Title 29—Labor--Volume 1
PART 4041A—TERMINATION OF MULTIEMPLOYER PLANS
§ 4041A.1   Purpose and scope.
The purpose of this part is to establish rules for notifying the PBGC of the termination of a multiemployer plan and rules for the administration of multiemployer plans that have terminated by mass withdrawal. Subpart B prescribes the contents of and procedures for filing a Notice of Termination for a multiemployer plan. Subpart C prescribes basic duties of plan sponsors of mass-withdrawal-terminated plans. (Other duties are prescribed in part 4281 of this chapter.) Subpart D contains procedures for closing out sufficient plans. This part applies to terminated multiemployer plans covered by title IV of ERISA but, in the case of subparts C and D, only to plans terminated by mass withdrawal under section 4041A(a)(2) of ERISA (including plans created by partition pursuant to section 4233 of ERISA).
§ 4041A.2   Definitions.
The following terms are defined in § 4001.2 of this chapter: annuity, ERISA, insurer, IRS, mass withdrawal, multiemployer plan, nonforfeitable benefit, PBGC, plan, and plan year. In addition, for purposes of this part:
Actuarial valuation means a report submitted to a plan of a valuation of plan assets and liabilities that is performed in accordance with subpart B of part 4281 of this chapter.
Available resources means available resources as described in section 4245(b)(3) of ERISA.
Benefits subject to reduction means those benefits accrued under plan amendments (or plans) adopted after March 26, 1980, or under collective bargaining agreements entered into after March 26, 1980, that are not eligible for PBGC's guarantee under section 4022A(b) of ERISA.
Financial assistance means financial assistance from PBGC under section 4261 of ERISA.
Insolvency benefit level means the greater of the resource benefit level or the benefit level guaranteed by PBGC for each participant and beneficiary in pay status.
Insolvency year means insolvency year as described in section 4245(b)(4) of ERISA.
Insolvent means unable to pay benefits when due during the plan year.
Nonguaranteed benefits means those benefits that are eligible for PBGC's guarantee under section 4022A(b) of ERISA, but exceed the guarantee limits under section 4022A(c).
Resource benefit level means resource benefit level as described in section 4245(b)(2) of ERISA.
§ 4041A.3   Method and date of filing; where to file; computation of time; issuances to third parties.
(a) Method and date of filing. The PBGC applies the rules in subpart A of part 4000 of this chapter to determine permissible methods of filing with the PBGC under this part. The PBGC applies the rules in subpart C of part 4000 of this chapter to determine the date that a submission under this part was filed with the PBGC.
(b) Where to file. See § 4000.4 of this chapter for information on where to file.
(c) Computation of time. The PBGC applies the rules in subpart D of part 4000 of this chapter to compute any time period for filing or issuance under this part.
(d) Method and date of issuance. The PBGC applies the rules in subpart B of part 4000 of this chapter to determine permissible methods of issuance under this part. The PBGC applies the rules in subpart C of part 4000 of this chapter to determine the date that an issuance under this part was provided.
§ 4041A.11   Requirement of notice.
(a) General. A notice of termination must be filed with PBGC by a multiemployer plan when the plan has terminated as described in section 4041A(a) of ERISA.
(b) Who must file. The plan sponsor or a duly authorized representative acting on behalf of the plan sponsor must sign and file the notice.
(c) When to file. (1) For a termination pursuant to a plan amendment, the notice must be filed with PBGC within thirty days after the amendment is adopted or effective, whichever is later.
(2) For a termination that results from a mass withdrawal, the notice must be filed with PBGC within thirty days after the last employer withdrew from the plan or thirty days after the first day of the first plan year for which no employer contributions were required under the plan, whichever is earlier.
(d) How and where to file. Filings with PBGC under this subpart must be submitted in accordance with the rules in subpart A of part 4000 of this chapter. See § 4000.4 of this chapter for information on where to file.
§ 4041A.12   Contents of notice.
(a) Information to be contained in notice. A notice of termination under § 4041A.11 required to be filed with PBGC must contain the information and certification specified in the instructions for the notice of termination on PBGC's website ( www.pbgc.gov ).
(b) Additional information. In addition to the information required under paragraph (a) of this section, PBGC may require the submission of any other information that PBGC determines is necessary for review of a notice of termination.
§ 4041A.21   General rule.
The plan sponsor of a multiemployer plan that terminates by mass withdrawal must continue to administer the plan in accordance with applicable statutory provisions, regulations, and plan provisions until a trustee is appointed under section 4042 of ERISA or until plan assets are distributed in accordance with subpart D of this part. In addition, the plan sponsor is responsible for the specific duties described in this subpart.
§ 4041A.22   Payment of benefits.
(a) Except as provided in paragraph (b), the plan sponsor shall pay any benefit attributable to employer contributions, other than a death benefit, only in the form of an annuity.
(b) The plan sponsor may pay a benefit in a form other than an annuity if—
(1) The plan distributes plan assets in accordance with subpart D of this part;
(2) The PBGC approves the payment of the benefit in an alternative form pursuant to § 4041A.27; or
(3) The value of the entire nonforfeitable benefit does not exceed $1,750.
(c) Except to the extent provided in the next sentence, the plan sponsor shall not pay benefits in excess of the amount that is nonforfeitable under the plan as of the date of termination, unless authorized to do so by the PBGC pursuant to § 4041A.27. Subject to the restriction stated in paragraph (d) of this section, however, the plan sponsor may pay a qualified preretirement survivor annuity with respect to a participant who died after the date of termination.
(d) The payment of benefits subject to reduction shall be discontinued to the extent provided in § 4281.31 if the plan sponsor determines, in accordance with § 4041A.24, that the plan's assets are insufficient to provide all nonforfeitable benefits.
(e) The plan sponsor shall, to the extent provided in § 4281.41, suspend the payment of nonguaranteed benefits if the plan sponsor determines, in accordance with § 4041A.25, that the plan is insolvent.
(f) The plan sponsor shall, to the extent required by § 4281.42, make retroactive payments of suspended benefits if it determines under that section that the level of the plan's available resources requires such payments.
§ 4041A.23   Withdrawal liability.
(a) Collection of withdrawal liability. Until plan assets are distributed in accordance with subpart D of this part, or until the end of the plan year as of which PBGC determines that plan assets (exclusive of claims for withdrawal liability) are sufficient to satisfy all nonforfeitable benefits under the plan, the plan sponsor must determine, give notice of, and collect withdrawal liability (including the liability arising as a result of the mass withdrawal), in accordance with subpart C of part 4219 of this chapter and sections 4201 through 4225 of ERISA.
(b) Filing of withdrawal liability information. For each employer that has withdrawn from the plan, the plan sponsor must file with PBGC, not later than 180 days after the end of the plan year in which the plan terminates and each plan year thereafter, the information specified in the withdrawal liability instructions on PBGC's website ( www.pbgc.gov ).
§ 4041A.24   Plan valuations and monitoring.
(a) Annual valuation requirement. The plan sponsor of a plan must have actuarial valuations performed in accordance with this section and with subpart B of part 4281 of this chapter.
(1) Termination year valuation. The plan sponsor of a plan must have an actuarial valuation performed for the plan for the plan year in which the plan terminates.
(2) High-obligation valuations. If the present value of a plan's nonforfeitable benefits exceeds $50 million according to the most recent actuarial valuation under this paragraph (a), the plan sponsor must have an actuarial valuation performed for the plan for each plan year.
(3) Low-obligation valuations. If the present value of a plan's nonforfeitable benefits does not exceed $50 million according to the most recent actuarial valuation under this paragraph (a), the plan sponsor may treat that actuarial valuation as the actuarial valuation for each of the four plan years following the plan year for which the actuarial valuation was performed.
(4) Timing and filing. Each actuarial valuation under this paragraph (a) must be performed within 150 days after the end of the plan year for which it is performed and must be filed with PBGC within 180 days after the end of that plan year in accordance with the valuation instructions on PBGC's website ( www.pbgc.gov ).
(5) Exception for plans closing out. Notwithstanding paragraphs (a)(1) through (4) of this section, no actuarial valuation is required for the plan year in which a plan closes out under subpart D of this part.
(b) Plan monitoring; benefit reductions —(1) Applicability. This paragraph (b) applies to a plan that is not receiving financial assistance from PBGC for the plan year following the plan year for which an actuarial valuation is performed under paragraph (a) of this section.
(2) Funding level determination. Upon the plan sponsor's receipt of each actuarial valuation under paragraph (a) of this section, the plan sponsor must determine whether the value of nonforfeitable benefits exceeds the value of plan assets (including withdrawal liability claims). If it does, then the plan sponsor must—
(i) Amend the plan to reduce benefits subject to reduction (if any) in accordance with the procedures in subpart C of part 4281 of this chapter to the extent necessary to ensure that the plan's assets are sufficient to discharge when due all of the plan's obligations with respect to nonforfeitable benefits or, if that result cannot be achieved, to the maximum extent possible; and
(ii) If, after implementing the provisions of paragraph (b)(2)(i) of this section, the plan's assets are insufficient to discharge when due all of the plan's obligations with respect to nonforfeitable benefits, make determinations of plan solvency in accordance with § 4041A.25.
(3) Notices of benefit reduction. The plan sponsor of a plan that is amended to reduce benefits under paragraph (b)(2)(i) of this section must provide participants and beneficiaries and PBGC notice of the benefit reduction in accordance with § 4281.32 of this chapter.
(c) Alternative method of compliance —(1) Applicability. This paragraph (c) applies to a plan that meets both of the following requirements—
(i) The plan is receiving financial assistance from PBGC for the plan year following the plan year for which an actuarial valuation is required under paragraph (a) of this section.
(ii) The present value of the plan's nonforfeitable benefits does not exceed $50 million according to the most recent actuarial valuation under paragraph (a) of this section.
(2) Alternative compliance requirements. A plan sponsor is considered to comply with the actuarial valuation and filing requirements of paragraph (a) of this section if both—
(i) The plan sponsor files with PBGC the information in paragraph (c)(3) of this section within the time required for filing the actuarial valuation under paragraph (a)(4) of this section; and
(ii) If, within 90 days after the plan sponsor makes the filing described in paragraph (c)(2)(i) of this section, PBGC requests other information reasonably required to determine the plan's assets and liabilities, the plan sponsor files such other information within 60 days after PBGC's request.
(3) Information to be provided. The information the plan sponsor must file with PBGC under paragraph (c)(2)(i) of this section is all of the following:
(i) The most recent summary plan description of the plan or the date the document was previously filed with PBGC.
(ii) The most recent actuarial valuation of the plan or the date the document was previously filed with PBGC.
(iii) Information reasonably necessary for PBGC to prepare an actuarial valuation as specified in the valuation instructions on PBGC's website ( www.pbgc.gov ).
§ 4041A.25   Periodic determinations of plan solvency.
(a) Annual insolvency determination. A plan that has no benefits subject to reduction and has assets insufficient to discharge when due all of the plan's obligations with respect to nonforfeitable benefits must make periodic determinations of plan solvency in accordance with this paragraph (a). No later than six months before the beginning of the applicable plan year described in this paragraph (a), or as soon as practicable after the plan sponsor determines the applicable plan year, and no later than six months before each plan year thereafter, the plan sponsor must determine in writing whether the plan is expected to be insolvent for such plan year. The applicable plan year is—
(1) For a plan that had no benefits subject to reduction when it terminated, the plan year the plan terminated; or
(2) For a plan that eliminated benefits subject to reduction by amendment after termination, the plan year in which the amendment that eliminated all (or all remaining) benefits subject to reduction is effective.
(b) Other determination of insolvency. Whether or not a prior determination of plan insolvency has been made under paragraph (a) of this section (or under section 4245 of ERISA), a plan sponsor that has reason to believe, taking into account the plan's recent and anticipated financial experience, that the plan is insolvent in the current plan year or is expected to be insolvent in the next plan year must determine in writing whether the plan is or is expected to be insolvent for that plan year.
(c) Benefit suspensions. If the plan sponsor determines that the plan is, or is expected to be, insolvent for a plan year, it must suspend benefits in accordance with § 4281.41.
(d) Insolvency notices. If the plan sponsor determines that the plan is insolvent in the current plan year or is expected to be insolvent in the next plan year it must provide notices of insolvency and notices of insolvency benefit level to PBGC and to participants and beneficiaries in accordance with subpart D of part 4281 of this chapter.
§ 4041A.26   Financial assistance.
A plan sponsor that determines a resource benefit level under section 4245(b)(2) of ERISA that is below the level of guaranteed benefits or that determines that the plan will be unable to pay guaranteed benefits for any month during an insolvency year shall apply for financial assistance from the PBGC in accordance with § 4281.47.
§ 4041A.27   PBGC approval to pay benefits not otherwise permitted.
Upon written application by the plan sponsor, the PBGC may authorize the plan to pay benefits other than nonforfeitable benefits or to pay benefits valued at more than $1,750 in a form other than an annuity. The PBGC will approve such payments if it determines that the plan sponsor has demonstrated that the payments are not adverse to the interests of the plan's participants and beneficiaries generally and do not unreasonably increase the PBGC's risk of loss with respect to the plan.
§ 4041A.41   General rule.
If a plan's assets, excluding any claim of the plan for unpaid withdrawal liability, are sufficient to satisfy all obligations for nonforfeitable benefits provided under the plan, the plan sponsor may close out the plan in accordance with this subpart by distributing plan assets in full satisfaction of all nonforfeitable benefits under the plan.
§ 4041A.42   Method of distribution.
(a) In general. The plan sponsor shall distribute plan assets by purchasing from an insurer contracts to provide all benefits required by § 4041A.43 to be provided in annuity form and by paying in a lump sum (or other alternative elected by the participant) all other benefits.
(b) Missing participants and beneficiaries. The plan sponsor must distribute plan benefits of missing distributees in accordance with subpart D of part 4050 of this chapter.
§ 4041A.43   Benefit forms.
(a) General rule. Except as provided in paragraph (b) of this section, the sponsor of a plan that is closed out shall provide for the payment of any benefit attributable to employer contributions only in the form of an annuity.
(b) Exceptions. The plan sponsor may pay a benefit attributable to employer contributions in a form other than an annuity if:
(1) The present value of the participant's entire nonforfeitable benefit, determined using the interest assumption under §§ 4044.41 through 4044.58, does not exceed the dollar amount specified in section 203(e)(1) of ERISA.
(2) The payment is for death benefits provided under the plan.
(3) The participant elects an alternative form of distribution under paragraph (c) of this section.
(c) Alternative forms of distribution. The plan sponsor may allow participants to elect alternative forms of distribution in accordance with this paragraph. When a form of distribution is offered as an alternative to the normal form, the plan sponsor shall notify each participant, in writing, of the form and estimated amount of the participant's normal form of distribution. The notification shall also describe any risks attendant to the alternative form. Participants' elections of alternative forms shall be in writing.
§ 4041A.44   Cessation of withdrawal liability.
The obligation of an employer to make payments of initial withdrawal liability and mass withdrawal liability shall cease on the date on which the plan's assets are distributed in full satisfaction of all nonforfeitable benefits provided by the plan.