lump sum—living missing participant.

This section applies to a missingparticipant whose designated benefitwas determined under § 4050.5(a)(3) (nolump sum) or § 4050.5(a)(4) (electivelump sum) and who is living on the dateas of which the PBGC begins payingbenefits.

(a) Missing participant whose benefitwas not in pay status as of the deemeddistribution date. The PBGC will paythe benefit of a missing participantwhose benefit was not in pay status asof the deemed distribution date asfollows.

(1) Time and form of benefit. ThePBGC will pay the missing participant’sbenefit in the guaranteed benefit form,beginning on the annuity starting dateelected by the missing participant(which shall not be before the later ofthe date of the election or the earliestdate on which the missing participantcould have begun receiving benefitsunder the plan).

(2) Amount of benefit. The PBGC willpay a benefit that is actuariallyequivalent to the unloaded designatedbenefit, i.e., each monthly (or otherperiodic) benefit payment will equal theunloaded designated benefit divided bythe present value (determined as of thedeemed distribution date under themissing participant annuityassumptions) of a $1 monthly (or otherperiodic) annuity beginning on theannuity starting date.

(b) Missing participant whose benefitwas in pay status as of the deemeddistribution date. The PBGC will paythe benefit of a missing participantwhose benefit was in pay status as of thedeemed distribution date as follows.

(1) Time and form of benefit. ThePBGC will pay the benefit in the formthat was in pay status, beginning whenthe missing participant is located.

(2) Amount of benefit. The PBGC willpay the monthly (or other periodic)amount of the pay status benefit, plus alump sum equal to the payments themissing participant would have


received under the plan, plus interest onthe missed payments (at the plan rate upto the deemed distribution date andthereafter at the designated benefitinterest rate) to the date as of which thePBGC pays the lump sum.

(c) Payment of lump sum. If a missingparticipant whose designated benefitwas determined under § 4050.5(a)(4)(elective lump sum) so elects, the PBGCwill pay his or her benefit in the formof a single sum. This election is noteffective unless the missingparticipant’s spouse consents (if suchconsent would be required undersection 205 of ERISA). The single sumequals the designated benefit plusinterest (at the designated benefitinterest rate) from the deemeddistribution date to the date as of whichthe PBGC pays the benefit.

§ 4050.10 Annuity or elective lump sum—beneficiary of deceased missingparticipant.

This section applies to a beneficiaryof a deceased missing participant whosedesignated benefit was determinedunder § 4050.5(a)(3) (no lump sum) or§ 4050.5(a)(4) (elective lump sum) andwhose benefit is not payable under§ 4050.9.

(a) If deceased missing participant’sbenefit was not in pay status as of thedeemed distribution date. The PBGCwill pay a benefit with respect to adeceased missing participant whosebenefit was not in pay status as of thedeemed distribution date as follows.

(1) General rule.—(i) Beneficiary. ThePBGC will pay a benefit to the survivingspouse of a missing participant who wasa participant (unless the survivingspouse has properly waived a benefit inaccordance with section 205 of ERISA).

(ii) Form and amount of benefit. ThePBGC will pay the survivor benefit inthe form of a single life annuity. Eachmonthly (or other periodic) benefitpayment will equal 50% of the quotientthat results when the unloadeddesignated benefit is divided by thepresent value (determined as of thedeemed distribution date under themissing participant annuityassumptions, and assuming that themissing participant survived to thedeemed distribution date) of a $1monthly (or other periodic) joint and 50percent survivor annuity beginning onthe annuity starting date, under whichreduced payments (at the 50 percentlevel) are made only after the death ofthe missing participant during the life ofthe spouse (and not after the death ofthe spouse during the missingparticipant’s life).

(iii) Time of benefit. The PBGC willpay the survivor benefit beginning at the

time elected by the surviving spouse(which shall not be before the later ofthe date of the election or the earliestdate on which the surviving spousecould have begun receiving benefitsunder the plan).

(2) If missing participant died beforedeemed distribution date.Notwithstanding the provisions ofparagraph (a)(1) of this section, if abeneficiary of a missing participant whodied before the deemed distributiondate establishes to the PBGC’ssatisfaction that he or she is the properbeneficiary or would have receivedbenefits under the plan in a form, at atime, or in an amount different from thebenefit paid under paragraph (a)(1)(ii) or(a)(1)(iii) of this section, the PBGC willmake payments in accordance with thefacts so established, but only in theguaranteed benefit form.

(3) Elective lump sum.Notwithstanding the provisions ofparagraphs (a)(1) and (a)(2) of thissection, if the beneficiary of a missingparticipant whose designated benefitwas determined under § 4050.5(a)(4)(elective lump sum) so elects, the PBGCwill pay his or her benefit in the formof a single sum. The single sum will beequal to the actuarial present value(determined as of the deemeddistribution date under the missingparticipant annuity assumptions) of thedeath benefit payable on the annuitystarting date, plus interest (at thedesignated benefit interest rate) from thedeemed distribution date to the date asof which the PBGC pays the benefit.

(b) If deceased missing participant’sbenefit was in pay status as of thedeemed distribution date. The PBGCwill pay a benefit with respect to adeceased missing participant whosebenefit was in pay status as of thedeemed distribution date as follows.

(1) Beneficiary. The PBGC will pay abenefit to the beneficiary (if any) of thebenefit that was in pay status as of thedeemed distribution date.

(2) Form and amount of benefit. ThePBGC will pay a monthly (or otherperiodic) amount equal to the monthly(or other periodic) amount, if any, thatthe beneficiary would have receivedunder the form of payment in effect,plus a lump sum payment equal to thepayments the beneficiary would havereceived under the plan subsequent tothe missing participant’s death andprior to the date as of which the benefitis paid under paragraph (b)(4) of thissection, plus interest on the missedpayments (at the plan rate up to thedeemed distribution date and thereafterat the designated benefit interest rate) tothe date as of which the benefit is paidunder paragraph (b)(4) of this section.

(3) Lump sum payment to estate. ThePBGC will make a lump sum paymentto the missing participant’s estate equalto the payments that the missingparticipant would have received underthe plan for the period prior to themissing participant’s death, plusinterest on the missed payments (at theplan rate up to the deemed distributiondate and thereafter at the designatedbenefit interest rate) to the date whenthe lump sum is paid. Notwithstandingthe preceding sentence, if a beneficiaryof a missing participant other than theestate establishes to the PBGC’ssatisfaction that the beneficiary isentitled to the lump sum payment, thePBGC will pay the lump sum to suchbeneficiary.

(4) Time of benefit. The PBGC willpay the survivor benefit beginning whenthe beneficiary is located.

(5) Spouse deceased. If the PBGClocates the estate of the deceasedmissing participant’s spouse undercircumstances where a benefit wouldhave been paid under this paragraph (b)if the spouse had been located whilealive, the PBGC shall pay to the spouse’sestate a lump sum payment computedin the same manner as provided for inparagraph (b)(2) of this section based onthe period from the missingparticipant’s death to the death of thespouse.

§ 4050.11 Limitations.

(a) Exclusive benefit. The benefitsprovided for under this part shall be theonly benefits payable by the PBGC tomissing participants or to beneficiariesbased on the benefits of deceasedmissing participants.

(b) Limitation on benefit value. Thetotal actuarial present value of allbenefits paid with respect to a missingparticipant under §§ 4050.8 through4050.10, determined as of the deemeddistribution date, shall not exceed themissing participant’s designated benefit.

(c) Guaranteed benefit. If a missingparticipant or his or her beneficiaryestablishes to the PBGC’s satisfactionthat the benefit under §§ 4050.8 through4050.10 (based on the designated benefitactually paid to the PBGC) is less thanthe minimum benefit in this paragraph(c), the PBGC shall instead pay theminimum benefit. The minimum benefitshall be the lesser of:

(1) The benefit as determined underthe PBGC’s rules for paying guaranteedbenefits in trusteed plans undersubparts A and B of part 4022 of thischapter (treating the deemeddistribution date as the termination datefor this purpose); or


(2) The benefit based on thedesignated benefit that should havebeen paid under § 4050.5.

(d) Limitation on annuity startingdate. A missing participant (or his orher survivor) may not elect an annuitystarting date after the later of—

(1) the required beginning date undersection 401(a)(9) of the Code; or

(2) the date when the missingparticipant (or the survivor) is notifiedof his or her right to a benefit.

§ 4050.12 Special rules.(a) Late-discovered participants. The

plan administrator of a plan thatterminates with one or more late-discovered participants shall (afterissuing notices to each such participantin accordance with §§ 4041.21 and4041.41 or 4041.46 of this chapter(whichever apply)), distribute each suchlate-discovered participant’s benefitwithin the period (determined withoutregard to the provisions of this part)described in § 4041.27(a) or § 4041.48(a)of this chapter (whichever applies) ifpracticable or (if not) as soon thereafteras practicable, but not more than 90days after the deemed distribution date(subject to extension under§ 4050.12(h)).

(b) Missing participants locatedquickly. Notwithstanding the provisionsof §§ 4050.8 through 4050.10, if thePBGC or the plan administrator locatesa missing participant within 30 daysafter the PBGC receives the missingparticipant’s designated benefit, thePBGC may in its discretion return themissing participant’s designated benefitto the plan administrator, and the planadministrator shall treat the missingparticipant like a late-discoveredparticipant.

(c) Qualified domestic relationsorders. Plan administrators and thePBGC shall take the provisions ofqualified domestic relations orders(QDROs) under section 206(d)(3) ofERISA or section 414(p) of the Code intoaccount in determining designatedbenefits and benefit payments by thePBGC, including treating an alternatepayee under an applicable QDRO as amissing participant or as a beneficiary ofa missing participant, as appropriate, inaccordance with the terms of the QDRO.For purposes of calculating the amountof the designated benefit of an alternatepayee, the plan administrator shall usethe assumptions for a missingparticipant who is a beneficiary under§ 4050.5(b).

(d) Employee contributions—(1)Mandatory employee contributions.Notwithstanding the provisions of§ 4050.5, if a missing participant mademandatory contributions (within the

meaning of section 4044(a)(2) of ERISA),the missing participant’s designatedbenefit shall not be less than the sum ofthe missing participant’s mandatorycontributions and interest to the deemeddistribution date at the plan’s rate or therate under section 204(c) of ERISA(whichever produces the greateramount).

(2) Voluntary employee contributions.(i) Applicability. This paragraph (d)(2)

applies to any employee contributionsthat were not mandatory (within themeaning of section 4044(a)(2) of ERISA)to which a missing participant isentitled in connection with thetermination of a defined benefit plan.

(ii) Payment to PBGC. A planadministrator, in accordance with themissing participant forms andinstructions, shall pay the employeecontributions described in paragraph(d)(2)(i) of this section (together withany earnings thereon) to the PBGC, andshall file Schedule MP with the PBGC,by the time the designated benefit is dueunder § 4050.6. Any such amount shallbe in addition to the designated benefitand shall be separately identified.

(iii) Payment by PBGC. In addition toany other amounts paid by the PBGCunder §§ 4050.8 through 4050.10, thePBGC shall pay any amount paid to itunder paragraph (d)(2)(ii) of thissection, with interest at the designatedbenefit interest rate from the date ofreceipt by the PBGC to the date ofpayment by the PBGC, in the samemanner as described in § 4050.8(automatic lump sums), except that ifthe missing participant died before thedeemed distribution date and there is nobeneficiary, payment shall be made tothe missing participant’s estate.

(e) Residual assets. The PBGC shalldetermine, in a manner consistent withthe purposes of this part and section4050 of ERISA, how the provisions ofthis part shall apply to any distribution,to participants and beneficiaries whocannot be located, of residual assetsremaining after the satisfaction ofbenefit liabilities in connection with thetermination of a defined benefit plan.Unless the PBGC otherwise determines,the deadline for payment of residualassets for a missing participant and forsubmission to the PBGC of a ScheduleMP (or an amended Schedule MP) is the30th day after the date on which allresidual assets have been distributed toall participants and beneficiaries otherthan missing participants for whompayment of residual assets is made tothe PBGC.

(f) Sufficient distress terminations. Inthe case of a plan undergoing a distresstermination (under section 4041(c) ofERISA) that is sufficient for at least all

guaranteed benefits and that distributesits assets in the manner described insection 4041(b)(3) of ERISA, the benefitassumed to be payable by the plan forpurposes of determining the amount ofthe designated benefit under § 4050.5shall be limited to the Title IV benefitplus any benefit to which funds undersection 4022(c) of ERISA have beenallocated.

(g) Similar rules for later payments. Ifthe PBGC determines that one or morepersons should receive benefits (whichmay be in addition to benefits alreadyprovided) in order for a plantermination to be valid (e.g., upon auditof the termination), and one or more ofsuch individuals cannot be located, thePBGC shall determine, in a mannerconsistent with the purposes of this partand section 4050 of ERISA, how theprovisions of this part shall apply tosuch benefits.

(h) Discretionary extensions. ThePBGC may in its sole discretion extendthe 120-day amended filing periods in§ 4050.6(a)(2)(ii) and (3) and the 90-daydistribution periods in § 4050.6(a)(2)and in paragraph (a) of this section—

(1) Where a recently-missingparticipant becomes a late-discoveredparticipant,

(2) Where the PBGC returns thedesignated benefit of a missingparticipant who is located quickly to theplan administrator under § 4050.12(b),or

(3) In other unusual circumstances.(i) Payments beginning after age 701⁄2.

If the PBGC begins paying an annuityunder § 4050.9(a) or 4050.10(a) to aparticipant or a participant’s spouseafter the January 1 following the datewhen the participant attained or wouldhave attained age 701⁄2, the PBGC shallpay to the participant or the spouse (ortheir respective estates) or both, asappropriate, the lump sum equivalent ofthe past annuity payments theparticipant and spouse would havereceived if the PBGC had begun makingpayments on such January 1. The PBGCshall also pay lump sum equivalentsunder this paragraph (i) if the PBGClocates the estate of the participant orspouse after both are deceased. (Nothingin this paragraph (i) shall increase thetotal value of the benefits payable withrespect to a missing participant.)

§ 4050.13 OMB control number.

The collection of informationrequirements contained in this part havebeen approved by the Office ofManagement under OMB ControlNumber 1212–0036.


Appendix A to part 4050—Examples ofDesignated Benefit Determinations forMissing Participants under § 4050.5

The calculation of the designated benefitunder § 4050.5 is illustrated by the followingexamples.

Example 1. Plan A provides that anyparticipant whose benefit has a value atdistribution of $1,750 or less will be paid alump sum, and that no other lump sums willbe paid. P, Q, and R are missing participants.

(1) As of the deemed distribution date, thevalue of P’s benefit is $1,700 under plan A’sassumptions. Under § 4050.5(a)(1), the planadministrator pays the PBGC $1,700 as P’sdesignated benefit.

(2) As of the deemed distribution date, thevalue of Q’s benefit is $3,700 under plan A’sassumptions and $3,200 under the missingparticipant lump sum assumptions. Under§ 4050.5(a)(2), the plan administrator paysthe PBGC $3,200 as Q’s designated benefit.

(3) As of the deemed distribution date, thevalue of R’s benefit is $3,400 under plan A’sassumptions, $3,600 under the missingparticipant lump sum assumptions, and$3,450 under the missing participant annuityassumptions. Under § 4050.5(a)(3), the planadministrator pays the PBGC $3,450 as R’sdesignated benefit.

Example 2. Plan B provides for a normalretirement age of 65 and permits earlycommencement of benefits at any agebetween 60 and 65, with benefits reduced by5 percent for each year before age 65 that thebenefit begins. The qualified joint and 50percent survivor annuity payable under theterms of the plan requires in all cases a 16percent reduction in the benefit otherwisepayable. The plan does not provide forelective lump sums.

(1) M is a missing participant whoseparated from service under plan B with adeferred vested benefit. M is age 50 at thedeemed distribution date, and has a normalretirement benefit of $1,000 per monthpayable at age 65 in the form of a single lifeannuity. M’s benefit as of the deemeddistribution date has a value greater than$3,500 using either plan assumptions or themissing participant lump sum assumptions.Accordingly, M’s designated benefit is to bedetermined under § 4050.5(a)(3).

(2) For purposes of determining M’sdesignated benefit, M is assumed to bemarried to a spouse who is also age 50 onthe deemed distribution date. M’s monthlybenefit in the form of the qualified joint andsurvivor annuity under the plan varies from$840 at age 65 (the normal retirement age)($1,000 × (1 ¥ .16)) to $630 at age 60 (theearliest retirement age) ($1,000 × (1 ¥ 5 ×(.05)) × (1 ¥ .16)).

(3) Under § 4050.5(a)(3), M’s benefit is tobe valued using the missing participantannuity assumptions. The select and ultimateinterest rates on Plan B’s deemed distributiondate are 7.50 percent for the first 20 years and5.75 percent thereafter. Using these rates andthe blended mortality table described inparagraph (2) of the definition of ‘‘missingparticipant annuity assumptions’’ in§ 4050.2, the plan administrator determinesthat the benefit commencing at age 60 is themost valuable benefit (i.e., the benefit at age

60 is more valuable than the benefit at ages61, 62, 63, 64 or 65). The present value asof the deemed distribution date of each dollarof annual benefit (payable monthly as a jointand 50 percent survivor annuity) is $5.4307if the benefit begins at age 60. (Because a newspouse may succeed to the survivor benefit,the mortality of the spouse during thedeferral period is ignored.) Thus, withoutadjustment (loading) for expenses, the valueof the benefit beginning at age 60 is $41,056(12 × $630 × 5.4307). The designated benefitis equal to this value plus an expenseadjustment of $300, or a total of $41,356.

Appendix B to Part 4050—Examples ofBenefit Payments for MissingParticipants Under §§ 4050.8 Through4050.10

The provisions of §§ 4050.8 through4050.10 are illustrated by the followingexamples.

Example 1. Participant M from Plan B (seeExample 2 in Appendix A of this part) islocated. M’s spouse is ten years younger thanM. M elects to receive benefits in the formof a joint and 50 percent survivor annuitycommencing at age 62.

(1) M’s designated benefit was $41,356.The unloaded designated benefit was$41,056. As of Plan B’s deemed distributiondate (and using the missing participantannuity assumptions), the present value perdollar of monthly benefit (payable monthlyas a joint and 50 percent survivor annuitycommencing at age 62 and reflecting theactual age of M’s spouse) is $4.7405. Thus,the monthly benefit to M at age 62 is $722($41,056 / (4.7405 × 12)). M’s spouse willreceive $361 (50 percent of $722) per monthfor life after the death of M.

(2) If M had instead been found to havedied on or after the deemed distribution date,and M’s spouse wanted benefits tocommence when M would have attained age62, the same calculation would be performedto arrive at a monthly benefit of $361 to M’sspouse.

Example 2. Participant P is a missingparticipant from Plan C, a plan that allowselective lump sums upon plan termination.Plan C’s administrator pays a designatedbenefit of $10,000 to the PBGC on behalf ofP, who was age 30 on the deemeddistribution date.

(1) P’s spouse, S, is located and has a deathcertificate showing that P died on or after thedeemed distribution date with S as spouse.S is the same age as P, and would likesurvivor benefits to commence immediately,at age 55 (as permitted by the plan). S’sbenefit is the survivor’s share of the joint and50 percent survivor annuity which isactuarially equivalent, as of the deemeddistribution date, to $9,700 (the unloadeddesignated benefit).

(2) The select and ultimate interest rates onPlan C’s deemed distribution date were 7.50percent for the first 20 years and 5.75 percentthereafter. Using these rates and the blendedmortality table described in paragraph (2) ofthe definition of ‘‘missing participant annuityassumptions’’ in § 4050.2, the present valueas of the deemed distribution date of eachdollar of annual benefit (payable monthly asa joint and 50 percent survivor annuity) is

$2.4048 if the benefit begins when S and Pwould have been age 55. Thus, the monthlybenefit to S commencing at age 55 is $168 (50percent of $9,700 / (2.4048 × 12)). Since Pcould have elected a lump sum upon plantermination, S may elect a lump sum. S’slump sum is the present value as of thedeemed distribution date (using the missingparticipant annuity assumptions) of themonthly benefit of $168, accumulated withinterest at the designated benefit interest rateto the date paid.

PART 4061—AMOUNTS PAYABLE BYTHE PENSION BENEFIT GUARANTYCORPORATION

§ 4061.1 Cross-references.

See part 4022 of this chapterregarding benefits payable underterminated single-employer plans and§ 4281.47 of this chapter regardingfinancial assistance to pay benefitsunder insolvent multiemployer plans.

PART 4062—LIABILITY FORTERMINATION OF SINGLE-EMPLOYERPLANS

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.


The purpose of this part is to set forthrules for determination and payment ofthe liability incurred, under section4062(b) of ERISA, upon termination ofany single-employer plan and, to theextent appropriate, determination of theliability incurred with respect tomultiple employer plans under sections4063 and 4064 of ERISA. The provisionsof this part regarding the amount ofliability to the PBGC that is incurredupon termination of a single-employerplan apply with respect to a plan forwhich a notice of intent to terminateunder section 4041(c) of ERISA is issuedor proceedings to terminate undersection 4042 of ERISA are institutedafter December 17, 1987. Thoseprovisions also apply, to the extentdescribed in paragraph (a) of thissection, to the amount of liability forwithdrawal from a multiple employerplan after that date.



§ 4001.2 of this chapter: benefitliabilities, Code, contributing sponsor,controlled group, ERISA, fair marketvalue, guaranteed benefit, multipleemployer plan, notice of intent toterminate, PBGC, person, plan, planadministrator, proposed terminationdate, single-employer plan, andtermination date.

In addition, for purposes of this part,the term collective net worth of personssubject to liability in connection with aplan termination means the sum of theindividual net worths of all persons thathave individual net worths which aregreater than zero and that (as of thetermination date) are contributingsponsors of the terminated plan ormembers of their controlled groups, asdetermined in accordance with section4062(d)(1) of ERISA and § 4062.4 of thispart.

§ 4062.3 Amount and payment of section4062(b) liability.

(a) Amount of liability.—(1) Generalrule. Except as provided in paragraph(a)(2) of this section, the amount ofsection 4062(b) liability is the totalamount (as of the termination date) ofthe unfunded benefit liabilities (withinthe meaning of section 4001(a)(18) ofERISA) to all participants andbeneficiaries under the plan, togetherwith interest calculated from thetermination date in accordance with§ 4062.7.

(2) Special rule in case of subsequentfinding of inability to pay guaranteedbenefits. In any distress terminationproceeding under section 4041(c) ofERISA and part 4041 of this chapter inwhich (as described in section4041(c)(3)(C)(ii) of ERISA), after adetermination that the plan is sufficientfor benefit liabilities or for guaranteedbenefits, the plan administrator findsthat the plan is or will be insufficient forguaranteed benefits and the PBGCconcurs with that finding, or the PBGCmakes such a finding on its owninitiative, actuarial present values shallbe determined as of the date of thenotice to, or the finding by, the PBGCof insufficiency for guaranteed benefits.

(b) Payment of liability. Section4062(b) liability is due and payable asof the termination date, in cash orsecurities acceptable to the PBGC,except that, as provided in § 4062.8(c),the PBGC shall prescribe commerciallyreasonable terms for payment of somuch of such liability as exceeds 30percent of the collective net worth ofpersons subject to liability inconnection with a plan termination. ThePBGC may make alternative

arrangements, as provided in§ 4062.8(b).

§ 4062.4 Determinations of net worth andcollective net worth.

(a) General rules. When a contributingsponsor, or member(s) of a contributingsponsor’s controlled group, notifies andsubmits information to the PBGC inaccordance with § 4062.6, the PBGCshall determine the net worth, as of thenet worth record date, of thatcontributing sponsor and any membersof its controlled group based on thefactors set forth in paragraph (c) of thissection and shall include the value ofany assets that it determines, pursuantto paragraph (d) of this section, havebeen improperly transferred. In makingsuch determinations, the PBGC willconsider information submittedpursuant to § 4062.6. The PBGC shallthen determine the collective net worthof persons subject to liability inconnection with a plan termination.

(b) Partnerships and soleproprietorships. In the case of a personthat is a partnership or a soleproprietorship, net worth does notinclude the personal assets andliabilities of the partners or soleproprietor, except for the assetsincluded pursuant to paragraph (d) ofthis section. As used in this paragraph,‘‘personal assets’’ are those assets whichdo not produce income for the businessbeing valued or are not used in thebusiness.

(c) Factors for determining net worth.A person’s net worth is equal to its fairmarket value and fair market value shallbe determined on the basis of the factorsset forth below, to the extent relevant;different factors may be considered withrespect to different portions of theperson’s operations.

(1) A bona fide sale of, agreement tosell, or offer to purchase or sell thebusiness of the person made on or aboutthe net worth record date.

(2) A bona fide sale of, agreement tosell, or offer to purchase or sell stock ora partnership interest in the person,made on or about the net worth recorddate.

(3) If stock in the person is publiclytraded, the price of such stock on orabout the net worth record date.

(4) The price/earnings ratios andprices of stocks of similar trades orbusinesses on or about the net worthrecord date.

(5) The person’s economic outlook, asreflected by its earnings and dividendprojections, current financial condition,and business history.

(6) The economic outlook for theperson’s industry and the market itserves.

(7) The appraised value, including theliquidating value, of the person’stangible and intangible assets.

(8) The value of the equity assumedin a plan of reorganization of a personin a case under title 11, United StatesCode, or any similar law of a state orpolitical subdivision thereof.

(9) Any other factor relevant indetermining the person’s net worth.

(d) Improper transfers. A person’s networth shall include the value of anyassets transferred by the person whichthe PBGC determines were improperlytransferred for the purpose, as inferredfrom all the facts and circumstances,and with the effect of avoiding liabilityunder this part. Assets ‘‘improperlytransferred’’ include but are not limitedto assets sold, leased or otherwisetransferred for less than adequateconsideration and assets distributed asgifts, capital distributions and stockredemptions inconsistent with pastpractices of the employer. The word‘‘transfer’’ includes but is not limited tosales, assignments, pledges, leases, giftsand dividends.

§ 4062.5 Net worth record date.(a) General. Unless the PBGC

establishes an earlier net worth recorddate pursuant to paragraph (b) of thissection, the net worth record date, forall purposes under this part, is theplan’s termination date.

(b) Establishment of an earlier networth record date. At any time duringa termination proceeding, the PBGC, inorder to prevent undue loss to or abuseof the plan termination insurancesystem, may establish as the net worthrecord date an earlier date during the120-day period ending with thetermination date.

(c) Notification. Whenever the PBGCestablishes an earlier net worth recorddate, it shall immediately give liableperson(s) written notification of thatfact. The written notice may alsoinclude a request for additionalinformation, as provided in§ 4062.6(a)(3).

§ 4062.6 Net worth notification andinformation.

(a) General. (1) A contributingsponsor or member of the contributingsponsor’s controlled group that believessection 4062(b) liability exceeds 30percent of the collective net worth ofpersons subject to liability inconnection with a plan terminationshall—

(i) So notify the PBGC by the 90th dayafter the notice of intent to terminate isfiled with the PBGC or, if no notice ofintent to terminate is filed with thePBGC and the PBGC institutes


proceedings under section 4042 ofERISA, within 30 days after theestablishment of the plan’s terminationdate in such proceedings; and

(ii) Submit to the PBGC theinformation specified in paragraph (b) ofthis section with respect to thecontributing sponsor and each memberof the contributing sponsor’s controlledgroup (if any)—

(A) By the 120th day after theproposed termination date, or

(B) If no notice of intent to terminateis filed with the PBGC and the PBGCinstitutes proceedings under section4042 of ERISA, within 120 days after theestablishment of the plan’s terminationdate in such proceedings.

(2) If a contributing sponsor or amember of its controlled group complieswith the requirements of paragraph(a)(1) of this section, the PBGC willconsider the requirements to be satisfiedby all members of that controlled group.

(3) The PBGC may require any personsubject to liability—

(i) To submit the informationspecified in paragraph (b) of this sectionwithin a shorter period whenever thePBGC believes that its ability to obtaininformation or payment of liability is injeopardy, and

(ii) To submit additional informationwithin 30 days, or a different specifiedtime, after the PBGC’s writtennotification that it needs suchinformation to make net worthdeterminations.

(4) If a provision of paragraph (b) ofthis section or a PBGC notice specifiesinformation previously submitted to thePBGC, a person may respond byidentifying the previous submission inwhich the response was provided.

(b) Net worth information. Thefollowing information specificationsapply, individually, with respect to eachperson subject to liability:

(1) An estimate, made in accordancewith § 4062.4, of the person’s net worthon the net worth record date and astatement, with supporting evidence, ofthe basis for the estimate.

(2) A copy of the person’s audited (orif not available, unaudited) financialstatements for the 5 full fiscal years plusany partial fiscal year preceding the networth record date. The statements mustinclude balance sheets, incomestatements, and statements of changes infinancial position and must beaccompanied by the annual reports, ifavailable.

(3) A statement of all sales and copiesof all offers or agreements to buy or sellat least 25 percent of the person’s assetsor at least 5 percent of the person’s stockor partnership interest, made on orabout the net worth record date.

(4) A statement of the person’s currentfinancial condition and businesshistory.

(5) A statement of the person’sbusiness plans, including projectedearnings and, if available, dividendprojections.

(6) Any appraisal of the person’s fixedand intangible assets made on or aboutthe net worth record date.

(7) A copy of any plan ofreorganization, whether or notconfirmed, with respect to a case undertitle 11, United States Code, or anysimilar law of a state or politicalsubdivision thereof, involving theperson and occurring within 5 calendaryears prior to or any time after the networth record date.

(c) Incomplete submission. If acontributing sponsor and/or members ofthe contributing sponsor’s controlledgroup do not submit all of theinformation required pursuant toparagraph (a) of this section (other thanthe estimate described in paragraph(b)(1) of this section) with respect toeach person subject to liability, thePBGC may base determinations of networth and the collective net worth ofpersons subject to liability inconnection with a plan termination onany such information that suchperson(s) did submit, as well as anyother pertinent information that thePBGC may have. In general, the PBGCwill view information as of a datefurther removed from the net worthrecord date as having less probativevalue than information as of a datenearer to the net worth record date.

§ 4062.7 Calculating interest on liabilityand refunds of overpayments.

(a) Interest. Whether or not the PBGChas granted deferred payment termspursuant to § 4062.8, the amount ofliability under this part includesinterest, from the termination date, onany unpaid portion of the liability. Suchinterest accrues at the rate set forth inparagraph (c) of this section until theliability is paid in full and iscompounded daily. When liabilityunder this part is paid in more than onepayment, the PBGC will apply eachpayment to the satisfaction of accruedinterest and then to the reduction ofprincipal.

(b) Refunds. If a contributing sponsoror member(s) of a contributing sponsor’scontrolled group pays the PBGC anamount that exceeds the full amount ofliability under this part, the PBGC shallrefund the excess amount, with interestat the rate set forth in paragraph (c) ofthis section. Interest on an overpaymentaccrues from the later of the date of theoverpayment or 10 days prior to the

termination date until the date of therefund and is compounded daily.

(c) Interest rate. The interest rate onliability under this part and refundsthereof is the annual rate prescribed insection 6601(a) of the Code, and willchange whenever the interest rate undersection 6601(a) of the Code changes.

§ 4062.8 Arrangements for satisfyingliability.

(a) General. The PBGC will deferpayment, or agree to other arrangementsfor the satisfaction, of any portion ofliability to the PBGC only when—

(1) As provided in paragraph (b) ofthis section, the PBGC determines thatsuch action is necessary to avoid theimposition of a severe hardship and thatthere is a reasonable possibility that theterms so prescribed will be met and theentire liability paid; or

(2) As provided in paragraph (c) ofthis section, the PBGC determines thatsection 4062(b) liability exceeds 30percent of the collective net worth ofpersons subject to liability inconnection with a plan termination.

(b) Upon request. If the PBGCdetermines that such action is necessaryto avoid the imposition of a severehardship on persons that are or maybecome liable under section 4062, 4063,or 4064 of ERISA and that there is areasonable possibility that persons soliable will be able to meet the termsprescribed and pay the entire liability,the PBGC, in its discretion and when sorequested in accordance with paragraph(b)(2) of this section, may grant deferredpayment or other terms for thesatisfaction of such liability.

(1) In determining what, if any, termsto grant, the PBGC shall examine thefollowing factors:

(i) The ratio of the liability to the networth of the person making the requestand (if different) to the collective networth of persons subject to liability inconnection with a plan termination.

(ii) The overall financial condition ofpersons that are or may become liable,including, with respect to each suchperson—

(A) The amounts and terms of existingdebts;

(B) The amount and availability ofliquid assets;

(C) Current and past cash flow; and(D) Projected cash flow, including a

projection of the impact on operationsthat would be caused by the immediatefull payment of the liability.

(iii) The availability of credit fromprivate sector sources to the personmaking the request and to other liablepersons.

(2) A contributing sponsor or memberof a contributing sponsor’s controlled


group may request deferred payment orother terms for the satisfaction of anyportion of the liability under section4062, 4063, or 4064 of ERISA at anytime by filing a written request. Therequest must include the informationspecified in § 4062.6(b), except that—

(i) If the request is filed one year ormore after the net worth record date,references to ‘‘the net worth recorddate’’ in § 4062.6(b) shall be replaced by‘‘the most recent annual anniversary ofthe net worth record date’’; and

(ii) Information that already has beensubmitted to the PBGC need not besubmitted again.

(c) Liability exceeding 30 percent ofcollective net worth. If the PBGCdetermines that section 4062(b) liabilityexceeds 30 percent of the collective networth of persons subject to the liability,the PBGC will, after making areasonable effort to reach agreementwith such persons, prescribecommercially reasonable terms forpayment of so much of the liability asexceeds 30 percent of the collective networth of such persons. The termsprescribed by the PBGC for payment ofthat portion of the liability (includinginterest) will provide for deferral of 50percent of any amount otherwisepayable for any year if a person subjectto such liability demonstrates to thesatisfaction of the PBGC that no personsubject to such liability has anyindividual pre-tax profits (within themeaning of section 4062(d)(2) of ERISA)for such person’s last full fiscal yearending during that year.

(d) Interest. Interest on unpaidliability is calculated in accordancewith § 4062.7(a).

(e) Security during period of deferredpayment. As a condition to the grantingof deferred payment terms, PBGC may,in its discretion, require that the liableperson(s) provide PBGC with suchsecurity for its obligations as the PBGCdeems adequate.

§ 4062.9 Filing of documents.(a) Date of filing. Any document

(including information) required orpermitted to be filed under this part isconsidered filed on the date of theUnited States postmark stamped on thecover in which the document is mailed,provided that—


(2) The document was mailed postageprepaid, properly packaged andaddressed to the PBGC. If the conditionsstated in both paragraphs (a)(1) and(a)(2) of this section are not met, thedocument is considered filed on thedate it is received by the PBGC.Documents received after regular

business hours are considered filed onthe next regular business day.

(b) Where to file. Payments of liabilityshall be clearly designated as such andinclude the name of the plan. Suchpayments shall be sent to the addressspecified in the notification or demandfor liability issued by the PBGC under§ 4068.3 or, if not so specified, to theaddress provided, upon request, by theInvestment Management Division,Pension Benefit Guaranty Corporation,1200 K Street, NW., Washington, DC20005–4026. Any document (includinginformation) required or permitted to befiled under this part, except fordocuments relating to appeals, shall besubmitted to the Insurance OperationsDepartment, Pension Benefit GuarantyCorporation, at the above address. Anydocument submitted pursuant to part4003 in connection with an appeal of aninitial determination shall be submittedto the Appeals Board, Pension BenefitGuaranty Corporation, at the aboveaddress.

§ 4062.10 Computation of time.

In computing any period of timeprescribed or allowed by this subpart,the day of the act, event, or default fromwhich the designated period of timebegins to run is not counted. The lastday of the period so computed shall beincluded, unless it is a Saturday,Sunday, or Federal holiday, in whichevent the period runs until the end ofthe next day which is not a Saturday,Sunday, or a Federal holiday. For thepurpose of computing interest accrued,a Saturday, Sunday or Federal holidayreferred to in the previous sentenceshall be included.(Approved by the Office of Management andBudget under control number 1212–0017.)

PART 4063—WITHDRAWAL LIABILITY;PLANS UNDER MULTIPLECONTROLLED GROUPS



(a) Part 4062, subpart A, of thischapter sets forth rules fordetermination and payment of theliability incurred, under section 4062(b)of ERISA, upon termination of anysingle-employer plan and, to the extentappropriate, determination of theliability incurred with respect tomultiple employer plans under sections4063 and 4064 of ERISA.

(b) Part 4068 of this chapter includesrules regarding the PBGC’s lien undersection 4068 of ERISA with respect toliability arising under section 4062,4063, or 4064.

PART 4064—LIABILITY ONTERMINATION OF SINGLE-EMPLOYERPLANS UNDER MULTIPLECONTROLLED GROUPS



(a) Part 4062, subpart A, of thischapter sets forth rules fordetermination and payment of theliability incurred under section 4062(b)of ERISA, upon termination of anysingle-employer plan and, to the extentappropriate, determination of theliability incurred with respect tomultiple employer plans under sections4063 and 4064 of ERISA.

(b) Part 4068 of this chapter includesrules regarding the PBGC’s lien undersection 4068 of ERISA with respect toliability 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.


The purpose of this part is to specifythe form and content of the AnnualReport required by section 4065 ofERISA. This part applies to all planscovered by title IV of ERISA.


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

§ 4065.3 Filing requirement.

Plan administrators shall file theAnnual Report on IRS/DOL/PBGCForms 5500, 5500–C, 5500–K or 5500–R, as appropriate, in accordance withthe instructions therein. (Approved bythe Office of Management and Budgetunder control number 1212–0026.)

PART 4067—RECOVERY OF LIABILITYFOR PLAN TERMINATIONS

§ 4067.1 Cross-reference.

Section 4062.8 of this chaptercontains rules on deferred payment andother arrangements for satisfaction ofliability to the PBGC after termination ofsingle-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.


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

§ 4068.1 Purpose; cross-references.This part contains rules regarding the

PBGC’s lien under section 4068 ofERISA with respect to liability arisingunder section 4062, 4063, or 4064 ofERISA.


§ 4001.2 of this chapter: ERISA, PBGC,person, plan, and termination date.

Collective net worth of persons subjectto liability in connection with a plantermination has the meaning in§ 4062.2.

§ 4068.3 Notification of and demand forliability.

(a) Notification of liability. Except asprovided in paragraph (c) of thissection, when the PBGC has determinedthe amount of the liability under part4062 and whether or not the liabilityhas already been paid, the PBGC shallnotify liable person(s) in writing of theamount of the liability. If the fullliability has not yet been paid, thenotification will include a request forpayment of the full liability and willindicate that, as provided in § 4062.8,the PBGC will prescribe commerciallyreasonable terms for payment of somuch of the liability as it determinesexceeds 30 percent of the collective networth of persons subject to liability inconnection with a plan termination. Inall cases, the notification will include astatement of the right to appeal theassessment of liability pursuant to part4003.

(b) Demand for liability. Except asprovided in paragraph (c) of thissection, if person(s) liable to the PBGCfail to pay the full liability and noappeal is filed or an appeal is filed andthe decision on appeal finds liability,the PBGC will issue a demand letter forthe liability—

(1) If no appeal is filed, upon theexpiration of time to file an appealunder part 4003; or

(2) If an appeal is filed, upon issuanceof a decision on the appeal finding thatthere is liability under this part.

The demand letter will indicate that,as provided in § 4062.8, the PBGC willprescribe commercially reasonableterms for payment of so much of theliability as it determines exceeds 30percent of the collective net worth ofsuch persons.

(c) Special rule. Notwithstandingparagraphs (a) and (b) of this section,the PBGC may, in any case in which itbelieves that its ability to assert orobtain payment of liability is injeopardy, issue a demand letter for the

liability under this part immediatelyupon determining the liability, withoutfirst issuing a notification of liabilitypursuant to paragraph (a) of this section.When the PBGC issues a demand letterunder this paragraph, there is no rightto an appeal pursuant to part 4003 ofthis chapter.

§ 4068.4 Lien.If any person liable to the PBGC under

section 4062, 4063, or 4064 of ERISAfails or refuses to pay the full amountof such liability within the timespecified in the demand letter issuedunder § 4068.3, the PBGC shall have alien in the amount of the liability,including interest, arising as of theplan’s termination date, upon allproperty and rights to property, whetherreal or personal, belonging to thatperson, except that such lien may not bein an amount in excess of 30 percent ofthe collective net worth of all personsdescribed in section 4062(a) of ERISAand part 4062 of this chapter.

PART 4203—EXTENSION OF SPECIALWITHDRAWAL 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.


§ 4203.1 Purpose and scope.(a) Purpose. The purpose of this part

is to prescribe procedures whereby amultiemployer plan may, pursuant tosections 4203(f) and 4208(e)(3) ofERISA, request the PBGC to approve aplan amendment which establishesspecial complete or partial withdrawalliability rules.

(b) Scope. This part applies to amultiemployer pension plan covered byTitle IV of ERISA.


§ 4001.2 of this chapter: completewithdrawal, employer, ERISA,multiemployer plan, PBGC, person,plan, plan sponsor, and plan year.

§ 4203.3 Plan adoption of specialwithdrawal rules.

(a) General rule. A plan may, subjectto the approval of the PBGC, establishby plan amendment special complete orpartial withdrawal liability rules. Acomplete withdrawal liability ruleadopted pursuant to this part shall besimilar to the rules for the constructionand entertainment industries described

in section 4203 (b) and (c) of ERISA. Apartial withdrawal liability rule adoptedpursuant to this part shall be consistentwith the complete withdrawal ruleadopted by the plan. A plan amendmentadopted under this part may not be putinto effect until it is approved by thePBGC.

(b) Discretionary provisions of theplan amendment. A plan amendmentadopted pursuant to this part may—

(1) Cover an entire industry orindustries, or be limited to a segment ofan industry; and

(2) Apply to cessations of theobligation to contribute that occurredprior to the adoption of the amendment.

§ 4203.4 Requests for PBGC approval ofplan amendments.

(a) Filing of request. A plan shallapply to the PBGC for approval of a planamendment which establishes specialcomplete or partial withdrawal liabilityrules. The request for approval shall befiled after the amendment is adopted.PBGC approval shall also be required forany subsequent modification of the planamendment, other than a repeal of theamendment which results in employersbeing subject to the general statutoryrules on withdrawal.

(b) Who may request. The plansponsor, or a duly authorizedrepresentative acting on behalf of theplan sponsor, shall sign and submit therequest.

(c) Where to file. The request shall bedelivered by mail or submitted by handto Reports Processing, InsuranceOperations Department, Pension BenefitGuaranty Corporation, 1200 K StreetNW., Washington, DC 20005–4026.

(d) Information. Each request shallcontain the following information:

(1) The name and address of the planfor which the plan amendment is beingsubmitted, and the telephone number ofthe plan sponsor or its authorizedrepresentative.

(2) A copy of the executedamendment, including the proposedeffective date.

(3) A statement certifying that noticeof the adoption of the amendment andthe request for approval filed under thispart has been given to all employerswho have an obligation to contributeunder the plan and to all employeeorganizations representing employeescovered under the plan.

(4) A statement indicating how thewithdrawal rules in the planamendment would operate in the eventof a sale of assets by a contributingemployer or the cessation of theobligation to contribute or the cessationof covered operations by all employers.

(5) A copy of the plan’s most recentactuarial valuation.


(6) For each of the previous five planyears, information on the number ofplan participants by category (active,retired and separate vested) and acomplete financial statement. Thisrequirement may be satisfied by thesubmission for each of those years ofForm 5500, including schedule B, orsimilar reports required under prior law.

(7) A detailed description of theindustry to which the plan amendmentwill apply, including informationsufficient to demonstrate the effect ofwithdrawals on the plan’s contributionbase, and information establishingindustry characteristics which wouldindicate that withdrawals in theindustry do not typically have anadverse effect on the plan’s contributionbase. Such industry characteristicsinclude the mobility of employees, theintermittent nature of employment, theproject-by-project nature of the work,extreme fluctuations in the level of anemployer’s covered work under theplan, the existence of a consistentpattern of entry and withdrawal byemployers, and the local nature of thework performed.

(e) Supplemental information. Inaddition to the information described inparagraph (d) of this section, a plan maysubmit any other information it believesis pertinent to its request. The PBGCmay require the plan sponsor to submitany other information the PBGCdetermines it needs to review a requestunder this part.

§ 4203.5 PBGC action on requests.(a) General. The PBGC shall approve

a plan amendment providing for theapplication of special complete orpartial withdrawal liability rules upon adetermination by the PBGC that the planamendment—

(1) Will apply only to an industry thathas characteristics that would make useof the special withdrawal rulesappropriate; and

(2) Will not pose a significant risk tothe insurance system.

(b) Notice of pendency of request. Assoon as practicable after receiving arequest for approval of a planamendment containing all theinformation required under § 4203.4, thePBGC shall publish a notice of thependency of the request in the FederalRegister. The notice shall contain asummary of the request and inviteinterested persons to submit writtencomments to the PBGC concerning therequest. The notice will normallyprovide for a comment period of 45days.

(c) PBGC decision on request. Afterthe close of the comment period, PBGCshall issue its decision in writing on the

request for approval of a planamendment. Notice of the decision shallbe published in the Federal Register.

§ 4203.6 OMB control number.The collections of information

contained in this part have beenapproved by the Office of Managementand Budget under OMB control number1212–0050.

PART 4204—VARIANCES FOR SALEOF ASSETS

Subpart A—General

Sec.4204.1 Purpose and scope.4204.2 Definitions.

Subpart B—Variance of the StatutoryRequirements

4204.11 Variance of the bond/escrow andsale-contract requirements.

4204.12 De minimis transactions.4204.13 Net income and net tangible assets

tests.

Subpart C—Procedures for Individual andClass Variances or Exemptions

4204.21 Requests to PBGC for variances andexemptions.

4204.22 PBGC action on requests.Authority: 29 U.S.C. 1302(b)(3), 1384(c).

Subpart A—General

§ 4204.1 Purpose and scope.(a) Purpose. Under section 4204 of

ERISA, an employer that ceases coveredoperations under a multiemployer plan,or ceases to have an obligation tocontribute for such operations, becauseof a bona fide, arm’s-length sale of assetsto an unrelated purchaser does not incurwithdrawal liability if certainconditions are met. One condition isthat the sale contract provide that theseller will be secondarily liable if thepurchaser withdraws from the planwithin five years and does not pay itswithdrawal liability. Another conditionis that the purchaser furnish a bond orplace funds in escrow, for a period offive plan years, in a prescribed amount.Section 4204 also authorizes the PBGCto provide for variances or exemptionsfrom these requirements. Subpart B ofthis part provides variances andexemptions from the requirements forcertain sales of assets. Subpart C of thispart establishes procedures under whicha purchaser or seller may, when theconditions set forth in subpart B are notsatisfied or when the parties decline toprovide certain financial information tothe plan, request the PBGC to grantindividual or class variances orexemptions from the requirements.

(b) Scope. In general, this part appliesto any sale of assets described in section4204(a)(1) of ERISA. However, this part

does not apply to a sale of assetsinvolving operations for which theseller is obligated to contribute to a plandescribed in section 404(c) of the Code,or a continuation of such a plan, unlessthe plan is amended to provide thatsection 4204 applies.


§ 4001.2 of this chapter: Code,employer, ERISA, IRS, multiemployerplan, PBGC, person, plan, planadministrator, plan sponsor, and planyear.

In addition, for purposes of this part:Date of determination means the date

on which a seller ceases coveredoperations or ceases to have anobligation to contribute for suchoperations as a result of a sale of assetswithin the meaning of section 4204(a) ofERISA.

Net income after taxes means revenueminus expenses after taxes (excludingextraordinary and non-recurring incomeor expenses), as presented in an auditedfinancial statement or, in the absence ofsuch statement, in an unauditedfinancial statement, each prepared inconformance with generally acceptedaccounting principles.

Net tangible assets means tangibleassets (assets other than licenses,patents copyrights, trade names,trademarks, goodwill, experimental ororganizational expenses, unamortizeddebt discounts and expenses and allother assets which, under generallyaccepted accounting principles, aredeemed intangible) less liabilities (otherthan pension liabilities). Encumberedassets shall be excluded from nettangible assets only to the extent of theamount of the encumbrance.

Purchaser means a purchaserdescribed in section 4204(a)(1) ofERISA.

Seller means a seller described insection 4204(a)(1) of ERISA.

Subpart B—Variance of the StatutoryRequirements

§ 4204.11 Variance of the bond/escrow andsale-contract requirements.

(a) General rule. A purchaser’s bondor escrow under section 4204(a)(1)(B) ofERISA and the sale-contract provisionunder section 4204(a)(1)(C) are notrequired if the parties to the sale informthe plan in writing of their intentionthat the sale be covered by section 4204of ERISA and demonstrate to thesatisfaction of the plan that at least oneof the criteria contained in § 4204.12 or§ 4204.13(a) is satisfied.

(b) Requests after posting of bond orestablishment of escrow. A request for a


variance may be filed at any time. If,after a purchaser has posted a bond orplaced money in escrow pursuant tosection 4204(a)(1)(B) of ERISA, thepurchaser demonstrates to thesatisfaction of the plan that the criterionin either § 4204.13 (a)(1) or (a)(2) issatisfied, then the bond shall becancelled or the amount in escrow shallbe refunded. For purposes ofconsidering a request after the bond orescrow is in place, the words ‘‘the yearpreceding the date of the variancerequest’’ shall be substituted for ‘‘thedate of determination’’ for the firstmention of that term in both § 4204.13(a)(1) and (a)(2). In addition, indetermining the purchaser’s average netincome after taxes under § 4204.13(a)(1),for any year included in the average forwhich the net income figure does notreflect the interest expense incurredwith respect to the sale, the purchaser’snet income shall be reduced by theamount of interest paid with respect tothe sale in the fiscal year following thedate of determination.

(c) Information required. A request fora variance shall contain financial orother information that is sufficient toestablish that one of the criteria in§ 4204.12 or § 4204.13(a) is satisfied. Arequest on the basis of either § 4204.13(a)(1) or (a)(2) shall also include a copyof the purchaser’s audited (if available)or (if not) unaudited financialstatements for the specified time period.

(d) Limited exemption duringpendency of request. Provided that all ofthe information required to besubmitted is submitted before the firstday of the first plan year beginning afterthe sale, a plan may not, pending itsdecision on the variance, require apurchaser to post a bond or place anamount in escrow pursuant to section4204(a)(1)(B). In the event a bond orescrow is not in place pursuant to thepreceding sentence, and the plandetermines that the request does notqualify for a variance, the purchasershall comply with section 4204(a)(1)(B)within 30 days after the date on whichit receives notice of the plan’s decision.(Approved by the Office of Management andBudget under control number 1212—0021)

§ 4204.12 De minimis transactions.

The criterion under this section is thatthe amount of the bond or escrow doesnot exceed the lesser of $250,000 or twopercent of the average total annualcontributions made by all employers tothe plan, for the purposes of section412(b)(3)(A) of the Code, for the threemost recent plan years ending before thedate of determination. For this purpose,‘‘contributions made’’ shall have the

same meaning as the term has under§ 4211.12(a) of this chapter.

§ 4204.13 Net income and net tangibleassets tests.

(a) General. The criteria under thissection are that either—

(1) Net income test. The purchaser’saverage net income after taxes for itsthree most recent fiscal years endingbefore the date of determination (asdefined in § 4204.12), reduced by anyinterest expense incurred with respectto the sale which is payable in the fiscalyear following the date ofdetermination, equals or exceeds 150percent of the amount of the bond orescrow required under ERISA section4204(a)(1)(B); or

(2) Net tangible assets test. Thepurchaser’s net tangible assets at theend of the fiscal year preceding the dateof determination (as defined in§ 4204.12), equal or exceed—

(i) If the purchaser was not obligatedto contribute to the plan before the sale,the amount of unfunded vested benefitsallocable to the seller under section4211 (with respect to the purchasedoperations), as of the date ofdetermination, or

(ii) If the purchaser was obligated tocontribute to the plan before the sale,the sum of the amount of unfundedvested benefits allocable to thepurchaser and to the seller under ERISAsection 4211 (with respect to thepurchased operations), each as of thedate of determination.

(b) Special rule when more than oneplan is covered by request. For thepurposes of paragraphs (a)(1) and (a)(2),if the transaction involves theassumption by the purchaser of theseller’s obligation to contribute to morethan one multiemployer plan, then thetotal amount of the bond or escrow orof the unfunded vested benefits, asapplicable, for all of the plans withrespect to which the purchaser has notposted a bond or escrow shall be usedto determine whether the applicable testis met.

(c) Non-applicability of tests in eventof purchaser’s insolvency. A purchaserwill not qualify for a variance under thissubpart pursuant to paragraph (a)(1) or(a)(2) of this section if, as of the earlierof the date of the plan’s decision on thevariance request or the first day of thefirst plan year beginning after the dateof determination, the purchaser is thesubject of a petition under title 11,United States Code, or of a proceedingunder similar provisions of stateinsolvency laws.

Subpart C—Procedures for Individualand Class Variances or Exemptions

§ 4204.21 Requests to PBGC for variancesand exemptions.

(a) General. If a transaction coveredby this part does not satisfy theconditions set forth in subpart B of thispart, or if the parties decline to provideto the plan privileged or confidentialfinancial information within themeaning of section 552(b)(4) of theFreedom of Information Act (5 U.S.C.552), the purchaser or seller may requestfrom the PBGC an exemption orvariance from the requirements ofsection 4204(a)(1) (B) and (C) of ERISA.

(b) Who may request. A purchaser ora seller may file a request for a varianceor exemption. The request may besubmitted by one or more dulyauthorized representatives acting onbehalf of the party or parties. When acontributing employer withdraws from aplan as a result of related sales of assetsinvolving several purchasers, orwithdraws from more than one plan asa result of a single sale, the applicationmay request a class variance orexemption for all the transactions.

(c) Where to file. The request shall bedelivered by mail or submitted by handto Reports Processing, InsuranceOperations Department, Pension BenefitGuaranty Corporation, 1200 K StreetNW., Washington, DC 20005–4026.


(1) The name and address of the planor plans for which the variance orexemption is being requested, and thetelephone number of the planadministrator of each plan.

(2) For each plan described inparagraph (d)(1) of this section, thenine-digit Employer IdentificationNumber (EIN) assigned by the IRS to theplan sponsor and the three-digit PlanIdentification Number (PN) assigned bythe plan sponsor to the plan, and, ifdifferent, also the EIN and PN last filedwith the PBGC. If an EIN or PN has notbeen assigned, that should be indicated.

(3) The name, address and telephonenumber of the seller and of its dulyauthorized representative, if any.

(4) The name, address and telephonenumber of the purchaser and of its dulyauthorized representative, if any.

(5) A full description of eachtransaction for which the request isbeing made, including effective date.

(6) A statement explaining why therequested variance or exemption wouldnot significantly increase the risk offinancial loss to the plan, includingevidence, financial or otherwise, thatsupports that conclusion.


(7) When the request for a variance orexemption is filed by the seller alone, astatement signed by the purchaserindicating its intention that section 4204of ERISA apply to the sale of assets.

(8) A statement indicating the amountof the purchaser’s bond or escrowrequired under section 4204(a)(1)(B) ofERISA.

(9) The estimated amount ofwithdrawal liability that the sellerwould otherwise incur as a result of thesale if section 4204 did not apply to thesale.

(10) A certification that a completecopy of the request has been sent toeach plan described in paragraph (d)(1)of this section and each collectivebargaining representative of the seller’semployees by certified mail, returnreceipt requested.

(e) Additional information. Inaddition to the information described inparagraph (d) of this section, the PBGCmay require the purchaser, the seller, orthe plan to submit any otherinformation the PBGC determines itneeds to review the request.

(f) Disclosure of information. Anyparty submitting information pursuantto this section may include a statementof whether any of the information is ofa nature that its disclosure may not berequired under the Freedom ofInformation Act, 5 U.S.C. 552. Thestatement should specify theinformation that may not be subject todisclosure and the grounds therefor.(Approved by the Office of Management andBudget under control number 1212–0021)

§ 4204.22 PBGC action on requests.(a) General. The PBGC shall approve

a request for a variance or exemption ifPBGC determines that approval of therequest is warranted, in that it—

(1) Would more effectively orequitably carry out the purposes of titleIV of ERISA; and

(2) Would not significantly increasethe risk of financial loss to the plan.

(b) Notice of pendency of request. Assoon as practicable after receiving avariance or exemption requestcontaining all the information specifiedin § 4204.21, the PBGC shall publish anotice of the pendency of the request inthe Federal Register. The notice shallprovide that any interested person may,within the period of time specifiedtherein, submit written comments to thePBGC concerning the request. Thenotice will usually provide for acomment period of 45 days.

(c) PBGC decision on request. ThePBGC shall issue a decision on avariance or exemption request as soonas practicable after the close of thecomment period described in paragraph

(b) of this section. PBGC’s decision shallbe in writing, and if the PBGCdisapproves the request, the decisionshall state the reasons therefor. Notice ofthe decision shall be published in theFederal Register.

PART 4206—ADJUSTMENT OFLIABILITY FOR A WITHDRAWALSUBSEQUENT TO A PARTIALWITHDRAWAL

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 partialwithdrawal liability.

4206.9 Amount of credit in plans usingalternative allocation methods.

4206.10 Special rule for 70-percent declinepartial withdrawals.

Authority: 29 U.S.C. 1302(b)(3) and1386(b).


is to prescribe rules, pursuant to section4206(b) of ERISA, for adjusting thepartial or complete withdrawal liabilityof an employer that previously partiallywithdrew from the same multiemployerplan. Section 4206(b)(1) provides thatwhen an employer that has partiallywithdrawn from a plan subsequentlyincurs liability for another partial or acomplete withdrawal from that plan, theemployer’s liability for the subsequentwithdrawal is to be reduced by theamount of its liability for the priorpartial withdrawal (less any waiver orreduction of that prior liability). Section4206(b)(2) requires the PBGC toprescribe regulations adjusting theamount of this credit to ensure that theliability for the subsequent withdrawalproperly reflects the employer’s share ofliability with respect to the plan. Thepurpose of the credit is to protect awithdrawing employer from beingcharged twice for the same unfundedvested benefits of the plan. Thereduction in the credit protects the otheremployers in the plan from becomingresponsible for unfunded vestedbenefits properly allocable to thewithdrawing employer. In the interestsof simplicity, the rules in this partprovide for, generally, a one-stepcalculation of the adjusted credit undersection 4206(b)(2) against the

subsequent liability, rather than forseparate calculations first of the creditunder section 4206(b)(1) and then of thereduction in the credit under paragraph(b)(2) of that section. In cases where thewithdrawal liability for the prior partialwithdrawal was reduced by anabatement or other reduction of thatliability, the adjusted credit is furtherreduced in accordance with § 4206.8 ofthis part.

(b) Scope. This part applies tomultiemployer plans covered underTitle IV of ERISA, and to employers thathave partially withdrawn from suchplans after September 25, 1980 andsubsequently completely or partiallywithdraw from the same plan.


The following are defined in § 4001.2of this chapter: Code, employer, ERISA,multiemployer plan, PBGC, plan, andplan year.

In addition, for purposes of this part:Complete withdrawal means a

complete withdrawal as described insection 4203 of ERISA.

Partial withdrawal means a partialwithdrawal as described in section 4205of ERISA.

§ 4206.3 Credit against liability for asubsequent withdrawal.

Whenever an employer that wasassessed withdrawal liability for apartial withdrawal from a plan partiallyor completely withdraws from that planin a subsequent plan year, it shallreceive a credit against the newwithdrawal liability in an amountgreater than or equal to zero, determinedin accordance with this part. If thecredit determined under §§ 4206.4through 4206.9 is less than zero, theamount of the credit shall equal zero.

§ 4206.4 Amount of credit in plans usingthe presumptive method.

(a) General. In a plan that uses thepresumptive allocation methoddescribed in section 4211(b) of ERISA,the credit shall equal the sum of theunamortized old liabilities determinedunder paragraph (b) of this section,multiplied by the fractions described ordetermined under paragraph (c) of thissection. When an employer’s priorpartial withdrawal liability has beenreduced or waived, this credit shall beadjusted in accordance with § 4206.8.

(b) Unamortized old liabilities. Theamounts determined under thisparagraph are the employer’sproportional shares, if any, of theunamortized amounts as of the end ofthe plan year preceding the withdrawalfor which the credit is being calculated,of—


(1) The plan’s unfunded vestedbenefits as of the end of the last planyear ending before September 26, 1980;

(2) The annual changes in the plan’sunfunded vested benefits for plan yearsending after September 25, 1980, andbefore the year of the prior partialwithdrawal; and

(3) The reallocated unfunded vestedbenefits (if any), as determined undersection 4211(b)(4) of ERISA, for planyears ending before the year of the priorpartial withdrawal.

(c) Employer’s allocable share of oldliabilities. The sum of the amountsdetermined under paragraph (b) aremultiplied by the two fractionsdescribed in this paragraph in order todetermine the amount of the oldliabilities that was previously assessedagainst the employer.

(1) The first fraction is the fractiondetermined under section 4206(a)(2) ofERISA for the prior partial withdrawal.

(2) The second fraction is a fraction,the numerator of which is the amountof the liability assessed against theemployer for the prior partialwithdrawal, and the denominator ofwhich is the product of—

(i) The amount of unfunded vestedbenefits allocable to the employer as ifit had completely withdrawn as of thedate of the prior partial withdrawal(determined without regard to anyadjustments), multiplied by—

(ii) The fraction determined undersection 4206(a)(2) of ERISA for the priorpartial withdrawal.

§ 4206.5 Amount of credit in plans usingthe modified presumptive method.

(a) General. In a plan that uses themodified presumptive methoddescribed in section 4211(c)(2) ofERISA, the credit shall equal the sum ofthe unamortized old liabilitiesdetermined under paragraph (b) of thissection, multiplied by the fractionsdescribed or determined underparagraph (c) of this section. When anemployer’s prior partial withdrawalliability has been reduced or waived,this credit shall be adjusted inaccordance with § 4206.8.

(b) Unamortized old liabilities. Theamounts described in this paragraphshall be determined as of the end of theplan year preceding the withdrawal forwhich the credit is being calculated, andare the employer’s proportional shares,if any, of—

(1) The plan’s unfunded vestedbenefits as of the end of the last planyear ending before September 26, 1980,reduced as if those obligations werebeing fully amortized in level annualinstallments over 15 years beginning

with the first plan year ending on orafter such date; and

(2) The aggregate post-1980 changeamount determined under section4211(c)(2)(C) of ERISA as if theemployer had completely withdrawn inthe year of the prior partial withdrawal,reduced as if those obligations werebeing fully amortized in level annualinstallments over the 5-year periodbeginning with the plan year in whichthe prior partial withdrawal occurred.

(c) Employer’s allocable share of oldliabilities. The sum of the amountsdetermined under paragraph (b) aremultiplied by the two fractionsdescribed in this paragraph in order todetermine the amount of old liabilitiesthat was previously assessed against theemployer.

(1) The first fraction is the fractiondetermined under section 4206(a)(2) ofERISA for the prior partial withdrawal.

(2) The second fraction is a fraction,the numerator of which is the amountof the liability assessed against theemployer for the prior partialwithdrawal, and the denominator ofwhich is the product of—

(i) The amount of unfunded vestedbenefits allocable to the employer as ifit had completely withdrawn as of thedate of the prior partial withdrawal(determined without regard to anyadjustments), multiplied by—

(ii) The fraction determined undersection 4206(a)(2) of ERISA for the priorpartial withdrawal.

§ 4206.6 Amount of credit in plans usingthe rolling-5 method.

In a plan that uses the rolling-5allocation method described in section4211(c)(3) of ERISA, the credit shallequal the amount of the liabilityassessed for the prior partialwithdrawal, reduced as if that amountwas being fully amortized in levelannual installments over the 5-yearperiod beginning with the plan year inwhich the prior partial withdrawaloccurred. When an employer’s priorpartial withdrawal liability has beenreduced or waived, this credit shall beadjusted in accordance with § 4206.8.

§ 4206.7 Amount of credit in plans usingthe direct attribution method.

In a plan that uses the directattribution allocation method describedin section 4211(c)(4) of ERISA, thecredit shall equal the amount of theliability assessed for the prior partialwithdrawal, reduced as if that amountwas being fully amortized in levelannual installments beginning with theplan year in which the prior partialwithdrawal occurred, over the greater of10 years or the amortization period for

the resulting base when the combinedcharge base and the combined creditbase are offset under section 412(b)(4) ofthe Code. When an employer’s priorpartial withdrawal liability has beenreduced or waived, this credit shall beadjusted in accordance with § 4206.8.

§ 4206.8 Reduction of credit for abatementor other reduction of prior partialwithdrawal liability.

(a) General. If an employer’swithdrawal liability for a prior partialwithdrawal has been reduced or waived,the credit determined pursuant to§§ 4206.4 through 4206.7 shall beadjusted in accordance with thissection.

(b) Computation. The adjusted creditis calculated by multiplying the creditdetermined under the precedingsections of this part by a fraction—

(1) the numerator of which is theexcess of the total partial withdrawalliability of the employer for all partialwithdrawals in prior years (excludingthose partial withdrawals for which thecredit is zero) over the present value ofeach abatement or other reduction ofthat prior withdrawal liabilitycalculated as of the date on which thatprior partial withdrawal liability wasdetermined; and

(2) the denominator of which is thetotal partial withdrawal liability of theemployer for all partial withdrawals inprior years (excluding those partialwithdrawals for which the credit iszero).

§ 4206.9 Amount of credit in plans usingalternative allocation methods.

A plan that has adopted an alternativemethod of allocating unfunded vestedbenefits pursuant to section 4211(c)(5)of ERISA and part 4211 of this chaptershall adopt, by plan amendment, amethod of calculating the creditprovided by § 4206.3 that is consistentwith the rules in §§ 4206.4 through4206.8 for plans using the statutoryallocation method most similar to theplan’s alternative allocation method.

§ 4206.10 Special rule for 70-percentdecline partial withdrawals.

For the purposes of applying the rulesin §§ 4206.4 through 4206.9 in any casein which either the prior or subsequentpartial withdrawal resulted from a 70-percent contribution decline (or a 35-percent decline in the case of certainretail food industry plans), the first yearof the 3-year testing period shall bedeemed to be the plan year in which thepartial withdrawal occurred.


PART 4207—REDUCTION OR WAIVEROF COMPLETE WITHDRAWALLIABILITY

Sec.4207.1 Purpose and scope.4207.2 Definitions.4207.3 Abatement.4207.4 Withdrawal liability payments


4207.5 Requirements for abatement.4207.6 Partial withdrawals after reentry.4207.7 Liability for subsequent complete

withdrawals and related adjustments forallocating unfunded vested benefits.

4207.8 Liability for subsequent partialwithdrawals.

4207.9 Special rules.4207.10 Plan rules for abatement.

Authority: 29 U.S.C. 1302(b)(3), 1387.


is to prescribe rules, pursuant to section4207(a) of ERISA, for reducing orwaiving the withdrawal liability ofcertain employers that have completelywithdrawn from a multiemployer planand subsequently resume coveredoperations under the plan. This partprescribes rules pursuant to which theplan must waive the employer’sobligation to make future liabilitypayments with respect to its completewithdrawal and must calculate theamount of the employer’s liability for apartial or complete withdrawal from theplan after its reentry into the plan. Thispart also provides procedures, pursuantto section 4207(b) of ERISA, for plansponsors of multiemployer plans toapply to PBGC for approval of planamendments that provide for thereduction or waiver of completewithdrawal liability under conditionsother than those specified in section4207(a) of ERISA and this part.

(b) Scope. This part applies tomultiemployer plans covered under titleIV of ERISA, and to employers that havecompletely withdrawn from such plansafter September 25, 1980, and that havenot, as of the date of their reentry intothe plan, fully satisfied their obligationto pay withdrawal liability arising fromthe complete withdrawal.


§ 4001.2 of this chapter: employer,ERISA, IRS, Multiemployer Act,multiemployer plan, nonforfeitablebenefit, PBGC, plan, and plan year .



Eligible employer means theemployer, 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 employershall continue to be an eligibleemployer notwithstanding theoccurrence of any of the followingevents:

(1) A restoration involving a merechange in identity, form or place oforganization, however effected;

(2) A reorganization involving aliquidation into a parent corporation;

(3) A merger, consolidation ordivision solely between (or among)trades or businesses (whether or notincorporated) of the employer; or

(4) An acquisition by or of, or amerger or combination with anothertrade or business.


Period of withdrawal means the planyear in which the employer completelywithdrew from the plan, the plan yearin which the employer reentered theplan and all intervening plan years.

§ 4207.3 Abatement.(a) General. Whenever an eligible

employer that has completelywithdrawn from a multiemployer planreenters the plan, it may apply to theplan for abatement of its completewithdrawal liability. Applications shallbe filed by the date of the firstscheduled withdrawal liability paymentfalling due after the employer resumescovered operations or, if later, thefifteenth calendar day after theemployer resumes covered operations.Applications shall identify the eligibleemployer, the withdrawn employer, ifdifferent, the date of withdrawal, andthe date of resumption of coveredoperations. Upon receiving anapplication for abatement, the plansponsor shall determine, in accordancewith paragraph (b) of this section,whether the employer satisfies therequirements for abatement of itscomplete withdrawal liability under§ 4207.5, § 4207.9, or a plan amendmentwhich has been approved by PBGCpursuant to § 4207.10. If the plansponsor determines that the employersatisfies the requirements for abatementof its complete withdrawal liability, theprovisions of paragraph (c) of thissection shall apply. If the plan sponsordetermines that the employer does notsatisfy the requirements for abatementof its complete withdrawal liability, theprovisions of paragraphs (d) and (e) ofthis section shall apply.

(b) Determination of abatement. Assoon as practicable after an eligibleemployer that completely withdrewfrom a multiemployer plan applies forabatement, the plan sponsor shall

determine whether the employersatisfies the requirements for abatementof its complete withdrawal liabilityunder this part and shall notify theemployer in writing of its determinationand of the consequences of itsdetermination, as described inparagraphs (c) or (d) and (e) of thissection, as appropriate. If a bond orescrow has been provided to the planunder § 4207.4, the plan sponsor shallsend a copy of the notice to the bondingor escrow agent.

(c) Effects of abatement. If the plansponsor determines that the employersatisfies the requirements for abatementof its complete withdrawal liabilityunder this part, then—

(1) The employer shall have noobligation to make future withdrawalliability payments to the plan withrespect to its complete withdrawal;

(2) The employer’s liability for asubsequent withdrawal shall bedetermined in accordance with § 4207.7or § 4207.8, as applicable;

(3) Any bonds furnished under§ 4207.4 shall be cancelled and anyamounts held in escrow under § 4207.4shall be refunded to the employer; and

(4) Any withdrawal liability paymentsdue after the reentry and made by theemployer to the plan shall be refundedby the plan without interest.

(d) Effects of non-abatement. If theplan sponsor determines that theemployer does not satisfy therequirements for abatement of itscomplete withdrawal liability under thispart, then—

(1) The bond or escrow furnishedunder § 4207.4 shall be paid to the planwithin 30 days after the date of the plansponsor’s notice under paragraph (b) ofthis section;

(2) The employer shall pay to the planwithin 30 days after the date of the plansponsor’s notice under paragraph (b) ofthis section, the amount of itswithdrawal liability payment orpayments, with respect to which thebond or escrow was furnished, in excessof the bond or escrow;

(3) The employer shall resume makingits withdrawal liability payments asthey are due to the plan; and

(4) The employer shall be treated asa new employer for purposes of anyfuture application of the withdrawalliability rules in sections 4201–4225 oftitle IV of ERISA with respect to itsparticipation in the plan after its reentryinto the plan, except that in plans usingthe ‘‘direct attribution’’ method (section4211(c)(4) of ERISA), the nonforfeitablebenefits attributable to service with theemployer shall include nonforfeitablebenefits attributable to service prior to


reentry that were not nonforfeitable atthat time.

(e) Collection of payments due andreview of non-abatement determination.The rules in part 4219, subpart C, of thischapter (relating to overdue, defaulted,and overpaid withdrawal liability) shallapply with respect to all paymentsrequired to be made under paragraphs(d)(2) and (d)(3) of this section. For thispurpose, a payment required to be madeunder paragraph (d)(2) shall be treatedas a withdrawal liability payment dueon the 30th day after the date of the plansponsor’s notice under paragraph (b) ofthis section.

(1) Review of non-abatementdetermination. A plan sponsor’sdetermination that the employer doesnot satisfy the requirements forabatement under this part shall besubject to plan review under section4219(b)(2) of ERISA and to arbitrationunder section 4221 of ERISA, within thetimes prescribed by those sections. Forthis purpose, the plan sponsor’s noticeunder paragraph (b) of this section shallbe treated as a demand under section4219(b)(1) of ERISA.

(2) Determination of abatement. If theplan sponsor or an arbitrator determinesthat the employer satisfies therequirements for abatement of itscomplete withdrawal liability under thispart, the plan sponsor shall immediatelyrefund the following payments (plusinterest, except as indicated below,determined in accordance with§ 4219.31(d) of this chapter as if thepayments were overpayments ofwithdrawal liability) to the employer ina lump sum:

(i) The amount of the employer’swithdrawal liability payment orpayments, without interest, due after itsreentry and made by the employer.

(ii) The bond or escrow paid to theplan under paragraph (d)(1) of thissection.

(iii) The amount of the employer’swithdrawal liability payment orpayments in excess of the bond orescrow, paid to the plan underparagraph (d)(2) of this section.

(iv) Any withdrawal liability paymentmade by the employer to the planpursuant to paragraph (d)(3) of thissection after the plan sponsor’s noticeunder paragraph (b) of this section.

§ 4207.4 Withdrawal liability paymentsduring pendency of abatementdetermination.

(a) General rule. An eligible employerthat completely withdraws from amultiemployer plan and subsequentlyreenters the plan may, in lieu of makingwithdrawal liability payments due afterits reentry, provide a bond to, or

establish an escrow account for, theplan that satisfies the requirements ofparagraph (b) of this section or any planrules adopted under paragraph (d) ofthis section, pending a determination bythe plan sponsor under § 4207.3(b) ofwhether the employer satisfies therequirements for abatement of itscomplete withdrawal liability. Anemployer that applies for abatement andneither provides a bond/escrow norpays its withdrawal liability paymentsremains eligible for abatement.

(b) Bond/escrow. The bond or escrowallowed by this section shall be in anamount equal to 70 percent of thewithdrawal liability payments thatwould otherwise be due. The bond orescrow relating to each payment shall befurnished before the due date of thatpayment. A single bond or escrow maybe provided for more than one paymentdue during the pendency of the plansponsor’s determination. The bond orescrow agreement shall provide that ifthe plan sponsor determines that theemployer does not satisfy therequirements for abatement of itscomplete withdrawal liability under thispart, the bond or escrow shall be paidto the plan upon notice from the plansponsor to the bonding or escrow agent.A bond provided under this paragraphshall be issued by a corporate suretycompany that is an acceptable surety forpurposes of section 412 of ERISA.

(c) Notice of bond/escrow.Concurrently with posting a bond orestablishing an escrow account underparagraph (b) of this section, theemployer shall notify the plan sponsor.The notice shall include a statement ofthe amount of the bond or escrow, thescheduled payment or payments withrespect to which the bond or escrow isbeing furnished, and the name andaddress of the bonding or escrow agent.

(d) Plan amendments concerningbond/escrow. A plan may, byamendment, adopt rules decreasing theamount specified in paragraph (b) of abond or escrow allowed under thissection. A plan amendment adoptedunder this paragraph may be appliedonly to the extent that it is consistentwith the purposes of ERISA.

§ 4207.5 Requirements for abatement.(a) General rule. Except as provided in

§ 4207.9 (d) and (e) (pertaining toacquisitions, mergers and othercombinations), an eligible employer thatcompletely withdraws from amultiemployer plan and subsequentlyreenters the plan shall have its liabilityfor that withdrawal abated inaccordance with § 4207.3(c) if theemployer resumes covered operationsunder the plan, and the number of

contribution base units with respect towhich the employer has an obligation tocontribute under the plan for themeasurement period (as defined inparagraph (b) of this section) after itresumes covered operations exceeds 30percent of the number of contributionbase units with respect to which theemployer had an obligation tocontribute under the plan for the baseyear (as defined in paragraph (c) of thissection).

(b) Measurement period. If theemployer resumes covered operationsunder the plan at least six full monthsprior to the end of a plan year andwould satisfy the test in paragraph (a)based on its contribution base units forthat plan year, then the measurementperiod shall be the period from the dateit resumes covered operations until theend of that plan year. If the employerwould not satisfy this test, or if theemployer resumes covered operationsunder the plan less than six full monthsprior to the end of the plan year, themeasurement period shall be the firsttwelve months after it resumes coveredoperations.

(c) Base year. For purposes ofparagraph (a) of this section, theemployer’s number of contribution baseunits for the base year is the averagenumber of contribution base units forthe two plan years in which itscontribution base units were thehighest, within the five plan yearsimmediately preceding the year of itscomplete withdrawal.

§ 4207.6 Partial withdrawals after reentry.(a) General rule. For purposes of

determining whether there is a partialwithdrawal of an eligible employerwhose liability is abated under this partupon the employer’s reentry into theplan or at any time thereafter, the plansponsor shall apply the rules in section4205 of ERISA, as modified by the rulesin this section, and section 108 of theMultiemployer Act. A partialwithdrawal of an employer whoseliability is abated under this part mayoccur under these rules upon theemployer’s reentry into the plan.However, a plan sponsor may notdemand payment of withdrawal liabilityfor a partial withdrawal occurring uponthe employer’s reentry before the plansponsor has determined that theemployer’s liability for its completewithdrawal is abated under this partand has so notified the employer inaccordance with § 4207.3(b).

(b) Partial withdrawal—70-percentcontribution decline. The plan sponsorshall determine whether there is apartial withdrawal described in section4205(a)(1) of ERISA (relating to a 70-


percent contribution decline) inaccordance with the rules in section4205 of ERISA and section 108 of theMultiemployer Act, as modified by therules in this paragraph, and shalldetermine the amount of an employer’sliability for that partial withdrawal inaccordance with the rules in § 4207.8(b).

(1) Definition of ‘‘3-year testingperiod.’’ For purposes of section4205(b)(1) of ERISA, the term ‘‘3-yeartesting period’’ means the periodconsisting of the plan year for which thedetermination is made and the twoimmediately preceding plan years,excluding any plan year during theperiod of withdrawal.

(2) Contribution base units for highbase year. For purposes of section4205(b)(1) of ERISA and except asprovided in section 108(d)(3) of theMultiemployer Act, in determining thenumber of contribution base units forthe high base year, if the five plan yearsimmediately preceding the beginning ofthe 3-year testing period include a planyear during the period of withdrawal,the number of contribution base unitsfor each such year of withdrawal shallbe deemed to be the greater of—

(i) The employer’s contribution baseunits for that plan year; or

(ii) The average of the employer’scontribution base units for the threeplan years preceding the plan year inwhich the employer completelywithdrew from the plan.

(c) Partial withdrawal—partialcessation of contribution obligation. Theplan sponsor shall determine whetherthere is a partial withdrawal describedin section 4205(a)(2) of ERISA (relatingto a partial cessation of the employer’scontribution obligation) in accordancewith the rules in section 4205 of ERISA,as modified by the rules in thisparagraph, and section 108 of theMultiemployer Act. In making thisdetermination, the sponsor shallexclude all plan years during the periodof withdrawal. A partial withdrawalunder this paragraph can occur noearlier than the plan year of reentry. Ifthe sponsor determines that there was apartial withdrawal, it shall determinethe amount of an employer’s liability forthat partial withdrawal in accordancewith the rules in § 4207.8(c).

§ 4207.7 Liability for subsequent completewithdrawals and related adjustments forallocating unfunded vested benefits.

(a) General. When an eligibleemployer that has had its liability for acomplete withdrawal abated under thispart completely withdraws from theplan, the employer’s liability for thatsubsequent withdrawal shall bedetermined in accordance with the rules

in sections 4201–4225 of title IV, asmodified by the rules in this section,and section 108 of the MultiemployerAct. In the case of a combinationdescribed in § 4207.9(d), themodifications described in this sectionshall be applied only with respect tothat portion of the eligible employer thathad previously withdrawn from theplan. In the case of a combinationdescribed in § 4207.9(e), themodifications shall be appliedseparately with respect to eachpreviously withdrawn employer thatcomprises the eligible employer. Inaddition, when a plan has abated theliability of a reentered employer, if theplan uses either the ‘‘presumptive’’ orthe ‘‘direct attribution’’ method (section4211(b) or (c)(4), respectively) forallocating unfunded vested benefits, theplan shall modify those allocationmethods as described in this section inallocating unfunded vested benefits toany employer that withdraws from theplan after the reentry.

(b) Allocation of unfunded vestedbenefits for subsequent withdrawal inplans using ‘‘presumptive’’ method. In aplan using the ‘‘presumptive’’ allocationmethod under section 4211(b) of ERISA,the amount of unfunded vested benefitsallocable to a reentered employer for asubsequent withdrawal shall equal thesum of—

(1) The unamortized amount of theemployer’s allocable shares of theamounts described in section 4211(b)(1),for the plan years preceding the initialwithdrawal, determined as if theemployer had not previouslywithdrawn;

(2) The sum of the unamortizedannual credits attributable to the year ofthe initial withdrawal and eachsucceeding year ending prior to reentry;and

(3) The unamortized amount of theemployer’s allocable shares of theamounts described in section 4211(b)(1)(A) and (C) for plan years ending afterits reentry. For purposes of paragraph(b)(2), the annual credit for a plan yearis the amount by which the employer’swithdrawal liability payments for theyear exceed the greater of theemployer’s imputed contributions oractual contributions for the year. Theemployer’s imputed contributions for ayear shall equal the average annualrequired contributions of the employerfor the three plan years preceding theinitial withdrawal. The amount of thecredit for a plan year is reduced by 5percent of the original amount for eachsucceeding plan year ending prior to theyear of the subsequent withdrawal.

(c) Allocation of unfunded vestedbenefits for subsequent withdrawal in

plans using ‘‘modified presumptive’’ or‘‘rolling-5’’ method. In a plan usingeither the ‘‘modified presumptive’’allocation method under section4211(c)(2) of ERISA or the ‘‘rolling-5’’method under section 4211(c)(3), theamount of unfunded vested benefitsallocable to a reentered employer for asubsequent withdrawal shall equal thesum of—

(1) The amount determined undersection 4211 (c)(2) or (c)(3) of ERISA, asappropriate, as if the date of reentrywere the employer’s initial date ofparticipation in the plan; and

(2) The outstanding balance, as of thedate of reentry, of the unfunded vestedbenefits allocated to the employer for itsprevious withdrawal (as defined inparagraph (c)(2)(i) of this section)reduced as if that amount were beingfully amortized in level annualinstallments, at the plan’s funding rateas of the date of reentry, over the perioddescribed in paragraph (c)(2)(ii),beginning with the first plan year afterreentry.

(i) The outstanding balance of theunfunded vested benefits allocated to anemployer for its previous withdrawal isthe excess of the amount determinedunder section 4211 (c)(2) or (c)(3) ofERISA as of the end of the plan year inwhich the employer initially withdrew,accumulated with interest at the plan’sfunding rate for that year, from that yearto the date of reentry, over thewithdrawal liability payments made bythe employer, accumulated with interestfrom the date of payment to the date ofreentry at the plan’s funding rate for theyear of entry.

(ii) The period referred to inparagraph (c)(2) for plans using themodified presumptive method is thegreater of five years, or the number offull plan years remaining on theamortization schedule under section4211(c)(2)(B)(i) of ERISA. For plansusing the rolling-5 method, the period isfive years.

(d) Adjustments applicable to allemployers in plans using ‘‘presumptive’’method. In a plan using the‘‘presumptive’’ allocation method undersection 4211(b) of ERISA, when the planhas abated the withdrawal liability of areentered employer pursuant to thispart, the following adjustments to theallocation method shall be made incomputing the unfunded vested benefitsallocable to any employer thatwithdraws from the plan in a plan yearbeginning after the reentry:

(1) The sum of the unamortizedamounts of the annual credits of areentered employer shall be treated as areallocated amount under section


4211(b)(4) of ERISA in the plan year inwhich the employer reenters.

(2) In the event that the 5-year periodused to compute the denominator of thefraction described in section 4211(b)(2)(E) and (b)(4)(D) of ERISA includesa year during the period of withdrawalof a reentered employer, thecontributions for a year during theperiod of withdrawal shall be adjustedto include any actual or imputedcontributions of the employer, asdetermined under paragraph (b) of thissection.

(e) Adjustments applicable to allemployers in plans using ‘‘directattribution’’ method. In a plan using the‘‘direct attribution’’ method undersection 4211(c)(4) of ERISA, when theplan has abated the withdrawal liabilityof a reentered employer pursuant to thispart, the following adjustments to theallocation method shall be made incomputing the unfunded vested benefitsallocable to any employer thatwithdraws from the plan in a plan yearbeginning after the reentry:

(1) The nonforfeitable benefitsattributable to service with a reenteredemployer prior to its initial withdrawalshall be treated as benefits that areattributable to service with thatemployer.

(2) For purposes of section4211(c)(4)(D) (ii) and (iii) of ERISA,withdrawal liability payments made bya reentered employer shall be treated ascontributions made by the reenteredemployer.

(f) Plans using alternative allocationmethods under section 4211(c)(5). Aplan that has adopted an alternativemethod of allocating unfunded vestedbenefits pursuant to section 4211(c)(5)of ERISA and part 4211 of this chaptershall adopt by plan amendment amethod of determining a reenteredemployer’s allocable share of the plan’sunfunded vested benefits upon itssubsequent withdrawal. The methodshall treat the reentered employer andother withdrawing employers in amanner consistent with the treatmentunder the paragraph(s) of this sectionapplicable to plans using the statutoryallocation method most similar to theplan’s alternative allocation method.

(g) Adjustments to amount of annualwithdrawal liability payments forsubsequent withdrawal. For purposes ofsection 4219(c)(1)(C) (i)(I) and (ii)(I) ofERISA, in determining the amount ofthe annual withdrawal liabilitypayments for a subsequent completewithdrawal, if the period of tenconsecutive plan years ending beforethe plan year in which the withdrawaloccurs includes a plan year during theperiod of withdrawal, the employer’s

number of contribution base units, usedin section 4219(c)(1)(C)(i)(I), or therequired employer contributions, usedin section 4219(c)(1)(C)(ii)(I), for eachsuch plan year during the period ofwithdrawal shall be deemed to be thegreater of—

(1) The employer’s contribution baseunits or the required employercontributions, as applicable, for thatyear; or

(2) The average of the employer’scontribution base units or of therequired employer contributions, asapplicable, for those plan years notduring the period of withdrawal, withinthe ten consecutive plan years endingbefore the plan year in which theemployer’s subsequent completewithdrawal occurred.

§ 4207.8 Liability for subsequent partialwithdrawals.

(a) General. When an eligibleemployer that has had its liability for acomplete withdrawal abated under thispart partially withdraws from the plan,the employer’s liability for thatsubsequent partial withdrawal shall bedetermined in accordance with the rulesin sections 4201–4225 of ERISA, asmodified by the rules in § 4207.7 (b)through (g) of this part and the rules inthis section, and section 108 of theMultiemployer Act.

(b) Liability for a 70-percentcontribution decline. The amount of anemployer’s liability under section4206(a) (relating to the calculation ofliability for a partial withdrawal),section 4208 (relating to the reduction ofliability for a partial withdrawal) andsection 4219(c)(1) (relating to theschedule of partial withdrawal liabilitypayments) of ERISA, for a subsequentpartial withdrawal described in section4205(a)(1) of ERISA (relating to a 70-percent contribution decline) shall bemodified in accordance with the rulesin this paragraph.

(1) Definition of ‘‘3-year testingperiod.’’ For purposes of sections4206(a) and 4219(c)(1) of ERISA, andparagraphs (b)(2)–(b)(4) of this section,the term ‘‘3-year testing period’’ meansthe period consisting of the plan year forwhich the determination is made andthe two immediately preceding planyears, excluding any plan year duringthe period of withdrawal.

(2) Determination date of section 4211allocable share. For purposes of section4206(a)(1)(B) of ERISA, the amountdetermined under section 4211 shall bedetermined as if the employer hadwithdrawn from the plan in a completewithdrawal on the last day of the firstplan year in the 3-year testing period orthe last day of the plan year in which

the employer reentered the plan,whichever is later.

(3) Calculation of fractional share ofsection 4211 amount. For purposes ofsections 4206(a)(2)(B)(ii) and4219(c)(1)(E)(ii) of ERISA, if the fiveplan years immediately preceding thebeginning of the 3-year testing periodinclude a plan year during the period ofwithdrawal, then, in determining thedenominator of the fraction described insection 4206(a)(2), the employer’scontribution base units for each suchyear of withdrawal shall be deemed tobe the greater of—

(i) The employer’s contribution baseunits for that plan year; or

(ii) The average of the employer’scontribution base units for the threeplan years preceding the plan year inwhich the employer completelywithdrew from the plan.

(4) Contribution base units for highbase year. If the five plan yearsimmediately preceding the beginning ofthe 3-year testing period include a planyear during the period of withdrawal,then for purposes of section 4208 (a)and (b)(1) of ERISA, the number ofcontribution base units for the high baseyear shall be the number of contributionbase units determined under paragraph(b)(3) of this section.

(c) Liability for partial cessation ofcontribution obligation. The amount ofan employer’s liability under section4206(a) (relating to the calculation ofliability for a partial withdrawal) andsection 4219(c)(1) (relating to theamount of the annual partial withdrawalliability payments) of ERISA, for asubsequent partial withdrawaldescribed in section 4205(a)(2) of ERISA(relating to a partial cessation of thecontribution obligation) shall bemodified in accordance with the rulesin this paragraph. For purposes ofsections 4206(a)(2)(B)(i) and4219(c)(1)(E)(ii) of ERISA, if the fiveplan years immediately preceding theplan year in which the partialwithdrawal occurs include a plan yearduring the period of withdrawal, thedenominator of the fraction described insection 4206(a)(2) shall be determinedin accordance with the rule set forth inparagraph (b)(3) of this section.

§ 4207.9 Special rules.(a) Employer that has withdrawn and

reentered the plan before the effectivedate of this part. This part shall apply,in accordance with the rules in thisparagraph, with respect to an eligibleemployer that completely withdrawsfrom a multiemployer plan afterSeptember 25, 1980, and is performingcovered work under the plan on theeffective date of this part. Upon the


application of an employer described inthe preceding sentence, the plansponsor of a multiemployer plan shalldetermine whether the employersatisfies the requirements for abatementof its complete withdrawal liabilityunder this part. Pending the plansponsor’s determination, the employermay provide the plan with a bond orescrow that satisfies the requirements of§ 4207.4, in lieu of making itswithdrawal liability payments due afterits application for an abatementdetermination. The plan sponsor shallnotify the employer in writing of itsdetermination and the consequences ofits determination as described in§ 4207.3 (c) or (d) and (e), as applicable.If the plan sponsor determines that theemployer qualifies for abatement, onlywithdrawal liability payments madeprior to the employer’s reentry shall beretained by the plan; payments made bythe employer after its reentry shall berefunded to the employer, with intereston those made prior to the applicationfor abatement, in accordance with§ 4207.3(e)(2). If a bond or escrow hasbeen provided to the plan in accordancewith § 4207.4, the plan sponsor shallsend a copy of the notice to the bondingor escrow agent. Sections 4207.6through 4207.8 shall apply with respectto the employer’s subsequent completewithdrawal occurring on or after theeffective date of this part, or partialwithdrawal occurring either before orafter that date. This paragraph shall notnegate reasonable actions taken by plansprior to the effective date of this partunder plan rules implementing section4207(a) of ERISA that were validlyadopted pursuant to section 405 of theMultiemployer Act.

(b) Employer with multiple completewithdrawals that has reentered the planbefore effective date of this part. If anemployer described in paragraph (a) ofthis section has completely withdrawnfrom a multiemployer plan on two ormore occasions before the effective dateof this part, the rules in paragraph (a) ofthis section shall be applied as modifiedby this paragraph.

(1) The plan sponsor shall determinewhether the employer satisfies therequirements for abatement under§ 4207.5 based on the most recentcomplete withdrawal.

(2) If the employer satisfies therequirements for abatement, theemployer’s liability with respect to allprevious complete withdrawals shall beabated.

(3) If the liability is abated, §§ 4207.6and 4207.7 shall be applied as if theemployer’s earliest completewithdrawal were its initial completewithdrawal.

(c) Employer with multiple completewithdrawals that has not reentered theplan as of the effective date of this part.If an eligible employer has completelywithdrawn from a multiemployer planon two or more occasions betweenSeptember 26, 1980 and the effectivedate of this part and is not performingcovered work under the plan on theeffective date of this regulation, therules in this part shall apply, subject tothe modifications specified inparagraphs (b)(1)–(b)(3) of this section,upon the employer’s reentry into theplan.

(d) Combination of withdrawnemployer with contributing employer. Ifa withdrawn employer merges orotherwise combines with an employerthat has an obligation to contribute tothe plan from which the first employerwithdrew, the combined entity is theeligible employer, and the rules of§ 4207.5 shall be applied—

(1) By subtracting from themeasurement period contribution baseunits the contribution base units forwhich the non-withdrawn portion of theemployer was obligated to contribute inthe last plan year ending prior to thecombination;

(2) By determining the base yearcontribution base units solely byreference to the contribution base unitsof the withdrawn portion of theemployer; and

(3) By using the date of thecombination, rather than the date ofresumption of covered operations, tobegin the measurement period.

(e) Combination of two or morewithdrawn employers. If two or morewithdrawn employers merge orotherwise combine, the combined entityis the eligible employer, and the rules of§ 4207.5 shall be applied by combiningthe number of contribution base unitswith respect to which each portion ofthe employer had an obligation tocontribute under the plan for its baseyear. However, the combined number ofcontribution base units shall not includecontribution base units of a withdrawnportion of the employer that had fullypaid its withdrawal liability as of thedate of the resumption of coveredoperations.

§ 4207.10 Plan rules for abatement.(a) General rule. Subject to the

approval of the PBGC, a plan may, byamendment, adopt rules for thereduction or waiver of completewithdrawal liability under conditionsother than those specified in §§ 4207.5and 4207.9 (c) and (d), provided thatsuch conditions relate to eventsoccurring or factors existing subsequentto a complete withdrawal year. The

request for PBGC approval shall be filedafter the amendment is adopted. A planamendment under this section may notbe put into effect until it is approved bythe PBGC. However, an amendment thatis approved by the PBGC may applyretroactively to the date of the adoptionof the amendment. PBGC approval shallalso be required for any subsequentmodification of the amendment, otherthan repeal of the amendment. Sections4207.6, 4207.7, and 4207.8 shall applyto all subsequent partial withdrawalsafter a reduction or waiver of completewithdrawal liability under a planamendment approved by the PBGCpursuant to this section.


(c) Where to file. The request shall beaddressed to Reports Processing,Insurance Operations Department,Pension Benefit Guaranty Corporation,1200 K Street, NW., Washington, DC20005–4026.


(1) The name and address of the planfor which the plan amendment is beingsubmitted and the telephone number ofthe plan sponsor or its duly authorizedrepresentative.

(2) The nine-digit EmployerIdentification Number (EIN) assigned tothe plan sponsor by the IRS and thethree-digit Plan Identification Number(PN) assigned to the plan by the plansponsor, and, if different, the EIN andPN last filed with the PBGC. If no EINor PN has been assigned, that should beindicated.

(3) A copy of the executedamendment, including—

(i) The date on which the amendmentwas adopted;

(ii) The proposed effective date; and(iii) The full text of the rules on the

reduction or waiver of completewithdrawal liability.

(4) A copy of the most recent actuarialvaluation report of the plan.

(5) A statement certifying that noticeof the adoption of the amendment andof the request for approval filed underthis section has been given to allemployers that have an obligation tocontribute under the plan and to allemployee organizations representingemployees covered under the plan.

(e) Supplemental information. Inaddition to the information described inparagraph (d) of this section, a plan maysubmit any other information that itbelieves it pertinent to its request. ThePBGC may require the plan sponsor tosubmit any other information that the


PBGC determines it needs to review arequest under this section.

(f) Criteria for PBGC approval. ThePBGC shall approve a plan amendmentauthorized by paragraph (a) of thissection if it determines that the rulestherein are consistent with the purposesof ERISA. An abatement rule is notconsistent with the purposes of ERISAif—

(1) Implementation of the rule wouldbe adverse to the interest of planparticipants and beneficiaries; or

(2) The rule would increase thePBGC’s risk of loss with respect to theplan.(Approved by the Office of Management andBudget under control number 1212–0044)

PART 4208—REDUCTION OR WAIVEROF 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


4208.6 Computation of reduced annualpartial withdrawal liability payment.

4208.7 Adjustment of withdrawal liabilityfor subsequent withdrawals.

4208.8 Multiple partial withdrawals in oneplan year.

4208.9 Plan adoption of additionalabatement conditions.

Authority: 29 U.S.C. 1302(b)(3), 1388 (c)and (e).


(a) Purpose. The purpose of this partis to establish rules for reducing orwaiving the liability of certainemployers that have partiallywithdrawn from a multiemployerpension plan.

(b) Scope. This part applies tomultiemployer pension plans coveredunder title IV of ERISA and toemployers that have partiallywithdrawn from such plans afterSeptember 25, 1980, and that have not,as of the date on which they satisfy theconditions for reducing or eliminatingtheir partial withdrawal liability, fullysatisfied their obligation to pay thatpartial withdrawal liability. This ruleshall not negate reasonable actionstaken by plans prior to the effective dateof this part under plan rulesimplementing section 4208 of ERISAthat were validly adopted pursuant tosection 405 of the Multiemployer Act.


The following terms are defined in§ 4001.2 of this chapter: employer,ERISA, IRS, Multiemployer Act,

multiemployer plan, PBGC, plan, andplan year.



Eligible employer means theemployer, as defined in section 4001(b)of ERISA, as it existed on the date of itsinitial partial or complete withdrawal,as applicable. An eligible employershall continue to be an eligibleemployer notwithstanding theoccurrence of any of the followingevents:

(1) A restoration involving a merechange in identity, form or place oforganization, however effected;

(2) A reorganization involving aliquidation into a parent corporation;

(3) A merger, consolidation ordivision solely between (or among)trades or businesses (whether or notincorporated) of the employer; or

(4) An acquisition by or of, or amerger or combination with anothertrade or business.


Partial withdrawal year means thethird year of the 3-year testing period inthe case of a partial withdrawal causedby a 70-percent contribution decline, orthe year of the partial cessation in thecase of a partial withdrawal caused bya partial cessation of the employer’scontribution obligation.

§ 4208.3 Abatement.(a) General. Whenever an eligible

employer that has partially withdrawnfrom a multiemployer plan satisfies therequirements in § 4208.4 for thereduction or waiver of its partialwithdrawal liability, it may apply to theplan for abatement of its partialwithdrawal liability. Applications shallidentify the eligible employer, thewithdrawn employer (if different), thedate of withdrawal, and the basis forreduction or waiver of its withdrawalliability. Upon receiving a completeapplication for abatement, the plansponsor shall determine, in accordancewith paragraph (b) of this section,whether the employer satisfies therequirements for abatement of its partialwithdrawal liability under § 4208.4. Ifthe plan sponsor determines that theemployer satisfies the requirements forabatement of its partial withdrawalliability, the provisions of paragraph (c)of this section shall apply. If the plansponsor determines that the employerdoes not satisfy the requirements forabatement of its partial withdrawalliability, the provisions of paragraphs(d) and (e) of this section shall apply.

(b) Determination of abatement.Within 60 days after an eligibleemployer that partially withdrew from amultiemployer plan applies forabatement in accordance with paragraph(a) of this section, the plan sponsor shalldetermine whether the employersatisfies the requirements for abatementof its partial withdrawal liability under§ 4208.4 and shall notify the employerin writing of its determination and ofthe consequences of its determination,as described in paragraphs (c) or (d) and(e) of this section, as appropriate. If abond or escrow has been provided to theplan under § 4208.5 of this part, theplan sponsor shall send a copy of thenotice to the bonding or escrow agent.

(c) Effects of abatement. If the plansponsor determines that the employersatisfies the requirements for abatementof its partial withdrawal liability under§ 4208.4, then—

(1) The employer’s partial withdrawalliability shall be eliminated or itsannual partial withdrawal liabilitypayments shall be reduced inaccordance with § 4208.6, as applicable;

(2) The employer’s liability for asubsequent withdrawal shall bedetermined in accordance with § 4208.7;

(3) Any bonds furnished under§ 4208.5 shall be canceled and anyamounts held in escrow under § 4208.5shall be refunded to the employer; and

(4) Any withdrawal liability paymentsoriginally due and paid after the end ofthe plan year in which the conditionsfor abatement were satisfied, in excessof the amount due under this part afterthat date shall be credited to theremaining withdrawal liabilitypayments, if any, owed by the employer,beginning with the first payment dueafter the revised payment schedule isissued pursuant to this paragraph. If thecredited amount is greater than theoutstanding amount of the employer’spartial withdrawal liability, the amountremaining after satisfaction of theliability shall be refunded to theemployer. Interest on the creditedamount at the rate prescribed in part4219, subpart C, of this chapter (relatingto overdue, defaulted, and overpaidwithdrawal liability) shall be added ifthe plan sponsor does not issue arevised payment schedule reflecting thecredit or make the required refundwithin 60 days after receipt by the plansponsor of a complete abatementapplication. Interest shall accrue fromthe 61st day.

(d) Effects of non-abatement. If theplan sponsor determines that theemployer does not satisfy therequirements for abatement of its partialwithdrawal liability under § 4208.4,then the employer shall take or cause to


be taken the actions set forth inparagraphs (d)(1)–(d)(3) of this section.The rules in part 4219, subpart C, shallapply with respect to all paymentsrequired to be made under paragraphs(d)(2) and (d)(3). For this purpose, apayment required under paragraph(d)(2) shall be treated as a withdrawalliability payment due on the 30th dayafter the date of the plan sponsor’snotice under paragraph (b) of thissection.

(1) Any bond or escrow furnishedunder § 4208.5 shall be paid to the planwithin 30 days after the date of the plansponsor’s notice under paragraph (b) ofthis section.

(2) The employer shall pay to the planwithin 30 days after the date of the plansponsor’s notice under paragraph (b) ofthis section, the amount of itswithdrawal liability payment orpayments, with respect to which thebond or escrow was furnished, in excessof the bond or escrow.

(3) The employer shall resume orcontinue making its partial withdrawalliability payments as they are due to theplan.

(e) Review of non-abatementdetermination. A plan sponsor’sdeterminations that the employer doesnot satisfy the requirements forabatement under § 4208.4 and of theamount of reduction determined under§ 4208.6 shall be subject to plan reviewunder section 4219(b)(2) of ERISA andto arbitration under section 4221 ofERISA and part 4221 of this chapter,within the times prescribed by thoseprovisions. For this purpose, the plansponsor’s notice under paragraph (b) ofthis section shall be treated as a demandunder section 4219(b)(1) of ERISA. If theplan sponsor upon review or anarbitrator determines that the employersatisfies the requirements for abatementof its partial withdrawal liability under§ 4208.4, the plan sponsor shallimmediately refund the amountsdescribed in paragraph (e)(1) of thissection if the liability is waived, orcredit and refund the amounts describedin paragraph (e)(2) if the annualpayment is reduced.

(1) Refund for waived liability. If theemployer’s partial withdrawal liabilityis waived, the plan sponsor shall refundto the employer the payments madepursuant to paragraphs (d)(1)–(d)(3) ofthis section (plus interest determined inaccordance with § 4219.31(d) of thischapter as if the payments wereoverpayments of withdrawal liability).

(2) Credit for reduced annualpayment. If the employer’s annualpartial withdrawal liability payment isreduced, the plan sponsor shall creditthe payments made pursuant to

paragraphs (d)(1)–(d)(3) of this section(plus interest determined in accordancewith § 4219.31(d) of this chapter as ifthe payments were overpayments ofwithdrawal liability) to futurewithdrawal liability payments owed bythe employer, beginning with the firstpayment that is due after thedetermination, and refund any credit(including interest) remaining aftersatisfaction of the outstanding amountof the employer’s partial withdrawalliability.

§ 4208.4 Conditions for abatement.(a) Waiver of liability for a 70-percent

contribution decline. An employer thathas incurred a partial withdrawal undersection 4205(a)(1) of ERISA shall haveno obligation to make payments withrespect to that partial withdrawal (otherthan delinquent payments) for planyears beginning after the secondconsecutive plan year in which theconditions of either paragraph (a)(1) or(a)(2) are satisfied for each of the twoyears:

(1) The number of contribution baseunits with respect to which theemployer has an obligation to contributeunder the plan for each year is not lessthan 90 percent of the total number ofcontribution base units with respect towhich the employer had an obligation tocontribute to the plan for the high baseyear (as defined in paragraph (d) of thissection).

(2) The conditions of this paragraphare satisfied if—

(i) The number of contribution baseunits with respect to which theemployer has an obligation to contributefor each year exceeds 30 percent of thetotal number of contribution base unitswith respect to which the employer hadan obligation to contribute to the planfor the high base year (as defined inparagraph (d) of this section); and

(ii) The total number of contributionbase units with respect to which allemployers under the plan haveobligations to contribute in each of thetwo years is not less than 90 percent ofthe total number of contribution baseunits for which all employers hadobligations to contribute in the partialwithdrawal year.

(b) Waiver of liability for a partialcessation of the employer’s contributionobligation. Except as provided in§ 4208.8, an employer that has incurredpartial withdrawal liability undersection 4205(a)(2) of ERISA shall haveno obligation to make payments withrespect to that partial withdrawal (otherthan delinquent payments) for planyears beginning after the secondconsecutive plan year in which theemployer satisfies the conditions under

either paragraph (b)(1) or (b)(2) of thissection.

(1) Partial restoration of withdrawnwork. The employer satisfies theconditions under this paragraph if, foreach of two consecutive plan years—

(i) The employer makes contributionsfor the same facility or under the samecollective bargaining agreement thatgave rise to the partial withdrawal;

(ii) The employer’s contribution baseunits for that facility or under thatagreement exceed 30 percent of thecontribution base units with respect towhich the employer had an obligation tocontribute for that facility or under thatagreement for the high base year (asdefined in paragraph (d) of this section);and

(iii) The total number of contributionbase units with respect to which theemployer has an obligation to contributeto the plan equals at least 90 percent ofthe total number of contribution baseunits with respect to which theemployer had an obligation tocontribute under the plan for the highbase year (as defined in paragraph (d) ofthis section).

(2) Substantial restoration ofwithdrawn work. The employer satisfiesthe conditions under this paragraph if,for each of two consecutive plan years—

(i) The employer makes contributionsfor the same facility or under the samecollective bargaining agreement thatgave rise to the partial withdrawal;

(ii) The employer’s contribution baseunits for that facility or under thatagreement are not less than 90 percentof the contribution base units withrespect to which the employer had anobligation to contribute for that facilityor under that agreement for the highbase year (as defined in paragraph (d) ofthis section); and

(iii) The total number of contributionbase units with respect to which theemployer has an obligation to contributeto the plan equals or exceeds the sumof—

(A) The number of contribution baseunits with respect to which theemployer had an obligation tocontribute in the year prior to the partialwithdrawal year, determined withoutregard to the contribution base units forthe facility or under the agreement thatgave rise to the partial withdrawal; and

(B) 90 percent of the contribution baseunits with respect to which theemployer had an obligation tocontribute for that facility or under thatagreement in either the year prior to thepartial withdrawal year or the high baseyear (as defined in paragraph (d) of thissection), whichever is less.

(c) Reduction in annual partialwithdrawal liability payment—


(1) Partial withdrawals under section4205(a)(1). An employer shall beentitled to a reduction of its annualpartial withdrawal liability payment fora plan year if the number ofcontribution base units with respect towhich the employer had an obligation tocontribute during the plan year exceedsthe greater of—

(i) 110 percent (or such lower numberas the plan may, by amendment, adopt)of the number of contribution base unitswith respect to which the employer hadan obligation to contribute in the partialwithdrawal year; or

(ii) The total number of contributionbase units with respect to which theemployer had an obligation tocontribute to the plan for the plan yearfollowing the partial withdrawal year.

(2) Partial withdrawals under section4205(a)(2). An employer that resumesthe obligation to contribute with respectto a facility or collective bargainingagreement that gave rise to a partialwithdrawal, but does not qualify to havethat liability waived under paragraph (b)of this section, shall have its annualpartial withdrawal liability paymentreduced for any plan year in which thetotal number of contribution base unitswith respect to which the employer hasan obligation to contribute equals orexceeds the sum of—

(i) The number of contribution baseunits for the reentered facility oragreement during that year; and

(ii) The total number of contributionbase units with respect to which theemployer had an obligation tocontribute to the plan for the yearfollowing the partial withdrawal year.

(d) High base year. For purposes ofparagraphs (a) and (b)(1)(iii) of thissection, the high base year contributionsare the average of the total contributionbase units for the two plan years forwhich the employer’s total contributionbase units were highest within the fiveplan years immediately preceding thebeginning of the 3-year testing perioddefined in section 4205(b)(1)(B)(i) ofERISA, with respect to paragraph (a) ofthis section, or the partial withdrawalyear, with respect to paragraph (b)(1)(iii)of this section. For purposes ofparagraphs (b)(1)(ii) and (b)(2) of thissection, the high base year contributionsare the average number of contributionbase units for the facility or under theagreement for the two plan years forwhich the employer’s contribution baseunits for that facility or under thatagreement were highest within the fiveplan years immediately preceding thepartial withdrawal.

§ 4208.5 Withdrawal liability paymentsduring pendency of abatementdetermination.

(a) Bond/Escrow. An employer thathas satisfied the requirements of§ 4208.4(a)(1) without regard to ‘‘90percent of’’ or § 4208.4(b) for one yearwith respect to all partial withdrawals itincurred in a plan year may, in lieu ofmaking scheduled withdrawal liabilitypayments in the second year for thosewithdrawals, provide a bond to, orestablish an escrow account for, theplan that satisfies the requirements ofparagraph (b) of this section or any planrules adopted under paragraph (d) ofthis section, pending a determination bythe plan sponsor of whether theemployer satisfies the requirements of§ 4208.4 (a)(1) or (b) for the secondconsecutive plan year. An employer thatapplies for abatement and neitherprovides a bond/escrow nor makes itswithdrawal liability payments remainseligible for abatement.

(b) Amount of bond/escrow. The bondor escrow allowed by this section shallbe in an amount equal to 50 percent ofthe withdrawal liability payments thatwould otherwise be due. The bond orescrow relating to each payment shall befurnished before the due date of thatpayment. A single bond or escrow maybe provided for more than one paymentdue during the pendency of the plansponsor’s determination. The bond orescrow agreement shall provide that ifthe plan sponsor determines that theemployer does not satisfy therequirements for abatement of its partialwithdrawal liability under § 4208.4(a)(1) or (b), the bond or escrow shall bepaid to the plan upon notice from theplan sponsor to the bonding or escrowagent. A bond provided under thisparagraph shall be issued by a corporatesurety company that is an acceptablesurety for purposes of section 412 ofERISA.

(c) Notice of bond/escrow.Concurrently with posting a bond orestablishing an escrow account underthis section, the employer shall notifythe plan sponsor. The notice shallinclude a statement of the amount of thebond or escrow, the scheduled paymentor payments with respect to which thebond or escrow is being furnished, andthe name and address of the bonding orescrow agent.

(d) Plan amendments concerningbond/escrow. A plan may, byamendment, adopt rules decreasing theamount of the bond or escrow specifiedin paragraph (b) of this section. A planamendment adopted under thisparagraph may be applied only to theextent that it is consistent with thepurposes of ERISA. An amendment

satisfies this requirement only if it doesnot create an unreasonable risk of lossto the plan.

(e) Plan sponsor determination.Within 60 days after the end of the planyear in which the bond/escrow isfurnished, the plan sponsor shalldetermine whether the employersatisfied the requirements of § 4208.4(a)(1) or (b) for the second consecutiveplan year. The plan sponsor shall notifythe employer and the bonding or escrowagent in writing of its determination andof the consequences of itsdetermination, as described in § 4208.3(c) or (d) and (e), as appropriate.

§ 4208.6 Computation of reduced annualpartial withdrawal liability payment.

(a) Amount of reduced payment. Anemployer that satisfies the requirementsof § 4208.4 (c)(1) or (c)(2) shall have itsannual partial withdrawal liabilitypayment for that plan year reduced inaccordance with paragraph (a)(1) or(a)(2) of this section, respectively.

(1) The reduced annual paymentamount for an employer that satisfies§ 4208.4(c)(1) shall be determined bysubstituting the number of contributionbase units in the plan year in which therequirements are satisfied for thenumber of contribution base units in theyear following the partial withdrawalyear in the numerator of the fractiondescribed in section 4206(a)(2)(A) ofERISA.

(2) The reduced annual payment foran employer that satisfies § 4208.4(c)(2)shall be determined by adding thecontribution base units for which theemployer is obligated to contribute withrespect to the reentered facility oragreement in the year in which therequirements are satisfied to thenumerator of the fraction described insection 4206(a)(2)(A) of ERISA.

(b) Credit for reduction. The plansponsor shall credit the account of anemployer that satisfies the requirementsof § 4208.4(c)(1) or (c)(2) with theamount of annual withdrawal liabilitythat it paid in excess of the amountdescribed in paragraph (a)(1) or (a)(2) ofthis section, as appropriate. The creditshall be applied, a revised paymentschedule issued, refund made andinterest added, all in accordance with§ 4208.3(c)(4).

§ 4208.7 Adjustment of withdrawal liabilityfor subsequent withdrawals.

The liability of an employer for apartial or complete withdrawal from aplan subsequent to a partial withdrawalfrom that plan in a prior plan year shallbe reduced in accordance with part4206 of this chapter.


§ 4208.8 Multiple partial withdrawals inone plan year.

(a) General rule. If an employerpartially withdraws from the samemultiemployer plan on two or moreoccasions during the same plan year, therules of § 4208.4 shall be applied asmodified by this section.

(b) Partial withdrawals under section4205 (a)(1) and (a)(2) in the same planyear. If an employer partially withdrawsfrom the same multiemployer plan as aresult of a 70-percent contributiondecline and a partial cessation of theemployer’s contribution obligation inthe same plan year, the employer shallnot be eligible for abatement under§ 4208.4 (b) or (c)(2) or under paragraph(c) of this section. The employer mayqualify for abatement under § 4208.4(a)and (c)(1) and under any rules adoptedby the plan pursuant to § 4208.9.

(c) Multiple partial cessations of theemployer’s contribution obligation. If anemployer permanently ceases to have anobligation to contribute for more thanone facility, under more than onecollective bargaining agreement, or forone or more facilities and under one ormore collective bargaining agreements,resulting in multiple partialwithdrawals under section 4205(b)(2)(A)in the same plan year, the abatementrules in § 4208.4(b) shall be applied asmodified by this paragraph. If anemployer resumes work at all suchfacilities and under all such collectivebargaining agreements, thedetermination of whether the employerqualifies for elimination of its liabilityunder § 4208.4(b) shall be made bysubstituting the test set forth inparagraph (c)(1) of this section for thatprescribed by § 4208.4 (b)(1)(ii) or(b)(2)(ii), as applicable. If the employerresumes work at or under fewer than allthe facilities or collective bargainingagreements described in this paragraph,the employer cannot qualify forelimination of its liability under§ 4208.4(b). However, the employer mayqualify for a reduction in its partialwithdrawal liability pursuant toparagraph (c)(2) of this section.

(1) Resumption of work at all facilitiesand under all bargaining agreements.The test under this paragraph issatisfied if for each of the twoconsecutive plan years referred to in§ 4208.4(b), the employer’s totalcontribution base units for the facilitiesand under the collective bargainingagreements with respect to which theemployer incurred the multiple partialwithdrawals exceed 30 percent of thetotal number of contribution base unitswith respect to which the employer hadan obligation to contribute for thosefacilities and under those agreements for

the base year (as defined in paragraph(d) of this section).

(2) Resumption at fewer than allfacilities or under fewer than allbargaining agreements. If the employersatisfies the conditions in § 4208.4(b)(1)(i) and (b)(1)(iii) and paragraph(c)(2)(i) of this section, or the conditionsin § 4208.4 (b)(2)(i) and (b)(2)(iii) andparagraph (c)(2)(ii) of this section, asapplicable, the employer’s withdrawalliability shall be partially waived as setforth in paragraph (c)(2)(iii) of thissection.

(i) With respect to a resumption ofwork under § 4208.4(b)(1), the conditionunder this paragraph is satisfied if, forthe two consecutive plan years referredto in § 4208.4(b)(1), the employer’scontribution base units for anyreentered facility or agreement exceed30 percent of the number ofcontribution base units with respect towhich the employer had an obligation tocontribute for that facility or under thatagreement for the base year (as definedin paragraph (d) of this section).

(ii) With respect to a resumption ofwork under § 4208.4(b)(2), the conditionunder this paragraph is satisfied if, forthe two consecutive plan years referredto in § 4208.4(b)(2), the employer’scontribution base units for anyreentered facility or agreement exceed90 percent of the number ofcontribution base units with respect towhich the employer had an obligation tocontribute for that facility or under thatagreement for the base year (as definedin paragraph (d) of this section).

(iii) The employer’s reducedwithdrawal liability and, if any, thereduced annual payments of the liabilityshall be determined by adding theaverage number of contribution baseunits that the employer is required tocontribute for those two consecutiveyears for that facility(ies) oragreement(s) to the numerator of thefraction described in section4206(a)(2)(A) of ERISA. The amount ofany remaining partial withdrawalliability shall be paid over the scheduleoriginally established starting with thefirst payment due after the revisedpayment schedule is issued under§ 4208.3(c)(4).

(d) Base Year. For purposes of thissection, the base year contribution baseunits for a reentered facility(ies) orunder a reentered agreement(s) are theaverage number of contribution baseunits for the facility(ies) or under theagreement(s) for the two plan years forwhich the employer’s contribution baseunits for that facility(ies) or under thatagreement(s) were highest within thefive plan years immediately precedingthe partial withdrawal.

§ 4208.9 Plan adoption of additionalabatement conditions.

(a) General rule. A plan may byamendment, subject to the approval ofthe PBGC, adopt rules for the reductionor waiver of partial withdrawal liabilityunder conditions other than thosespecified in § 4208.4, provided that suchconditions relate to events occurring orfactors existing subsequent to a partialwithdrawal year. The request for PBGCapproval shall be filed after theamendment is adopted. PBGC approvalshall also be required for anysubsequent modification of theamendment, other than repeal of theamendment. A plan amendment underthis section may not be put into effectuntil it is approved by the PBGC. Anamendment that is approved by thePBGC may apply retroactively.


(c) Where to file. The request shall beaddressed to Reports Processing,Insurance Operations Department,Pension Benefit Guaranty Corporation,1200 K Street NW., Washington, DC20005–4026.


(1) The name and address of the planfor which the plan amendment is beingsubmitted and the telephone number ofthe plan sponsor or its duly authorizedrepresentative.

(2) The nine-digit EmployerIdentification Number (EIN) assigned tothe plan sponsor by the IRS and thethree-digit Plan Identification Number(PIN) assigned to the plan by the plansponsor, and, if different, also the EIN–PIN last filed with the PBGC. If an EIN–PIN has not been assigned, that shouldbe indicated.

(3) A copy of the executedamendment, including—

(i) the date on which the amendmentwas adopted;

(ii) the proposed effective date;(iii) the full text of the rules on the

reduction or waiver of partialwithdrawal liability; and

(iv) the full text of the rules adjustingthe reduction in the employer’s liabilityfor a subsequent partial or completewithdrawal, as required by section4206(b)(1) of ERISA.

(4) A copy of the most recent actuarialvaluation report of the plan.

(5) A statement certifying that noticeof the adoption of the amendment andof the request for approval filed underthis section has been given to allemployers that have an obligation tocontribute under the plan and to all


employee organizations representingemployees covered under the plan.

(e) Supplemental information. Inaddition to the information described inparagraph (d) of this section, a plan maysubmit any other information that itbelieves is pertinent to its request. ThePBGC may require the plan sponsor tosubmit any other information that thePBGC determines that it needs to reviewa request under this section.

(f) Criteria for PBGC approval. ThePBGC shall approve a plan amendmentauthorized by paragraph (a) of thissection if it determines that the rulestherein are consistent with the purposesof ERISA. An abatement amendment isnot consistent with the purposes ofERISA unless the PBGC determinesthat—

(1) The amendment is not adverse tothe interests of plan participants andbeneficiaries in the aggregate; and

(2) The amendment would notsignificantly increase the PBGC’s risk ofloss with respect to the plan.(Approved by the Office of Management andBudget under control no. 1212–0039)

PART 4211—ALLOCATING UNFUNDEDVESTED BENEFITS TO WITHDRAWINGEMPLOYERS

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 PBGCApproval

4211.11 Changes not subject to PBGCapproval.

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

4211.13 Modifications to the directattribution method.

Subpart C—Changes Subject to PBGCApproval

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 MergedMultiemployer Plans

4211.31 Allocation of unfunded vestedbenefits following the merger of plans.

4211.32 Presumptive method forwithdrawals after the initial plan year.

4211.33 Modified presumptive method forwithdrawals after the initial plan year.

4211.34 Rolling-5 method for withdrawalsafter the initial plan year.

4211.35 Direct attribution method forwithdrawals after the initial plan year.

4211.36 Modifications to the determinationof initial liabilities, the amortization ofinitial liabilities, and the allocationfraction.

4211.37 Allocating unfunded vestedbenefits for withdrawals before the endof 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

§ 4211.1 Purpose and scope.(a) Purpose. Section 4211 of ERISA

provides four methods for allocatingunfunded vested benefits to employersthat withdraw from a multiemployerplan: the presumptive method (section4211(b)); the modified presumptivemethod (section 4211(c)(2)); the rolling-5 method (section 4211(c)(3)); and thedirect attribution method (section4211(c)(4)). With the minor exceptionscovered in § 4211.3, a plan determinesthe amount of unfunded vested benefitsallocable to a withdrawing employer inaccordance with the presumptivemethod, unless the plan is amended toadopt an alternative allocative method.Generally, the PBGC must approve theadoption of an alternative allocationmethod. On September 25, 1984, 49 FR37686, the PBGC granted a classapproval of all plan amendmentsadopting one of the statutory alternativeallocation methods. Subpart C sets forththe criteria and procedures for PBGCapproval of nonstatutory alternativeallocation methods. Section 4211(c)(5)of ERISA also permits certainmodifications to the statutory allocationmethods. The PBGC is to prescribe thesemodifications in a regulation, and plansmay adopt them without PBGCapproval. Subpart B contains thepermissible modifications to thestatutory methods. Plans may adoptother modifications subject to PBGCapproval under subpart C. Finally,under section 4211(f) of ERISA, thePBGC is required to prescribe rulesgoverning the application of thestatutory allocation methods ormodified methods by plans followingmerger of multiemployer plans. SubpartD sets forth alternative allocativemethods to be used by merged plans. Inaddition, such plans may adopt any ofthe allocation methods or modificationsdescribed under subparts B and C inaccordance with the rules undersubparts B and C.

(b) Scope. This part applies to allmultiemployer plans covered by title IVof ERISA.


§ 4001.2 of this chapter: Code,employer, IRS, multiemployer plan,

nonforfeitable benefit, PBGC, plan, andplan year.

In addition, for purposes of this part:Initial plan year means a merged

plan’s first complete plan year thatbegins after the establishment of themerged plan.

Initial plan year unfunded vestedbenefits means the unfunded vestedbenefits as of the close of the initial planyear, less the value as of the end of theinitial plan year of all outstandingclaims for withdrawal liability that canreasonably be expected to be collectedfrom employers that had withdrawn asof the end of the initial plan year.

Merged plan means a plan that is theresult of the merger of two or moremultiemployer plans.

Merger means the combining of two ormore multiemployer plans into onemultiemployer plan.

Prior plan means the plan in which anemployer participated immediatelybefore that plan became a part of themerged plan.

Unfunded vested benefits means anamount by which the value ofnonforfeitable benefits under the planexceeds the value of the assets of theplan.

Withdrawing employer means theemployer for whom withdrawal liabilityis being calculated under section 4201of ERISA.

Withdrawn employer means anemployer who, prior to the withdrawingemployer, has discontinuedcontributions to the plan or coveredoperations under the plan and whoseobligation to contribute has not beenassumed by a successor employerwithin the meaning of section 4204 ofERISA. A temporary suspension ofcontributions, including a suspensiondescribed in section 4218(2) of ERISA,is not considered a discontinuance ofcontributions.

§ 4211.3 Special rules for constructionindustry and IRC section 404(c) plans.

(a) Construction plans. Except asprovided in §§ 4211.11(b) and4211.21(b), a plan that primarily coversemployees in the building andconstruction industry shall use thepresumptive method for allocatingunfunded vested benefits.

(b) Section 404(c) plans. A plandescribed in section 404(c) of the Codeor a continuation of such a plan shallallocate unfunded vested benefits underthe rolling-5 method unless the plan, byamendment, adopts an alternativemethod or modification.


Subpart B—Changes Not Subject toPBGC Approval

§ 4211.11 Changes not subject to PBGCapproval.

(a) General rule. A plan, other than aplan that primarily covers employees inthe building and construction industry,may adopt, by amendment, any of thestatutory allocation methods and any ofthe modifications set forth in §§ 4211.12and 4211.13, without the approval ofthe PBGC.

(b) Building and construction industryplans. A plan that primarily coversemployees in the building andconstruction industry may adopt, byamendment, any of the modifications tothe presumptive rule set forth in§ 4211.12 without the approval of thePBGC.

§ 4211.12 Modifications to thepresumptive, modified presumptive androlling-5 methods.

(a) ‘‘Contributions made’’ and ‘‘totalamount contributed’’. Each of theallocation fractions used in thepresumptive, modified presumptive androlling-5 methods is based oncontributions that certain employershave made to the plan for a five-yearperiod. For purposes of these methods,and except as provided in paragraph (b)of this section, ‘‘the sum of allcontributions made’’ or ‘‘total amountcontributed’’ by employers for a planyear means the amounts (other thanwithdrawal liability payments)considered contributed to the plan forthe plan year for purposes of section412(b)(3)(A) of the Code. For plan yearsbefore section 412 applies to the plan,‘‘the sum of all contributions made’’ or‘‘total amount contributed’’ means theamount reported to the IRS or theDepartment of Labor as totalcontributions for the plan year; forexample, for plan years in which theplan filed the Form 5500, the amountreported as total contributions on thatform. Employee contributions, if any,shall be excluded from the totals.

(b) Changing the period for countingcontributions. A plan sponsor mayamend a plan to modify thedenominators in the presumptive,modified presumptive and rolling-5methods in accordance with one of thealternatives described in this paragraph.Except as provided in paragraph (b)(4)of this section, any amendment adoptedunder this paragraph shall be appliedconsistently to all plan years.Contributions counted for one plan yearmay be not counted for any other planyear. If a contribution is counted as partof the ‘‘total amount contributed’’ forany plan year used to determine a

denominator, that contribution may notalso be counted as a contribution owedwith respect to an earlier year used todetermine the same denominator,regardless of when the plan collectedthat contribution.

(1) A plan sponsor may amend a planto provide that ‘‘the sum of allcontributions made’’ or ‘‘total amountcontributed’’ for a plan year means theamount of contributions that the planactually received during the plan year,without regard to whether thecontributions are treated as made forthat plan year under section412(b)(3)(A) of the Code.

(2) A plan sponsor may amend a planto provide that ‘‘the sum of allcontributions made’’ or ‘‘total amountcontributed’’ for a plan year means theamount of contributions actuallyreceived during the plan year, increasedby the amount of contributions receivedduring a specified period of time afterthe close of the plan year not to exceedthe period described in section412(c)(10) of the Code and regulationsthereunder.

(3) A plan sponsor may amend a planto provide that ‘‘the sum of allcontributions made’’ or ‘‘total amountcontributed’’ for a plan year means theamount of contributions actuallyreceived during the plan year, increasedby the amount of contributions accruedduring the plan year and receivedduring a specified period of time afterthe close of the plan year not to exceedthe period described in section412(c)(10) of the Code and regulationsthereunder.

(4) A plan sponsor may amend a planto provide that—

(i) For plan years ending beforeSeptember 26, 1980, ‘‘the sum of allcontributions made’’ or ‘‘total amountcontributed’’ means the amount of totalcontributions reported on Form 5500and, for years before the plan wasrequired to file Form 5500, the amountof total contributions reported on anypredecessor reporting form required bythe Department of Labor or the IRS; and

(ii) For subsequent plan years, ‘‘thesum of all contributions made’’ or ‘‘totalamount contributed’’ means the amountdescribed in paragraph (a) of thissection, or the amount described inparagraph (b)(1), (b)(2) or (b)(3) of thissection.

(c) Excluding contributions ofsignificant withdrawn employers.Contributions of certain withdrawnemployers are excluded from thedenominator in each of the fractionsused to determine a withdrawingemployer’s share of unfunded vestedbenefits under the presumptive,modified presumptive and rolling-5

methods. Except as provided inparagraph (c)(1) of this section,contributions of all employers thatpermanently cease to have an obligationto contribute to the plan or permanentlycease covered operations before the endof the period of plan years used todetermine the fractions for allocatingunfunded vested benefits under each ofthose methods (and contributions of allemployers that withdrew beforeSeptember 26, 1980) are excluded fromthe denominators of the fractions.

(1) The plan sponsor of a plan usingthe presumptive, modified presumptiveor rolling-5 method may amend the planto provide that only the contributions ofsignificant withdrawn employers shallbe excluded from the denominators ofthe fractions used in those methods.

(2) For purposes of this paragraph (c),‘‘significant withdrawn employer’’means—

(i) An employer to which the plan hassent a notice of withdrawal liabilityunder section 4219 of ERISA; or

(ii) A withdrawn employer that in anyplan year used to determine thedenominator of a fraction contributed atleast $250,000 or, if less, 1% of allcontributions made by employers forthat year.

(3) If a group of employers withdrawin a concerted withdrawal, the planshall treat the group as a singleemployer in determining whether themembers are significant withdrawnemployers under paragraph (c)(2) of thissection. A ‘‘concerted withdrawal’’means a cessation of contributions tothe plan during a single plan year—

(i) By an employer association;(ii) By all or substantially all of the

employers covered by a single collectivebargaining agreement; or

(iii) By all or substantially all of theemployers covered by agreements witha single labor organization.

§ 4211.13 Modifications to the directattribution method.

(a) Error in direct attribution method.The unfunded vested benefits allocatedto a withdrawing employer under thedirect attribution method are the sum ofthe employer’s attributable liability,determined under section 4211(c)(4)(A)(i) and (B) of ERISA, and theemployer’s share of the plan’sunattributable liability, determinedunder section 4211(c)(4)(E) andallocated to the employer under section4211(c)(4)(F). Plan sponsors shouldallocate unattributable liabilities on thebasis of the employer’s share of theattributable liabilities. However, section4211(c)(4)(F) of ERISA, which describesthe allocation of unattributableliabilities, contains a typographical


error. Therefore, plans adopting thedirect attribution method shall modifythe phrase ‘‘as the amount determinedunder subparagraph (C) for theemployer bears to the sum of theamounts determined undersubparagraph (C) for all employersunder the plan’’ in section 4211(c)(4)(F)by substituting ‘‘subparagraph (B)’’ for‘‘subparagraph (C)’’ in both places itappears.

(b) Allocating unattributable liabilitybased on contributions in period beforewithdrawal. A plan that is amended toadopt the direct attribution method mayprovide that instead of allocating theunattributable liability in accordancewith section 4211(c)(4)(F) of ERISA, theemployer’s share of the plan’sunattributable liability shall bedetermined by multiplying the plan’sunattributable liability determinedunder section 4211(c)(4)(E) by afraction—

(1) The numerator of which is thetotal amount of contributions requiredto be made by the withdrawingemployer over a period of consecutiveplan years (not fewer than five) endingbefore the withdrawal; and

(2) The denominator of which is thetotal amount contributed under the planby all employers for the same period ofyears used in paragraph (b)(1) of thissection, decreased by any amountcontributed by an employer thatwithdrew from the plan during thoseplan years.

Subpart C—Changes Subject to PBGCApproval

§ 4211.21 Changes subject to PBGCapproval.

(a) General rule. Subject to theapproval of the PBGC pursuant to thissubpart, a plan, other than a plan thatprimarily covers employees in thebuilding and construction industry, mayadopt, by amendment, any allocationmethod or modification to an allocationmethod that is not permitted undersubpart B of this part.

(b) Building and construction industryplans. Subject to the approval of thePBGC pursuant to this subpart, a planthat primarily covers employees in thebuilding and construction industry mayadopt, by amendment, any allocationmethod or modification to an allocationmethod that is not permitted under§ 4211.12 if the method or modificationis applicable only to its employers thatare not construction industry employerswithin the meaning of section4203(b)(1)(A) of ERISA.

(c) Substantial overallocation notallowed. No plan may adopt anallocation method or modification to an

allocation method that results in asystematic and substantialoverallocation of the plan’s unfundedvested benefits.

(d) Use of method prior to approval.A plan may implement an alternativeallocation method or modification to anallocation method that requires PBGCapproval before that approval is given.However, the plan sponsor shall assessliability in accordance with thisparagraph.

(1) Demand for payment. Until thePBGC approves the allocation method ormodification, a plan may not demandwithdrawal liability under section 4219of ERISA in an amount that exceeds thelesser of the amount calculated underthe amendment or the amountcalculated under the allocation methodthat the plan would be required to useif the PBGC did not approve theamendment. The plan must inform eachwithdrawing employer of both amountsand explain that the higher amount maybecome payable depending on thePBGC’s decision on the amendment.

(2) Adjustment of liability. Whennecessary because of the PBGC decisionon the amendment, the plan shall adjustthe amount demanded from eachemployer under paragraph (c)(1) of thissection and the employer’s withdrawalliability payment schedule. The lengthof the payment schedule shall beincreased, as necessary. The plan shallnotify each affected employer of theadjusted liability and payment scheduleand shall collect the adjusted amount inaccordance with the adjusted schedule.

§ 4211.22 Requests for PBGC approval.

(a) General. A plan shall submit arequest for approval of an alternativeallocation method or modification to anallocation method to the PBGC inaccordance with the requirements ofthis section as soon as practicable afterthe adoption of the amendment.

(b) Who shall submit. The plansponsor, or a duly authorizedrepresentative acting on behalf of theplan sponsor, shall sign the request.

(c) Where to submit. The plan shallsubmit the request by first class mail orcourier service to Reports Processing,Insurance Operations Department,Pension Benefit Guaranty Corporation,1200 K Street, NW., Washington, DC20005–4026, or by hand to the aboveaddress.

(d) Content. Each request shallcontain the following information:

(1) The name, address and telephonenumber of the plan sponsor, and of theduly authorized representative, if any,of the plan sponsor.

(2) The name of the plan.

(3) The nine-digit EmployerIdentification Number (EIN) that theInternal Revenue Service assigned to theplan sponsor and the three-digit PlanIdentification Number (PIN) that theplan sponsor assigned to the plan, and,if different, also the EIN-PIN that theplan last filed with the PBGC. If the planhas no EIN-PIN, the request shall soindicate.

(4) The date the amendment wasadopted.

(5) A copy of the amendment, settingforth the full text of the alternativeallocation method or modification.

(6) The allocation method that theplan currently uses and a copy of theplan amendment (if any) that adoptedthe method.

(7) A statement certifying that noticeof the adoption of the amendment hasbeen given to all employers that have anobligation to contribute under the planand to all employee organizations thatrepresent employees covered by theplan.

(e) Additional information. Inaddition to the information listed inparagraph (d) of this section, the PBGCmay require the plan sponsor to submitany other information that the PBGCdetermines is necessary for the reviewof an alternative allocation method ormodification to an allocation method.(Approved by the Office of Management andBudget under control number 1212–0035)

§ 4211.23 Approval of alternative method.

(a) General. The PBGC shall approvean alternative allocation method ormodification to an allocation method ifthe PBGC determines that adoption ofthe method or modification would notsignificantly increase the risk of loss toplan participants and beneficiaries or tothe PBGC.

(b) Criteria. An alternative allocationmethod or modification to an allocationmethod satisfies the requirements ofparagraph (a) of this section if it meetsthe following three conditions:

(1) The method or modificationallocates a plan’s unfunded vestedbenefits, both for the adoption year andfor the five subsequent plan years, to thesame extent as any of the statutoryallocation methods, or any modificationto a statutory allocation methodpermitted under subpart B.

(2) The method or modificationallocates unfunded vested benefits toeach employer on the basis of either theemployer’s share of contributions to theplan or the unfunded vested benefitsattributable to each employer. Themethod or modification may take intoaccount differences in contribution ratespaid by different employers and


differences in benefits of differentemployers’ employees.

(3) The method or modification fullyreallocates among employers that havenot withdrawn from the plan allunfunded vested benefits that the plansponsor has determined cannot becollected from withdrawn employers, orthat are not assessed against withdrawnemployers because of sections 4209,4219(c)(1)(B) or 4225 of ERISA.

(c) PBGC action on request. ThePBGC’s decision on a request forapproval shall be in writing. If the PBGCdisapproves the request, the decisionshall state the reasons for thedisapproval and shall include astatement of the sponsor’s right torequest a reconsideration of the decisionpursuant to part 4003 of this chapter.

§ 4211.24 Special rule for certainalternative methods previously approved.

A plan may not apply to anyemployer withdrawing on or afterNovember 25, 1987, an allocationmethod approved by the PBGC beforethat date that allocates to the employerthe greater of the amounts of unfundedvested benefits determined under twodifferent allocation rules. Until a planthat has been using such a method isamended to adopt a valid allocationmethod, its allocation method shall bedeemed to be the statutory allocationmethod that would apply if it had neverbeen amended.

Subpart D—Allocation Methods forMerged Multiemployer Plans

§ 4211.31 Allocation of unfunded vestedbenefits following the merger of plans.

(a) General Rule. Except as providedin paragraphs (b) through (d) of thissection, when two or moremultiemployer plans merge, the mergedplan shall adopt one of the statutoryallocation methods, in accordance withsubpart B of this part, or one of theallocation methods prescribed in§§ 4211.32 through 4211.35, and themethod adopted shall apply to allemployer withdrawals occurring afterthe initial plan year. Alternatively, amerged plan may adopt its ownallocation method in accordance withsubpart C of this part. If a merged planfails to adopt an allocation methodpursuant to this subpart or subpart B orC, it shall use the presumptiveallocation method prescribed in§ 4211.32. In addition, a merged planmay adopt any of the modificationsprescribed in § 4211.36 or in subpart Bof this part.

(b) Construction plans. Except asprovided in the next sentence, a mergedplan that primarily covers employees in

the building and construction industryshall use the presumptive allocationmethod prescribed in § 4211.32.However, the plan may, with respect toemployers that are not constructionindustry employers within the meaningof section 4203(b)(1)(A) of ERISA,adopt, by amendment, one of thealternative methods prescribed in§§ 4211.33 through 4211.35 or any otherallocation method. Any suchamendment shall be adopted inaccordance with subpart C of this part.A construction plan may, without thePBGC’s approval, adopt by amendmentany of the modifications set forth in§ 4211.36 or any of the modifications tothe statutory presumptive method setforth in § 4211.12.

(c) Section 404(c) plans. A mergedplan that is a continuation of a plandescribed in section 404(c) of the Codeshall use the rolling-5 allocation methodprescribed in § 4211.34, unless the plan,by amendment, adopts an alternativemethod. The plan may adopt one of thestatutory allocation methods or one ofthe allocation methods set forth in§§ 4211.32 through 4211.35 withoutPBGC approval; adoption of any otherallocation method is subject to PBGCapproval under subpart B of this plan.The plan may, without the PBGC’sapproval, adopt by amendment any ofthe modifications set forth in § 4211.36or in subpart B of this part.

(d) Withdrawals before the end of theinitial plan year. For employerwithdrawals after the effective date of amerger and prior to the end of the initialplan year, the amount of unfundedvested benefits allocable to awithdrawing employer shall bedetermined in accordance with§ 4211.37.

§ 4211.32 Presumptive method forwithdrawals after the initial plan year.

(a) General rule. Under this section,the amount of unfunded vested benefitsallocable to an employer that withdrawsfrom a merged plan after the initial planyear is the sum (but not less than zero)of—

(1) The employer’s proportional share,if any, of the unamortized amount of theplan’s initial plan year unfunded vestedbenefits, as determined under paragraph(b) of this section;

(2) The employer’s proportional shareof the unamortized amount of thechange in the plan’s unfunded vestedbenefits for plan years ending after theinitial plan year, as determined underparagraph (c) of this section; and

(3) The employer’s proportional shareof the unamortized amounts of thereallocated unfunded vested benefits (if

any) as determined under paragraph (d)of this section.

(b) Share of initial plan yearunfunded vested benefits. Anemployer’s proportional share, if any, ofthe unamortized amount of the plan’sinitial plan year unfunded vestedbenefits is the sum of the employer’sshare of its prior plan’s liabilities(determined under paragraph (b)(1) ofthis section) and the employer’s share ofthe adjusted initial plan year unfundedvested benefits (determined underparagraph (b)(2) of this section), withsuch sum reduced by five percent of theoriginal amount for each plan yearsubsequent to the initial year.

(1) Share of prior plan liabilities. Anemployer’s share of its prior plan’sliabilities is the amount of unfundedvested benefits that would have beenallocable to the employer if it hadwithdrawn on the first day of the initialplan year, determined as if each planhad remained a separate plan.

(2) Share of adjusted initial plan yearunfunded vested benefits. Anemployer’s share of the adjusted initialplan year unfunded vested benefitsequals the plan’s initial plan yearunfunded vested benefits, less theamount that would be determined underparagraph (b)(1) of this section for eachemployer that had not withdrawn as ofthe end of the initial plan year,multiplied by a fraction—

(i) The numerator of which is theamount determined under paragraph(b)(1) of this section; and

(ii) The denominator of which is thesum of the amounts that would bedetermined under paragraph (b)(1) ofthis section for each employer that hadnot withdrawn as of the end of theinitial plan year.

(c) Share of annual changes. Anemployer’s proportional share of theunamortized amount of the change inthe plan’s unfunded vested for the planyears ending after the end of the initialplan year is the sum of the employer’sproportional shares (determined underparagraph (c)(2) of this section) of theunamortized amount of the change inunfunded vested benefits (determinedunder paragraph (c)(1) of this section)for each plan year in which theemployer has an obligation to contributeunder the plan ending after the initialplan year and before the plan year inwhich the employer withdraws.

(1) Change in plan’s unfunded vestedbenefits. The change in a plan’sunfunded vested benefits for a plan yearis the amount by which the unfundedvested benefits at the end of a plan year,less the value as of the end of such yearof all outstanding claims for withdrawalliability that can reasonably be expected


to be collected from employers that hadwithdrawn as of the end of the initialplan year, exceed the sum of theunamortized amount of the initial planyear unfunded vested benefits(determined under paragraph (c)(1)(i) ofthis section) and the unamortizedamounts of the change in unfundedvested benefits for each plan yearending after the initial plan year andpreceding the plan year for which thechange is determined (determinedunder paragraph (c)(1)(ii) of thissection).

(i) Unamortized amount of initialplan year unfunded vested benefits. Theunamortized amount of the initial planyear unfunded vested benefits is theamount of those benefits reduced by fivepercent of the original amount for eachsucceeding plan year.

(ii) Unamortized amount of thechange. The unamortized amount of thechange in a plan’s unfunded vestedbenefits with respect to a plan year isthe change in unfunded vested benefitsfor the plan year, reduced by fivepercent of such change for eachsucceeding plan year.

(2) Employer’s proportional share. Anemployer’s proportional share of theamount determined under paragraph(c)(1) of this section is computed bymultiplying that amount by a fraction—

(i) The numerator of which is the totalamount required to be contributedunder the plan (or under the employer’sprior plan) by the employer for the planyear in which the change arose and thefour preceding full plan years; and

(ii) The denominator of which is thetotal amount contributed under the plan(or under employer’s prior plan) for theplan year in which the change arose andthe four preceding full plan years by allemployers that had an obligation tocontribute under the plan for the planyear in which such change arose,reduced by any amount contributed byan employer that withdrew from theplan in the year in which the changearose.

(d) Share of reallocated amounts. Anemployer’s proportional share of theunamortized amounts of the reallocatedunfunded vested benefits, if any, is thesum of the employer’s proportionalshares (determined under paragraph(d)(2) of this section) of the unamortizedamount of the reallocated unfundedvested benefits (determined underparagraph (d)(1) of this section) for eachplan year ending before the plan year inwhich the employer withdrew from theplan.

(1) Unamortized amount ofreallocated unfunded vested benefits.The unamortized amount of thereallocated unfunded vested benefits

with respect to a plan year is the sumof the amounts described in paragraphs(d)(1)(i), (d)(1)(ii), and (d)(1)(iii) of thissection for the plan year, reduced byfive percent of such sum for eachsucceeding plan year.

(i) Uncollectible amounts. Amountsincluded as reallocable under thisparagraph are those that the plansponsor determines in that plan year tobe uncollectible for reasons arising outof cases or proceedings under Title 11,United States Code, or similarproceedings, with respect to anemployer that withdrew after the closeof the initial plan year.

(ii) Relief amounts. Amounts includedas reallocable under this paragraph arethose that the plan sponsor determinesin that plan year will not be assessed asa result of the operation of sections4209, 4219(c)(1)(B), or 4225 of ERISAwith respect to an employer thatwithdrew after the close of the initialplan year.

(iii) Other amounts. Amountsincluded as reallocable under thisparagraph are those that the plansponsor determines in that plan year tobe uncollectible or unassessable forother reasons under standards notinconsistent with regulations prescribedby the PBGC.

(2) Employer’s proportional share. Anemployer’s proportional share of theamount of the reallocated unfundedvested benefits with respect to a planyear is computed by multiplying theunamortized amount of the reallocatedunfunded vested benefits (as of the endof the year preceding the plan year inwhich the employer withdraws) by theallocation fraction described inparagraph (c)(2) of this section for thesame plan year.

§ 4211.33 Modified presumptive methodfor withdrawals after the initial plan year.

(a) General rule. Under this section,the amount of unfunded vested benefitsallocable to an employer that withdrawsfrom a merged plan after the initial planyear is the sum of the employer’sproportional share, if any, of theunamortized amount of the plan’s initialplan year unfunded vested benefits(determined under paragraph (b) of thissection) and the employer’sproportional share of the unamortizedamount of the unfunded vested benefitsarising after the initial plan year(determined under paragraph (c) of thissection).

(b) Share of initial plan yearunfunded vested benefits. Anemployer’s proportional share, if any, ofthe unamortized amount of the plan’sinitial plan year unfunded vestedbenefits is the sum of the employer’s

share of its prior plan’s liabilities, asdetermined under § 4211.32(b)(1), andthe employer’s share of the adjustedinitial plan year unfunded vestedbenefits, as determined under§ 4211.32(b)(2), with such sum reducedas if it were being fully amortized inlevel annual installments over fifteenyears beginning with the first plan yearafter the initial plan year.

(c) Share of unfunded vested benefitsarising after the initial plan year. Anemployer’s proportional share of theamount of the plan’s unfunded vestedbenefits arising after the initial plan yearis the employer’s proportional share(determined under paragraph (c)(2) ofthis section) of the plan’s unfundedvested benefits as of the end of the planyear preceding the plan year in whichthe employer withdraws, reduced by theamount of the plan’s unfunded vestedbenefits as of the close of the initial planyear (determined under paragraph (c)(1)of this section).

(1) Amount of unfunded vestedbenefits. The plan’s unfunded vestedbenefits as of the end of the plan yearpreceding the plan year in which theemployer withdraws shall be reducedby the sum of—

(i) The value as of that date of alloutstanding claims for withdrawalliability that can reasonably be expectedto be collected, with respect toemployers that withdrew before thatplan year; and

(ii) The sum of the amounts thatwould be allocable under paragraph (b)of this section to all employers that havean obligation to contribute in the planyear preceding the plan year in whichthe employer withdraws and that alsohad an obligation to contribute in thefirst plan year ending after the initialplan year.

(2) Employer’s proportional share. Anemployer’s proportional share of theamount determined under paragraph(c)(1) of this section is computed bymultiplying that amount by a fraction—

(i) The numerator of which is the totalamount required to be contributedunder the plan (or under the employer’sprior plan) by the employer for the lastfive full plan years ending before thedate on which the employer withdraws;and

(ii) The denominator of which is thetotal amount contributed under the plan(or under each employer’s prior plan) byall employers for the last five full planyears ending before the date on whichthe employer withdraws, increased bythe amount of any employercontributions owed with respect toearlier periods that were collected inthose plan years, and decreased by anyamount contributed by an employer that


withdrew from the plan (or prior plan)during those plan years.

§ 4211.34 Rolling-5 method forwithdrawals after the initial plan year.

(a) General rule. Under this section,the amount of unfunded vested benefitsallocable to an employer that withdrawsfrom a merged plan after the initial planyear is the sum of the employer’sproportional share, if any, of theunamortized amount of the plan’s initialplan year unfunded vested benefits(determined under paragraph (b) of thissection) and the employer’sproportional share of the unamortizedamount of the unfunded vested benefitsarising after the initial plan year(determined under paragraph (c) of thissection).

(b) Share of initial plan yearunfunded vested benefits. Anemployer’s proportional share, if any, ofthe unamortized amount of the plan’sinitial plan year unfunded vestedbenefits is the sum of the employer’sshare of its prior plan’s liabilities, asdetermined under § 4211.32(b)(1), andthe employer’s share of the adjustedinitial plan year unfunded vestedbenefits, as determined under§ 4211.32(b)(2), with such sum reducedas if it were being fully amortized inlevel annual installments over five yearsbeginning with the first plan year afterthe initial plan year.

(c) Share of unfunded vested benefitsarising after the initial plan year. Anemployer’s proportional share of theamount of the plan’s unfunded vestedbenefits arising after the initial plan yearis the employer’s proportional sharedetermined under § 4211.33(c).

§ 4211.35 Direct attribution method forwithdrawals after the initial plan year.

The allocation method under thissection is the allocation methoddescribed in section 4211(c)(4) ofERISA.

§ 4211.36 Modifications to thedetermination of initial liabilities, theamortization of initial liabilities, and theallocation fraction.

(a) General rule. A plan using any ofthe allocation methods described in§§ 4211.32 through 4211.34 may, byplan amendment and without PBGCapproval, adopt any of the modificationsdescribed in this section.

(b) Restarting initial liabilities. A planmay be amended to allocate the initialplan year unfunded vested benefitsunder § 4211.32(b), § 4211.33(b), or§ 4211.34(b) without separatelyallocating to employers the liabilitiesattributable to their participation undertheir prior plans. An amendment underthis paragraph must include an

allocation fraction under paragraph (d)of this section for determining theemployer’s proportional share of thetotal unfunded benefits as of the closeof the initial plan year.

(c) Amortizing initial liabilities. Aplan may by amendment modify theamortization of initial liabilities ineither of the following ways:

(1) If two or more plans that use thepresumptive allocation method ofsection 4211(b) of ERISA merge, themerged plan may adjust theamortization of initial liabilities under§ 4211.32(b) to amortize those unfundedvested benefits over the remaininglength of the prior plans’ amortizationschedules.

(2) A plan that has adopted theallocation method under § 4211.33 or§ 4211.34 may adjust the amortization ofinitial liabilities under § 4211.33(b) or§ 4211.34(b) to amortize those unfundedvested benefits in level annualinstallments over any period of at leastfive and not more than fifteen years.

(d) Changing the allocation fraction.A plan may by amendment replace theallocation fraction under § 4211.32(b),§ 4211.33(b), or § 4211.34(b) with any ofthe following contribution-basedfractions—

(1) A fraction, the numerator of whichis the total amount required to becontributed under the merged and priorplans by the withdrawing employer inthe 60-month period ending on the lastday of the initial plan year, and thedenominator of which is the sum forthat period of the contributions made byall employers that had not withdrawn asof the end of the initial plan year;

(2) A fraction, the numerator of whichis the total amount required to becontributed by the withdrawingemployer for the initial plan year andthe four preceding full plan years of itsprior plan, and the denominator ofwhich is the sum of all contributionsmade over that period by employers thathad not withdrawn as of the end of theinitial plan year; or

(3) A fraction, the numerator of whichis the total amount required to becontributed to the plan by thewithdrawing employer since theeffective date of the merger, and thedenominator of which is the sum of allcontributions made over that period byemployers that had not withdrawn as ofthe end of the initial plan year.

§ 4211.37 Allocating unfunded vestedbenefits for withdrawals before the end ofthe initial plan year.

If an employer withdraws after theeffective date of a merger and before theend of the initial plan year, the amountof unfunded vested benefits allocable to

the employer shall be determined as ifeach plan had remained a separate plan.In making this determination, the plansponsor shall use the allocation methodof the withdrawing employer’s priorplan and shall compute the employer’sallocable share of the plan’s unfundedvested benefits as if the day before theeffective date of the merger were the endof the last plan year prior to thewithdrawal.

PART 4219—NOTICE, COLLECTION,AND REDETERMINATION OFWITHDRAWAL LIABILITY


Subpart B—Redetermination of WithdrawalLiability Upon Mass Withdrawal4219.11 Withdrawal liability upon mass

withdrawal.4219.12 Employers liable upon mass

withdrawal.4219.13 Amount of liability for de minimis

amounts.4219.14 Amount of liability for 20-year-

limitation amounts.4219.15 Determination of reallocation

liability.4219.16 Imposition of liability.4219.17 Filings with PBGC.4219.18 Withdrawal in a plan year in which

substantially all employers withdraw.4219.19 Information collection.

Subpart C—Overdue, Defaulted, andOverpaid Withdrawal Liability4219.31 Overdue and defaulted withdrawal

liability; overpayment.4219.32 Interest on overdue, defaulted and

overpaid withdrawal liability.4219.33 Plan rules concerning overdue and

defaulted withdrawal liability.Authority: 29 U.S.C. 1302(b)(3) and

1399(c)(6).

Subpart A—General

§ 4219.1 Purpose and scope.(a) Subpart A. Subpart A of this part

describes the purpose and scope of theprovisions in this part and definedterms used in this part.

(b) Subpart B.(1) Purpose. When a multiemployer

plan terminates by the withdrawal ofevery employer from the plan, or whensubstantially all employers withdrawfrom a multiemployer plan pursuant toan agreement or arrangement towithdraw from the plan, section4219(c)(1)(D)(i) of ERISA requires thatthe liability of such withdrawingemployers be determined (orredetermined) without regard to the 20-year limitation on annual paymentsestablished in section 4219(c)(1)(B) ofERISA. In addition, section4219(c)(1)(D)(ii) requires that, upon the


occurrence of a withdrawal describedabove, the total unfunded vestedbenefits of the plan be fully allocatedamong such withdrawing employers ina manner that is not inconsistent withPBGC regulations. Section 4209(c) ofERISA provides that the de minimisreduction established in sections 4209(a) and (b) of ERISA shall not apply toan employer that withdraws in a planyear in which substantially allemployers withdraw from the plan, or toan employer that withdraws pursuant toan agreement to withdraw during aperiod of one or more plan years duringwhich substantially all employerswithdraw pursuant to an agreement orarrangement to withdraw. The purposeof subpart B of this part is to prescriberules, pursuant to sections 4219(c)(1)(D)and 4209(c) of ERISA, for redeterminingan employer’s withdrawal liability andfully allocating the unfunded vestedbenefits of a multiemployer plan ineither of two mass-withdrawalsituations: the termination of a plan bythe withdrawal of every employer andthe withdrawal of substantially allemployers pursuant to an agreement orarrangement to withdraw. Subpart Balso prescribes rules for redeterminingthe liability of an employer withoutregard to section 4209 (a) or (b) whenthe employer withdraws in a plan yearin which substantially all employerswithdraw, regardless of the occurrenceof a mass withdrawal. (See part 4281regarding the valuation of unfundedvested benefits to be fully allocatedunder subpart B, and parts 4041A and4281 regarding the powers and duties ofthe plan sponsor of a plan terminated bymass withdrawal.)

(2) Scope. Subpart B applies tomultiemployer plans covered by title IVof ERISA, with respect to which there isa termination by the withdrawal ofevery employer (including a plancreated by a partition pursuant tosection 4233 of ERISA) or a withdrawalof substantially all employers in theplan pursuant to an agreement orarrangement to withdraw from the plan,and to employers that withdraw fromsuch multiemployer plans. Theobligations of a plan sponsor of a mass-withdrawal-terminated plan undersubpart B shall cease to apply when theplan assets are distributed in fullsatisfaction of all nonforfeitable benefitsunder the plan. Subpart B also applies,to the extent appropriate, tomultiemployer plans with respect towhich there is a withdrawal ofsubstantially all employers in a singleplan year and to employers thatwithdraw from such plans in that planyear.

(c) Subpart C. Subpart C establishesthe interest rate to be charged onoverdue, defaulted and overpaidwithdrawal liability under section4219(c)(6) of ERISA, and authorizesmultiemployer plans to adoptalternative rules concerning assessmentof interest and related matters. SubpartC applies to multiemployer planscovered under title IV of ERISA, and toemployers that have withdrawn fromsuch plans after April 28, 1980 (May 2,1979, for certain employers in theseagoing industry).


section 4001.2 of this chapter: employer,ERISA, IRS, mass withdrawal,multiemployer plan, nonforfeitablebenefit, PBGC, plan, and plan year.

(b) For purposes of this part:Initial withdrawal liability means the

amount of withdrawal liabilitydetermined in accordance with sections4201 through 4225 of title IV withoutregard to the occurrence of a masswithdrawal.

Mass withdrawal liability means thesum of an employer’s liability for deminimis amounts, liability for 20-year-limitation amounts, and reallocationliability.

Mass withdrawal valuation datemeans—

(1) In the case of a termination bymass withdrawal, the last day of theplan year in which the plan terminates;or

(2) in the case of a withdrawal ofsubstantially all employers pursuant toan agreement or arrangement towithdraw, the last day of the plan yearas of which substantially all employershave withdrawn.

Reallocation liability means theamount of unfunded vested benefitsallocated to an employer in the event ofa mass withdrawal.

Reallocation record date means a dateselected by the plan sponsor, whichshall be not earlier than the date of theplan’s actuarial report for the year of themass withdrawal and not later than oneyear after the mass withdrawalvaluation date.

Redetermination liability means thesum of an employer’s liability for deminimis amounts and the employer’sliability for 20-year-limitation amounts.

Unfunded vested benefits means theamount by which the present value ofa plan’s vested benefits exceeds thevalue of plan assets (including claims ofthe plan for unpaid initial withdrawalliability and redetermination liability),determined in accordance with section4281 of ERISA and part 4281, subpart B.

(c) For purposes of subpart B—

Withdrawal means a completewithdrawal as defined in section 4203of ERISA.

Subpart B—Redetermination ofWithdrawal Liability Upon MassWithdrawal

§ 4219.11 Withdrawal liability upon masswithdrawal.

(a) Initial withdrawal liability. Theplan sponsor of a multiemployer planthat experiences a mass withdrawalshall determine initial withdrawalliability pursuant to section 4201 ofERISA of every employer that hascompletely or partially withdrawn fromthe plan and for whom the liability hasnot previously been determined and, inaccordance with section 4202 of ERISA,notify each employer of the amount ofthe initial withdrawal liability andcollect the amount of the initialwithdrawal liability from eachemployer.

(b) Mass withdrawal liability. Theplan sponsor of a multiemployer planthat experiences a mass withdrawalshall also—

(1) Notify withdrawing employers, inaccordance with § 4219.16(a), that amass withdrawal has occurred;

(2) Within 150 days after the masswithdrawal valuation date, determinethe liability of withdrawn employers forde minimis amounts and for 20-year-limitation amounts in accordance with§§ 4219.13 and 4219.14;

(3) Within one year after thereallocation record date, determine thereallocation liability of withdrawnemployers in accordance with§ 4219.15;

(4) Notify each withdrawing employerof the amount of mass withdrawalliability determined pursuant to thissubpart and the schedule for payment ofsuch liability, and demand payment ofand collect that liability, in accordancewith § 4219.16; and

(5) Notify the PBGC of the occurrenceof a mass withdrawal and certify, inaccordance with § 4219.17, thatdeterminations of mass withdrawalliability have been completed.

(c) Extensions of time. The plansponsor of a multiemployer plan thatexperiences a mass withdrawal mayapply to the PBGC for an extension ofthe deadlines contained in paragraph (b)of this section. The PBGC shall approvesuch a request only if it finds thatfailure to grant the extension will createan unreasonable risk of loss to planparticipants or the PBGC.

§ 4219.12 Employers liable upon masswithdrawal.

(a) Liability for de minimis amounts.An employer shall be liable for de


minimis amounts to the extent providedin section 4219(c)(1)(D) of ERISA if theemployer’s initial withdrawal liabilitywas reduced pursuant to section 4209(a) or (b) of ERISA.

(b) Liability for 20-year-limitationamounts. An employer shall be liablefor 20-year-limitation amounts to theextent provided in section 4219(c)(1)(D)of ERISA.

(c) Liability for reallocation liability.An employer shall be liable forreallocation liability if the employerwithdrew pursuant to an agreement orarrangement to withdraw from amultiemployer plan from whichsubstantially all employers withdrewpursuant to an agreement orarrangement to withdraw, or if theemployer withdrew after the beginningof the second full plan year precedingthe termination date from a plan thatterminated by the withdrawal of everyemployer, and, as of the reallocationrecord date—

(1) The employer has not beencompletely liquidated or dissolved;

(2) The employer is not the subject ofa case or proceeding under title 11,United States Code, or any case orproceeding under similar provisions ofstate insolvency laws, except that a plansponsor may determine that such anemployer is liable for reallocationliability if the plan sponsor determinesthat the employer is reasonablyexpected to be able to pay its initialwithdrawal liability and itsredetermination liability in full and ontime to the plan; and

(3) The plan sponsor has notdetermined that the employer’s initialwithdrawal liability or itsredetermination liability is limited bysection 4225 of ERISA.

(d) General exclusion. In the eventthat a plan experiences successive masswithdrawals, an employer that has beendetermined to be liable under thissubpart for any component of masswithdrawal liability shall not be liableas a result of the same withdrawal forthat component of mass withdrawalliability with respect to a subsequentmass withdrawal.

(e) Free-look rule. An employer that isnot liable for initial withdrawal liabilitypursuant to a plan amendment adoptingsection 4210(a) of ERISA shall not beliable for de minimis amounts or for 20-year-limitation amounts, but shall beliable for reallocation liability inaccordance with paragraph (c) of thissection.

(f) Payment of initial withdrawalliability. An employer’s payment of itstotal initial withdrawal liability,whether by prepayment or otherwise,for a withdrawal which is later

determined to be part of a masswithdrawal shall not exclude theemployer from or otherwise limit theemployer’s mass withdrawal liabilityunder this subpart.

(g) Agreement presumed. Withdrawalby an employer during a period of threeconsecutive plan years within whichsubstantially all employers withdrawfrom a plan shall be presumed to be awithdrawal pursuant to an agreement orarrangement to withdraw unless theemployer proves otherwise by apreponderance of the evidence.

§ 4219.13 Amount of liability for deminimis amounts.

An employer that is liable for deminimis amounts shall be liable to theplan for the amount by which theemployer’s allocable share of unfundedvested benefits for the purpose ofdetermining its initial withdrawalliability was reduced pursuant tosection 4209 (a) or (b) of ERISA. Anyliability for de minimis amountsdetermined under this section shall belimited by section 4225 of ERISA to theextent that section would have beenlimiting had the employer’s initialwithdrawal liability been determinedwithout regard to the de minimisreduction.

§ 4219.14 Amount of liability for 20-year-limitation amounts.

An employer that is liable for 20-year-limitation amounts shall be liable to theplan for an amount equal to the presentvalue of all initial withdrawal liabilitypayments for which the employer wasnot liable pursuant to section4219(c)(1)(B) of ERISA. The presentvalue of such payments shall bedetermined as of the end of the planyear preceding the plan year in whichthe employer withdrew, using theassumptions that were used todetermine the employer’s paymentschedule for initial withdrawal liabilitypursuant to section 4219(c)(1)(A)(ii) ofERISA. Any liability for 20-year-limitation amounts determined underthis section shall be limited by section4225 of ERISA to the extent that sectionwould have been limiting had theemployer’s initial withdrawal liabilitybeen determined without regard to the20-year limitation.

§ 4219.15 Determination of reallocationliability.

(a) General rule. In accordance withthe rules in this section, the plansponsor shall determine the amount ofunfunded vested benefits to bereallocated and shall fully allocate thoseunfunded vested benefits among allemployers liable for reallocationliability.

(b) Amount of unfunded vestedbenefits to be reallocated. For purposesof this section, the amount of a plan’sunfunded vested benefits to bereallocated shall be the amount of theplan’s unfunded vested benefits,determined as of the mass withdrawalvaluation date, adjusted to exclude fromplan assets the value of the plan’sclaims for unpaid initial withdrawalliability and unpaid redeterminationliability that are deemed to beuncollectible under § 4219.12(c)(1) or(c)(2).

(c) Amount of reallocation liability.An employer’s reallocation liabilityshall be equal to the sum of theemployer’s initial allocable share of theplan’s unfunded vested benefits, asdetermined under paragraph (c)(1) ofthis section, plus any unassessableamounts allocated to the employerunder paragraph (c)(2), limited bysection 4225 of ERISA to the extent thatsection would have been limiting hadthe employer’s reallocation liabilitybeen included in the employer’s initialwithdrawal liability. If a plan isdetermined to have no unfunded vestedbenefits to be reallocated, thereallocation liability of each liableemployer shall be zero.

(1) Initial allocable share. Except asotherwise provided in rules adopted bythe plan pursuant to paragraph (d) ofthis section, and in accordance withparagraph (c)(3) of this section, anemployer’s initial allocable share shallbe equal to the product of the plan’sunfunded vested benefits to bereallocated, multiplied by a fraction—

(i) The numerator of which is the sumof the employer’s initial withdrawalliability and the employer’sredetermination liability, if any; and

(ii) The denominator of which is thesum of all initial withdrawal liabilitiesand all the redetermination liabilities ofall employers liable for reallocationliability.

(2) Allocation of unassessableamounts. If after computing eachemployer’s initial allocable share ofunfunded vested benefits, the plansponsor knows that any portion of anemployer’s initial allocable share isunassessable as withdrawal liabilitybecause of the limitations in section4225 of ERISA, the plan sponsor shallallocate any such unassessable amountsamong all other liable employers. Thisallocation shall be done by prorating theunassessable amounts on the basis ofeach such employer’s initial allocableshare. No employer shall be liable forunfunded vested benefits allocatedunder paragraph (c)(1) or this paragraphto another employer that are determinedto be unassessable or uncollectible


subsequent to the plan sponsor’sdemand for payment of reallocationliability.

(3) Special rule for certain employerswith no or reduced initial withdrawalliability. If an employer has no initialwithdrawal liability because of theapplication of the free-look rule insection 4210 of ERISA, then, incomputing the fraction prescribed inparagraph (c)(1), the plan sponsor shalluse the employer’s allocable share ofunfunded vested benefits, determinedunder section 4211 of ERISA at the timeof the employer’s withdrawal andadjusted in accordance with section4225 of ERISA, if applicable. If anemployer’s initial withdrawal liabilitywas reduced pursuant to section 4209(a)or (b) of ERISA and the employer is notliable for de minimis amounts pursuantto § 4219.13, then, in computing thefraction prescribed in paragraph (c)(1) ofthis section, the plan sponsor shall usethe employer’s allocable share ofunfunded vested benefits, determinedunder section 4211 of ERISA at the timeof the employer’s withdrawal andadjusted in accordance with section4225 of ERISA, if applicable.

(d) Plan rules. Plans may adopt rulesfor calculating an employer’s initialallocable share of the plan’s unfundedvested benefits in a manner other thanthat prescribed in paragraph (c)(1) ofthis section, provided that those rulesallocate the plan’s unfunded vestedbenefits to substantially the same extentthe prescribed rules would. Plan rulesadopted under this paragraph shalloperate and be applied uniformly withrespect to each employer. If such ruleswould increase the reallocation liabilityof any employer, they may be effectivewith respect to that employer earlierthan three full plan years after theiradoption only if the employer consentsto the application of the rules to itself.The plan sponsor shall give a writtennotice to each contributing employerand each employee organization thatrepresents employees covered by theplan of the adoption of plan rules underthis paragraph.

§ 4219.16 Imposition of liability.(a) Notice of mass withdrawal. Within

30 days after the mass withdrawalvaluation date, the plan sponsor shallgive written notice of the occurrence ofa mass withdrawal to each employerthat the plan sponsor reasonably expectsmay be a liable employer under§ 4219.12. The notice shall include—

(1) The mass withdrawal valuationdate;

(2) A description of the consequencesof a mass withdrawal under thissubpart; and

(3) A statement that each employerobligated to make initial withdrawalliability payments shall continue tomake those payments in accordancewith its schedule. Failure of the plansponsor to notify an employer of a masswithdrawal as required by thisparagraph shall not cancel theemployer’s mass withdrawal liability orwaive the plan’s claim for such liability.

(b) Notice of redetermination liability.Within 30 days after the date as ofwhich the plan sponsor is requiredunder § 4219.11(b)(2) to havedetermined the redetermination liabilityof employers, the plan sponsor shallissue a notice of redeterminationliability in writing to each employerliable under § 4219.12 for de minimisamounts or 20-year-limitation amounts,or both. The notice shall include—

(1) The amount of the employer’sliability, if any, for de minimis amountsdetermined pursuant to § 4219.13;

(2) The amount of the employer’sliability, if any, for 20-year-limitationamounts determined pursuant to§ 4219.14;

(3) The schedule for payment of theliability determined under paragraph (f)of this section;

(4) A demand for payment of theliability in accordance with theschedule; and

(5) A statement of when the plansponsor expects to issue notices ofreallocation liability to liable employers.

(c) Notice of reallocation liability.Within 30 days after the date as ofwhich the plan sponsor is requiredunder § 4219.11(b)(3) to havedetermined the reallocation liability ofemployers, the plan sponsor shall issuea notice of reallocation liability inwriting to each employer liable forreallocation liability. The notice shallinclude—

(1) The amount of the employer’sreallocation liability determinedpursuant to § 4219.15;

(2) The schedule for payment of theliability determined under paragraph (f)of this section; and

(3) A demand for payment of theliability in accordance with theschedule.

(d) Notice to employers not liable. Theplan sponsor shall notify in writing anyemployer that receives a notice of masswithdrawal under paragraph (a) of thissection and subsequently is determinednot to be liable for mass withdrawalliability or any component thereof. Thenotice shall specify the liability fromwhich the employer is excluded andshall be provided to the employer notlater than the date by which liableemployers are to be provided notices ofreallocation liability pursuant to

paragraph (c) of this section. If theemployer is not liable for masswithdrawal liability, the notice shallalso include a statement, if applicable,that the employer is obligated tocontinue to make initial withdrawalliability payments in accordance withits existing schedule for payment ofsuch liability.

(e) Combined notices. A plan sponsormay combine a notice ofredetermination liability with the noticeof and demand for payment of initialwithdrawal liability. If a masswithdrawal and a withdrawal describedin § 4219.18 occur concurrently, a plansponsor may combine—

(1) A notice of mass withdrawal witha notice of withdrawal issued pursuantto § 4219.18(d); and

(2) A notice of redeterminationliability with a notice of liability issuedpursuant to § 4219.18(e).

(f) Payment schedules. The plansponsor shall establish paymentschedules for payment of an employer’smass withdrawal liability in accordancewith the rules in section 4219(c) ofERISA, as modified by this paragraph.For an employer that owes initialwithdrawal liability as of the masswithdrawal valuation date, the plansponsor shall establish new paymentschedules for each element of masswithdrawal liability by amending theinitial withdrawal liability paymentschedule in accordance with theparagraph (f)(1) of this section. For allother employers, the payment schedulesshall be established in accordance withparagraph (f)(2).

(1) Employers owing initialwithdrawal liability as of masswithdrawal valuation date. For anemployer that owes initial withdrawalliability as of the mass withdrawalvaluation date, the plan sponsor shallamend the existing schedule ofpayments in order to amortize the newamounts of liability being assessed, i.e.,redetermination liability andreallocation liability. With respect toredetermination liability, the plansponsor shall add that liability to thetotal initial withdrawal liability anddetermine a new payment schedule, inaccordance with section 4219(c)(1) ofERISA, using the interest assumptionsthat were used to determine the originalpayment schedule. For reallocationliability, the plan sponsor shall add thatliability to the present value, as of thedate following the mass withdrawalvaluation date, of the unpaid portion ofthe amended payment scheduledescribed in the preceding sentence anddetermine a new payment schedule oflevel annual payments, calculated as ifthe first payment were made on the day


following the mass withdrawalvaluation date using the interestassumptions used for determining theamount of unfunded vested benefits tobe reallocated.

(2) Other employers. For an employerthat had no initial withdrawal liability,or had fully paid its liability prior to themass withdrawal valuation date, theplan sponsor shall determine thepayment schedule for redeterminationliability, in accordance with section4219(c)(1) of ERISA, in the same mannerand using the same interest assumptionsas were used or would have been usedin determining the payment schedulefor the employer’s initial withdrawalliability. With respect to reallocationliability, the plan sponsor shall followthe rules prescribed in paragraph (f)(1)of this section.

(g) Review of mass withdrawalliability determinations. Determinationsof mass withdrawal liability madepursuant to this subpart shall be subjectto plan review under section 4219(b)(2)of ERISA and to arbitration undersection 4221 of ERISA within the timesprescribed by those sections. Mattersthat relate solely to the amount of, andschedule of payments for, an employer’sinitial withdrawal liability are notmatters relating to the employer’sliability under this subpart and are notsubject to review pursuant to thisparagraph.

(h) Cessation of withdrawal liabilityobligations. If the plan sponsor of aterminated plan distributes plan assetsin full satisfaction of all nonforfeitablebenefits under the plan, the plansponsor’s obligation to impose andcollect liability, and each employer’sobligation to pay liability, in accordancewith this subpart ceases on the date ofsuch distribution.

(i) Determination that a masswithdrawal has not occurred. If a plansponsor determines, after imposingmass withdrawal liability pursuant tothis subpart, that a mass withdrawal hasnot occurred, the plan sponsor shallrefund to employers all payments ofmass withdrawal liability with interest,except that a plan sponsor shall notrefund payments of liability for deminimis amounts to an employer thatremains liable for such amounts under§ 4219.18. Interest shall be credited atthe interest rate prescribed in subpart Cand shall accrue from the date thepayment was received by the plan untilthe date of the refund.

§ 4219.17 Filings with PBGC.(a) Filing requirements. The plan

sponsor shall file with PBGC a noticethat a mass withdrawal has occurredand separate certifications that

determinations of redeterminationliability and reallocation liability havebeen made and notices provided toemployers in accordance with thissubpart.

(b) Who shall file. The plan sponsoror a duly authorized representativeacting on behalf of the plan sponsorshall sign and file the notice and thecertifications.

(c) When to file. A notice of masswithdrawal for a plan from whichsubstantially all employers withdrawpursuant to an agreement orarrangement to withdraw shall be filedwith the PBGC no later than 30 daysafter the mass withdrawal valuationdate. A notice of mass withdrawaltermination shall be filed within thetime prescribed for the filing of thatnotice in part 4041A, subparts A and B,of this chapter. Certifications of liabilitydeterminations shall be filed with thePBGC no later than 30 days after thedate on which the plan sponsor isrequired to have provided employerswith notices pursuant to § 4219.16.

(d) Where to file. The notice andcertifications may be sent by mail orsubmitted by hand during normalworking hours to Reports Processing,Insurance Operations Department,Pension Benefit Guaranty Corporation,1200 K Street NW., Washington, DC20005–4026.

(e) Filing date. For purposes ofparagraph (c)—

(1) The notice is considered filed onthe date of the postmark stamped on thecover in which the notice is mailed if—

(i) The postmark was made by theUnited States Postal Service; and

(ii) The notice was mailed postageprepaid, properly packaged andaddressed to the PBGC.

(2) If both conditions described inparagraph (e)(1) are not met, the noticeis considered filed on the date it isreceived by the PBGC, except thatnotices received after regular businesshours are considered filed on the nextregular business day.

(f) Contents of notice of masswithdrawal. If a plan terminates by thewithdrawal of every employer, a noticeof termination filed in accordance withpart 4041A, subparts A and B, of thischapter shall satisfy the requirementsfor a notice of mass withdrawal underthis subpart. If substantially allemployers withdraw from a planpursuant to an agreement orarrangement to withdraw, the notice ofmass withdrawal shall contain thefollowing information:

(1) The name of the plan.(2) The name, address and telephone

number of the plan sponsor and of the

duly authorized representative, if any,of the plan sponsor.

(3) The nine-digit EmployerIdentification Number (EIN) assigned bythe IRS to the plan sponsor and thethree-digit Plan Identification Number(PIN) assigned by the plan sponsor tothe plan, and, if different, the EIN orPIN last filed with the PBGC. If no EINor PIN has been assigned, the noticeshall so indicate.

(4) The mass withdrawal valuationdate.

(5) A description of the facts on whichthe plan sponsor has based itsdetermination that a mass withdrawalhas occurred, including the number ofcontributing employers withdrawn andthe number remaining in the plan, anda description of the effect of the masswithdrawal on the plan’s contributionbase.

(g) Contents of certifications. Eachcertification shall contain the followinginformation:


number of the plan sponsor and of theduly authorized representative, if any,of the plan sponsor.

(3) The nine-digit EmployerIdentification Number (EIN) assigned bythe IRS to the plan sponsor and thethree-digit Plan Identification Number(PIN) last assigned by the plan sponsorto the plan, and, if different, the EIN orPIN filed with the PBGC. If no EIN orPIN has been assigned, the notice shallso indicate.

(4) Identification of the liabilitydetermination to which the certificationrelates.

(5) A certification, signed by the plansponsor or a duly authorizedrepresentative, that the determinationshave been made and the notices givenin accordance with this subpart.

(6) For reallocation liabilitycertifications—

(i) A certification, signed by the plan’sactuary, that the determination ofunfunded vested benefits has been donein accordance with part 4281, subpart B;and

(ii) A copy of plan rules, if any,adopted pursuant to § 4219.15(d).

(h) Additional information. Inaddition to the information described inparagraph (g) of this section, the PBGCmay require the plan sponsor to submitany other information the PBGCdetermines it needs in order to monitorcompliance with this subpart.

§ 4219.18 Withdrawal in a plan year inwhich substantially all employers withdraw.

(a) General rule. An employer thatwithdraws in a plan year in whichsubstantially all employers withdraw


from the plan shall be liable to the planfor de minimis amounts if theemployer’s initial withdrawal liabilitywas reduced pursuant to section 4209(a)or (b) of ERISA.

(b) Amount of liability. An employer’sliability for de minimis amounts underthis section shall be determinedpursuant to § 4219.13.

(c) Plan sponsor’s obligations. Theplan sponsor of a plan that experiencesa withdrawal described in paragraph (a)shall—

(1) Determine and collect initialwithdrawal liability of every employerthat has completely or partiallywithdrawn, in accordance with sections4201 and 4202 of ERISA;

(2) Notify each employer that is ormay be liable under this section, inaccordance with paragraph (d) of thissection;

(3) Within 90 days after the end of theplan year in which the withdrawaloccurred, determine, in accordance withparagraph (b) of this section, theliability of each withdrawing employerthat is liable under this section;

(4) Notify each liable employer, inaccordance with paragraph (e) of thissection, of the amount of its liabilityunder this section, demand payment ofand collect that liability; and

(5) Certify to the PBGC thatdeterminations of liability have beencompleted, in accordance withparagraph (g) of this section.

(d) Notice of withdrawal. Within 30days after the end of a plan year inwhich a plan experiences a withdrawaldescribed in paragraph (a), the plansponsor shall notify in writing eachemployer that is or may be liable underthis section. The notice shall specify theplan year in which substantially allemployers have withdrawn, describe theconsequences of such withdrawal underthis section, and state that an employerobligated to make initial withdrawalliability payments shall continue tomake those payments in accordancewith its schedule.

(e) Notice of liability. Within 30 daysafter the determination of liability, theplan sponsor shall issue a notice ofliability in writing to each liableemployer. The notice shall include—

(1) The amount of the employer’sliability for de minimis amounts;

(2) A schedule for payment of theliability, determined under § 4219.16(f);and

(3) A demand for payment of theliability in accordance with theschedule.

(f) Review of liability determinations.Determinations of liability madepursuant to this section shall be subjectto plan review under section 4219(b)(2)

of ERISA and to arbitration undersection 4221 of ERISA, subject to thelimitations contained in § 4219.16(g).

(g) Notice to the PBGC. No later than30 days after the notices of liabilityunder this section are required to beprovided to liable employers, the plansponsor shall file with the PBGC anotice. The notice shall include theitems described in § 4219.17 (g)(1)through (g)(3), as well as theinformation listed below. In addition,the PBGC may require the plan sponsorto submit any further information thatthe PBGC determines it needs in orderto monitor compliance with this section.

(1) The plan year in which thewithdrawal occurred.

(2) A description of the effect of thewithdrawal, including the number ofcontributing employers that withdrewin the plan year in which substantiallyall employers withdrew, the number ofemployers remaining in the plan, and adescription of the effect of thewithdrawal on the plan’s contributionbase.

(3) A certification, signed by the plansponsor or duly authorizedrepresentative, that determinations havebeen made and notices given inaccordance with this section.

§ 4219.19 Information collection.The information collection

requirements contained in §§ 4219.16,4219.17, and 4219.18 have beenapproved by the Office of Managementand Budget under control number 1212–0034.

Subpart C—Overdue, Defaulted, andOverpaid Withdrawal Liability

§ 4219.31 Overdue and defaultedwithdrawal liability; overpayment.

(a) Overdue withdrawal liabilitypayment. Except as otherwise providedin rules adopted by the plan inaccordance with § 4219.33, awithdrawal liability payment is overdueif it is not paid on the date set forth inthe schedule of payments established bythe plan sponsor.

(b) Default.(1) Except as provided in paragraph

(c)(1), ‘‘default’’ means—(i) The failure of an employer to pay

any overdue withdrawal liabilitypayment within 60 days after theemployer receives written notificationfrom the plan sponsor that the paymentis overdue; and

(ii) Any other event described in rulesadopted by the plan which indicates asubstantial likelihood that an employerwill be unable to pay its withdrawalliability.

(2) In the event of a default, a plansponsor may require immediate

payment of all or a portion of theoutstanding amount of an employer’swithdrawal liability, plus interest. In theevent that the plan sponsor acceleratesonly a portion of the outstandingamount of an employer’s withdrawalliability, the plan sponsor shall establisha new schedule of payments for theremaining amount of the employer’swithdrawal liability.

(c) Plan review or arbitration ofliability determination. The followingrules shall apply with respect to theobligation to make withdrawal liabilitypayments during the period for planreview and arbitration and with respectto the failure to make such payments:

(1) A default as a result of failure tomake any payments shall not occuruntil the 61st day after the last of—

(i) Expiration of the period describedin section 4219(b)(2)(A) of ERISA;

(ii) If the employer requests reviewunder section 4219(b)(2)(A) of ERISA ofthe plan’s withdrawal liabilitydetermination or the schedule ofpayments established by the plan,expiration of the period described insection 4221(a)(1) of ERISA forinitiation of arbitration; or

(iii) If arbitration is timely initiatedeither by the plan, the employer or both,issuance of the arbitrator’s decision.

(2) Any amounts due before theexpiration of the period described inparagraph (c)(1) shall be paid inaccordance with the scheduleestablished by the plan sponsor. If apayment is not made when due underthe schedule, the payment is overdueand interest shall accrue in accordancewith the rules and at the same rate setforth in § 4219.32.

(d) Overpayments. If the plan sponsoror an arbitrator determines thatpayments made in accordance with theschedule of payments established by theplan sponsor have resulted in anoverpayment of withdrawal liability, theplan sponsor shall refund theoverpayment, with interest, in a lumpsum. The plan sponsor shall creditinterest on the overpayment from thedate of the overpayment to the date onwhich the overpayment is refunded tothe employer at the same rate as the ratefor overdue withdrawal liabilitypayments, as established under§ 4219.32 or by the plan pursuant to§ 4219.33.

§ 4219.32 Interest on overdue, defaultedand overpaid withdrawal liability.

(a) Interest assessed. The plan sponsorof a multiemployer plan—

(1) Shall assess interest on overduewithdrawal liability payments from thedue date, as defined in paragraph (d) of


this section, until the date paid, asdefined in paragraph (e); and

(2) In the event of a default, mayassess interest on any acceleratedportion of the outstanding withdrawalliability from the due date, as defined inparagraph (d) of this section, until thedate paid, as defined in paragraph (e).

(b) Interest rate. Except as otherwiseprovided in rules adopted by the planpursuant to § 4219.33, interest underthis section shall be charged or creditedfor each calendar quarter at an annualrate equal to the average quoted primerate on short-term commercial loans forthe fifteenth day (or next business dayif the fifteenth day is not a business day)of the month preceding the beginning ofeach calendar quarter, as reported by theBoard of Governors of the FederalReserve System in Statistical ReleaseH.15 (‘‘Selected Interest Rates’’).

(c) Calculation of interest. Theinterest rate under paragraph (b) of thissection is the nominal rate for anycalendar quarter or portion thereof. Theamount of interest due the plan foroverdue or defaulted withdrawalliability, or due the employer foroverpayment, is equal to the overdue,defaulted, or overpaid amountmultiplied by:

(1) For each full calendar quarter inthe period from the due date (or date ofoverpayment) to the date paid (or dateof refund), one-fourth of the annual ratein effect for that quarter;

(2) For each full calendar month in apartial quarter in that period, one-twelfth of the annual rate in effect forthat quarter; and

(3) For each day in a partial month inthat period, one-three-hundred-sixtiethof the annual rate in effect for thatmonth.

(d) Due date. Except as otherwiseprovided in rules adopted by the plan,the due date from which interestaccrues shall be, for an overduewithdrawal liability payment and for anamount of withdrawal liability indefault, the date of the missed paymentthat gave rise to the delinquency or thedefault.

(e) Date paid. Any payment ofwithdrawal liability shall be deemed tohave been paid on the date on which itis received.

§ 4219.33 Plan rules concerning overdueand defaulted withdrawal liability.

Plans may adopt rules relating tooverdue and defaulted withdrawalliability, provided that those rules areconsistent with ERISA. These rules mayinclude, but are not limited to, rules fordetermining the rate of interest to becharged on overdue, defaulted andoverpaid withdrawal liability (provided

that the rate reflects prevailing marketrates for comparable obligations); rulesproviding reasonable grace periodsduring which late payments may bemade without interest; additionaldefinitions of default which indicate asubstantial likelihood that an employerwill be unable to pay its withdrawalliability; and rules pertaining toacceleration of the outstanding balanceon default. Plan rules adopted underthis section shall be reasonable. Planrules shall operate and be applieduniformly with respect to eachemployer, except that the rules may takeinto account the creditworthiness of anemployer. Rules which take intoaccount the creditworthiness of anemployer shall state with particularitythe categories of creditworthiness theplan will use, the specific differences intreatment accorded employers indifferent categories, and the standardsand procedures for assigning anemployer to a category.

PART 4220—PROCEDURES FORPBGC APPROVAL OF PLANAMENDMENTS

Sec.4220.1 Purpose and scope.4220.2 Definitions.4220.3 Requests for PBGC approval.4220.4 PBGC action on requests.

Authority: 29 U.S.C. 1302(b)(3), 1400.

§ 4220.1 Purpose and scope.(a) General. This part establishes

procedures under which a plan sponsorshall request the PBGC to approve aplan amendment under section 4220 ofERISA. This part applies to allmultiemployer plans covered by title IVof ERISA that adopt amendmentspursuant to the authorization of sections4201–4219 of ERISA (except foramendments adopted pursuant tosection 4211(c)(5)). (The coveredamendments are set forth in paragraph(b) of this section.) The subsequentmodification of a plan amendmentadopted by authorization of thosesections is also covered by this part.This part does not, however, cover aplan amendment that merely repeals apreviously adopted amendment,returning the plan to the statutorilyprescribed rule.

(b) Covered amendments.Amendments made pursuant to thefollowing sections of ERISA are coveredby this part:

(1) Section 4203 (b)(1)(B)(ii).(2) Section 4203(c)(4).(3) Section 4205(c)(1).(4) Section 4205(d).(5) Section 4209(b).(6) Section 4210(b)(2).(7) Section 4211(c)(1).

(8) Section 4211(c)(4)(D).(9) Section 4211(d)(1).(10) Section 4211(d)(2).(11) Section 4219(c)(1)(C)(ii)(I).(12) Section 4219(c)(1)(C)(iii).(c) Exception. Submission of a request

for approval under this part is notrequired for a plan amendment forwhich the PBGC has published a noticein the Federal Register granting classapproval.


The following terms are defined in§ 4001.2 of this chapter: employer,ERISA, IRS, multiemployer plan, PBGC,plan, and plan sponsor.

§ 4220.3 Requests for PBGC approval.

(a) Filing of request. A request forapproval of an amendment filed withthe PBGC in accordance with thissection shall constitute notice to thePBGC for purposes of the 90-day periodspecified in section 4220 of ERISA. Arequest is deemed filed on the date onwhich a request containing allinformation required by paragraph (d) ofthis section is received by the PBGC.

(b) Who may request. The plansponsor, or a duly authorizedrepresentative acting on behalf of a plansponsor, shall sign and submit therequest.

(c) Where to file. The request shall bedelivered by hand or by mail to ReportsProcessing, Insurance OperationsDepartment, Pension Benefit GuarantyCorporation, 1200 K Street NW.,Washington, DC 20005–4026.

(d) Information. Each request filedshall contain the following information:

(1) The name of the plan for whichthe amendment is being submitted, andthe name, address and the telephonenumber of the plan sponsor or its dulyauthorized representative.

(2) The nine-digit EmployerIdentification Number (EIN) assigned bythe IRS to the plan sponsor and thethree-digit Plan Identification Number(PIN) assigned by the plan sponsor tothe plan, and, if different, the EIN orPIN last filed with PBGC. If no EIN orPIN has been assigned, that fact must beindicated.

(3) A copy of the amendment asadopted, including its proposedeffective date.

(4) A copy of the most recent actuarialvaluation of the plan.

(5) A statement containing acertification that notice of the adoptionof the amendment has been given to allemployers who have an obligation tocontribute under the plan and to allemployee organizations representingemployees covered by the plan.


(6) Any other information that theplan sponsor believes to be pertinent toits request.

(e) Supplemental information. ThePBGC may require a plan sponsor tosubmit any other information that thePBGC determines to be necessary toreview a request under this part. ThePBGC may suspend the running of the90-day period pursuant to § 4220.4(c),pending the submission of thesupplemental information.(Approved by the Office of Management andBudget under control number 1212–0031)

§ 4220.4 PBGC action on requests.

(a) General. Upon receipt of acomplete request, the PBGC shall notifythe plan sponsor in writing of the dateof commencement of the 90-day periodspecified in section 4220 of ERISA.Except as provided in paragraph (c) ofthis section, the PBGC shall approve ordisapprove a plan amendmentsubmitted to it under this part within 90days after receipt of a complete requestfor approval. If the PBGC fails to actwithin the 90-day period, or within thatperiod notifies the plan sponsor that itwill not disapprove the amendment, theamendment may be made effectivewithout the approval of the PBGC.

(b) Decision on request. The PBGC’sdecision on a request for approval shallbe in writing. If the PBGC disapprovesthe plan amendment, the decision shallstate the reasons for the disapproval. Anapproval by the PBGC constitutes itsfinding only with respect to the issue ofrisk as set forth in section 4220(c) ofERISA, and not with respect to whetherthe amendment is otherwise properlyadopted in accordance with the terms ofERISA and the plan in question.

(c) Suspension of the 90-day period.The PBGC may suspend the running ofthe 90-day period referred to inparagraph (a) of this section if itdetermines that additional informationis required under § 4220.3(e). When itdoes so, PBGC’s request for additionalinformation will advise the plansponsor that the running of 90-dayperiod has been suspended. The 90-dayperiod will resume running on the dateon which the additional information isreceived by the PBGC, and the PBGCwill notify the plan sponsor of that dateupon receipt of the information.

PART 4221—ARBITRATION OFDISPUTES IN MULTIEMPLOYERPLANS

Sec.4221.1 Purpose and scope.4221.2 Definitions.4221.3 Initiation of arbitration.4221.4 Appointment of the arbitrator.

4221.5 Powers and duties of thearbitrator.

4221.6 Hearing.4221.7 Reopening of proceedings.4221.8 Award.4221.9 Reconsideration of award.4221.10 Costs.4221.11 Waiver of rules.4221.12 Calculation of periods of time.4221.13 Filing or service of documents.4221.14 PBGC-approved arbitration

procedures.Authority: 29 U.S.C. 1302(b)(3), 1401.


(a) Purpose. The purpose of this partis to establish procedures for thearbitration, pursuant to section 4221 ofERISA, of withdrawal liability disputesarising under sections 4201 through4219 and 4225 of ERISA.

(b) Scope. This part applies toarbitration proceedings initiatedpursuant to section 4221 of ERISA andthis part on or after September 26, 1985.On and after the effective date, any planrules governing arbitration procedures(other than a plan rule adopting a PBGC-approved arbitration procedure inaccordance with § 4221.14) are effectiveonly to the extent that they areconsistent with this part and adopted bythe arbitrator in a particular proceeding.


The following terms are defined in§ 4001.2 of this chapter: ERISA, IRS,multiemployer plan, PBGC, plan, andplan sponsor.

In addition, for purposes of this part:Arbitrator means an individual or

panel of individuals selected accordingto this part to decide a disputeconcerning withdrawal liability.

Employer means an individual,partnership, corporation or other entityagainst which a plan sponsor has madea demand for payment of withdrawalliability pursuant to section 4219(b)(1)of ERISA.

Party or parties means the employerand the plan sponsor involved in awithdrawal liability dispute.

Withdrawal liability dispute means adispute described in § 4221.1(a) of thischapter.

§ 4221.3 Initiation of arbitration.(a) Time limits—in general.

Arbitration of a withdrawal liabilitydispute may be initiated within the timelimits described in section 4221(a)(1) ofERISA.

(b) Waiver or extension of time limits.Arbitration shall be initiated inaccordance with this section,notwithstanding any inconsistentprovision of any agreement entered intoby the parties before the date on whichthe employer received notice of the

plan’s assessment of withdrawalliability. The parties may, however,agree at any time to waive or extend thetime limits for initiating arbitration.

(c) Establishment of timeliness ofinitiation. A party that unilaterallyinitiates arbitration is responsible forestablishing that the notice of initiationof arbitration was timely received by theother party. If arbitration is initiated byagreement of the parties, the date onwhich the agreement to arbitrate wasexecuted establishes whether thearbitration was timely initiated.

(d) Contents of agreement or notice. Ifthe employer initiates arbitration, itshall include in the notice of initiationa statement that it disputes the plansponsor’s determination of itswithdrawal liability and is initiatingarbitration. A copy of the demand forwithdrawal liability and any request forreconsideration, and the responsethereto, shall be attached to the notice.If a party other than an employerinitiates arbitration, it shall include inthe notice a statement that it is initiatingarbitration and a brief description of thequestions on which arbitration issought. If arbitration is initiated byagreement, the agreement shall includea brief description of the questionssubmitted to arbitration. In no case iscompliance with formal rules ofpleading required.

(e) Effect of deficient agreement ornotice. If a party fails to object promptlyin writing to deficiencies in an initiationagreement or a notice of initiation ofarbitration, it waives its right to object.

§ 4221.4 Appointment of the arbitrator.(a) Appointment of and acceptance by

arbitrator. The parties shall select thearbitrator within 45 days after thearbitration is initiated, or within suchother period as is mutually agreed afterthe initiation of arbitration, and shallmail to the designated arbitrator a noticeof his or her appointment. The notice ofappointment shall include a copy of thenotice or agreement initiatingarbitration, a statement that thearbitration is to be conducted inaccordance with this part, and a requestfor a written acceptance by thearbitrator. The arbitrator’s appointmentbecomes effective upon his or herwritten acceptance, stating his or heravailability to serve and making anydisclosures required by paragraph (b) ofthis section. If the arbitrator does notaccept in writing within 15 days afterthe notice of appointment is mailed ordelivered to him or her, he or she isdeemed to have declined to act, and theparties shall select a new arbitrator inaccordance with paragraph (d) of thissection.


(b) Disclosure by arbitrator anddisqualification. Upon accepting theappointment, the arbitrator shalldisclose to the parties anycircumstances likely to affect his or herimpartiality, including any bias or anyfinancial or personal interest in theresult of the arbitration and any past orpresent relationship with the parties ortheir counsel. If any party determinesthat the arbitrator should be disqualifiedbecause of the information disclosed,that party shall notify all other partiesand the arbitrator no later than 10 daysafter the arbitrator makes the disclosurerequired by this paragraph (but in noevent later than the commencement ofthe hearing under § 4221.6). Thearbitrator shall then withdraw, and theparties shall select another arbitrator inaccordance with paragraph (d) of thissection.

(c) Challenge and withdrawal. Afterthe arbitrator has been selected, a partymay request that he or she withdrawfrom the proceedings at any point beforea final award is rendered on the groundthat he or she is unable to render anaward impartially. The request forwithdrawal shall be served on all otherparties and the arbitrator by hand or bycertified or registered mail and shallinclude a statement of thecircumstances that, in the requestingparty’s view, affect the arbitrator’simpartiality and a statement that therequesting party has brought thesecircumstances to the attention of thearbitrator and the other parties at theearliest practicable point in theproceedings. If the arbitrator determinesthat the circumstances adduced arelikely to affect his or her impartialityand have been presented in a timelyfashion, he or she shall withdraw fromthe proceedings and notify the parties ofthe reasons for his or her withdrawal.The parties shall then select a newarbitrator in accordance with paragraph(d) of this section.

(d) Filling vacancies. If the designatedarbitrator declines his or herappointment or, after accepting his orher appointment, is disqualified,resigns, dies, withdraws, or is unable toperform his or her duties at any timebefore a final award is rendered, theparties shall select another arbitrator tofill the vacancy. The selection shall bemade, in accordance with the procedureused in the initial selection, within 20days after the parties receive notice ofthe vacancy. The matter shall then bereheard by the newly chosen arbitrator,who may, in his or her discretion, relyon all or any portion of the recordalready established.

(e) Failure to select arbitrator. If theparties fail to select an arbitrator within

the time prescribed by this section,either party or both may seek thedesignation and appointment of anarbitrator in a United States districtcourt pursuant to the provisions of title9 of the United States Code.

§ 4221.5 Powers and duties of thearbitrator.

(a) Arbitration hearing. Except asotherwise provided in this part, thearbitrator shall conduct the arbitrationhearing under § 4221.6 in the samemanner, and shall possess the samepowers, as an arbitrator conducting aproceeding under title 9 of the UnitedStates Code.

(1) Application of the law. In reachinghis or her decision, the arbitrator shallfollow applicable law, as embodied instatutes, regulations, court decisions,interpretations of the agencies chargedwith the enforcement of ERISA, andother pertinent authorities.

(2) Prehearing discovery. Thearbitrator may allow any party toconduct prehearing discovery byinterrogatories, depositions, requests forthe production of documents, or othermeans, upon a showing that thediscovery sought is likely to lead to theproduction of relevant evidence andwill not be disproportionatelyburdensome to the other parties. Thearbitrator may impose appropriatesanctions if he or she determines that aparty has failed to respond to discoveryin good faith or has conducteddiscovery proceedings in bad faith or forthe purpose of harassment. Thearbitrator may, at the request of anyparty or on his or her own motion,require parties to give advance notice ofexpert or other witnesses that theyintend to introduce.

(3) Admissibility of evidence. Thearbitrator determines the relevance andmateriality of the evidence offeredduring the course of the hearing and isthe judge of the admissibility ofevidence offered. Conformity to legalrules of evidence is not necessary. Tothe extent reasonably practicable, allevidence shall be taken in the presenceof the arbitrator and the parties. Thearbitrator may, however, consideraffidavits, transcripts of depositions,and similar documents.

(4) Production of documents or otherevidence. The arbitrator may subpoenawitnesses or documents upon his or herown initiative or upon request by anyparty after determining that theevidence is likely to be relevant to thedispute.

(b) Prehearing conference. If itappears that a prehearing conferencewill expedite the proceedings, thearbitrator may, at any time before the

commencement of the arbitrationhearing under § 4221.6, direct theparties to appear at a conference toconsider settlement of the case,clarification of issues and stipulation offacts not in dispute, admission ofdocuments to avoid unnecessary proof,limitations on the number of expert orother witnesses, and any other mattersthat could expedite the disposition ofthe proceedings.

(c) Proceeding without hearing. Thearbitrator may render an award withouta hearing if the parties agree and filewith the arbitrator such evidence as thearbitrator deems necessary to enablehim or her to render an award under§ 4221.8.

§ 4221.6 Hearing.(a) Time and place of hearing

established. Unless the parties agree toproceed without a hearing as providedin § 4221.5(c), the parties and thearbitrator shall, no later than 15 daysafter the written acceptance by thearbitrator is mailed to the parties,establish a date and place for thehearing. If agreement is not reachedwithin the 15-day period, the arbitratorshall, within 10 additional days, choosea location and set a hearing date. Thedate set for the hearing may be no laterthan 50 days after the mailing date ofthe arbitrator’s written acceptance.

(b) Notice. After the time and place forthe hearing have been established, thearbitrator shall serve a written notice ofthe hearing on the parties by hand or bycertified or registered mail.

(c) Appearances. The parties mayappear in person or by counsel or otherrepresentatives. Any party that, afterbeing duly notified and without goodcause shown, fails to appear in personor by representative at a hearing orconference, or fails to file documents ina timely manner, is deemed to havewaived all rights with respect theretoand is subject to whatever orders ordeterminations the arbitrator may make.

(d) Record and transcript of hearing.Upon the request of either party, thearbitrator shall arrange for a record ofthe arbitration hearing to be made bystenographic means or by taperecording. The cost of making the recordand the costs of transcription andcopying are costs of the arbitrationproceedings payable as provided in§ 4221.10(b) except that, if only oneparty requests that a transcript of therecord be made, that party shall pay thecost of the transcript.

(e) Order of hearing. The arbitratorshall conduct the hearing in accordancewith the following rules:

(1) Opening. The arbitrator shall openthe hearing and place in the record the


notice of initiation of arbitration or theinitiation agreement. The arbitrator mayask for statements clarifying the issuesinvolved.

(2) Presentation of claim andresponse. The arbitrator shall establishthe procedure for presentation of claimand response in such a manner as toafford full and equal opportunity to allparties for the presentation of theircases.

(3) Witnesses. All witnesses shalltestify under oath or affirmation and aresubject to cross-examination byopposing parties. If testimony of anexpert witness is offered by a partywithout prior notice to the other party,the arbitrator shall grant the other partya reasonable time to prepare for cross-examination and to produce expertwitnesses on its own behalf. Thearbitrator may on his or her owninitiative call expert witnesses on anyissue raised in the arbitration. The costof any expert called by the arbitrator isa cost of the proceedings payable asprovided in § 4221.10(b).

(f) Continuance of hearing. Thearbitrator may, for good cause shown,grant a continuance for a reasonableperiod. When granting a continuance,the arbitrator shall set a date forresumption of the hearing.

(g) Filing of briefs. Each party may filea written statement of facts andargument supporting the party’sposition. The parties’ briefs are due nolater than 30 days after the close of thehearing. Within 15 days thereafter, eachparty may file a reply brief concerningmatters contained in the opposing brief.The arbitrator may establish a briefingschedule and may reduce or extendthese time limits. Each party shalldeliver copies of all of its briefs to thearbitrator and to all opposing parties.

§ 4221.7 Reopening of proceedings.(a) Grounds for reopening. At any

time before a final award is rendered,the proceedings may be reopened, onthe motion of the arbitrator or at therequest of any party, for the purpose oftaking further evidence or rehearing orrearguing any matter, if the arbitratordetermines that—

(1) The reopening is likely to result innew information that will have amaterial effect on the outcome of thearbitration;

(2) Good cause exists for the failure ofthe party that requested reopening topresent such information at the hearing;and

(3) The delay caused by the reopeningwill not be unfairly injurious to anyparty.

(b) Comments on and notice ofreopening. The arbitrator shall allow all

affected parties the opportunity tocomment on any motion or request toreopen the proceedings. If he or shedetermines that the proceedings shouldbe reopened, he or she shall give allparties written notice of the reasons forreopening and of the schedule of thereopened proceedings.

§ 4221.8 Award.(a) Form. The arbitrator shall render a

written award that—(1) States the basis for the award,

including such findings of fact andconclusions of law (which need not beexplicitly designated as such) as arenecessary to resolve the dispute;

(2) Adjusts (or provides a method foradjusting) the amount or schedule ofpayments to be made after the award toreflect overpayments or underpaymentsmade before the award was rendered orrequires the plan sponsor to refundoverpayments in accordance with§ 4219.31(d); and

(3) Provides for an allocation of costsin accordance with § 4221.10.

(b) Time of award. Except as providedin paragraphs (c), (d), and (e) of thissection, the arbitrator shall render theaward no later than 30 days after theproceedings close. The award isrendered when filed or served on theparties as provided in § 4221.13. Theaward is final when the period forseeking modification or reconsiderationin accordance with § 4221.9(a) hasexpired or the arbitrator has rendered arevised award in accordance with§ 4221.9(c).

(c) Reopened proceedings. If theproceedings are reopened in accordancewith § 4221.7 after the close of thehearing, the arbitrator shall render theaward no later than 30 days after thedate on which the reopened proceedingsare closed.

(d) Absence of hearing. If the partieshave chosen to proceed without ahearing, the arbitrator shall render theaward no later than 30 days after thedate on which final statements andproofs are filed with him or her.

(e) Agreement for extension of time.Notwithstanding paragraphs (b), (c), and(d), the parties may agree to anextension of time for the arbitrator’saward in light of the particular facts andcircumstances of their dispute.

(f) Close of proceedings. For purposesof paragraphs (b) and (c) of this section,the proceedings are closed on the dateon which the last brief or reply brief isdue or, if no briefs are to be filed, on thedate on which the hearing or rehearingcloses.

(g) Publication of award. After a finalaward has been rendered, the plansponsor shall make copies available

upon request to the PBGC and to allcompanies that contribute to the plan.The plan sponsor may imposereasonable charges for copying andpostage.

§ 4221.9 Reconsideration of award.(a) Motion for reconsideration and

objections. A party may seekmodification or reconsideration of thearbitrator’s award by filing a writtenmotion with the arbitrator and allopposing parties within 20 days afterthe award is rendered. Opposing partiesmay file objections to modification orreconsideration within 10 days after themotion is filed. The filing of a writtenmotion for modification orreconsideration suspends the 30-dayperiod under section 4221(b)(2) ofERISA for requesting court review of theaward. The 30-day statutory periodagain begins to run when the arbitratordenies the motion pursuant toparagraph (c) of this section or rendersa revised award.

(b) Grounds for modification orreconsideration. The arbitrator maygrant a motion for modification orreconsideration of the award only if—

(1) There is a numerical error or amistake in the description of anyperson, thing, or property referred to inthe award; or

(2) The arbitrator has rendered anaward upon a matter not submitted tothe arbitrator and the matter affects themerits of the decision; or

(3) The award is imperfect in a matterof form not affecting the merits of thedispute.

(c) Decision of arbitrator. Thearbitrator shall grant or deny the motionfor modification or reconsideration, andmay render an opinion to support his orher decision within 20 days after themotion is filed with the arbitrator, orwithin 30 days after the motion is filedif an objection is also filed.

§ 4221.10 Costs.The costs of arbitration under this

part shall be borne by the parties asfollows:

(a) Witnesses. Each party to thedispute shall bear the costs of its ownwitnesses.

(b) Other costs of arbitration. Exceptas provided in § 4221.6(d) with respectto a transcript of the hearing, the partiesshall bear the other costs of thearbitration proceedings equally unlessthe arbitrator determines otherwise. Theparties may, however, agree to adifferent allocation of costs if theiragreement is entered into after theemployer has received notice of theplan’s assessment of withdrawalliability.


(c) Attorneys’ fees. The arbitrator mayrequire a party that initiates or contestsan arbitration in bad faith or engages indilatory, harassing, or other improperconduct during the course of thearbitration to pay reasonable attorneys’fees of other parties.

§ 4221.11 Waiver of rules.Any party that fails to object in

writing in a timely manner to anydeviation from any provision of this partis deemed to have waived the right tointerpose that objection thereafter.

§ 4221.12 Calculation of periods of time.For purposes of calculating any

period of time under this part, theperiod begins to run on the dayfollowing the day that a communicationis received or an act is completed. If thelast day of the period is a Federal, State,or local holiday or a non-business dayfor one of the parties or the arbitrator,the period runs until the end of the firstbusiness day that follows. Holidays ornon-business days occurring during therunning of the period of time areincluded in calculating the period.

§ 4221.13 Filing or service of documents.(a) By mail. A document that is to be

filed or served under this part isconsidered filed or served on—

(1) The date of the receipt provided tothe sender by the United States PostalService, if the document was sent bycertified or registered mail, postageprepaid, properly packaged, andproperly addressed; or

(2) The date of the United StatesPostal Service postmark stamped on thecover in which the document is mailed,if paragraph (a)(1) is not applicable, alegible postmark was made, and thedocument was sent postage prepaid,properly packaged, and properlyaddressed.

(b) By means other than mail. Adocument required to be deliveredunder this part that is not mailed inaccordance with paragraph (a) of thissection is considered filed or served onthe date on which it is received.

§ 4221.14 PBGC-approved arbitrationprocedures.

(a) Use of PBGC-approved arbitrationprocedures. In lieu of the proceduresprescribed by this part, an arbitrationmay be conducted in accordance withan alternative arbitration procedureapproved by the PBGC in accordancewith paragraph (c) of this section. Aplan may by plan amendment requirethe use of a PBGC-approved procedurefor all arbitrations of withdrawalliability disputes, or the parties mayagree to the use of a PBGC-approvedprocedure in a particular case.

(b) Scope of alternative procedures. Ifan arbitration is conducted inaccordance with a PBGC-approvedarbitration procedure, the alternativeprocedure shall govern all aspects of thearbitration, with the followingexceptions:

(1) The time limits for the initiationof arbitration may not differ from thoseprovided for by § 4221.3.

(2) The arbitrator shall be selectedafter the initiation of the arbitration.

(3) The arbitrator shall give the partiesopportunity for prehearing discoverysubstantially equivalent to that providedby § 4221.5(a)(2).

(4) The award shall be made availableto the public to at least the extentprovided by § 4221.8(g).

(5) The costs of arbitration shall beallocated in accordance with § 4221.10.

(c) Procedure for approval ofalternative procedures. The PBGC mayapprove arbitration procedures on itsown initiative by publishing anappropriate notice in the FederalRegister. The sponsor of an arbitrationprocedure may request PBGC approvalof its procedures by submitting anapplication to the PBGC. Theapplication shall be submitted toReports Processing, InsuranceOperations Department, Pension BenefitGuaranty Corporation, 1200 K Street,NW., Washington, DC 20005–4026, andshall include:

(1) A copy of the procedures forwhich approval is sought;

(2) A description of the history,structure and membership of theorganization that sponsors theprocedures; and

(3) A discussion of the reasons why,in the sponsoring organization’sopinion, the procedures satisfy thecriteria for approval set forth in thissection.

(d) Criteria for approval of alternativeprocedures. The PBGC shall approve anapplication if it determines that theproposed procedures will besubstantially fair to all parties involvedin the arbitration of a withdrawalliability dispute and that the sponsoringorganization is neutral and able to carryout its role under the procedures. ThePBGC may request comments on theapplication by publishing anappropriate notice in the FederalRegister. Notice of the PBGC’s decisionon the application shall be published inthe Federal Register. Unless the noticeof approval specifies otherwise,approval will remain effective untilrevoked by the PBGC through a FederalRegister notice.

PART 4231—MERGERS ANDTRANSFERS BETWEENMULTIEMPLOYER PLANS

Sec.4231.1 Purpose and scope.4231.2 Definitions.4231.3 Requirements for mergers and

transfers.4231.4 Preservation of accrued benefits.4231.5 Valuation requirement.4231.6 Plan solvency tests.4231.7 De minimis mergers and transfers.4231.8 Notice of merger or transfer.4231.9 Request for compliance

determination.4231.10 Actuarial calculations and

assumptions.Authority: 29 U.S.C. 1302(b)(3), 1411.


is to prescribe notice requirementsunder section 4231 of ERISA for mergersand transfers of assets or liabilitiesamong multiemployer pension plans.This part also interprets the otherrequirements of section 4231 andprescribes special rules for de minimismergers and transfers.

(b) Scope. This part applies to mergersand transfers among multiemployerplans where all of the plansimmediately before and immediatelyafter the transaction are multiemployerplans covered by title IV of ERISA.


§ 4001.2 of this chapter: ERISA, fairmarket value, IRS, multiemployer plan,PBGC, plan, and plan year.

In addition, for purposes of this part:Actuarial valuation means a valuation

of assets and liabilities performed by anenrolled actuary using the actuarialassumptions used for purposes ofdetermining the charges and credits tothe funding standard account undersection 302 of ERISA and section 412 ofthe Code.

Certified change of collectivebargaining representative means achange of collective bargainingrepresentative certified under the Labor-Management Relations Act of 1947, asamended, or the Railway Labor Act, asamended.

Fair market value of assets has thesame meaning as the term has forminimum funding purposes undersection 302 of ERISA and section 412 ofthe Code.

Merger means the combining of two ormore plans into a single plan. Forexample, a consolidation of two plansinto a new plan is a merger.

Significant transfer means the transferof assets that equal or exceed 15% of theassets of the transferor plan before thetransfer or the transfer of unfunded


accrued benefits that equal or exceed15% of the assets of the transferee plan(including a plan that did not exist priorto the transfer) before the transfer.

Transfer and transfer of assets orliabilities mean a diminution of assets orliabilities with respect to one plan andthe acquisition of these assets or theassumption of these liabilities byanother plan or plans (including a planthat did not exist prior to the transfer).However, the shifting of assets orliabilities pursuant to a writtenreciprocity agreement between twomultiemployer plans in which one planassumes liabilities of another plan is nota transfer of assets or liabilities. Inaddition, the shifting of assets betweenseveral funding media used for a singleplan (such as between trusts, betweenannuity contracts, or between trusts andannuity contracts) is not a transfer ofassets or liabilities.

§ 4231.3 Requirements for mergers andtransfers.

(a) General requirements. A plansponsor may not cause a multiemployerplan to merge with one or moremultiemployer plans or transfer assetsor liabilities to or from anothermultiemployer plan unless the mergeror transfer satisfies all of the followingrequirements:

(1) No participant’s or beneficiary’saccrued benefit may be lowerimmediately after the effective date ofthe merger or transfer than the benefitimmediately before the merger ortransfer.

(2) Actuarial valuations of the plansinvolved in the merger or transfer shallhave been performed in accordancewith § 4231.5.

(3) For each plan involved in thetransaction, an enrolled actuary shall-

(i) Determine that the plan meets theapplicable plan solvency requirementset forth in § 4231.6; or

(ii) Otherwise demonstrate thatbenefits under the plan are notreasonably expected to be subject tosuspension under section 4245 ofERISA.

(4) The plan sponsor shall notify thePBGC of the merger or transfer inaccordance with § 4231.8.

(b) Compliance determination. If aplan sponsor requests a determinationthat a merger or transfer that mayotherwise be prohibited by section406(a) or (b)(2) of ERISA satisfies therequirements of section 4231 of ERISA,the plan sponsor shall submit theinformation described in § 4231.9 inaddition to the information required by§ 4231.8. PBGC may request additionalinformation if necessary to determinewhether a merger or transfer complies

with the requirements of section 4231and this part. Plan sponsors are notrequired to request a compliancedetermination. Under section 4231(c) ofERISA, if the PBGC determines that themerger or transfer complies with section4231 of ERISA and this part, the mergeror transfer will not constitute a violationof the prohibited transaction provisionsof section 406(a) and (b)(2) of ERISA.

(c) Certified change in bargainingrepresentative. Transfers of assets andliabilities pursuant to a certified changein bargaining representative aregoverned by section 4235 of ERISA.Plan sponsors involved in such transfersare not required to comply with thispart. However, under section 4235(f)(1)of ERISA, the plan sponsors of the plansinvolved in the transfer may agree to atransfer that complies with sections4231 and 4234 of ERISA. Plan sponsorsthat elect to comply with sections 4231and 4234 must comply with the rules inthis part.(Approved by the Office of Management andBudget under control number 1212–0022)

§ 4231.4 Preservation of accrued benefits.Section 4231(b)(2) of ERISA and

§ 4231.3(a)(1) require that noparticipant’s or beneficiary’s accruedbenefit may be lower immediately afterthe effective date of the merger ortransfer than the benefit immediatelybefore the merger or transfer. A planthat assumes an obligation to paybenefits for a group of participantssatisfies this requirement only if theplan contains a provision preserving allaccrued benefits. The determination ofwhat is an accrued benefit shall be madein accordance with section 411 of theCode and the regulations thereunder.

§ 4231.5 Valuation requirement.(a) Mergers and non-significant

transfers. A merger or a transfer that isnot significant (‘‘non-significanttransfer’’) satisfies section 4231(b)(4) ofERISA and § 4231.3(a)(2) (requiring anactuarial valuation) if an actuarialvaluation has been performed for eachplan involved in the merger or transfer,based on the assets and liabilities of theplan as of a date not more than threeyears before the date on which thenotice of the merger or transfer is filed.

(b) Significant transfers. A significanttransfer satisfies section 4231(b)(4) ofERISA and § 4231.3(a)(2) if an actuarialvaluation has been performed for eachplan involved in the transfer, based onthe assets and liabilities of the plan asof a date not earlier than the first dayof the last plan year ending before theproposed effective date of the transfer.The valuation shall separately identifyassets, contributions and liabilities

being transferred, and shall be based onthe actuarial assumptions and methodsthat are expected to be used for the firstplan year beginning after the transfer.

§ 4231.6 Plan solvency tests.

(a) Significant transfers. A significanttransfer satisfies the plan solvencyrequirement of section 4231(b)(3) ofERISA and § 4231.3(a)(3)(i) if all of thefollowing requirements are met by eachplan involved in the transfer:

(1) Expected contributions shall equalor exceed the estimated amountnecessary to satisfy the minimumfunding requirement of section 412(a) ofthe Code (including reorganizationfunding, if applicable) for the five planyears beginning on or after the proposedeffective date of the transfer.

(2) The fair market value of planassets immediately after the transfershall equal or exceed the total amountof expected benefit payments during thefirst five plan years beginning on or afterthe proposed effective date of thetransfer.

(3) Expected contributions for the firstplan year beginning on or after theproposed effective date of the transfershall equal or exceed expected benefitpayments for that plan year.

(4) Contributions for the amortizationperiod shall equal or exceed unfundedaccrued benefits plus expected normalcosts.

(i) Notwithstanding paragraph (c)(4)of this section, ‘‘unfunded accruedbenefits’’ means the excess of thepresent value of accrued benefits overthe fair market value of the assets,determined on the basis of the actuarialvaluation required under § 4231.5(b).

(ii) ‘‘Amortization period’’ meanseither 25 plan years or the amortizationperiod for the resulting base when thecombined charge base and the combinedcredit base are offset under section412(b)(4) of the Code. The actuary mayselect either period.

(b) Mergers and non-significanttransfers. A merger or non-significanttransfer satisfies the plan solvencyrequirement of section 4231(b)(3) ofERISA and § 4231.3(a)(3)(i) if, for themerged plan or for each plan thatcontinues after the transfer—

(1) The fair market value of planassets immediately after the merger ortransfer equals or exceeds five times thebenefit payments in the last plan yearending before the proposed effectivedate of the merger or transfer; or

(2) In each of the first five plan yearsbeginning after the proposed effectivedate of the merger or transfer, expectedplan assets plus expected contributionsand investment earnings equal or


exceed expected expenses and benefitpayments for the plan year.

(c) Rules for determinations. Indetermining whether a transactionsatisfies the plan solvency requirementsset forth in this section, the followingrules apply:

(1) Expected contributions after amerger or transfer shall be determinedby assuming that contributions willequal contributions received in oraccrued for the last full plan year endingbefore the date on which the notice ofmerger or transfer is filed with thePBGC. Contributions shall be adjusted,however, to reflect any change in therate of employer contributions that hasbeen negotiated (whether or not ineffect), or a trend of changingcontribution base units over thepreceding five plan years or otherperiod of time that can be demonstratedto be more appropriate.

(2) Expected normal costs shall bedetermined under the funding methodand assumptions used by the planactuary for purposes of determining theminimum funding requirement undersection 412 of the Code (which requiresthat such assumptions be reasonable inthe aggregate). If the plan is using anaggregate funding method, normal costsshall be determined under the entry agenormal method.

(3) Expected benefit payments shallbe determined by assuming that currentbenefits remain in effect and that allscheduled increases in benefits occur.

(4) The fair market value of planassets immediately after the merger ortransfer shall be based on the mostrecent data available to the plan sponsorimmediately before the date on whichthe notice is filed.

(5) Expected investment earningsshall be determined using the sameinterest assumption used fordetermining the minimum fundingrequirement under section 412 of theCode.

(6) Expected expenses shall bedetermined using expenses in the lastplan year ending before the notice isfiled, adjusted to reflect any anticipatedchanges.

(7) Expected plan assets for a planyear shall be determined by adjustingthe most current data on fair marketvalue of plan assets to reflect expectedcontributions, investment earnings,benefit payments and expenses for eachplan year between the date of the mostcurrent data and the beginning of theplan year for which expected assets arebeing determined.

§ 4231.7 De minimis mergers andtransfers.

(a) Special plan solvency rule. Inorder to determine whether a deminimis merger or transfer satisfies theplan solvency requirement in§ 4231.6(b), the plan assets, expectedcontributions and expected benefits maybe determined without regard to any deminimis mergers or transfers that haveoccurred since the last valuationperformed to establish charges andcredits to the minimum fundingstandard account under section 412(b)of the Code.

(b) De minimis merger defined. Amerger is de minimis if the presentvalue of accrued benefits (whether ornot vested) of one plan is less than 3percent of the fair market value of theother plan’s assets.

(c) De minimis transfer defined. Atransfer of assets or liabilities is deminimis if—

(1) The fair market value of the assetstransferred, if any, is less than 3 percentof the fair market value of all the assetsof the transferor plan; and

(2) The present value of the accruedbenefits transferred (whether or notvested) is less than 3 percent of the fairmarket value of all the assets of thetransferee plan.

(d) Value of assets and benefits. Forpurposes of paragraphs (b) and (c) ofthis section, the value of plan assets andaccrued benefits may be determined asof any date prior to the proposedeffective date of the merger or transfer,but not earlier than the date of the mostrecent valuation performed for purposesof section 412(b) of the Code.

(e) Aggregation required. Indetermining whether a merger ortransfer is de minimis, the assets andaccrued benefits transferred in previousde minimis mergers and transfers withinthe same plan year shall be aggregatedas described in paragraphs (e)(1) and(e)(2) of this section. For the purposesof those paragraphs, the value of planassets may be determined as of the dateduring the plan year on which the totalvalue of the plan’s assets is the highest.

(1) A merger is not de minimis if thetotal present value of accrued benefitsmerged into a plan, when aggregatedwith all prior de minimis mergers of andtransfers to that plan effective withinthe same plan year, equals or exceeds 3percent of the value of the plan’s assets.

(2) A transfer is not de minimis if,when aggregated with all previousmergers and transfers effective withinthe same plan year—

(i) The value of all assets transferredfrom the plan equals or exceeds 3percent of the value of the plan’s assets;or

(ii) The present value of all accruedbenefits transferred to the plan equals orexceeds 3 percent of the plan’s assets.

§ 4231.8 Notice of merger or transfer.

(a) When to file. Except as provided inparagraph (f) of this section, a notice ofa proposed merger or transfer shall befiled not less than 120 days before theeffective date of the transaction. Forpurposes of this part, the effective dateof a merger or transfer is the earlier of—

(1) The date on which one planassumes liability for benefits accruedunder another plan involved in thetransaction; or

(2) The date on which one plantransfers assets to another plan involvedin the transaction.

(b) Who shall file. The plan sponsorsof all plans involved in a merger ortransfer, or the duly authorizedrepresentative(s) acting on behalf of theplan sponsors, shall jointly file thenotice required by this section.

(c) Where to file. The notice shall bedelivered by mail or submitted by handto Reports Processing, InsuranceOperations Department, Pension BenefitGuaranty Corporation, 1200 K StreetNW., Washington, DC 20005–4026.

(d) Filing date. For purposes ofparagraph (a) of this section, the noticeis not considered filed until all of theinformation required by paragraph (e) ofthis section has been submitted. Exceptas provided in the next sentence, thenotice is considered filed on the date itis received by the PBGC, unless it isreceived after regular business hours, inwhich event it is considered filed on thenext regular business day. The notice isconsidered filed on the date of thepostmark stamped on the cover inwhich the notice is mailed if—


(2) The notice was mailed postageprepaid, properly packaged andaddressed to the PBGC.

(e) Information required. Each noticeshall contain the following information:

(1) For each plan involved in themerger or transfer—

(i) The name of the plan;(ii) The name, address and telephone

number of the plan sponsor and of theplan sponsor’s duly authorizedrepresentative, if any; and

(iii) The nine-digit employerIdentification Number (EIN) assigned bythe IRS to the plan sponsor and thethree-digit Plan Identification Number(PIN) assigned by the plan sponsor tothe plan, and, if different, the EIN orPIN last filed with the PBGC. If no EINor PIN has been assigned, the noticeshall so indicate.


(2) The kind of transaction beingreported (merger, significant transfer ornon-significant transfer).

(3) The proposed effective date of themerger or transfer.

(4) A copy of the plan provisionstating that no participant’s orbeneficiary’s accrued benefit will belower immediately after the merger ortransfer than the benefit immediatelybefore the transaction.

(5) One of the following statements,certified by an enrolled actuary:

(i) A statement that the merger ortransfer is de minimis as defined in§ 4231.7. A notice of a de minimismerger or transfer is not required toinclude the information described inparagraph (e)(6) or (e)(7) of this section.

(ii) A statement that the merger ortransfer satisfies the applicable plansolvency test set forth in § 4231.6,indicating which is the applicable test.

(iii) A statement of the basis on whichthe actuary has determined that benefitsunder the plan are not reasonablyexpected to be subject to suspensionunder section 4245 of ERISA, includingthe supporting data or calculations,assumptions and methods.

(6) For mergers or transfers (otherthan de minimis mergers or transfers), acopy of the most recent actuarialvaluation report that satisfies therequirements of § 4231.5.

(7) For a significant transfer, thefollowing information used in makingthe plan solvency determination under§ 4231.6(a):

(i) The present value of the accruedbenefits and fair market value of planassets under the valuation required by§ 4231.5(b), allocable to each plan afterthe transfer.

(ii) The fair market value of assets ineach plan after the transfer (determinedin accordance with § 4231.6(c)(4)).

(iii) The expected benefit paymentsfor each plan in the first plan yearbeginning on or after the proposedeffective date of the transfer (determinedin accordance with § 4231.6(c)(3)).

(iv) The contribution rates in effect foreach plan for the first plan yearbeginning on or after the proposedeffective date of the transfer.

(v) The expected contributions foreach plan in the first plan yearbeginning on or after the proposedeffective date of the transfer (determinedin accordance with § 4231.6(c)(1)).

(f) Waiver of notice. PBGC may waivethe notice requirements of this sectionand section 4231(b)(1) of ERISA if theplan sponsor demonstrates to thesatisfaction of the PBGC that failure tocomplete the merger or transfer in lessthan 120 days after filing the notice willcause harm to participants or

beneficiaries of the plans involved inthe transaction.(Approved by the Office of Management andBudget under control number 1212–0022)

§ 4231.9 Request for compliancedetermination.

(a) General. A request for adetermination that a merger or transfercomplies with the requirements ofsection 4231 of ERISA may be filed bythe plan sponsor or sponsors of one ormore plans involved in a merger ortransfer. The request shall contain theinformation described in paragraph (b)or (c) of this section, as applicable.

(1) The place of filing. The requestshall be delivered to the address setforth in § 4231.8(c).

(2) Single request permitted for all deminimis transactions. Because the plansolvency test for de minimis mergersand transfers is based on the most recentvaluation (without adjustment forintervening de minimis transactions), aplan sponsor may submit a singlerequest for a compliance determinationcovering all de minimis mergers ortransfers that occur between one planvaluation and the next. However, theplan sponsor must still notify PBGC ofeach de minimis merger or transferseparately, in accordance with § 4231.8.The single request for a compliancedetermination may be filed concurrentlywith any one of the notices of a deminimis merger or transfer.

(b) Contents of request: merger ortransfer that is not de minimis. Arequest for a compliance determinationconcerning a merger or transfer that isnot de minimus shall contain—

(1) A copy of the merger or transferagreement;

(2) A summary of the requiredcalculations, including a completedescription of assumptions andmethods, on which the enrolled actuarybased the certification that the merger ortransfer satisfied a plan solvency testdescribed in § 4231.6; and

(3) For a significant transfer, copies ofall actuarial valuations performedwithin the 5 years preceding theproposed effective date of the transfer.

(c) Contents of request: De minimusmerger or transfer. A request for acompliance determination concerning ade minimis merger or transfer shallcontain one of the following statements,certified by an enrolled actuary:

(1) A statement that the merger ortransfer satisfies one of the plansolvency tests set forth in § 4231.6(b),indicating which test is satisfied.

(2) A statement of the basis on whichthe actuary has determined that benefitsunder the plan are not reasonablyexpected to be subject to suspension

under section 4245 of ERISA, includingsupporting data or calculations,assumptions and methods.(Approved by the Office of Management andBudget under control number 1212–0022)

§ 4231.10 Actuarial calculations andassumptions.

(a) Most recent valuation. Allcalculations required by this part shallbe based on the most recent actuarialvaluation as of the date of filing thenotice, updated to show any materialchanges.

(b) Assumptions. All calculationsrequired by this part shall be based onmethods and assumptions that arereasonable in the aggregate, based ongenerally accepted actuarial principles.

(c) Updated calculations. If the actualdate of the merger or transfer is morethan one year after the date the noticeis filed with the PBGC, PBGC mayrequire the plans involved to provideupdated calculations andrepresentations based on the actualeffective date of the transaction.(Approved by the Office of Management andBudget under control number 1212–0022)

PART 4245—NOTICE OF INSOLVENCY

Sec.4245.1 Purpose and scope.4245.2 Definitions.4245.3 Notice of insolvency.4245.4 Contents of notice of insolvency.4245.5 Notice of insolvency benefit level.4245.6 Contents of notice of insolvency

benefit level.4245.7 PBGC address.

Authority: 29 U.S.C. 1302(b)(3), 1426(e).


(a) Purpose. The purpose of this partis to prescribe notice requirementspertaining to insolvent multiemployerplans that are in reorganization.

(b) Scope. This part applies tomultiemployer plans in reorganizationcovered by title IV of ERISA, other thanplans that have terminated by masswithdrawal under section 4041A(a)(2) ofERISA.


The following terms are defined in§ 4001.2 of this chapter: employer,ERISA, IRS, multiemployer plan,nonforfeitable benefit, PBGC, person,plan, and plan year.

In addition, for purposes of this part:Actuarial valuation means a report

submitted to the plan in connectionwith a valuation of plan assets andliabilities, which, in the case of a plancovered by subparts C and D of part4281, shall be performed in accordancewith subpart B of part 4281.


Available resources means, for a planyear, available resources as described insection 4245(b)(3) of ERISA.



Insolvency benefit level means thegreater of the resource benefit level orthe benefit level guaranteed by thePBGC for each participant andbeneficiary in pay status.


Insolvent means that a plan is unableto pay benefits when due during theplan year. A plan terminated by masswithdrawal is not insolvent unless it hasbeen amended to eliminate all benefitsthat are subject to reduction undersection 4281(c) of ERISA, or, in theabsence of an amendment, no benefitsunder the plan are subject to reductionunder section 4281(c) of ERISA.

Reasonably expected to enter paystatus means, with respect to planparticipants and beneficiaries, persons(other than those in pay status) who,according to plan records, are disabled,have applied for benefits, or havereached or will reach during theapplicable period the normal retirementage under the plan, and any otherswhom it is reasonable for the plansponsor to expect to enter pay statusduring the applicable period.

Reorganization means reorganizationunder section 4241(a) of ERISA.


§ 4245.3 Notice of insolvency.(a) Requirement of notice. A plan

sponsor of a multiemployer plan inreorganization that determines undersection 4245 (b)(1), (d)(1) or (d)(2) ofERISA that the plan’s availableresources are or may be insufficient topay benefits when due for a plan yearshall so notify the PBGC and theinterested parties, as defined inparagraph (d) of this section. A singlenotice may cover more than one planyear. The notices shall be delivered inthe manner and within the timeprescribed in this section and shallcontain the information described in§ 4245.4.

(b) When delivered. A plan sponsorshall mail or otherwise deliver the

notices of insolvency no later than 30days after it determines that the plan isor may become insolvent, as describedin paragraph (a) of this section.However, the notice to participants andbeneficiaries in pay status may bedelivered concurrently with the firstbenefit payment made more than 30days after the determination ofinsolvency.

(c) Methods of delivery. The notice ofinsolvency shall be delivered by mail orby hand to the PBGC and the interestedparties described in paragraph (d) of thissection, other than participants andbeneficiaries who are not in pay statuswhen the notice is required to bedelivered. The notice to participantsand beneficiaries who are not in paystatus shall be provided in any mannerreasonably calculated to reach thoseparticipants and beneficiaries.Reasonable methods of notificationinclude, but are not limited to, postingthe notice at participants’ worksites orpublishing the notice in a unionnewsletter or in a newspaper of generalcirculation in the area or areas whereparticipants reside. Notice to aparticipant shall be deemed notice tothat participant’s beneficiary orbeneficiaries.

(d) Interested parties. For purposes ofthis part, the term ‘‘interested parties’’means—

(1) Employers required to contributeto the plan;

(2) Employee organizations that, forcollective bargaining purposes,represent plan participants employed bysuch employers; and

(3) Plan participants andbeneficiaries.

§ 4245.4 Contents of notice of insolvency.(a) Notice to the PBGC. A notice of

insolvency required to be filed with thePBGC pursuant to § 4245.3 shall containthe information set forth below:


number of the plan sponsor and of theplan sponsor’s duly authorizedrepresentative, if any.


(4) The IRS key district that hasjurisdiction over determination letterswith respect to the plan.

(5) The case number assigned to theplan by the PBGC. If the plan has nocase number, the notice shall state

whether the plan has previously filed anotice of insolvency with the PBGC and,if so, the date on which the notice wasfiled.

(6) The plan year or years for whichthe plan sponsor has determined thatthe plan is or may become insolvent.

(7) A copy of the plan document,including the last restatement of theplan and all subsequent amendments ineffect, or to become effective, during theinsolvency year or years. However, if acopy of the plan document wassubmitted to the PBGC with a previousnotice of insolvency or notice ofinsolvency benefit level, onlysubsequent plan amendments need besubmitted, and the notice shall statewhen the copy of the plan documentwas filed.

(8) A copy of the most recent actuarialvaluation for the plan and a copy of themost recent Schedule B (Form 5500)filed for the plan, if the Schedule Bcontains more recent information thanthe actuarial valuation. If the actuarialvaluation or Schedule B was previouslysubmitted to the PBGC, it may beomitted, and the notice shall state thedate on which the document was filedand that the information is still accurateand complete.

(9) The estimated amount of annualbenefit payments under the plan(determined without regard to theinsolvency) for each insolvency year.

(10) The estimated amount of theplan’s available resources for eachinsolvency year.

(11) A certification, signed by the plansponsor (or a duly authorizedrepresentative), that notices ofinsolvency have been given to allinterested parties in accordance withthe requirements of this part.

(b) Notices to interested parties. Anotice of insolvency required under§ 4245.3 to be given to an interestedparty, as defined in § 4245.3(d), shallcontain the information set forth below:

(1) The name of the plan.(2) The plan year or years for which

the plan sponsor has determined thatthe plan is or may become insolvent.

(3) The estimated amount of annualbenefit payment under the plan(determined without regard to theinsolvency) for each insolvency year.

(4) The estimated amount of theplan’s available resources for eachinsolvency year.

(5) A statement that, during theinsolvency year, benefits above theamount that can be paid from availableresources or the level guaranteed by thePBGC, whichever is greater, will besuspended, with a brief explanation ofwhich benefits are guaranteed by thePBGC. The following statement may be


included as an explanation of PBGC-guaranteed benefits:

Should the plan become insolvent,each participant’s benefit guaranteed bythe Pension Benefit GuarantyCorporation (PBGC) is determined asfollows. Each participant’snonforfeitable monthly benefit payableunder the plan at retirement iscomputed. This benefit is then dividedby the participant’s years of creditedservice under the plan. Of the resultingfigure (the accrual rate), the first $5 isguaranteed at 100%. Any additionalamount (up to $15) is either 75% or65% guaranteed, depending on the pastfunding practices of the plan. Anyremaining amount that exceeds $20 isnot guaranteed. The PBGC guaranteesthe payment of a monthly benefit equalto this adjusted accrual rate times yearsof credited service. The PBGC does notguarantee benefits or benefit increasesthat have been in effect for fewer than60 months before the plan becomesinsolvent or is amended to reduceaccrued benefits.

(6) The name, address, and telephonenumber of the plan administrator orother person designated by the plansponsor to answer inquiries concerningbenefits during the plan’s insolvency.

§ 4245.5 Notice of insolvency benefit level.(a) Requirement of notice. Except as

provided in paragraph (b) of thissection, for each insolvency year theplan sponsor shall notify the PBGC andthe interested parties, as defined in§ 4245.3(d), of the level of benefitsexpected to be paid during the year (the‘‘insolvency benefit level’’). Thesenotices shall be delivered in the mannerand within the time prescribed in thissection and shall contain theinformation described in § 4245.6.

(b) Waiver of notice to certaininterested parties. The notice ofinsolvency benefit level required underthis section need not be given tointerested parties, other thanparticipants and beneficiaries who arein pay status or are reasonably expectedto enter pay status during theinsolvency year, for an insolvency yearimmediately following the plan year inwhich a notice of insolvency wasrequired to be delivered pursuant to§ 4245.3, provided that the notice ofinsolvency was in fact delivered.

(c) When delivered. The plan sponsorshall mail or otherwise deliver therequired notices of insolvency benefitlevel no later than 60 days before thebeginning of the insolvency year, exceptthat if the determination of insolvencyis made fewer than 120 days before thebeginning of the insolvency year, thenotices shall be delivered within 60

days after the date of the plan sponsor’sdetermination.

(d) Methods of delivery. The notice ofinsolvency benefit level shall bedelivered by mail or by hand to thePBGC and to the interested partiesdescribed in § 4245.3(d), other thanparticipants and beneficiaries who areneither in pay status nor reasonablyexpected to enter pay status during theinsolvency year for which the notice isgiven. The notice to participants andbeneficiaries not in pay status, norreasonably expected to enter pay statusduring the insolvency year, shall beprovided in any manner reasonablycalculated to reach those participantsand beneficiaries. Reasonable methodsof notification include, but are notlimited to, posting the notice atparticipants’ worksites or publishing thenotice in a union newsletter or in anewspaper of general circulation in thearea or areas where participants reside.Notice to a participant shall be deemednotice to that participant’s beneficiaryor beneficiaries.

§ 4245.6 Contents of notice of insolvencybenefit level.

(a) Notice to the PBGC. A notice ofinsolvency benefit level required to befiled with the PBGC pursuant to§ 4245.5(a) shall contain the informationset forth below, except as provided inthe next sentence. The informationrequired in paragraphs (a)(7) to (a)(10)need be submitted only if it is differentfrom the information submitted to thePBGC with the notice of insolvencyfiled for that insolvency year (see§ 4245.4 (a)(7) to (a)(10)) or the notice ofinsolvency benefit level filed for a prioryear. When any information is omittedunder this exception, the notice shall sostate and indicate when the notice ofinsolvency or prior notice of insolvencybenefit level was filed.


number of the plan sponsor and of theplan sponsor’s authorizedrepresentative, if any.


(4) The IRS key district that hasjurisdiction over determination letterswith respect to the plan.

(5) The case number assigned to theplan by the PBGC.

(6) The plan year for which the noticeis filed.

(7) A copy of the plan document,including any amendments, in effectduring the insolvency year.

(8) A copy of the most recent actuarialvaluation for the plan and a copy of themost recent Schedule B (Form 5500)filed for the plan, if the Schedule Bcontains more recent information thanthe actuarial valuation.

(9) The estimated amount of annualbenefit payments under the plan(determined without regard to theinsolvency) for the insolvency year.

(10) The estimated amount of theplan’s available resources for theinsolvency year.

(11) The estimated amount of theannual benefit payments guaranteed bythe PBGC for the insolvency year.

(12) The amount of financialassistance, if any, requested from thePBGC.

(13) A certification, signed by the plansponsor (or a duly authorizedrepresentative), that notices ofinsolvency benefit level have been givento all interested parties in accordancewith the requirements of this part.

When financial assistance isrequested, the PBGC may require theplan sponsor to submit additionalinformation necessary to process therequest.

(b) Notices to interested parties otherthan participants in or entering paystatus. A notice of insolvency benefitlevel required by § 4245.5(a) to bedelivered to interested parties, asdefined in § 4245.3(d), other than anotice to a participant or beneficiarywho is in pay status or is reasonablyexpected to enter pay status during theinsolvency year, shall include theinformation set forth below:

(1) The name of the plan.(2) The plan year for which the notice

is issued.(3) The estimated amount of annual

benefit payments under the plan(determined without regard to theinsolvency) for the insolvency year.


(5) The amount of financialassistance, if any, requested from thePBGC.

(c) Notices to participants andbeneficiaries in or entering pay status. Anotice of insolvency benefit levelrequired by § 4245.5(a) to be deliveredto participants and beneficiaries whoare in pay status or are reasonablyexpected to enter pay status during theinsolvency year for which the notice isgiven, shall include the followinginformation:

(1) The name of the plan.(2) The plan year for which the notice

is issued.


(3) A statement of the monthly benefitexpected to be paid to the participant orbeneficiary during the insolvency year.

(4) A statement that in subsequentplan years, depending on the plan’savailable resources, this benefit levelmay be increased or decreased but willnot fall below the level guaranteed bythe PBGC, and that the participant orbeneficiary will be notified in advanceof the new benefit level if it is less thanhis full nonforfeitable benefit under theplan.

(5) The name, address, and telephonenumber of the plan administrator orother person designated by the plansponsor to answer inquiries concerningbenefits during the plan’s insolvency.

§ 4245.7 PBGC address.All notices required to be filed with

the PBGC under this part shall beaddressed to Reports Processing,Insurance Operations Department,Pension Benefit Guaranty Corporation,1200 K Street NW., Washington, DC20005–4026.(Approved by the Office of Management andBudget under control number 1212–0033)

PART 4261—FINANCIAL ASSISTANCETO MULTIEMPLOYER PLANS

§ 4261.1 Cross-reference.See § 4281.47 for procedures for

applying to the PBGC for financialassistance under section 4261 of ERISA.

PART 4281—DUTIES OF PLANSPONSOR FOLLOWING MASSWITHDRAWAL

Subpart A—GeneralSec.4281.1 Purpose and scope.4281.2 Definitions.4281.3 Submission of documents.4281.4 Collection of information.

Subpart B—Valuation of Plan Benefits andPlan Assets4281.11 Valuation dates.4281.12 Benefits to be valued.4281.13 Benefit valuation methods—in

general.4281.14 Mortality assumptions—in general.4281.15 Mortality assumptions—lump

sums under trusteed plans.4281.16 Benefit valuation methods—plans

closing out.4281.17 Asset valuation methods—in

general.4281.18 Outstanding claims for withdrawal

liability.

Subpart C—Benefit Reductions

4281.31 Plan amendment.4281.32 Notices of benefit reductions.4281.33 Restoration of benefits.

Subpart D—Benefit Suspensions4281.41 Benefit suspensions.4281.42 Retroactive payments.

4281.43 Notices of insolvency and annualupdates.

4281.44 Contents of notices of insolvencyand annual updates.

4281.45 Notices of insolvency benefit level.4281.46 Contents of notices of insolvency

benefit level.4281.47 Application for financial

assistance.Authority: 29 U.S.C. 1302(b)(3), 1341a,

1399(c)(1)(D), and 1441.


§ 4281.1 Purpose and scope.(a) General.(1) Purpose. When a multiemployer

plan terminates by mass withdrawalunder section 4041A(a)(2) of ERISA, theplan’s assets and benefits must bevalued annually under section 4281(b)of ERISA, and plan benefits may have tobe reduced or suspended to the extentprovided in section 4281 (c) or (d). Thispart implements the provisions ofsection 4281 and provides rules forapplying for financial assistance fromthe PBGC under section 4261 of ERISA.The plan valuation rules in this partalso apply to the determination ofreallocation liability under section4219(c)(1)(D) of ERISA and subpart B ofpart 4219 of this chapter formultiemployer plans that undergo masswithdrawal (with or withouttermination).

(2) Scope. This part applies tomultiemployer plans covered by Title IVof ERISA that have terminated by masswithdrawal under section 4041A(a)(2) ofERISA (including plans created bypartition pursuant to section 4233 ofERISA). Subpart B of this part alsoapplies to covered multiemployer plansthat have undergone mass withdrawalwithout terminating.

(b) Subpart B. Subpart B establishesrules for determining the value ofmultiemployer plan benefits and assets,including outstanding claims forwithdrawal liability, for plans requiredto perform annual valuations undersection 4281(b) of ERISA or allocateunfunded vested benefits under section4219(c)(1)(D) of ERISA.

(c) Subpart C. Subpart C sets forthprocedures under which the plansponsor of a terminated plan shallamend the plan to reduce benefitssubject to reduction in accordance withsection 4281(c) of ERISA and§ 4041A.24(b) of this chapter. Subpart Capplies to a plan for which the annualvaluation required by § 4041A.24(a)indicates that the value of nonforfeitablebenefits under the plan exceeds thevalue of the plan’s assets (includingclaims for withdrawal liability) if, at theend of the plan year for which thatvaluation was done, the plan provided

any benefits subject to reduction.Benefit reductions required to be madeunder subpart C shall not apply toaccrued benefits under plans or planamendments adopted on or beforeMarch 26, 1980, or under collectivebargaining agreements entered into onor before March 26, 1980.

(d) Subpart D. Subpart D sets forth theprocedures under which the plansponsor of an insolvent plan mustsuspend benefit payments and issueinsolvency notices in accordance withsection 4281(d) of ERISA and§ 4041A.25 (c) and (d) of this chapter.Subpart D applies to a plan that hasbeen amended under section 4281(c) ofERISA and subpart C of this part toeliminate all benefits subject toreduction and to a plan that provided nobenefits subject to reduction as of thedate on which the plan terminated.


section 4001.2 of this chapter: annuity,employer, ERISA, fair market value, IRS,insurer, irrevocable commitment, masswithdrawal, multiemployer plan,nonforfeitable benefit, normalretirement age, PBGC, person, plan, planadministrator, and plan year.

In addition, for purposes of this part:Available resources means, for a plan

year, available resources as described insection 4245(b)(3) of ERISA.



Insolvency benefit level means thegreater of the resource benefit level orthe benefit level guaranteed by thePBGC for each participant andbeneficiary in pay status.


Insolvent means that a plan is unableto pay benefits when due during theplan year. A plan terminated by masswithdrawal is not insolvent unless it hasbeen amended to eliminate all benefitsthat are subject to reduction undersection 4281(c), or, in the absence of anamendment, no benefits under the planare subject to reduction under section4281(c) of ERISA.

Pro rata means that the requiredbenefit reduction or payment shall beallocated among affected participants inthe same proportion that each such


participant’s nonforfeitable benefitsunder the plan bear to all nonforfeitablebenefits of those participants under theplan.

Reasonably expected to enter paystatus means, with respect to planparticipants and beneficiaries, persons(other than those in pay status) who,according to plan records, are disabled,have applied for benefits, or havereached or will reach during theapplicable period the normal retirementage under the plan, and any otherswhom it is reasonable for the plansponsor to expect to enter pay statusduring the applicable period.


Valuation date means the last day ofthe plan year in which the planterminates and the last day of each planyear thereafter.

§ 4281.3 Submission of documents.

(a) Filing date. Any notice, documentor information required to be filed withthe PBGC under this part shall beconsidered filed on the date of theUnited States postmark stamped on thecover in which the document orinformation is mailed, provided that thepostmark was made by the United StatesPostal Service and the document wasmailed postage prepaid, properlypackaged and addressed to the PBGC. Ifthese conditions are not met, thedocument shall be considered filed onthe date on which it was received by thePBGC.

(b) Address. All notices, documentsand information required to be filedwith the PBGC under this part shall beaddressed to Reports Processing,Insurance Operations Department,Pension Benefit Guaranty Corporation,1200 K Street NW., Washington, DC20005–4026.

§ 4281.4 Collection of information.

The collection of informationrequirements contained in this part havebeen approved by the Office ofManagement and Budget under controlnumber 1212–0032.

Subpart B—Valuation of Plan Benefitsand Plan Assets

§ 4281.11 Valuation dates.

(a) Annual valuations of mass-withdrawal-terminated plans. Thevaluation dates for the annual valuationrequired under section 4281(b) of ERISAshall be the last day of the plan year inwhich the plan terminates and the lastday of each plan year thereafter.

(b) Valuations related to masswithdrawal reallocation liability. The

valuation date for determining the valueof unfunded vested benefits (forpurposes of allocation) under section4219(c)(1)(D) of ERISA shall be—

(1) If the plan terminates by masswithdrawal, the last day of the plan yearin which the plan terminates; or

(2) If substantially all the employerswithdraw from the plan pursuant to anagreement or arrangement to withdrawfrom the plan, the last day of the planyear as of which substantially allemployers have withdrawn from theplan pursuant to the agreement orarrangement.

§ 4281.12 Benefits to be valued.

(a) Form of benefit. The plan sponsorshall determine the form of each benefitto be valued, without regard to the formof benefit valued in any prior year, inaccordance with the following rules:

(1) If a benefit is in pay status as ofthe valuation date, the plan sponsorshall value the form of benefit beingpaid.

(2) If a benefit is not in pay status asof the valuation date but a valid electionwith respect to the form of benefit hasbeen made on or before the valuationdate, the plan sponsor shall value theform of benefit so elected.

(3) If a benefit is not in pay status asof the valuation date and no validelection with respect to the form ofbenefit has been made on or before thevaluation date, the plan sponsor shallvalue the form of benefit that, under theterms of the plan or applicable law, ispayable in the absence of a validelection.

(b) Timing of benefit. The plansponsor shall value benefits whosestarting date is subject to election—

(1) By assuming that the starting dateof each benefit is the earliest date, notpreceding the valuation date, that couldbe elected; or

(2) By using any other assumptionthat the plan sponsor demonstrates tothe satisfaction of the PBGC is morereasonable under the circumstances.

§ 4281.13 Benefit valuation methods—ingeneral.

(a) General rule. Except as otherwiseprovided in paragraph (b) of this section(regarding the valuation of benefitspayable as lump sums under trusteedplans) and § 4281.16 (regarding plansthat are closing out), the plan sponsorshall value benefits as of the valuationdate by—

(1) Using the interest assumptionsdescribed in Table I of appendix B topart 4044 of this chapter;

(2) Using the mortality assumptionsdescribed in § 4281.14;

(3) Using interpolation methods,where necessary, at least as accurate aslinear interpolation;

(4) Applying valuation formulas thataccord with generally accepted actuarialprinciples and practices; and

(5) Adjusting the values to reflect theloading for expenses in accordance withappendix C to part 4044 of this chapter(substituting the term ‘‘benefits’’ for theterm ‘‘benefit liabilities (as defined in 29U.S.C. § 1301(a)(16))’’).

(b) Benefits payable as lump sumsunder trusteed plans. If the PBGC istrustee of a multiemployer plan, fordetermining whether the value of abenefit is $3,500 or less under§ 4022.7(b)(1) and for calculating theamount of a lump sum benefit, thePBGC shall value benefits to be paid aslump sums in the same manner asbenefits to be paid as annuities exceptthat the interest assumptions prescribedby Table II of appendix B to part 4044of this chapter and the mortalityassumptions prescribed by § 4281.15shall apply, and there shall be noadjustment to reflect the loading forexpenses.

§ 4281.14 Mortality assumptions—ingeneral.

(a) General rule. Except as otherwiseprovided in § 4281.15 (regarding thevaluation of benefits payable as lumpsums under trusteed plans), and subjectto paragraph (b) of this section(regarding certain death benefits), theplan administrator shall use themortality factors prescribed inparagraphs (c), (d), and (e) of thissection to value benefits under§ 4281.13.

(b) Certain death benefits. If anannuity for one person is in pay statuson the valuation date, and if thepayment of a death benefit after thevaluation date to another person, whoneed not be identifiable on the valuationdate, depends in whole or in part on thedeath of the pay status annuitant, thenthe plan administrator shall value thedeath benefit using—

(1) the mortality rates that areapplicable to the annuity in pay statusunder this section to represent themortality of the pay status annuitant;and

(2) the mortality rates applicable toannuities not in pay status and todeferred benefits other than annuities,under paragraph (c) of this section, torepresent the mortality of the deathbeneficiary.

(c) Mortality rates for healthy lives.The mortality rates applicable toannuities in pay status on the valuationdate that are not being received asdisability benefits, to annuities not in


pay status on the valuation date, and todeferred benefits other than annuities,are,—

(1) For male participants, the rates inTable 1 of appendix A to part 4044 ofthis chapter, and

(2) For female participants, the ratesin Table 1 of appendix A to part 4044of this chapter, set back 6 years.

(d) Mortality rates for disabled lives(other than Social Security disability).The mortality rates applicable toannuities in pay status on the valuationdate that are being received as disabilitybenefits and for which neither eligibilityfor, nor receipt of, Social Securitydisability benefits is a prerequisite,are,—

(1) For male participants, the rates inTable 1 of appendix A to part 4044 ofthis chapter, set forward 3 years, and

(2) For female participants, the ratesin Table 1 of appendix A to part 4044of this chapter, set back 3 years.

(e) Mortality rates for disabled lives(Social Security disability). Themortality rates applicable to annuities inpay status on the valuation date that arebeing received as disability benefits andfor which either eligibility for, or receiptof, Social Security disability benefits isa prerequisite, are the rates in Tables 2–M and 2–F of appendix A to part 4044of this chapter.

§ 4281.15 Mortality assumptions—lumpsums under trusteed plans.

(a) General rule. If the PBGC is trusteeof a multiemployer plan, fordetermining whether the value of abenefit is $3,500 or less under§ 4022.7(b)(1) and for calculating theamount of a lump sum benefit, thePBGC will use the mortality rates inTable 3 of appendix A to part 4044 ofthis chapter.

§ 4281.16 Benefit valuation methods—plans closing out.

(a) Applicability. For purposes of theannual valuation required by section4281(b) of ERISA, the plan sponsor shallvalue the plan’s benefits in accordancewith paragraph (b) of this section if,—

(1) Plans closed out before valuation.Before the time when the valuation isperformed, the plan has satisfied in fullall liabilities for payment ofnonforfeitable benefits, in a mannerconsistent with the terms of the planand applicable law, by the purchase ofone or more nonparticipatingirrevocable commitments from one ormore insurers, with respect to allbenefits payable as annuities, and by thepayment of single-sum cashdistributions, with respect to benefitsnot payable as annuities; or

(2) Plans to be closed out aftervaluation. As of the time when the

valuation is performed, the plan sponsorreasonably expects that the plan willclose out before the next annualvaluation date and the plan sponsor hasa currently exercisable bid or bids toprovide the irrevocable commitment(s)described in paragraph (a)(1) of thissection and the total cost of theirrevocable commitment(s) under thebid, plus the total amount of the single-sum cash distributions described inparagraph (a)(1), does not exceed thevalue of the plan’s assets, exclusive ofoutstanding claims for withdrawalliability, as determined under thissubpart.

(b) Valuation rule. The present valueof nonforfeitable benefits under thissection is the total amount of single-sumcash distributions made or to be madeplus the cost of the irrevocablecommitment(s) purchased or to bepurchased in order to satisfy in full allliabilities of the plan for nonforfeitablebenefits.

§ 4281.17 Asset valuation methods—ingeneral.

(a) General rule. The plan sponsorshall value plan assets as of thevaluation date, using the valuationmethods prescribed by this section and§ 4281.18 (regarding outstanding claimsfor withdrawal liability), and deductingadministrative liabilities in accordancewith paragraph (c) of this section.

(b) Assets other than withdrawalliability claims. The plan sponsor shallvalue any plan asset (other than anoutstanding claim for withdrawalliability) by such method or methods asthe plan sponsor reasonably believesmost accurately determine fair marketvalue.

(c) Adjustment for administrativeliabilities. In determining the total valueof plan assets, the plan sponsor shallsubtract all plan liabilities, other thanliabilities to pay benefits. For thispurpose, any obligation to repayfinancial assistance received from thePBGC under section 4261 of ERISA is aplan liability other than a liability topay benefits. The obligation to repayfinancial assistance shall be valued bydetermining the value of the scheduledpayments in the same manner asprescribed in § 4281.18(a) for valuingclaims for withdrawal liability.

§ 4281.18 Outstanding claims forwithdrawal liability.

(a) Value of claim. The plan sponsorshall value an outstanding claim forwithdrawal liability owed by anemployer described in paragraph (b) ofthis section in accordance withparagraphs (a)(1) and (a)(2) of thissection:

(1) If the schedule of withdrawalliability payments provides for one ormore series of equal payments, the plansponsor shall value each series ofpayments as an annuity certain inaccordance with the provisions of§ 4281.13.

(2) If the schedule of withdrawalliability payments provides for one ormore payments that are not part of aseries of equal payments as described inparagraph (a)(1) of this section, the plansponsor shall value each such unequalpayment as a lump-sum payment inaccordance with the provisions of§ 4281.13.

(b) Employers neither liquidated norin insolvency proceedings. The plansponsor shall value an outstandingclaim for withdrawal liability underparagraph (a) of this section if, as of thevaluation date—

(1) The employer has not beencompletely liquidated or dissolved; and

(2) The employer is not the subject ofany case or proceeding under title 11,United States Code, or any case orproceeding under similar provisions ofstate insolvency laws; except that theclaim for withdrawal liability of anemployer that is the subject of aproceeding described in this paragraph(b)(2) shall be valued under paragraph(a) of this section if the plan sponsordetermines that the employer isreasonably expected to be able to pay itswithdrawal liability in full and on time.

(c) Claims against other employers.The plan sponsor shall value at zero anyoutstanding claim for withdrawalliability owed by an employer that doesnot meet the conditions set forth inparagraph (b) of this section.

Subpart C—Benefit Reductions

§ 4281.31 Plan amendment.The plan sponsor of a plan described

in § 4281.31 shall amend the plan toeliminate those benefits subject toreduction in excess of the value ofbenefits that can be provided by planassets. Such reductions shall be effectedby a pro rata reduction of all benefitssubject to reduction or by elimination orpro rata reduction of any category ofbenefit. Benefit reductions required bythis section shall apply onlyprospectively. An amendment requiredunder this section shall take effect nolater than six months after the end of theplan year for which it is determined thatthe value of nonforfeitable benefitsexceeds the value of the plan’s assets.

§ 4281.32 Notices of benefit reductions.(a) Requirement of notices. A plan

sponsor of a multiemployer plan underwhich a plan amendment reducing


benefits is adopted pursuant to section4281(c) of ERISA shall so notify thePBGC and plan participants andbeneficiaries whose benefits are reducedby the amendment. The notices shall bedelivered in the manner and within thetime prescribed, and shall contain theinformation described, in this section.The notice required in this section shallbe filed in lieu of the notice describedin section 4244A(b)(2) of ERISA.

(b) When delivered. The plan sponsorshall mail or otherwise deliver thenotices of benefit reduction no laterthan the earlier of—

(1) 45 days after the amendmentreducing benefits is adopted; or

(2) The date of the first reducedbenefit payment.

(c) Method of delivery. The notices ofbenefit reductions shall be delivered bymail or by hand to the PBGC and to planparticipants and beneficiaries who arein pay status when the notice isrequired to be delivered or who arereasonably expected to enter pay statusbefore the end of the plan year after theplan year in which the amendment isadopted. The notice to otherparticipants and beneficiaries whosebenefit is reduced by the amendmentshall be provided in any mannerreasonably calculated to reach thoseparticipants and beneficiaries.Reasonable methods of notificationinclude, but are not limited to, postingthe notice at participants’ worksites orpublishing the notice in a unionnewsletter or newspaper of generalcirculation in the area or areas whereparticipants reside. Notice to aparticipant shall be deemed notice tothe participant’s beneficiary orbeneficiaries.

(d) Contents of notice to the PBGC. Anotice of benefit reduction required tobe filed with the PBGC pursuant toparagraph (a) of this section shallcontain the following information:

(1) The name of the plan.(2) The name, address, and telephone


(3) The nine-digit EmployerIdentification Number (EIN) assigned bythe IRS to the plan sponsor and thethree-digit Plan Number (PN) assignedby the plan sponsor to the plan, and, ifdifferent, the EIN or PN last filed withthe PBGC. If no EIN or PN has beenassigned, the notice shall so state.

(4) The case number assigned by thePBGC to the filing of the plan’s noticeof termination pursuant to part 4041A,subpart B, of this chapter.

(5) A statement that a planamendment reducing benefits has been

adopted, listing the date of adoption andthe effective date of the amendment.

(6) A certification, signed by the plansponsor or its duly authorizedrepresentative, that notice of the benefitreductions has been given to allparticipants and beneficiaries whosebenefits are reduced by the planamendment, in accordance with therequirements of this section.

(e) Contents of notice to participantsand beneficiaries. A notice of benefitreductions required under paragraph (a)of this section to be given to planparticipants and beneficiaries whosebenefits are reduced by the amendmentshall contain the following information:

(1) The name of the plan.(2) A statement that a plan

amendment reducing benefits has beenadopted, listing the date of adoption andthe effective date of the amendment.

(3) A summary of the amendment,including a description of the effect ofthe amendment on the benefits to whichit applies.

(4) The name, address, and telephonenumber of the plan administrator orother person designated by the plansponsor to answer inquiries concerningbenefits.

§ 4281.33 Restoration of benefits.

(a) General. The plan sponsor of aplan that has been amended to reducebenefits under this subpart shall amendthe plan to restore those benefits beforeadopting any amendment increasingbenefits under the plan. A plan is notrequired to make retroactive benefitpayments with respect to any benefitthat was reduced and subsequentlyrestored in accordance with this section.

(b) Notice to the PBGC. The plansponsor shall notify the PBGC in writingof any restoration under this section.The notice shall include the informationspecified in § 4281.32 (d)(1) through(d)(4); a statement that a planamendment restoring benefits has beenadopted, the date of adoption, and theeffective date of the amendment; and acertification, signed by the plan sponsoror its duly authorized representative,that the amendment has been adoptedin accordance with this section.

Subpart D—Benefit Suspensions

§ 4281.41 Benefit suspensions.

If the plan sponsor determines thatthe plan is or is expected to be insolventfor a plan year, the plan sponsor shallsuspend benefits to the extent necessaryto reduce the benefits to the greater ofthe resource benefit level or the level ofguaranteed benefits.

§ 4281.42 Retroactive payments.(a) Erroneous resource benefit level. If,

by the end of a year in which benefitswere suspended under § 4281.41, theplan sponsor determines in writing thatthe plan’s available resources in thatyear could have supported benefitpayments above the resource benefitlevel determined for that year, the plansponsor may distribute the excessresources to each affected participantand beneficiary who received benefitpayments that year on a pro rata basis.The amount distributed to eachparticipant under this paragraph maynot exceed the amount that, whenadded to benefit payments alreadymade, brings the total benefit for theplan year up to the total benefitprovided under the plan.

(b) Benefits paid below resourcebenefit level. If, by the end of a plan yearin which benefits were suspendedunder § 4281.41, any benefit has notbeen paid at the resource benefit level,amounts up to the resource benefit levelthat were unpaid shall be distributed toeach affected participant andbeneficiary on a pro rata basis to theextent possible, taking into account theplan’s total available resources in thatyear.

§ 4281.43 Notices of insolvency andannual updates.

(a) Requirement of notices ofinsolvency. A plan sponsor thatdetermines that the plan is, or isexpected to be, insolvent for a plan yearshall issue notices of insolvency to thePBGC and to plan participants andbeneficiaries. Once notices ofinsolvency have been issued to thePBGC and to plan participants andbeneficiaries, no notice of insolvencyneeds to be issued for subsequentinsolvency years. Notices shall bedelivered in the manner and within thetime prescribed in this section and shallcontain the information described in§ 4281.44.

(b) Requirement of annual updates. Aplan sponsor that has issued notices ofinsolvency to the PBGC and to planparticipants and beneficiaries shallthereafter issue annual updates to thePBGC and participants and beneficiariesfor each plan year beginning after theplan year for which the notice ofinsolvency was issued. However, theplan sponsor need not issue an annualupdate to plan participants andbeneficiaries who are issued notices ofinsolvency benefit level in accordancewith § 4281.45 for the same insolvencyyear. A plan sponsor that, after issuingannual updates for a plan year,determines under § 4041A.25(b) that theplan is or may be insolvent for that plan


year need not issue revised annualupdates. Annual updates shall bedelivered in the manner and within thetime prescribed in this section and shallcontain the information described in§ 4281.44.

(c) Notices of insolvency—whendelivered. Except as provided in thenext sentence, the plan sponsor shallmail or otherwise deliver the notices ofinsolvency no later than 30 days afterthe plan sponsor determines that theplan is or may be insolvent. However,the notice to plan participants andbeneficiaries in pay status may bedelivered concurrently with the firstbenefit payment made after thedetermination of insolvency.

(d) Annual updates—when delivered.Except as provided in the next sentence,the plan sponsor shall mail or otherwisedeliver annual updates no later than 60days before the beginning of the planyear for which the annual update isissued. A plan sponsor that determinesunder § 4041A.25(b) that the plan is ormay be insolvent for a plan year andthat has not at that time issued annualupdates for that year, shall mail orotherwise deliver the annual updates bythe later of 60 days before the beginningof the plan year or 30 days after the dateof the plan sponsor’s determinationunder § 4041A.25(b).

(e) Notices of insolvency—method ofdelivery. The notices of insolvency shallbe delivered by mail or by hand to thePBGC and to plan participants andbeneficiaries in pay status when thenotice is required to be delivered.Notice to participants and beneficiariesnot in pay status shall be provided inany manner reasonably calculated toreach those participants andbeneficiaries. Reasonable methods ofnotification include, but are not limitedto, posting the notice at participants’worksites or publishing the notice in aunion newsletter or newspaper ofgeneral circulation in the area or areaswhere participants reside. Notice to aparticipant shall be deemed notice tothat participant’s beneficiary orbeneficiaries.

(f) Annual updates—method ofdelivery. Each annual update shall bedelivered by mail or by hand to thePBGC. Each annual update to planparticipants and beneficiaries shall beprovided in any manner reasonablycalculated to reach participants andbeneficiaries. Reasonable methods ofnotification include, but are not limitedto, posting the notice at participants’worksites and publishing the notice ina union newsletter of general circulationin the area or areas where participantsreside. Notice to a participant shall be

deemed notice to that participant’sbeneficiary or beneficiaries.

§ 4281.44 Contents of notices ofinsolvency and annual updates.

(a) Notice of insolvency to the PBGC.A notice of insolvency required under§ 4281.43(a) to be filed with the PBGCshall contain the following information:

(1) The name of the plan.(2) The name, address, and telephone


(3) The nine-digit EmployerIdentification Number (EIN) assigned bythe IRS to the plan sponsor and thethree-digit Plan Number (PN) assignedby the plan sponsor to the plan, and, ifdifferent, the EIN or PN last filed withthe PBGC. If no EIN or PN has beenassigned, the notice shall so state.

(4) The IRS Key District that hasjurisdiction over determination letterswith respect to the plan.

(5) The case number assigned by thePBGC to the filing of the plan’s noticeof termination pursuant to part 4041A,subparts A and B, of this chapter.

(6) The plan year for which the plansponsor has determined that the plan isor may be insolvent.

(7) A copy of the plan documentcurrently in effect, i.e., a copy of the lastrestatement of the plan and allsubsequent amendments. However, if acopy of the plan document wassubmitted to the PBGC with a previousfiling, only subsequent planamendments need be submitted, and thenotice shall state when the copy of theplan document was filed.

(8) A copy of the most recent actuarialvaluation for the plan (i.e., the mostrecent report submitted to the plan inconnection with a valuation of planassets and liabilities, which shall beperformed in accordance with subpart Bof this part). If the actuarial valuationwas previously submitted to the PBGC,it may be omitted, and the notice shallstate the date on which the documentwas filed and that the information isstill accurate and complete.

(9) The estimated amount of annualbenefit payments under the plan(determined without regard to theinsolvency) for the insolvency year.


(11) The estimated amount of theannual benefits guaranteed by the PBGCfor the insolvency year.

(12) A statement indicating whetherthe notice of insolvency is the result ofan insolvency determination under§ 4041A.25 (a) or (b).

(13) A certification, signed by the plansponsor or its duly authorized

representative, that notices ofinsolvency have been given to all planparticipants and beneficiaries inaccordance with this part.

(b) Notice of insolvency toparticipants and beneficiaries. A noticeof insolvency required under§ 4281.43(a) to be issued to planparticipants and beneficiaries shallcontain the following information:

(1) The name of the plan.(2) A statement of the plan year for

which the plan sponsor has determinedthat the plan is or may be insolvent.

(3) A statement that benefits above theamount that can be paid from availableresources or the level guaranteed by thePBGC, whichever is greater, will besuspended during the insolvency year,with a brief explanation of whichbenefits are guaranteed by the PBGC.


(c) Annual update to the PBGC. Eachannual update required by § 4281.43(b)to be filed with the PBGC shall containthe following information:

(1) The case number assigned by thePBGC to the filing of the plan’s noticeof termination pursuant to part 4041A,subparts A and B, of this chapter.

(2) A copy of the annual update toplan participants and beneficiaries, asdescribed in paragraph (d) of thissection, for the plan year.

(3) A statement indicating whetherthe annual update is the result of aninsolvency determination under§ 4041A.25(a) or (b).

(4) A certification, signed by the plansponsor or a duly authorizedrepresentative, that the annual updatehas been given to all plan participantsand beneficiaries in accordance withthis part.

(d) Annual updates to participantsand beneficiaries. Each annual updaterequired by § 4281.43(b) to be issued toplan participants and beneficiaries shallcontain the following information:

(1) The name of the plan.(2) The date the notice of insolvency

was issued and the insolvency yearidentified in the notice.

(3) The plan year to which the annualupdate pertains and the plan sponsor’sdetermination whether the plan may beinsolvent in that year.

(4) If the plan may be insolvent for theplan year, a statement that benefitsabove the amount that can be paid fromavailable resources or the levelguaranteed by the PBGC, whichever isgreater, will be suspended during theinsolvency year, with a brief


explanation of which benefits areguaranteed by the PBGC.

(5) If the plan will not be insolvent forthe plan year, a statement that fullnonforfeitable benefits under the planwill be paid.


§ 4281.45 Notices of insolvency benefitlevel.

(a) Requirement of notices. For eachinsolvency year, the plan sponsor shallissue a notice of insolvency benefit levelto the PBGC and to plan participantsand beneficiaries in pay status orreasonably expected to enter pay statusduring the insolvency year. The noticesshall be delivered in the manner andwithin the time prescribed in thissection and shall contain theinformation described in § 4281.46.

(b) When delivered. The plan sponsorshall mail or otherwise deliver thenotices of insolvency benefit level nolater than 60 days before the beginningof the insolvency year. A plan sponsorthat determines under § 4041A.25(b)that the plan is or may be insolvent fora plan year shall mail or otherwisedeliver the notices of insolvency benefitlevel by the later of 60 days before thebeginning of the insolvency year or 60days after the date of the plan sponsor’sdetermination under § 4041A.25(b).

(c) Method of delivery. The notices ofinsolvency benefit level shall bedelivered by mail or by hand to thePBGC and to plan participants andbeneficiaries in pay status or reasonablyexpected to enter pay status during theinsolvency year.

§ 4281.46 Contents of notices ofinsolvency benefit level.

(a) Notice to the PBGC. A notice ofinsolvency benefit level required by§ 4281.45(a) to be filed with the PBGCshall contain the information specifiedin § 4281.44(a)(1) through (a)(5) and(a)(7) through (a)(11) and:

(1) The insolvency year for which thenotice is being filed.

(2) The amount of financialassistance, if any, requested from thePBGC. (When financial assistance isrequested, the plan sponsor shall submitan application in accordance with§ 4281.47.)

(3) A statement indicating whetherthe notice of insolvency benefit level isthe result of an insolvencydetermination under § 4041A.25(a) or(b).

(4) A certification, signed by the plansponsor or its duly authorized

representative, that a notice ofinsolvency benefit level has been sent toall plan participants and beneficiaries inpay status or reasonably expected toenter pay status during the insolvencyyear, in accordance with this part.

(b) Notice to participants in orentering pay status. A notice ofinsolvency benefit level required by§ 4281.45(a) to be delivered to planparticipants and beneficiaries in paystatus or reasonably expected to enterpay status during the insolvency yearfor which the notice is given, shallcontain the following information:

(1) The name of the plan.(2) The insolvency year for which the

notice is being sent.(3) The monthly benefit that the

participant or beneficiary may expect toreceive during the insolvency year.

(4) A statement that in subsequentplan years, depending on the plan’savailable resources, this benefit levelmay be increased or decreased but notbelow the level guaranteed by the PBGC,and that the participant or beneficiarywill be notified in advance of the newbenefit level if it is less than theparticipant’s full nonforfeitable benefitunder the plan.

(5) The amount of the participant’s orbeneficiary’s monthly nonforfeitablebenefit under the plan.

(6) The amount of the participant’s orbeneficiary’s monthly benefit that isguaranteed by the PBGC.


§ 4281.47 Application for financialassistance.

(a) General. If the plan sponsordetermines that the plan’s resourcebenefit level for an insolvency year isbelow the level of benefits guaranteedby PBGC or that the plan will be unableto pay guaranteed benefits when due forany month during the year, the plansponsor shall apply to the PBGC forfinancial assistance pursuant to section4261 of ERISA. The application shall befiled within the time prescribed inparagraph (b) of this section. When theresource benefit level is below theguarantee level, the application shallcontain the information set forth inparagraph (c) of this section. When theplan is unable to pay guaranteedbenefits for any month, the applicationshall contain the information set forth inparagraph (d) of this section.

(b) When to apply. When the plansponsor determines a resource benefitlevel that is less than guaranteedbenefits, it shall apply for financial

assistance at the same time that itsubmits its notice of insolvency benefitlevel pursuant to § 4281.45. When theplan sponsor determines an inability topay guaranteed benefits for any month,it shall apply for financial assistancewithin 15 days after making thatdetermination.

(c) Contents of application—resourcebenefit level below level of guaranteedbenefits. A plan sponsor applying forfinancial assistance because the plan’sresource benefit level is below the levelof guaranteed benefits shall file anapplication that includes theinformation specified in § 4281.44 (a)(1)through (a)(5) and:

(1) The insolvency year for which theapplication is being filed.

(2) A participant data scheduleshowing each participant andbeneficiary in pay status or reasonablyexpected to enter pay status during theyear for which financial assistance isrequested, listing for each—

(i) Name;(ii) Sex;(iii) Date of birth;(iv) Credited service;(v) Vested accrued monthly benefit;(vi) Monthly benefit guaranteed by

PBGC;(vii) Benefit commencement date; and(viii) Type of benefit.(d) Contents of application—unable to

pay guaranteed benefits for any month.A plan sponsor applying for financialassistance because the plan is unable topay guaranteed benefits for any monthshall file an application that includesthe data described in § 4281.44 (a)(1)through (a)(5), the month for whichfinancial assistance is requested, andthe plan’s available resources andguaranteed benefits payable in thatmonth. The participant data scheduledescribed in paragraph (c)(2) of thissection shall be submitted upon therequest of the PBGC.

(e) Additional information. The PBGCmay request any additional informationthat it needs to calculate or verify theamount of financial assistance necessaryas part of the conditions of grantingfinancial assistance pursuant to section4261 of ERISA.

PART 4901—EXAMINATION ANDCOPYING OF PENSION BENEFITGUARANTY CORPORATIONRECORDS

Subpart A—General

Sec.4901.1 Purpose and scope.4901.2 Definitions.4901.3 Disclosure facilities.4901.4 Information maintained in public

reference room.4901.5 Disclosure of other information.


Subpart B—Procedure for Formal Requests4901.11 Submittal of requests for access to

records.4901.12 Description of information

requested.4901.13 Receipt by agency of request.4901.14 Action on request.4901.15 Appeals from denial of requests.4901.16 Extensions of time.4901.17 Exhaustion of administrative

remedies.

Subpart C—Restrictions on Disclosure

4901.21 Restrictions in general.4901.22 Partial disclosure.4901.23 Records of concern to more than

one agency.4901.24 Special rules for trade secrets and

confidential commercial or financialinformation submitted to the PBGC.

Subpart D—Fees

4901.31 Charges for services.4901.32 Fee schedule.4901.33 Payment of fees.4901.34 Waiver or reduction of charges.

Authority: 5 U.S.C. 552; 29 U.S.C.1302(b)(3); E.O. 12600, 52 FR 23781.

Subpart A—General

§ 4901.1 Purpose and scope.This part contains the general rules of

the PBGC implementing the Freedom ofInformation Act. This part sets forthgenerally the categories of recordsaccessible to the public, the types ofrecords subject to prohibitions orrestrictions on disclosure, and theprocedure whereby members of thepublic may obtain access to and inspectand copy information from records inthe custody of the PBGC.

§ 4901.2 Definitions.In addition to terminology in part

4001 of this chapter, as used in thispart—

Agency, person, party, rule,rulemaking, order, and adjudicationhave the meanings attributed to theseterms by the definitions in 5 U.S.C. 551,except where the context demonstratesthat a different meaning is intended,and except that for purposes of theFreedom of Information Act the termagency as defined in 5 U.S.C. 551includes any executive department,military department, Governmentcorporation, Government controlledcorporation, or other establishment inthe executive branch of the Government(including the Executive Office of thePresident) or any independentregulatory agency.

Disclosure officer means thedesignated official in theCommunications and Public AffairsDepartment, PBGC.

FOIA means the Freedom ofInformation Act, as amended (5 U.S.C.552).

Working day means any weekdayexcepting Federal holidays.

§ 4901.3 Disclosure facilities.(a) Public reference room. The PBGC

will maintain a public reference room inits offices located at 1200 K Street NW.,Washington, DC 20005–4026, whereinpersons may inspect and copy allrecords made available for suchpurposes under this part.

(b) No withdrawal of records. Noperson may remove any record madeavailable for inspection or copyingunder this part from the place where itis made available except with thewritten consent of the General Counselof the PBGC.

§ 4901.4 Information maintained in publicreference room.

The PBGC shall make available in itspublic reference room for inspectionand copying without formal request—

(a) Information published in theFederal Register. Copies of FederalRegister documents published by thePBGC, and copies of Federal Registerindexes;

(b) Information in PBGC publications.Copies of informational material, suchas press releases, pamphlets, and othermaterial ordinarily made available tothe public without cost as part of apublic information program;

(c) Rulemaking proceedings. Allpapers and documents made a part ofthe official record in administrativeproceedings conducted by the PBGC inconnection with the issuance,amendment, or revocation of rules andregulations or determinations havinggeneral applicability or legal effect withrespect to members of the public or aclass thereof (with a register being keptto identify the persons who inspect therecords and the times at which they doso);

(d) Except to the extent that deletionof identifying details is required toprevent a clearly unwarranted invasionof personal privacy (in which case thejustification for the deletion shall befully explained in writing)—

(1) Adjudication proceedings. Finalopinions, orders, and (except to theextent that an exemption provided byFOIA must be asserted in the publicinterest to prevent a clearlyunwarranted invasion of personalprivacy or violation of law or to ensurethe proper discharge of the functions ofthe PBGC) other papers and documentsmade a part of the official record inadjudication proceedings conducted bythe PBGC,

(2) Policy statements andinterpretations. Statements of policyand interpretations affecting a member

of the public which have been adoptedby the PBGC and which have not beenpublished in the Federal Register, and

(3) Staff manuals and instructions.Administrative staff manuals andinstructions to staff issued by the PBGCthat affect any member of the public,and

(e) Indexes to certain records. Currentindexes (updated at least quarterly)identifying materials described inparagraph (a)(2) of FOIA and paragraph(d) of this section.

§ 4901.5 Disclosure of other information.(a) In general. Upon the request of any

person submitted in accordance withsubpart B of this part, the disclosureofficer shall make any document (orportion thereof) from the records of thePBGC in the custody of any official ofthe PBGC available for inspection andcopying unless exempt from disclosureunder the provisions of subsection (b) ofFOIA and subpart C of this part. Thesubpart B procedures must be used forrecords that are not made available inthe PBGC’s public reference room under§ 4901.4 and may be used for recordsthat are available in the public referenceroom. Records that could be producedonly by manipulation of existinginformation (such as computer analysesof existing data), thus creatinginformation not previously in being, arenot records of the PBGC and are notrequired to be furnished under FOIA.

(b) Discretionary disclosure.Notwithstanding the applicability of anexemption under subsection (b) of FOIAand subpart C of this part (other than anexemption under paragraph (b)(1) or(b)(3) of FOIA and § 4901.21 (a)(2) and(a)(3)), the disclosure officer may(subject to 18 U.S.C. 1905 and§ 4901.21(a)(1)) make any document (orportion thereof) from the records of thePBGC available for inspection andcopying if the disclosure officerdetermines that disclosure furthers thepublic interest and does not impede thedischarge of any of the functions of thePBGC.

Subpart B—Procedure for FormalRequests

§ 4901.11 Submittal of requests for accessto records.

A request to inspect or copy anyrecord subject to this subpart shall besubmitted in writing to the DisclosureOfficer, Communications and PublicAffairs Department, Pension BenefitGuaranty Corporation, 1200 K StreetNW., Washington, DC 20005–4026. Toexpedite processing, the words ‘‘FOIArequest’’ should appear clearly on therequest and its envelope.


§ 4901.12 Description of informationrequested.

(a) In general. Each request shouldreasonably describe the record orrecords sought in sufficient detail topermit identification and location witha reasonable amount of effort. So far aspracticable, the request should specifythe subject matter of the record, theplace where and date or approximatedate when made, the person or officethat made it, and any other pertinentidentifying details.

(b) Deficient descriptions. If thedescription is insufficient to enable aprofessional employee familiar with thesubject area of the request to locate therecord with a reasonable amount ofeffort, the disclosure officer will notifythe requester and, to the extent possible,indicate the additional informationrequired. Every reasonable effort shallbe made to assist a requester in theidentification and location of the recordor records sought. Records will not bewithheld merely because it is difficult tofind them.

(c) Requests for categories of records.Requests calling for all records fallingwithin a reasonably specific categorywill be regarded as reasonably describedwithin the meaning of this section andparagraph (a)(3) of FOIA if the PBGC isreasonably able to determine whichrecords come within the request and tosearch for and collect them withoutunduly interfering with PBGCoperations. If PBGC operations would beunduly disrupted, the disclosure officershall promptly notify the requester andprovide an opportunity to confer in anattempt to reduce the request tomanageable proportions.

§ 4901.13 Receipt by agency of request.The disclosure officer shall note the

date and time of receipt on each requestfor access to records. A request shall bedeemed received and the period withinwhich action on the request shall betaken, as set forth in § 4901.14 of thispart, shall begin on the next businessday following such date, except that arequest shall be deemed received only ifand when the PBGC receives—

(a) A sufficient description under§ 4901.12;

(b) Payment or assurance of paymentif required under § 4901.33(b); and

(c) The requester’s consent to paysubstantial search, review, and/orduplication charges under subpart D ofthis part if the PBGC determines thatsuch charges may be substantial and sonotifies the requester. Consent may bein the form of a statement that costsunder subpart D will be acceptableeither in any amount or up to aspecified amount. To avoid possible

delay, a requester may include such astatement in a request.

§ 4901.14 Action on request.(a) Time for action. Promptly and in

any event within 10 working days afterreceipt of a disclosure request (subjectto extension under § 4901.16), thedisclosure officer shall take action withrespect to each requested item (orportion of an item) under eitherparagraph (b), (c), or (d) of this section.

(b) Request granted. If the disclosureofficer determines that the requestshould be granted, the requester shall beso advised and the records shall bepromptly made available to therequester.

(c) Request denied. If the disclosureofficer determines that the requestshould be denied, the requester shall beso advised in writing with a briefstatement of the reasons for the denial,including a reference to the specificexemption(s) authorizing the denial andan explanation of how each suchexemption applies to the matterwithheld. The denial shall also includethe name and title or position of theperson(s) responsible for the denial andoutline the appeal procedure available.

(d) Records not promptly located. Asto records that are not located in timeto make an informed determination, thedisclosure officer may deny the requestand so advise the requester in writingwith an explanation of thecircumstances. The denial shall alsoinclude the name and title or positionof the person(s) responsible for thedenial, outline the appeal procedureavailable, and advise the requester thatthe search or examination will becontinued and that the denial may bewithdrawn, modified, or confirmedwhen processing of the request iscompleted.

§ 4901.15 Appeals from denial of requests.(a) Submittal of appeals. If a

disclosure request is denied in whole orin part by the disclosure officer, therequester may file a written appealwithin 30 days from the date of thedenial or, if later (in the case of a partialdenial), 30 days from the date therequester receives the disclosedmaterial. The appeal shall state thegrounds for appeal and any supportingstatements or arguments, and shall beaddressed to the General Counsel,Pension Benefit Guaranty Corporation,1200 K Street NW., Washington, DC20005–4026. To expedite processing,the words ‘‘FOIA appeal’’ should appearclearly on the appeal and its envelope.

(b) Receipt and consideration ofappeal. The General Counsel shall notethe date and time of receipt on each

appeal and notify the requester thereof.Promptly and in any event within 20working days after receipt of an appeal(subject to extension under § 4901.16),the General Counsel shall issue adecision on the appeal.

(1) The General Counsel maydetermine de novo whether the denialof disclosure was in accordance withFOIA and this part.

(2) If the denial appealed from wasunder § 4901.14(d), the General Counselshall consider any supplementarydetermination by the disclosure officerin deciding the appeal.

(3) Unless otherwise ordered by thecourt, the General Counsel may act onan appeal notwithstanding thependency of an action for judicial reliefin the same matter and, if no appeal hasbeen filed, may treat such an action asthe filing of an appeal.

(c) Decision on appeal. As to eachitem (or portion of an item) whosenondisclosure is appealed, the GeneralCounsel shall either—

(1) Grant the appeal and so advise therequester in writing, in which case therecords with respect to which theappeal is granted shall be promptlymade available to the requester; or

(2) Deny the appeal and so advise therequester in writing with a briefstatement of the reasons for the denial,including a reference to the specificexemption(s) authorizing the denial, anexplanation of how each suchexemption applies to the matterwithheld, and notice of the provisionsfor judicial review in paragraph (a)(4) ofFOIA. The General Counsel’s decisionshall be the final action of the PBGCwith respect to the request.

(d) Records of appeals. Copies of bothgrants and denials of appeals shall becollected in one file available in thePBGC’s public reference room under§ 4901.4(d)(1) and indexed under§ 4901.4(e).

§ 4901.16 Extensions of time.In unusual circumstances (as

described in subparagraph (a)(6)(B) ofFOIA), the time to respond to adisclosure request under § 4901.14(a) oran appeal under § 4901.15(b) may beextended as reasonably necessary toprocess the request or appeal. Thedisclosure officer (with the priorapproval of the General Counsel) or theGeneral Counsel, as appropriate, shallnotify the requester in writing withinthe original time period of the reasonsfor the extension and the date when aresponse is expected to be sent. Themaximum extension for responding to adisclosure request shall be 10 workingdays, and the maximum extension forresponding to an appeal shall be 10


working days minus the amount of anyextension on the request to which theappeal relates.

§ 4901.17 Exhaustion of administrativeremedies.

If the disclosure officer fails to makea determination to grant or deny accessto requested records, or the GeneralCounsel does not make a decision onappeal from a denial of access to PBGCrecords, within the time prescribed(including any extension) for makingsuch determination or decision, therequester’s administrative remediesshall be deemed exhausted and therequester may apply for judicial reliefunder FOIA. However, since a courtmay allow the PBGC additional time toact as provided in FOIA, processing ofthe request or appeal shall continue andthe requester shall be so advised.

Subpart C—Restrictions on Disclosure

§ 4901.21 Restrictions in general.(a) Records not disclosable. Records

shall not be disclosed to the extentprohibited by—

(1) 18 U.S.C. 1905, dealing in generalwith commercial and financialinformation;

(2) Paragraph (b)(1) of FOIA, dealingin general with matters of nationaldefense and foreign policy; or

(3) Paragraph (b)(3) of FOIA, dealingin general with matters specificallyexempted from disclosure by statute,including information or documentarymaterial submitted to the PBGCpursuant to sections 4010 and 4043 ofERISA.

(b) Records disclosure of which maybe refused. Records need not (but may,as provided in § 4901.5(b)) be disclosedto the extent provided by—

(1) Paragraph (b)(2) of FOIA, dealingin general with internal agencypersonnel rules and practices;

(2) Paragraph (b)(4) of FOIA, dealingin general with trade secrets andcommercial and financial information;

(3) Paragraph (b)(5) of FOIA, dealingin general with inter-agency and intra-agency memoranda and letters;

(4) Paragraph (b)(6) of FOIA, dealingin general with personnel, medical, andsimilar files;

(5) Paragraph (b)(7) of FOIA, dealingin general with records or informationcompiled for law enforcement purposes;

(6) Paragraph (b)(8) of FOIA, dealingin general with reports on financialinstitutions; or

(7) Paragraph (b)(9) of FOIA, dealingin general with information about wells.

§ 4901.22 Partial disclosure.If an otherwise disclosable record

contains some material that is protected

from disclosure, the record shall not forthat reason be withheld from disclosureif deletion of the protected material isfeasible. This principle shall be appliedin particular to identifying details thedisclosure of which would constitute anunwarranted invasion of personalprivacy.

§ 4901.23 Record of concern to more thanone agency.

If the release of a record in thecustody of the PBGC would be ofconcern not only to the PBGC but alsoto another Federal agency, the recordwill be made available by the PBGConly if its interest in the record is theprimary interest and only aftercoordination with the other interestedagency. If the interest of the PBGC in therecord is not primary, the request willbe transferred promptly to the agencyhaving the primary interest, and therequester will be so notified.

§ 4901.24 Special rules for trade secretsand confidential commercial or financialinformation submitted to the PBGC.

(a) Application. To the extentpermitted by law, this section applies toa request for disclosure of a record thatcontains information that has beendesignated by the submitter in goodfaith in accordance with paragraph (b)of this section or a record that the PBGChas reason to believe contains suchinformation, unless—

(1) Access to the information isdenied;

(2) The information has beenpublished or officially made available tothe public;

(3) Disclosure of the information isrequired by law other than FOIA; or

(4) The designation under paragraph(b) of this section appears obviouslyfrivolous, except that in such a case thePBGC will notify the submitter inwriting of a determination to disclosethe information within a reasonabletime before the disclosure date (whichshall be specified in the notice).

(b) Designation by submitter. Todesignate information as being subjectto this section, the submitter shall, atthe time of submission or by areasonable time thereafter, assert thatinformation being submitted isconfidential business information anddesignate, with appropriate markings,the portion(s) of the submission towhich the assertion applies. Anydesignation under this paragraph shallexpire 10 years after the date ofsubmission unless a longer designationperiod is requested and reasonablejustification is provided therefor.

(c) Notification to submitter ofdisclosure request. When disclosure of

information subject to this section maybe made, the disclosure officer or(where disclosure may be made inresponse to an appeal) the GeneralCounsel shall promptly notify thesubmitter, describing (or providing acopy of) the information that may bedisclosed, and afford the submitter areasonable period of time to object inwriting to the requested disclosure. (Thenotification to the submitter may be oralor written; if oral, it will be confirmedin writing.) When a submitter is notifiedunder this paragraph, the requester shallbe notified that the submitter is beingafforded an opportunity to object todisclosure.

(d) Objection of submitter. Asubmitter’s statement objecting todisclosure should specify all groundsrelied upon for opposing disclosure ofany portion(s) of the information undersubsection (b) of FOIA and, with respectto the exemption in paragraph (b)(4) ofFOIA, demonstrate why the informationis a trade secret or is commercial orfinancial information that is privilegedor confidential. Facts asserted should becertified or otherwise supported.(Information provided pursuant to thisparagraph may itself be subject todisclosure under FOIA.) Any timelyobjection of a submitter under thisparagraph shall be carefully consideredin determining whether to grant adisclosure request or appeal.

(e) Notification to submitter ofdecision to disclose. If the disclosureofficer or (where disclosure is inresponse to an appeal) the GeneralCounsel decides to disclose informationsubject to this section despite thesubmitter’s objections, the disclosureofficer (or General Counsel) shall givethe submitter written notice, explainingbriefly why the information is to bedisclosed despite those objections,describing the information to bedisclosed, and specifying the date whenthe information will be disclosed to therequester. The notification shall, to theextent permitted by law, be provided areasonable number of days before thedisclosure date so specified, and a copyshall be provided to the requester.

(f) Notification to submitter of actionto compel disclosure. The disclosureofficer or the General Counsel shallpromptly notify the submitter if arequester brings suit seeking to compeldisclosure.

Subpart D—Fees

§ 4901.31 Charges for services.(a) Generally. Pursuant to the

provisions of FOIA, as amended,charges will be assessed to cover thedirect costs of searching for, reviewing,


and/or duplicating records requestedunder FOIA from the PBGC, exceptwhere the charges are limited or waivedunder paragraph (b) or (d) of thissection, according to the fee schedule in§ 4901.32 of this part. No charge will beassessed if the costs of routinecollection and processing of the feewould be equal to or greater than the feeitself.

(1) ‘‘Direct costs’’ means thoseexpenditures which the PBGC actuallyincurs in searching for and duplicating(and in the case of commercialrequesters, reviewing) documents torespond to a request under FOIA andthis part. Direct costs include, forexample, the salary of the employeeperforming work (i.e., the basic rate ofpay plus benefits) or an establishedaverage pay for a homogeneous class ofpersonnel (e.g., all administrative/clerical or all professional/executive),and the cost of operating duplicatingmachinery. Not included in direct costsare overhead expenses such as costs ofspace, and heating or lighting thefacility in which the records are stored.

(2) ‘‘Search’’ means all time spentlooking for material that is responsive toa request under FOIA and this part,including page-by-page or line-by-lineidentification of materials within adocument, if required, and may be donemanually or by computer using existingprogramming. ‘‘Search’’ should bedistinguished from ‘‘review’’ which isdefined in paragraph (a)(3) of thissection.

(3) ‘‘Review’’ means the process ofexamining documents located inresponse to a request under FOIA andthis part to determine whether anyportion of any document located ispermitted or required to be withheld. Italso includes processing any documentsfor disclosure, e.g., doing all that isnecessary to excise them and otherwiseprepare them for release. Review doesnot include time spent resolving generallegal or policy issues regarding theapplication of exemptions.

(4) ‘‘Duplication’’ means the processof making a copy of a documentnecessary to respond to a request underFOIA and this part, in a form that isreasonably usable by the requester.Copies can take the form of paper copy,microform, audio-visual materials, ormachine readable documentation (e.g.,magnetic tape or disk), among others.

(b) Categories of requesters.Requesters who seek access to recordsunder FOIA and this part are dividedinto four categories: commercial userequesters, educational andnoncommercial scientific institutions,representatives of the news media, andall other requesters. The PBGC will

determine the category of a requesterand charge fees according to thefollowing rules.

(1) Commercial use requesters. Whenrecords are requested for commercialuse, the PBGC will assess charges, asprovided in this subpart, for the fulldirect costs of searching for, reviewingfor release, and duplicating the recordssought. Fees for search and review maybe charged even if the record searchedfor is not found or if, after it is found,it is determined that the request toinspect it may be denied under theprovisions of subsection (b) of FOIA andthis part.

(i) ‘‘Commercial use’’ request means arequest from or on behalf of one whoseeks information for a use or purposethat furthers the commercial, trade, orprofit interests of the requester or theperson on whose behalf the request ismade.

(ii) In determining whether a requestproperly belongs in this category, thePBGC will look to the use to which arequester will put the documentsrequested. Moreover, where the PBGChas reasonable cause to doubt the use towhich a requester will put the recordssought, or where that use is not clearfrom the request itself, the PBGC willrequire the requester to provideclarification before assigning the requestto this category.

(2) Educational and noncommercialscientific institution requesters. Whenrecords are requested by an educationalor noncommercial scientific institution,the PBGC will assess charges, asprovided in this subpart, for the fulldirect cost of duplication only,excluding charges for the first 100pages.

(i) ‘‘Educational institution’’ means apreschool, a public or privateelementary or secondary school, aninstitution of graduate higher education,an institution of undergraduate highereducation, an institution of professionaleducation, and an institution ofvocational education, which operates aprogram or programs of scholarlyresearch.

(ii) ‘‘Noncommercial scientificinstitution’’ means an institution that isnot operated on a ‘‘commercial’’ basis asthat term is defined in paragraph(b)(1)(i) of this section, and which isoperated solely for the purpose ofconducting scientific research theresults of which are not intended topromote any particular product orindustry.

(iii) To be eligible for inclusion in thiscategory, requesters must show that therequest is being made as authorized byand under the auspices of a qualifyinginstitution and that the records are not

sought for a commercial use, but aresought in furtherance of scholarly (if therequest is from an educationalinstitution) or scientific (if the request isfrom a noncommercial scientificinstitution) research.

(3) Requesters who are representativesof the news media. When records arerequested by representatives of the newsmedia, the PBGC will assess charges, asprovided in this subpart, for the fulldirect cost of duplication only,excluding charges for the first 100pages.

(i) ‘‘Representative of the newsmedia’’ means any person activelygathering news for an entity that isorganized and operated to publish orbroadcast news to the public. The term‘‘news’’ means information that is aboutcurrent events or that would be ofcurrent interest to the public. Examplesof news media entities includetelevision or radio stations broadcastingto the public at large, and publishers ofperiodicals (but only in those instanceswhen they can qualify as disseminatorsof ‘‘news’’) who make their productsavailable for purchase or subscriptionby the general public. These examplesare not intended to be all-inclusive.‘‘Freelance’’ journalists may be regardedas working for a news organization ifthey can demonstrate a solid basis forexpecting publication through thatorganization, even though not actuallyemployed by it.

(ii) To be eligible for inclusion in thiscategory, the request must not be madefor a commercial use. A request forrecords supporting the newsdissemination function of the requesterwho is a representative of the newsmedia shall not be considered to be arequest that is for a commercial use.

(4) All other requesters. When recordsare requested by requesters who do notfit into any of the categories inparagraphs (b)(1) through (b)(3) of thissection, the PBGC will assess charges, asprovided in this subpart, for the fulldirect cost of searching for andduplicating the records sought, with theexceptions that there will be no chargefor the first 100 pages of duplication andthe first two hours of manual searchtime (or its cost equivalent in computersearch time). Notwithstanding thepreceding sentence, there will be nocharge for search time in the event ofrequests under the Privacy Act of 1974from subjects of records filed in thePBGC’s systems of records for thedisclosure of records about themselves.Search fees, where applicable, may becharged even if the record searched foris not found.

(c) Aggregation of requests. If thePBGC reasonably believes that a


requester or group of requesters isattempting to break a request down intoa series of requests for the purpose ofevading the assessment of fees, thePBGC will aggregate any such requestsand charge accordingly. In no case willthe PBGC aggregate multiple requests onunrelated subjects from one requester.

(d) Waiver or reduction of charges.Circumstances under which searching,review, and duplication facilities orservices may be made available to therequester without charge or at a reducedcharge are set forth in § 4901.34 of thispart.

§ 4901.32 Fee schedule.(a) Charges for searching and review

of records. Charges applicable underthis subpart to the search for and reviewof records will be made according to thefollowing fee schedule:

(1) Search and review time. (i)Ordinary search and review by custodialor clerical personnel, $1.75 for eachone-quarter hour or fraction thereof ofemployee worktime required to locate orobtain the records to be searched and tomake the necessary review; and (ii)search or review requiring services ofprofessional or supervisory personnel tolocate or review requested records,$4.00 for each one-quarter hour orfraction thereof of professional orsupervisory personnel worktime.

(2) Additional search costs. If thesearch for a requested record requirestransportation of the searcher to thelocation of the records or transportationof the records to the searcher, at a costin excess of $5.00, actual transportationcosts will be added to the search timecost.

(3) Search in computerized records.Charges for information that is availablein whole or in part in computerizedform will include the cost of operatingthe central processing unit (CPU) forthat portion of operating time that isdirectly attributable to searching forrecords responsive to the request,personnel salaries apportionable to thesearch, and tape or printout productionor an established agency-wide averagerate for CPU operating costs andoperator/programmer salaries involvedin FOIA searches. Charges will becomputed at the rates prescribed inparagraphs (a) and (b) of this section.

(b) Charges for duplication of records.Charges applicable under this subpartfor obtaining requested copies of recordsmade available for inspection will bemade according to the following feeschedule and subject to the followingconditions.

(1) Standard copying fee. $0.15 foreach page of record copies furnished.This standard fee is also applicable to

the furnishing of copies of availablecomputer printouts as stated inparagraph (a)(3) of this section.

(2) Voluminous material. If thevolume of page copy desired by therequester is such that the reproductioncharge at the standard page rate wouldbe in excess of $50, the person desiringreproduction may request a special ratequotation from the PBGC.

(3) Limit of service. Not more than 10copies of any document will befurnished.

(4) Manual copying by requester. Nocharge will be made for manual copyingby the requesting party of any documentmade available for inspection under theprovisions of this part. The PBGC shallprovide facilities for such copyingwithout charge at reasonable timesduring normal working hours.

(5) Indexes. Pursuant to paragraph(a)(2) of FOIA copies of indexes orsupplements thereto which aremaintained as therein provided butwhich have not been published will beprovided on request at a cost not toexceed the direct cost of duplication.

(c) Other charges. The scheduled fees,set forth in paragraphs (a) and (b) of thissection, for furnishing records madeavailable for inspection and duplicationrepresent the direct costs of furnishingthe copies at the place of duplication.Upon request, single copies of therecords will be mailed, postage prepaid,free of charge. Actual costs oftransmitting records by special methodssuch as registered, certified, or specialdelivery mail or messenger, and ofspecial handling or packaging, ifrequired, will be charged in addition tothe scheduled fees.

§ 4901.33 Payment of fees.

(a) Medium of payment. Payment ofthe applicable fees as provided in thissubsection shall be made in cash, byU.S. postal money order, or by checkpayable to the PBGC. Postage stampswill not be accepted in lieu of cash,checks, or money orders as payment forfees specified in the schedule. Cashshould not be sent by mail.

(b) Advance payment or assurance ofpayment. Payment or assurance ofpayment before work is begun orcontinued on a request may be requiredunder the following rules.

(1) Where the PBGC estimates ordetermines that charges allowable underthe rules in this subpart are likely toexceed $250, the PBGC may requireadvance payment of the entire fee orassurance of payment, as follows:

(i) Where the requester has a historyof prompt payment of fees under thispart, the PBGC will notify the requester

of the likely cost and obtain satisfactoryassurance of full payment; or

(ii) Where the requester has no historyof payment for requests made pursuantto FOIA and this part, the PBGC mayrequire the requester to make anadvance payment of an amount up tothe full estimated charges.

(2) Where the requester haspreviously failed to pay a fee charged ina timely fashion (i.e., within 30 days ofthe date of the billing), the PBGC mayrequire the requester to pay the fullamount owed plus any applicableinterest as provided in paragraph (c) ofthis section (or demonstrate that he has,in fact, paid the fee) and to make anadvance payment of the full amount ofthe estimated fee.

(c) Late payment interest charges. ThePBGC may assess late payment interestcharges on any amounts unpaid by the31st day after the date a bill is mailedto a requester. Interest will be assessedat the rate prescribed in 31 U.S.C. 3717and will accrue from the date the bill ismailed.

§ 4901.34 Waiver or reduction of charges.

(a) The disclosure officer may waiveor reduce fees otherwise applicableunder this subpart when disclosure ofthe information is in the public interestbecause it is likely to contributesignificantly to public understanding ofthe operations or activities of thegovernment and is not primarily in thecommercial interest of the requester. Afee waiver request shall set forth fulland complete information upon whichthe request for waiver is based.

(b) The disclosure officer may reduceor waive fees applicable under thissubpart when the requester hasdemonstrated his inability to pay suchfees.

PART 4902—DISCLOSURE ANDAMENDMENT OF RECORDSPERTAINING TO INDIVIDUALS UNDERTHE PRIVACY ACT

Sec.4902.1 Purpose and scope.4902.2 Definitions.4902.3 Procedures for determining

existence of and requesting access torecords.

4902.4 Disclosure of record to anindividual.

4902.5 Procedures for requestingamendment of a record.

4902.6 Action on request for amendment ofa record.

4902.7 Appeal of a denial of a request foramendment of a record.

4902.8 Fees.4902.9 Specific exemptions.

Authority: 5 U.S.C. 552a.


§ 4902.1 Purpose and scope.This part establishes procedures

whereby an individual can determinewhether the PBGC maintains any systemof records that contains a recordpertaining to the individual, proceduresto effect access to an individual’s recordupon his or her request, and proceduresfor making requests to amend records,for making the initial determinations onsuch requests, and for appealing denialsof such requests. This part alsoprescribes the fees for making copies ofan individual’s record. Finally, this partsets forth those systems of records thatare exempted from certain disclosureand other provisions of the Privacy Act(5 U.S.C. 552a).

§ 4902.2 Definitions.In addition to terminology in part

4001 of this chapter, as used in this part:Disclosure officer means the

designated official in theCommunications and Public AffairsDepartment, PBGC.

Record means any item, collection, orgrouping of information about anindividual that is maintained by anagency, including, but not limited to,his or her education, financialtransactions, medical history, andcriminal or employment history andthat contains his or her name, or theidentifying number, symbol, or otheridentifying particular assigned to theindividual, such as a finger or voiceprint or a photograph.

System of records means a group ofany records under the control of anyagency from which information isretrieved by the name of the individualor by some identifying number, symbol,or other identifying particular assignedto the individual.

Working day means any weekdayexcepting Federal holidays.

§ 4902.3 Procedures for determiningexistence of and requesting access torecords.

(a) Any individual may submit awritten request, either by mail to theDisclosure Officer, Communications andPublic Affairs Department, PensionBenefit Guaranty Corporation, 1200 KStreet NW., Washington, DC 20005–4026, or in person between the hours of9 a.m. and 4 p.m. on any working dayin Suite 240 at the above address, for thepurpose of—

(1) Learning whether a system ofrecords maintained by the PBGCcontains any record pertaining to therequester, or

(2) Obtaining access to such a record.(b) Each request submitted pursuant

to paragraph (a) of this section shallinclude the name of the system of

records to which the request pertainsand the requester’s full name, homeaddress and date of birth, and shallclearly state on the envelope and on therequest ‘‘Privacy Act Request.’’ If thisinformation is insufficient to enable thePBGC to identify the record in question,the disclosure officer shall request suchfurther identifying data as the disclosureofficer deems necessary to locate therecord.

(c) Unless the request is only fornotification of the existence of a recordand such notification is required underthe Freedom of Information Act (5U.S.C. 552), the requester shall berequired to provide verification of his orher identity to the PBGC as set forth inparagraph (c) (1) or (2) of this section,as appropriate.

(1) If the request is made by mail, therequester shall submit a notarizedstatement establishing his or heridentity.

(2) If the request is made in person,the requester shall show identificationsatisfactory to the disclosure officer,such as a driver’s license, employeeidentification, annuitant identificationor Medicare card.

(d) The disclosure officer shallrespond to the request in writing within10 working days after receipt of therequest or of such additionalinformation as may be required underparagraph (b) of this section. If a requestfor access to a record is granted, theresponse shall state when the recordwill be made available.

§ 4902.4 Disclosure of record to anindividual.

(a) When the disclosure officer grantsa request for access to records under§ 4902.3, such records shall be madeavailable when the requester is advisedof the determination or as promptlythereafter as possible. At the requester’soption, the record will be madeavailable for the requester’s inspectionand copying at the Communications andPublic Affairs Department, PensionBenefit Guaranty Corporation, 1200 KStreet NW., Washington, DC 20005–4026, between the hours of 9 a.m. and4 p.m. on any working day, or a copyof the record will be mailed to therequester.

(b) If the requester desires to beaccompanied by another individualduring the inspection and/or copying ofthe record, the requester shall, eitherwhen the record is made available or atany earlier time, submit to thedisclosure officer a signed statementidentifying such other individual andauthorizing such other individual to bepresent during the inspection and/orcopying of the record.

§ 4902.5 Procedures for requestingamendment of a record.

(a) Any individual about whom thePBGC maintains a record contained in asystem of records may request that therecord be amended. Such a request shallbe submitted in the same mannerdescribed in § 4902.3(a).

(b) Each request submitted underparagraph (a) of this section shallinclude the information described in§ 4902.3(b) and a statement specifyingthe changes to be made in the recordand the justification therefor. Thedisclosure officer may request furtheridentifying data as described in§ 4902.3(b).

(c) An individual who desiresassistance in the preparation of arequest for amendment of a record shallsubmit such request for assistance inwriting to the Deputy General Counsel,Pension Benefit Guaranty Corporation,1200 K Street NW., Washington, DC20005–4026. The Deputy GeneralCounsel shall respond to such request aspromptly as possible.

§ 4902.6 Action on request for amendmentof a record.

(a) Within 20 working days afterreceipt by the PBGC of a request foramendment of a record under § 4902.5,unless for good cause shown theExecutive Director of the PBGC extendssuch 20-day period, the disclosureofficer shall notify the requester inwriting whether and to what extent therequest shall be granted. To the extentthat the request is granted, thedisclosure officer shall cause therequested amendment to be madepromptly.

(b) When a request for amendment ofa record is denied in whole or in part,the denial shall include a statement ofthe reasons therefor, the procedures forappealing such denial, and a notice thatthe requester has a right to assistance inpreparing an appeal of the denial.

(c) An individual who desiresassistance in preparing an appeal of adenial under this section shall submit arequest in writing to the Deputy GeneralCounsel, Pension Benefit GuarantyCorporation, 1200 K Street NW.,Washington, DC 20005–4026. TheDeputy General Counsel shall respondto the request as promptly as possible,but in no event more than 30 days afterreceipt.

§ 4902.7 Appeal of a denial of a request foramendment of a record.

(a) An appeal from a denial of arequest for amendment of a recordunder § 4902.6 shall be submitted,within 45 days of receipt of the denial,to the General Counsel, Pension Benefit


Guaranty Corporation, 1200 K StreetNW., Washington, DC 20005–4026,unless the record subject to such requestis one maintained by the Office of theGeneral Counsel, in which event theappeal shall be submitted to the DeputyExecutive Director at the same address.The appeal shall state in detail the basison which it is made and both theenvelope and the appeal shall clearlystate ‘‘Privacy Act Request’’.

(b) Within 30 working days after thereceipt of the appeal, unless for goodcause shown the Executive Director ofthe PBGC extends such 30-day period,the General Counsel or, whereappropriate, the Deputy ExecutiveDirector, shall issue a decision inwriting granting or denying the appealin whole or in part. To the extent thatthe appeal is granted, the GeneralCounsel or, where appropriate, theDeputy Executive Director, shall causethe requested amendment to be madepromptly. To the extent that the appealis denied, the decision shall include thereasons for the denial and a notice of therequester’s right to submit a briefstatement setting forth reasons fordisputing the denial of appeal, to seekjudicial review of the denial pursuant to5 U.S.C. 552a(g)(1)(A), and to obtainfurther information concerning theprovisions for judicial review under thatsection.

(c) An individual whose appeal hasbeen denied in whole or in part maysubmit a brief summary statementsetting forth reasons for disputing suchdenial. Such statement shall besubmitted within 30 days of receipt ofthe denial of the appeal to theDisclosure Officer. Any such statementshall be made available by the PBGC toanyone to whom the record issubsequently furnished and may also beaccompanied, at the discretion of thePBGC, by a brief statement summarizingthe PBGC’s reasons for refusing toamend the record. The PBGC shall alsoprovide copies of the individual’sstatement of dispute to all priorrecipients of the record with respect towhom an accounting of the disclosure ofthe record was maintained pursuant to5 U.S.C. 552a(c)(1).

(d) To request further informationconcerning the provisions for judicialreview, an individual shall submit suchrequest in writing to the Deputy GeneralCounsel, who shall respond to suchrequest as promptly as possible.

§ 4902.8 Fees.

When an individual requests a copyof his or her record under § 4902.4,charges for the copying shall be madeaccording to the following fee schedule:

(a) Standard copying fee. There shallbe a charge of $0.15 per page of recordcopies furnished. Where the copying feeis less than $1.50, it shall not beassessed.

(b) Voluminous material. If thevolume of page copy desired by therequester is such that the reproductioncharge at the standard page rate wouldbe in excess of $50, the individualdesiring reproduction may request aspecial rate quotation from the PBGC.

(c) Manual copying by requester. Nocharge will be made for manual copyingby the requester of any document madeavailable for inspection under § 4902.4.The PBGC shall provide facilities forsuch copying without charge betweenthe hours of 9 a.m. and 4 p.m. on anyworking day.

§ 4902.9 Specific exemptions.(a) Under the authority granted by 5

U.S.C. 552a(k)(5), the PBGC herebyexempts the system of records entitled‘‘Personnel Security InvestigationRecords—PBGC’’ from the provisions of5 U.S.C. §§ 552a (c)(3), (d), (e)(1), (e)(4)(G), (H), and (I), and (f), to the extentthat the disclosure of such materialwould reveal the identity of a sourcewho furnished information to PBGCunder an express promise ofconfidentiality or, before September 27,1975, under an implied promise ofconfidentiality.

(b) The reasons for asserting thisexemption are to insure the gaining ofinformation essential to determiningsuitability and fitness for PBGCemployment, access to information, andsecurity clearances, to insure that fulland candid disclosures are obtained inmaking such determinations, to preventsubjects of such determinations fromthwarting the completion of suchdeterminations, and to avoid revealingthe identities of persons who furnishinformation to the PBGC in confidence.

PART 4903—DEBT COLLECTION

Subpart A—General

Sec.4903.1 Purpose and scope.4903.2 General.4903.3 Definitions.

Subpart B—Administrative Offset

4903.21 Application of Federal ClaimsCollection Standards.

4903.22 Administrative offset procedures.4903.23 PBGC requests for offset by other

agencies.4903.24 Requests for offset from other

agencies.

Subpart C—Tax Refund Offset

4903.31 Eligibility of debt for tax refundoffset.

4903.32 Tax refund offset procedures.

4903.33 Referral of debt for tax refundoffset.

Subpart D—Salary Offset [Reserved]

Authority: 29 U.S.C. 1302(b); 31 U.S.C.3701, 3711(f), 3720A; 4 CFR part 102; 26 CFR301.6402—6.

Subpart A—General

§ 4903.1 Purpose and scope.(a) Subpart A. Subpart A of this part

contains definitions and generalprovisions applicable to debt collectiongenerally.

(b) Subpart B. Subpart B of this partprescribes procedures for debtcollection by administrative offset, asauthorized by the Federal ClaimsCollection Act (31 U.S.C. 3716), andconsistent with applicable provisions ofthe Federal Claims CollectionStandards. These procedures applywhen the PBGC determines thatcollection by administrative offset of aclaim that is liquidated or certain inamount is feasible and not otherwiseprohibited or when another agencyseeks administrative offset against apayment to be made by the PBGC.

(c) Subpart C. Subpart C of this partprescribes procedures for debtcollection by tax refund offset, asauthorized by section 3720A ofsubchapter II, chapter 37 of title 31 ofthe United States Code (31 U.S.C.3720A) and in accordance withapplicable IRS regulations (26 CFR 301–6402.6), including a related procedurefor disclosure to a consumer reportingagency. These procedures apply todeterminations that a debt of at least $25is past-due and legally enforceable, toreferrals by the PBGC of past-due,legally enforceable debts to the IRS foroffset, and to any subsequentcorrections of information contained insuch referrals.

§ 4903.2 General.(a) Certain PBGC efforts to obtain

payment of debts arising out of activitiesunder ERISA are authorized by andsubject to requirements prescribedunder other federal statutes. When, andto the extent, such requirements applyto collection of a debt by the PBGC,PBGC activities will be consistent withsuch requirements, as well as with anyother applicable requirements (see, e.g.,parts 4003, 4007, and 4062 of thischapter).

(b)(1) The Executive Director of thePBGC has delegated to the Director ofthe Financial Operations Departmentprimary responsibility for PBGC debtcollection activities. This delegationincludes responsibility for proceduresimplementing requirements prescribedunder federal statutes other than ERISA,


and for coordinating the activities ofother PBGC departments withfunctional responsibilities for differenttypes of claims.

(2) PBGC departments are responsiblefor ascertaining indebtedness and otheraspects of agency collection activitieswithin their areas of functionalresponsibility.


§ 4001.2 of this chapter: IRS, PBGC, andperson. In addition, for purposes of thispart:

Administrative offset has the meaningset forth in 31 U.S.C. 3701(a)(1).

Agency means an executive orlegislative agency (within the meaningof 31 U.S.C. 3701(a)(4)).

Claim and debt, as defined in theFederal Claims Collection Standards (4CFR 101.2(a)), are used synonymouslyand interchangeably to refer to anamount of money or property which hasbeen determined by an appropriateagency official to be owed to the UnitedStates from any person, organization, orentity, except another Federal agency.

Consumer reporting agency has themeaning set forth in 31 U.S.C.3701(a)(3).

Federal Claims Collection Act meansthe Federal Claims Collection Act of1966, as amended (31 U.S.C. 3701 etseq.).

Federal Claims Collection Standardsmeans 4 CFR parts 101 through 105,which are regulations issued jointly bythe Comptroller General of the UnitedStates and the Attorney General of theUnited States that implement theFederal Claims Collection Act.

Repayment agreement means awritten agreement by a debtor to repaya debt to the PBGC.

Tax refund offset means the reductionby the IRS of a tax overpayment payableto a taxpayer by the amount of past-due,legally enforceable debt owed by thattaxpayer to a federal agency that hasentered into an agreement with the IRSwith regard to its participation in the taxrefund offset program, pursuant to IRSregulations (26 CFR 301.6402–6).

Subpart B—Administrative Offset

§ 4903.21 Application of Federal ClaimsCollection Standards.

The PBGC will determine thefeasibility of collection byadministrative offset, whether to accepta repayment agreement in lieu of offset,and how to apply amounts collected byadministrative offset on multiple debtsas provided in the Federal ClaimsCollection Standards (4 CFR 102.3).

(a) Feasibility. The PBGC willdetermine whether collection by

administrative offset is feasible on acase-by-case basis in the exercise ofsound discretion. In making suchdeterminations, the PBGC will consider:

(1) Whether administrative offset canbe accomplished, both practically andlegally;

(2) Whether administrative offset isbest suited to further and protect allgovernmental interests;

(3) In appropriate circumstances, thedebtor’s financial condition; and

(4) Whether offset would tend tointerfere substantially with or defeat thepurposes of the program authorizing thepayments against which offset iscontemplated.

(b) Repayment agreements. The PBGCwill exercise its discretion indetermining whether to accept arepayment agreement in lieu of offset,balancing the Government’s interest incollecting the debt against fairness tothe debtor. If the debt is delinquent(within the meaning of 4 CFR 101.2(b))and the debtor has not disputed itsexistence or amount, the PBGC willaccept a repayment agreement in lieu ofoffset only if the debtor is able toestablish that offset would result inundue financial hardship or would beagainst equity and good conscience.

(c) Multiple debts. When the PBGCcollects multiple debts byadministrative offset, it will apply therecovered amounts to those debts inaccordance with the best interests of theUnited States, as determined by thefacts and circumstances of the particularcase, paying special attention toapplicable statutes of limitations.

§ 4903.22 Administrative offsetprocedures.

(a) General. Except as otherwiserequired by law or as provided inparagraph (e) of this section, the PBGCwill not effect administrative offsetagainst a payment to be made to adebtor prior to the completion of theprocedures specified in paragraphs (b)and (c) of this section. However, thePBGC will not duplicate any notice orother procedural protection itpreviously provided in connection withthe same debt under some otherstatutory or regulatory authority, such aspart 4003 of this chapter.

(b) Notice. The PBGC will providewritten notice informing the debtor ofthe following:

(1) The nature and amount of thedebt, and the PBGC’s intention to collectby offset;

(2) That the debtor may inspect andcopy PBGC records pertaining to thedebt in accordance with part 4901 orpart 4902 of this chapter, as applicable(access under the Freedom of

Information Act (5 U.S.C. 552) or thePrivacy Act (5 U.S.C. 552a),respectively);

(3) How and from whom the debtormay obtain administrative review of adetermination of indebtedness;

(4) The facts and circumstances thatthe PBGC will consider in determiningwhether to accept a repaymentagreement in lieu of offset; and

(5) If the PBGC has not previouslydemanded payment of the debt, the dateby which payment must be made toavoid further collection action.

(c) Administrative review. (1) A debtormay obtain review within the PBGC ofa determination of indebtedness bysubmitting a written request for review,designated as such, to the PBGC officialspecified in the notice of indebtedness.Unless another regulation in thischapter specifies a different period oftime, such a request must be submittedwithin 30 days after the date of a PBGCnotice under paragraph (b) of thissection.

(2) A request for review must:(i) State the ground(s) on which the

debtor disputes the debt; and(ii) Reference all pertinent

information already in the possession ofthe PBGC and include any additionalinformation believed to be relevant.

(3) The PBGC will review adetermination of indebtedness, whenrequested to do so in a timely manner.The PBGC will issue a written decision,based on the written record, and willnotify the debtor of its decision.

(i) The review will be conducted byan official of at least the same level ofauthority as the person who made thedetermination of indebtedness.

(ii) The notice of the PBGC’s decisionon review will include a brief statementof the reason(s) why the determinationof indebtedness has or has not beenchanged.

(4) Upon receipt of a request foradministrative review, the PBGC may,in its discretion, temporarily suspendtransactions in any of the debtor’saccounts maintained by the PBGC. If thePBGC resolves the dispute in thedebtor’s favor, it will lift the suspensionimmediately.

(d) Repayment agreement in lieu ofoffset. (1) The PBGC will not considerentering a repayment agreement in lieuof offset unless a debtor submits a copyof the debtor’s most recent audited (orif not available, unaudited) financialstatement (with balance sheets, incomestatements, and statements of changes infinancial position), to the extent suchdocuments have been prepared, andother information regarding the debtor’sfinancial condition (e.g., the types ofinformation on assets, liabilities,


earnings, and other factors specified inparagraphs (b)(3) through (b)(7) of§ 4062.6 of this chapter).

(2) The PBGC may require appropriatesecurity as a condition of accepting arepayment agreement in lieu of offset.

(e) Exception. (1) The PBGC mayeffect administrative offset against apayment to be made to the debtor priorto completing the procedures specifiedin paragraphs (b) and (c) of this sectionif:

(i) Failure to take the offset wouldsubstantially prejudice the government’sability to collect the debt; and

(ii) The time before the payment is tobe made does not reasonably permit thecompletion of those procedures.

(2) The PBGC has determined that acase in which it applies the special rulein § 4068.3(c) of this chapter meets thecriteria in paragraph (e)(1) of thissection.

(3) If the PBGC effects administrativeoffset against a payment to be made toa debtor prior to completing theprocedures specified in paragraphs (b)and (c) of this section, the PBGC—

(i) Will promptly complete thoseprocedures; and

(ii) Will promptly refund any amountsrecovered by offset but later found notto be owed to the Government.

§ 4903.23 PBGC requests for offset byother agencies.

(a) General. The PBGC may requestthat funds payable to its debtor byanother agency be administrativelyoffset to collect a debt owed to the PBGCby the debtor. A PBGC request foradministrative offset against amountsdue and payable from the Civil ServiceRetirement and Disability Fund will bemade in accordance with 5 CFR part831, subpart R (Agency Requests toOPM for Recovery of a Debt from theCivil Service Retirement and DisabilityFund).

(b) Certification. In requestingadministrative offset, the Director of theFinancial Operations Department (or adepartment official designated by theDirector) will certify in writing to theagency holding funds of the debtor—

(1) That the debtor owes the debt(including the amount) and that thePBGC has fully complied with theprovisions of 4 CFR 102.3; and

(2) In a request for administrativeoffset against amounts due and payablefrom the Civil Service Retirement andDisability Fund, that the PBGC hascomplied with applicable statutes andthe regulations and procedures of theOffice of Personnel Management.

§ 4903.24 Requests for offset from otheragencies.

(a) General. As provided in theFederal Claims Collections Standards (4CFR 102.3(d)), the PBGC generally willcomply with requests from otheragencies to initiate administrative offsetto collect debts owed to the UnitedStates unless the requesting agency hasnot complied with the applicableprovisions of the Federal ClaimsCollection Standards or the offset wouldbe otherwise contrary to law.

(b) Submission of requests. (1) Anyagency may request that funds payableto its debtor by the PBGC beadministratively offset to collect a debtowed to such agency by the debtor bysubmitting the certification described inparagraph (c) of this section.

(2) All such requests should bedirected to the Director, FinancialOperations Department, Pension BenefitGuaranty Corporation, 1200 K Street,NW., Washington, DC 20005–4026.

(c) Certification required. The PBGCwill not initiate administrative offset inresponse to a request from anotheragency until it receives writtencertification from the requesting agency,signed by an appropriate agency official,that the debtor owes the debt (includingthe amount) and that the requestingagency has fully complied with theprovisions of 4 CFR 102.3 (with acitation to the agency’s ownadministrative offset regulations).

Subpart C—Tax Refund Offset

§ 4903.31 Eligibility of debt for tax refundoffset.

The PBGC will determine whether adebt is eligible for tax refund offset inaccordance with IRS regulations (26CFR 301.6402–6 (c) and (d)). The PBGCmay refer a past-due, legally enforceabledebt to the IRS for offset if:

(a) The debt is a judgment debt, or thePBGC’s right of action accrued not morethan 10 years earlier (unless the debt isspecifically exempt from thisrequirement);

(b) The PBGC cannot currently collectthe debt by salary offset (pursuant to 5U.S.C. 5514(a)(1));

(c) The debt is ineligible foradministrative offset (by reason of 31U.S.C. 3716(c)(2)), or the PBGC cannotcurrently collect the debt byadministrative offset (under 31 U.S.C.3716 and subpart B of this part) againstamounts payable by the debtor to thePBGC;

(d) The PBGC has notified, orattempted to notify, the debtor of itsintent to refer the debt, given the debtoran opportunity to present evidence thatall or part of the debt is not past-due or

not legally enforceable, considered anyevidence presented by the debtor inaccordance with § 4903.32, anddetermined that the debt is past-due andlegally enforceable;

(e) If the debt is a consumer debt andexceeds $100, the PBGC has disclosedthe debt to a consumer reporting agency(as authorized by 31 U.S.C. 3711(f) andprovided in § 4903.32), unless aconsumer reporting agency would beprohibited from reporting informationconcerning the debt (by reason of 15U.S.C. 1681c); and

(f) The debt is at least $25.

§ 4903.32 Tax refund offset procedures.(a) General. Before referring a debt for

tax refund offset, the PBGC willcomplete the procedures specified inparagraph (b) and, if applicable,paragraph (c) of this section. The PBGCmay satisfy these requirements inconjunction with any other proceduresthat apply to the same debt, such asthose prescribed in § 4903.22 or part4003 of this chapter.

(b) Notice, opportunity to presentevidence, and determination ofindebtedness.

(1) The PBGC will notify, or make areasonable attempt to notify, a personowing a debt (a ‘‘debtor’’) that a debt ispast-due and if not repaid within 60days, the PBGC will refer the debt to theIRS for offset against any overpaymentof tax. For this purpose, compliancewith IRS procedures (26 CFR 301.6402–6(d)(1)) constitutes a reasonable attemptto notify a debtor.

(2) A debtor will have at least 60 daysto present evidence, for considerationby the PBGC, that all or part of a debtis not past-due or not legallyenforceable.

(3) If evidence that all or part of a debtis not past-due or not legally enforceableis considered by an agent or personother than a PBGC employee acting onbehalf of the PBGC, a debtor will haveat least 30 days from the date of thedetermination on the debt to requestreview by the Director of the FinancialOperations Department (or a departmentofficial designated by the Director).

(4) The PBGC will notify a debtor ofits determination as to whether all orpart of a debt is past-due and legallyenforceable.

(c) Consumer reporting agencydisclosure.

(1)(i) If a consumer debt exceeds $100,the Director of the Financial OperationsDepartment (or a department officialdesignated by the Director), afterverifying the validity and overdue statusof the debt and that section 605 of theConsumer Credit Protection Act (15U.S.C. 1681c) does not prohibit a


consumer reporting agency fromreporting information concerning thedebt because it is obsolete, will send theindividual who owes the debt a writtennotice—

(A) That the debt is past-due;(B) That the PBGC intends to disclose

to a consumer reporting agency that theindividual is responsible for the debtand the specific information to bedisclosed; and

(C) How the individual may obtain anexplanation of the debt, dispute theinformation in PBGC’s records, andobtain administrative review of the debt.

(ii) If the PBGC does not have acurrent address for an individual, theDirector of the Financial OperationsDepartment (or a department officialdesignated by the Director) will takereasonable action to locate theindividual.

(2) The Director of the FinancialOperations Department (or a departmentofficial designated by the Director) willdisclose the debt if, within 60 days (or,at his or her discretion, more than 60days) after sending the notice describedin paragraph (c)(1) of this section, theindividual has not repaid the debt, oragreed to repay the debt under a writtenagreement, or requested administrativereview of the debt.

§ 4903.33 Referral of debt for tax refundoffset.

The Director of the FinancialOperations Department (or a departmentofficial designated by the Director) willrefer debts to the IRS for refund offset,and will correct referrals, in accordancewith IRS regulations (26 CFR 301.6402–6(e) and (f)).

Subpart D—Salary Offset [Reserved]

PART 4904—ETHICAL CONDUCT OFEMPLOYEES

Sec.4904.1 Outside employment and other

activity.Authority: 29 U.S.C. 1302(b); E.O. 11222,

30 FR 6469; 5 CFR 735.104.

§ 4904.1 Outside employment and otheractivity.

(a)–(c) [Reserved].(d) An employee who is engaged in or

is planning to engage in outsideemployment, business, professional orother such activities for pay shall obtainclearance:

(1) When such activities raise aquestion of conflict with this subpart orany applicable laws, orders, regulationsor standards, or

(2) When applicable laws, orders orregulations require clearance of suchactivities.

(e) A request for clearance shall be inwriting and shall include a statement ofthe nature of and the amount of time tobe devoted to the activity. The heads ofoffices shall receive and review requestsfor clearance submitted by members oftheir staff. The Executive Director or hisdesignee shall receive and reviewrequests for clearance submitted by theheads of offices and special Governmentemployees. The employee reviewing therequest for clearance may require theemployee making the request to furnishsuch other information as may beappropriate in considering the requestand shall consult with the Corporation’sEthics Counselor where appropriate.The request may be granted only if suchactivity would be consistent withapplicable laws, orders and regulations.If the request for clearance is notgranted, the employee making therequest shall not commence or continuein the activity unless the ExecutiveDirector or his designee, upon writtenrequest of the employee, determines thatsuch activity would be consistent withapplicable laws, orders and regulations.

PART 4905—APPEARANCES INCERTAIN PROCEEDINGS

Sec.4905.1 Purpose and scope.4905.2 Definitions.4905.3 General.4905.4 Appearances by PBGC employees.4905.5 Requests for authenticated copies of

PBGC records.4905.6 Penalty.

Authority: 29 U.S.C. 1302(b); E.O. 11222,30 FR 6469; 5 CFR 735.104.

§ 4905.1 Purpose and scope.(a) Purpose. This part sets forth the

rules and procedures to be followedwhen a PBGC employee or formeremployee is requested or served withcompulsory process to appear as awitness or produce documents in aproceeding in which the PBGC is not aparty, if such appearance arises out of,or is related to, his or her employmentwith the PBGC. It provides a centralizeddecisionmaking mechanism forresponding to such requests andcompulsory process.

(b) Scope. (1) This part applies when,in a judicial, administrative, legislative,or other proceeding, a PBGC employeeor former employee is requested orserved with compulsory process toprovide testimony concerninginformation acquired in the course ofperforming official duties or because ofofficial status and/or to producematerial acquired in the course ofperforming official duties or containedin PBGC files.

(2) This part does not apply to:

(i) Proceedings in which the PBGC isa party;

(ii) Congressional requests orsubpoenas for testimony or documents;or

(iii) Appearances by PBGC employeesin proceedings that do not arise out of,or relate to, their employment withPBGC (e.g., outside activities that areengaged in consistent with applicablestandards of ethical conduct).


For purposes of this part:Appearance means testimony or

production of documents or othermaterial, including an affidavit,deposition, interrogatory, declaration, orother required written submission.

Compulsory Process means anysubpoena, order, or other demand of acourt or other authority (e.g., anadministrative agency or a state or locallegislative body) for the appearance of aPBGC employee or former employee.

Employee means any officer oremployee of the PBGC, including aspecial government employee.

Proceeding means any proceedingbefore any federal, state, or local court;federal, state, or local agency; state orlocal legislature; or other authorityresponsible for administering regulatoryrequirements or adjudicating disputes orcontroversies, including arbitration,mediation, and other similarproceedings.

Special government employee meansan employee of the PBGC who isretained, designated, appointed oremployed to perform, with or withoutcompensation, for not to exceed onehundred and thirty days during anythree hundred and sixty-fiveconsecutive days, temporary dutieseither on a full-time or intermittentbasis (18 U.S.C. 202).

§ 4905.3 General.No PBGC employee or former

employee may appear in any proceedingto which this part applies to testify and/or produce documents or other materialunless authorized under this part.

§ 4905.4 Appearances by PBGCemployees.

(a) Whenever a PBGC employee orformer employee is requested or servedwith compulsory process to appear in aproceeding to which this part applies,he or she will promptly notify theGeneral Counsel.

(b) The General Counsel or his or herdesignee will authorize an appearanceby a PBGC employee or formeremployee if, and to the extent, he or shedetermines that such appearance is inthe interest of the PBGC.


(1) In determining whether anappearance is in the interest of thePBGC, the General Counsel or his or herdesignee will consider relevant factors,including:

(i) What, if any, objective of the PBGC(and, where relevant, any federalagency, if the United States is a party)would be promoted by the appearance;

(ii) Whether the appearance wouldunnecessarily interfere with theemployee’s official duties;

(iii) Whether the appearance wouldresult in the appearance of improperlyfavoring one litigant over another; and

(iv) Whether the appearance isappropriate under applicablesubstantive and procedural rules.

(2) If the General Counsel or his or herdesignee concludes that compulsoryprocess is essentially a request for PBGCrecord information, it will be treated asa request under the Freedom ofInformation Act, as amended, inaccordance with part 4901 of thischapter, except to the extent that thePrivacy Act of 1974, as amended, andpart 4902 of this chapter governdisclosure of a record maintained on anindividual.

(c) If, in response to compulsoryprocess in a proceeding to which thispart applies, the General Counsel or hisor her designee has not authorized anappearance by the return date, theemployee or former employee shallappear at the stated time and place(unless advised by the General Counselor his or her designee that process eitherwas not validly issued or served or hasbeen withdrawn), accompanied by aPBGC attorney, produce a copy of thispart of the regulations, and respectfullydecline to provide any testimony orproduce any documents or othermaterial. When the demand is underconsideration, the employee shallrespectfully request that the court orother authority stay the demandpending the employee’s receipt ofinstructions from the General Counsel.

§ 4905.5 Requests for authenticatedcopies of PBGC records.

The PBGC will grant requests forauthenticated copies of PBGC records,for purposes of admissibility under 28U.S.C. 1733 and Rule 44 of the FederalRules of Civil Procedure, for recordsthat are to be disclosed pursuant to thispart or part 4901 of this chapter.Appropriate fees will be charged forproviding authenticated copies of PBGCrecords, in accordance with part 4901,subpart D, of this chapter.

§ 4905.6 Penalty.A PBGC employee who testifies or

produces documents or other material

in violation of a provision of this partof the regulations shall be subject todisciplinary action.

PART 4907—ENFORCEMENT OFNONDISCRIMINATION ON THE BASISOF HANDICAP IN PROGRAMS ORACTIVITIES CONDUCTED BY THEPENSION BENEFIT GUARANTYCORPORATION

Sec.4907.101 Purpose.4907.102 Application.4907.103 Definitions.4907.104–4907.109 [Reserved]4907.110 Self-evaluation.4907.111 Notice.4907.112–4907.129 [Reserved]4907.130 General prohibitions against

discrimination.4907.131–4907.139 [Reserved]4907.140 Employment.4907.141–4907.148 [Reserved]4907.149 Program accessibility:

Discrimination prohibited.4907.150 Program accessibility: Existing

facilities.4907.151 Program accessibility: New

construction and alterations.4907.152–4907.159 [Reserved]4907.160 Communications.4907.161–4907.169 [Reserved]4907.170 Compliance procedures.4907.171–4907.999 [Reserved]

Authority: 29 U.S.C. 794, 1302(b)(3).

§ 4907.101 Purpose.This part effectuates section 119 of

the Rehabilitation, ComprehensiveServices, and DevelopmentalDisabilities Amendments of 1978,which amended section 504 of theRehabilitation Act of 1973 to prohibitdiscrimination on the basis of handicapin programs or activities conducted byExecutive agencies or the United StatesPostal Service.

§ 4907.102 Application.This part applies to all programs or

activities conducted by the agency.

§ 4907.103 Definitions.For purposes of this part, the term—Assistant Attorney General means the

Assistant Attorney General, Civil RightsDivision, United States Department ofJustice.

Auxiliary aids means services ordevices that enable persons withimpaired sensory, manual, or speakingskills to have an equal opportunity toparticipate in, and enjoy the benefits of,programs or activities conducted by theagency. For example, auxiliary aidsuseful for persons with impaired visioninclude readers, brailled materials,audio recordings, telecommunicationsdevices and other similar services anddevices. Auxiliary aids useful forpersons with impaired hearing include

telephone handset amplifiers,telephones compatible with hearingaids, telecommunication devices fordeaf persons (TDD’s), interpreters,notetakers, written materials, and othersimilar services and devices.

Complete complaint means a writtenstatement that contains thecomplainant’s name and address anddescribes the agency’s allegeddiscriminatory action in sufficient detailto inform the agency of the nature anddate of the alleged violation of section504. It shall be signed by thecomplainant or by someone authorizedto do so on his or her behalf. Complaintsfiled on behalf of classes or third partiesshall describe or identify (by name, ifpossible) the alleged victims ofdiscrimination.

Facility means all or any portion ofbuildings, structures, equipment, roads,walks, parking lots, rolling stock orother conveyances, or other real orpersonal property.

Handicapped person means anyperson who has a physical or mentalimpairment that substantially limits oneor more major life activities, has arecord of such an impairment, or isregarded as having such an impairment.

As used in this definition, the phrase:(1) Physical or mental impairment

includes—(i) Any physiological disorder or

condition, cosmetic disfigurement, oranatomical loss affecting one or more ofthe following body systems:Neurological; musculoskeletal; specialsense organs; respiratory, includingspeech organs; cardiovascular;reproductive; digestive; genitourinary;hemic and lymphatic; skin; andendocrine; or

(ii) Any mental or psychologicaldisorder, such as mental retardation,organic brain syndrome, emotional ormental illness, and specific learningdisabilities. The term ‘‘physical ormental impairment’’ includes, but is notlimited to, such diseases and conditionsas orthopedic, visual, speech, andhearing impairments, cerebral palsy,epilepsy, muscular dystrophy, multiplesclerosis, cancer, heart disease, diabetes,mental retardation, emotional illness,and drug addiction and alcoholism.

(2) Major life activities includesfunctions such as caring for one’s self,performing manual tasks, walking,seeing, hearing, speaking, breathing,learning, and working.

(3) Has a record of such animpairment means has a history of, orhas been misclassified as having, amental or physical impairment thatsubstantially limits one or more majorlife activities.


(4) Is regarded as having animpairment means—

(i) Has a physical or mentalimpairment that does not substantiallylimit major life activities but is treatedby the agency as constituting such alimitation;

(ii) Has a physical or mentalimpairment that substantially limitsmajor life activities only as a result ofthe attitudes of others toward suchimpairment; or

(iii) Has none of the impairmentsdefined in subparagraph (1) of thisdefinition but is treated by the agencyas having such an impairment.

Historic preservation programs meansprograms conducted by the agency thathave preservation of historic propertiesas a primary purpose.

Historic properties means thoseproperties that are listed or eligible forlisting in the National Register ofHistoric Places or properties designatedas historic under a statute of theappropriate State or local governmentbody.

Qualified handicapped personmeans—

(1) With respect to preschool,elementary, or secondary educationservices provided by the agency, ahandicapped person who is a member ofa class of persons otherwise entitled bystatute, regulation, or agency policy toreceive education services from theagency.

(2) With respect to any other agencyprogram or activity under which aperson is required to perform services orto achieve a level of accomplishment, ahandicapped person who meets theessential eligibility requirements andwho can achieve the purpose of theprogram or activity withoutmodifications in the program or activitythat the agency can demonstrate wouldresult in a fundamental alteration in itsnature;

(3) With respect to any other programor activity, a handicapped person whomeets the essential eligibilityrequirements for participation in, orreceipt of benefits from, that program oractivity; and

(4) Qualified handicapped person isdefined for purposes of employment in29 CFR 1613.702(f), which is madeapplicable to this part by § 4907.140.

Section 504 means section 504 of theRehabilitation Act of 1973 (Pub. L. 93–112, 87 Stat. 394 (29 U.S.C. 794)), asamended by the Rehabilitation ActAmendments of 1974 (Pub. L. 93–516,88 Stat. 1617), and the Rehabilitation,Comprehensive Services, andDevelopmental DisabilitiesAmendments of 1978 (Pub. L. 95–602,92 Stat. 2955). As used in this part,

section 504 applies only to programs oractivities conducted by Executiveagencies and not to federally assistedprograms.

Substantial impairment means asignificant loss of the integrity offinished materials, design quality, orspecial character resulting from apermanent alteration.

§§ 4907.104–4907.109 [Reserved]

§ 4907.110 Self-evaluation.(a) The agency shall, by August 24,

1987, evaluate its current policies andpractices, and the effects thereof, that donot or may not meet the requirements ofthis part, and, to the extent modificationof any such policies and practices isrequired, the agency shall proceed tomake the necessary modifications.

(b) The agency shall provide anopportunity to interested persons,including handicapped persons ororganizations representing handicappedpersons, to participate in the self-evaluation process by submittingcomments (both oral and written).

(c) The agency shall, until three yearsfollowing the completion of the self-evaluation, maintain on file and makeavailable for public inspection:

(1) a description of areas examinedand any problems identified, and

(2) a description of any modificationsmade.

§ 4907.111 Notice.The agency shall make available to

employees, applicants, participants,beneficiaries, and other interestedpersons such information regarding theprovisions of this part and itsapplicability to the programs oractivities conducted by the agency, andmake such information available tothem in such manner as the head of theagency finds necessary to apprise suchpersons of the protections againstdiscrimination assured them by section504 and this regulation.

§§ 4907.112–4907.129 [Reserved]

§ 4907.130 General prohibitions againstdiscrimination.

(a) No qualified handicapped personshall, on the basis of handicap, beexcluded from participation in, bedenied the benefits of, or otherwise besubjected to discrimination under anyprogram or activity conducted by theagency.

(b)(1) The agency, in providing anyaid, benefit, or service, may not, directlyor through contractual, licensing, orother arrangements, on the basis ofhandicap—

(i) Deny a qualified handicappedperson the opportunity to participate in

or benefit from the aid, benefit, orservice;

(ii) Afford a qualified handicappedperson an opportunity to participate inor benefit from the aid, benefit, orservice that is not equal to that affordedothers;

(iii) Provide a qualified handicappedperson with an aid, benefit, or servicethat is not as effective in affording equalopportunity to obtain the same result, togain the same benefit, or to reach thesame level of achievement as thatprovided to others;

(iv) Provide different or separate aid,benefits, or services to handicappedpersons or to any class of handicappedpersons than is provided to othersunless such action is necessary toprovide qualified handicapped personswith aid, benefits, or services that are aseffective as those provided to others;

(v) Deny a qualified handicappedperson the opportunity to participate asa member of planning or advisoryboards; or

(vi) Otherwise limit a qualifiedhandicapped person in the enjoyment ofany right, privilege, advantage, oropportunity enjoyed by others receivingthe aid, benefit, or service.

(2) The agency may not deny aqualified handicapped person theopportunity to participate in programsor activities that are not separate ordifferent, despite the existence ofpermissibly separate or differentprograms or activities.

(3) The agency may not, directly orthrough contractual or otherarrangements, utilize criteria or methodsof administration the purpose or effectof which would—

(i) Subject qualified handicappedpersons to discrimination on the basis ofhandicap; or

(ii) Defeat or substantially impairaccomplishment of the objectives of aprogram or activity with respect tohandicapped persons.

(4) The agency may not, indetermining the site or location of afacility, make selections the purpose oreffect of which would—

(i) Exclude handicapped personsfrom, deny them the benefits of, orotherwise subject them todiscrimination under any program oractivity conducted by the agency; or

(ii) Defeat or substantially impair theaccomplishment of the objectives of aprogram or activity with respect tohandicapped persons.

(5) The agency, in the selection ofprocurement contractors, may not usecriteria that subject qualifiedhandicapped persons to discriminationon the basis of handicap.


(6) The agency may not administer alicensing or certification program in amanner that subjects qualifiedhandicapped persons to discriminationon the basis of handicap, nor may theagency establish requirements for theprograms or activities of licensees orcertified entities that subject qualifiedhandicapped persons to discriminationon the basis of handicap. However, theprograms or activities of entities that arelicensed or certified by the agency arenot, themselves, covered by this part.

(c) The exclusion of nonhandicappedpersons from the benefits of a programlimited by Federal statute or ExecutiveOrder to handicapped persons or theexclusion of a specific class ofhandicapped persons from a programlimited by Federal statute or ExecutiveOrder to a different class ofhandicapped persons is not prohibitedby this part.

(d) The agency shall administerprograms and activities in the mostintegrated setting appropriate to theneeds of qualified handicapped persons.

§§ 4907.131–4907.139 [Reserved]

§ 4907.140 Employment.No qualified handicapped person

shall, on the basis of handicap, besubjected to discrimination inemployment under any program oractivity conducted by the agency. Thedefinitions, requirements, andprocedures of section 501 of theRehabilitation Act of 1973 (29 U.S.C.791), as established by the EqualEmployment Opportunity Commissionin 29 CFR part 1613, shall apply toemployment in federally-conductedprograms or activities.

§§ 4907.141–4907.148 [Reserved]

§ 4907.149 Program accessibility:Discrimination prohibited.

Except as otherwise provided in§ 4907.150, no qualified handicappedperson shall, because the agency’sfacilities are inaccessible to or unusableby handicapped persons, be denied thebenefits of, be excluded fromparticipation in, or otherwise besubjected to discrimination under anyprogram or activity conducted by theagency.

§ 4907.150 Program accessibility: Existingfacilities.

(a) General. The agency shall operateeach program or activity so that theprogram or activity, when viewed in itsentirety, is readily accessible to andusable by handicapped persons. Thisparagraph does not—

(1) Necessarily require the agency tomake each of its existing facilities

accessible to and usable by handicappedpersons;

(2) In the case of historic preservationprograms, require the agency to take anyaction that would result in a substantialimpairment of significant historicfeatures of an historic property; or

(3) Require the agency to take anyaction that it can demonstrate wouldresult in a fundamental alteration in thenature of a program or activity or inundue financial and administrativeburdens. In those circumstances whereagency personnel believe that theproposed action would fundamentallyalter the program or activity or wouldresult in undue financial andadministrative burdens, the agency hasthe burden of proving that compliancewith § 4907.150(a) would result in suchalteration or burdens. The decision thatcompliance would result in suchalteration or burdens must be made bythe agency head or his or her designeeafter considering all agency resourcesavailable for use in the funding andoperation of the conducted program oractivity, and must be accompanied by awritten statement of the reasons forreaching that conclusion. If an actionwould result in such an alteration orsuch burdens, the agency shall take anyother action that would not result insuch an alteration or such burdens butwould nevertheless ensure thathandicapped persons receive thebenefits and services of the program oractivity.

(b) Methods—(1) General. The agency may comply

with the requirements of this sectionthrough such means as redesign ofequipment, reassignment of services toaccessible buildings, assignment ofaides to beneficiaries, home visits,delivery of services at alternateaccessible sites, alteration of existingfacilities and construction of newfacilities, use of accessible rolling stock,or any other methods that result inmaking its programs or activities readilyaccessible to and usable by handicappedpersons. The agency is not required tomake structural changes in existingfacilities where other methods areeffective in achieving compliance withthis section. The agency, in makingalterations to existing buildings, shallmeet accessibility requirements to theextent compelled by the ArchitecturalBarriers Act of 1968, as amended (42U.S.C. 4151–4157), and any regulationsimplementing it. In choosing amongavailable methods for meeting therequirements of this section, the agencyshall give priority to those methods thatoffer programs and activities to qualifiedhandicapped persons in the mostintegrated setting appropriate.

(2) Historic preservation programs. Inmeeting the requirements of§ 4907.150(a) in historic preservationprograms, the agency shall give priorityto methods that provide physical accessto handicapped persons. In cases wherea physical alteration to an historicproperty is not required because of§ 4907.150 (a)(2) or (a)(3), alternativemethods of achieving programaccessibility include—

(i) Using audio-visual materials anddevices to depict those portions of anhistoric property that cannot otherwisebe made accessible;

(ii) Assigning persons to guidehandicapped persons into or throughportions of historic properties thatcannot otherwise be made accessible; or

(iii) Adopting other innovativemethods.

(c) Time period for compliance. Theagency shall comply with theobligations established under thissection by October 21, 1986, except thatwhere structural changes in facilities areundertaken, such changes shall be madeby August 22, 1989, but in any event asexpeditiously as possible.

(d) Transition plan. In the event thatstructural changes to facilities will beundertaken to achieve programaccessibility, the agency shall develop,by February 23, 1987 a transition plansetting forth the steps necessary tocomplete such changes. The agencyshall provide an opportunity tointerested persons, includinghandicapped persons or organizationsrepresenting handicapped persons, toparticipate in the development of thetransition plan by submitting comments(both oral and written). A copy of thetransition plan shall be made availablefor public inspection. The plan shall, ata minimum—

(1) Identify physical obstacles in theagency’s facilities that limit theaccessibility of its programs or activitiesto handicapped persons;

(2) Describe in detail the methods thatwill be used to make the facilitiesaccessible;

(3) Specify the schedule for taking thesteps necessary to achieve compliancewith this section and, if the time periodof the transition plan is longer than oneyear, identify steps that will be takenduring each year of the transitionperiod; and

(4) Indicate the official responsible forimplementation of the plan.

§ 4907.151 Program accessibility: Newconstruction and alterations.

Each building or part of a buildingthat is constructed or altered by, onbehalf of, or for the use of the agencyshall be designed, constructed, or


altered so as to be readily accessible toand usable by handicapped persons.The definitions, requirements, andstandards of the Architectural BarriersAct (42 U.S.C. 4151–4157), asestablished in 41 CFR 101–19.600 to101–19.607, apply to buildings coveredby this section.

§§ 4907.152–4907.159 [Reserved]

§ 4907.160 Communications.(a) The agency shall take appropriate

steps to ensure effective communicationwith applicants, participants, personnelof other Federal entities, and membersof the public.

(1) The agency shall furnishappropriate auxiliary aids wherenecessary to afford a handicappedperson an equal opportunity toparticipate in, and enjoy the benefits of,a program or activity conducted by theagency.

(i) In determining what type ofauxiliary aid is necessary, the agencyshall give primary consideration to therequests of the handicapped person.

(ii) The agency need not provideindividually prescribed devices, readersfor personal use or study, or otherdevices of a personal nature.

(2) Where the agency communicateswith applicants and beneficiaries bytelephone, telecommunication devicesfor deaf person (TDD’s) or equallyeffective telecommunication systemsshall be used.

(b) The agency shall ensure thatinterested persons, including personswith impaired vision or hearing, canobtain information as to the existenceand location of accessible services,activities, and facilities.

(c) The agency shall provide signageat a primary entrance to each of itsinaccessible facilities, directing users toa location at which they can obtaininformation about accessible facilities.The international symbol foraccessibility shall be used at eachprimary entrance of an accessiblefacility.

(d) This section does not require theagency to take any action that it candemonstrate would result in afundamental alteration in the nature ofa program or activity or in unduefinancial and administrative burdens. Inthose circumstances where agencypersonnel believe that the proposed

action would fundamentally alter theprogram or activity or would result inundue financial and administrativeburdens, the agency has the burden ofproving that compliance with§ 4907.160 would result in suchalteration or burdens. The decision thatcompliance would result in suchalteration or burdens must be made bythe agency head or his or her designeeafter considering all agency resourcesavailable for use in the funding andoperation of the conducted program oractivity, and must be accompanied by awritten statement of the reasons forreaching that conclusion. If an actionrequired to comply with this sectionwould result in such an alteration orsuch burdens, the agency shall take anyother action that would not result insuch an alteration or such burdens butwould nevertheless ensure that, to themaximum extent possible, handicappedpersons receive the benefits and servicesof the program or activity.

§§ 4907.161–4907.169 [Reserved]

§ 4907.170 Compliance procedures.

(a) Except as provided in paragraph(b) of this section, this section appliesto all allegations of discrimination onthe basis of handicap in programs oractivities conducted by the agency.

(b) The agency shall processcomplaints alleging violations of section504 with respect to employmentaccording to the procedures establishedby the Equal Employment OpportunityCommission in 29 CFR part 1613pursuant to section 501 of theRehabilitation Act of 1973 (29 U.S.C.791).

(c) The Equal Opportunity Managershall be responsible for coordinatingimplementation of this section.Complaints may be sent to EqualOpportunity Manager, HumanResources Department, Pension BenefitGuaranty Corporation, 1200 K StreetNW., Washington, DC 20005–4026.

(d) The agency shall accept andinvestigate all complete complaints forwhich it has jurisdiction. All completecomplaints must be filed within 180days of the alleged act of discrimination.The agency may extend this time periodfor good cause.

(e) If the agency receives a complaintover which it does not have jurisdiction,

it shall promptly notify the complainantand shall make reasonable efforts torefer the complaint to the appropriategovernment entity.

(f) The agency shall notify theArchitectural and TransportationBarriers Compliance Board upon receiptof any complaint alleging that a buildingor facility that is subject to theArchitectural Barriers Act of 1968, asamended (42 U.S.C. 4151–4157), orsection 502 of the Rehabilitation Act of1973, as amended (29 U.S.C. 792), is notreadily accessible to and usable byhandicapped persons.

(g) Within 180 days of the receipt ofa complete complaint for which it hasjurisdiction, the agency shall notify thecomplainant of the results of theinvestigation in a letter containing—

(1) Findings of fact and conclusions oflaw;

(2) A description of a remedy for eachviolation found; and

(3) A notice of the right to appeal.(h) Appeals of the findings of fact and

conclusions of law or remedies must befiled by the complainant within 90 daysof receipt from the agency of the letterrequired by § 4907.170(g). The agencymay extend this time for good cause.

(i) Timely appeals shall be acceptedand processed by the head of theagency.

(j) The head of the agency shall notifythe complainant of the results of theappeal within 60 days of the receipt ofthe request. If the head of the agencydetermines that additional informationis needed from the complainant, he orshe shall have 60 days from the date ofreceipt of the additional information tomake his or her determination on theappeal.

(k) The time limits cited in paragraphs(g) and (j) of this section may beextended with the permission of theAssistant Attorney General.

(l) The agency may delegate itsauthority for conducting complaintinvestigations to other Federal agencies,except that the authority for making thefinal determination may not bedelegated to another agency.

§§ 4907.171–4907.999 [Reserved]

[FR Doc. 96–16398 Filed 6–28–96; 8:45 am]BILLING CODE 7708–01–P