33302 Federal Register / Vol. 69, No. 114 / Tuesday, June 15, 2004 / Rules and Regulations 

Example 8. Annuity with partial 

commutation feature. (i) The facts are the 

same as in Example 7 except that the annuity 

provides Z4 may request, at any time before 

Z4 attains age 84, an ad hoc payment on his 

next payment due date with future payments 

reduced by an amount equal to the ad hoc 

payment divided by the factor obtained from 

Table M (from Example 7) corresponding to 

Z4’s age at the time of the ad hoc payment. 

Because, at each age, the factors in Table M 

are less than the corresponding life 

expectancies in the Single Life Table in A–

1 of § 1.401(a)(9)–9, total future expected 

payments under Contract Y4 will decrease 

after an ad hoc payment. Thus, ad hoc 

distributions received by Z4 from Contract 

Y4 will satisfy the requirements under 

paragraph (c)(4) of this A–4. 

(ii) As an illustration of paragraph (i) of 

this Example 8, if Z4 were to request, on the 

day before he was to attain age 84, an ad hoc 

payment of $100,000 on his next payment 

due date, his recalculated annual payment 

amount would be reduced to $27,500. This 

amount is determined as $40,000 (the 

amount of Z4’s next annual payment) 

reduced by $12,500 (his $100,000 ad hoc 

payment divided by the Table M factor at age 

84 of 8.0). Thus, Z4’s total future expected 

payments after the ad hoc payment (and 

including the ad hoc payment) are equal to 

$322,750 ($100,000 plus $27,500 multiplied 

by the Single Life Table value of 8.1). Note 

that this $322,750 amount is less than the 

amount of Z4’s total future expected 

payments before the ad hoc payment 

($324,000, determined as $40,000 multiplied 

by 8.1), and the requirements under 

paragraph (c)(4) of this A–4 are be satisfied.

Example 9. Annuity with excessive 

increases. (i) A retired participant (Z5) in 

defined contribution plan X attains age 701⁄2

in 2005. Z5 elects to purchase annuity 

Contract Y5 from Insurance Company W in 

2005 with a premium of $1,000,000. Contract 

Y5 is a single life annuity contract with a 20-

year period certain. Contract Y5 provides for 

an initial payment of $200,000, a second 

payment one year from the time of purchase 

of $40,000, and 18 succeeding annual 

payments each increasing at a constant 

percentage rate of 4.5 percent from the 

preceding payment. 

(ii) Contract Y5 fails to meet the 

requirements of section 401(a)(9) because the 

total future expected payments without 

regard to any increases in the annuity 

payment, calculated as $200,000 in year one 

and $40,000 in each of years two through 

twenty, is only $960,000 (i.e., an amount that 

does not exceed the total value used to 

purchase the annuity).

Q–15: Are there special rules 

applicable to payments made under a 

defined benefit plan or annuity contract 

to a surviving child? 

A–15: Yes, pursuant to section 

401(a)(9)(F), payments under a defined 

benefit plan or annuity contract that are 

made to an employee’s child until such 

child reaches the age of majority (or 

dies, if earlier) may be treated, for 

purposes of section 401(a)(9), as if such 

payments were made to the surviving 

spouse to the extent they become 

payable to the surviving spouse upon 

cessation of the payments to the child. 

For purposes of the preceding sentence, 

a child may be treated as having not 

reached the age of majority if the child 

has not completed a specified course of 

education and is under the age of 26. In 

addition, a child who is disabled within 

the meaning of section 72(m)(7) when 

the child reaches the age of majority 

may be treated as having not reached 

the age of majority so long as the child 

continues to be disabled. Thus, when 

payments described in this paragraph 

A–15 become payable to the surviving 

spouse because the child attains the age 

of majority, recovers from a disabling 

illness, dies, or completes a specified 

course of education, there is not an 

increase in benefits under A–1 of this 

section. Likewise, the age of child 

receiving such payments is not taken 

into consideration for purposes of the 

minimum incidental benefit 

requirement of A–2 of this section. 

Q–16: Will a governmental plan 

within the meaning of section 414(d) 

fail to satisfy section 401(a)(9) if annuity 

payments under the plan do not satisfy 

this section? 

A–16: (a) Except as provided in 

paragraph (b) of this A–16, annuity 

payments under a governmental plan 

within the meaning of section 414(d) 

must satisfy this section. 

(b) In the case of an annuity 

distribution option provided under the 

terms of a governmental plan as in effect 

on April 17, 2002, the plan will not fail 

to satisfy section 401(a)(9) merely 

because the annuity payments do not 

satisfy the requirements A–1 through A–

15 of this section, provided the 

distribution option satisfies section 

401(a)(9) based on a reasonable and 

good faith interpretation of the 

provisions of section 401(a)(9).

Q–17: What are the rules for 

determining required minimum 

distributions for defined benefit plans 

and annuity contracts for calendar years 

2003, 2004, and 2005? 

A–17: A distribution from a defined 

benefit plan or annuity contract for 

calendar years 2003, 2004, and 2005 

will not fail to satisfy section 401(a)(9) 

merely because the payments do not 

satisfy A–1 through A–16 of this 

section, provided the payments satisfy 

section 401(a)(9) based on a reasonable 

and good faith interpretation of the 

provisions of section 401(a)(9). For 

governmental plans, this reasonable 

good faith standard extends to the end 

of the calendar year that contains the 

90th day after the opening of the first 

legislative session of the legislative body 

with the authority to amend the plan 

that begins on or after June 15, 2004, if 

such 90th day is later than December 31, 

2005.

§ 1.401(a)(9)–6T [Removed]

■ Par. 4. Section 1.401(a)(9)–6T is 

removed.

■ Par. 5. In § 1.401(a)(9)–8 A–2, the first 

sentence in paragraph (a)(2) is revised to 

read as follows:

§ 1.401(a)(9)–8 Special rules.

* * * * *

A–2(a) * * *

(2) If the employee’s benefit in a 

defined contribution plan is divided 

into separate accounts and the 

beneficiaries with respect to one 

separate account differ from the 

beneficiaries with respect to the other 

separate accounts of the employee 

under the plan, for years subsequent to 

the calendar year containing the date as 

of which the separate accounts were 

established, or date of death if later, 

such separate account under the plan is 

not aggregated with the other separate 

accounts under the plan in order to 

determine whether the distributions 

from such separate account under the 

plan satisfy section 401(a)(9). * * *

* * * * *

Approved: June 1, 2004. 

Mark E. Matthews, 

Deputy Commissioner for Services and 

Enforcement. 

Gregory F. Jenner, 

Acting Assistant Secretary of the Treasury.

[FR Doc. 04–13475 Filed 6–14–04; 8:45 am] 

BILLING CODE 4830–01–P

PENSION BENEFIT GUARANTY 

CORPORATION 

29 CFR Parts 4022 and 4044 

Benefits Payable in Terminated SingleEmployer Plans; Allocation of Assets 

in Single-Employer Plans; Interest 

Assumptions for Valuing and Paying 

Benefits

AGENCY: Pension Benefit Guaranty 

Corporation.

ACTION: Final rule.

SUMMARY: The Pension Benefit Guaranty 

Corporation’s regulations on Benefits 

Payable in Terminated Single-Employer 

Plans and Allocation of Assets in 

Single-Employer Plans prescribe interest 

assumptions for valuing and paying 

benefits under terminating singleemployer plans. This final rule amends 

the regulations to adopt interest 

assumptions for plans with valuation 

dates in July 2004. Interest assumptions

Federal Register / Vol. 69, No. 114 / Tuesday, June 15, 2004 / Rules and Regulations 33303

are also published on the PBGC’s Web 

site (http://www.pbgc.gov).

EFFECTIVE DATE: July 1, 2004.

FOR FURTHER INFORMATION CONTACT:

Harold J. Ashner, Assistant General 

Counsel, Office of the General Counsel, 

Pension Benefit Guaranty Corporation, 

1200 K Street, NW., Washington, DC 

20005, 202–326–4024. (TTY/TDD users 

may call the Federal relay service tollfree at 1–800–877–8339 and ask to be 

connected to 202–326–4024.)

SUPPLEMENTARY INFORMATION: The 

PBGC’s regulations prescribe actuarial 

assumptions—including interest 

assumptions—for valuing and paying 

plan benefits of terminating singleemployer plans covered by title IV of 

the Employee Retirement Income 

Security Act of 1974. The interest 

assumptions are intended to reflect 

current conditions in the financial and 

annuity markets. 

Three sets of interest assumptions are 

prescribed: (1) A set for the valuation of 

benefits for allocation purposes under 

section 4044 (found in Appendix B to 

part 4044), (2) a set for the PBGC to use 

to determine whether a benefit is 

payable as a lump sum and to determine 

lump-sum amounts to be paid by the 

PBGC (found in Appendix B to part 

4022), and (3) a set for private-sector 

pension practitioners to refer to if they 

wish to use lump-sum interest rates 

determined using the PBGC’s historical 

methodology (found in Appendix C to 

part 4022). 

Accordingly, this amendment (1) adds 

to Appendix B to part 4044 the interest 

assumptions for valuing benefits for 

allocation purposes in plans with 

valuation dates during July 2004, (2) 

adds to Appendix B to part 4022 the 

interest assumptions for the PBGC to 

use for its own lump-sum payments in 

plans with valuation dates during July 

2004, and (3) adds to Appendix C to 

part 4022 the interest assumptions for 

private-sector pension practitioners to 

refer to if they wish to use lump-sum 

interest rates determined using the 

PBGC’s historical methodology for 

valuation dates during July 2004.

For valuation of benefits for allocation 

purposes, the interest assumptions that 

the PBGC will use (set forth in 

Appendix B to part 4044) will be 4.50 

percent for the first 20 years following 

the valuation date and 5.00 percent 

thereafter. These interest assumptions 

represent an increase (from those in 

effect for June 2004) of 0.20 percent for 

the first 20 years following the valuation 

date and are otherwise unchanged. 

The interest assumptions that the 

PBGC will use for its own lump-sum 

payments (set forth in Appendix B to 

part 4022) will be 3.50 percent for the 

period during which a benefit is in pay 

status and 4.00 percent during any years 

preceding the benefit’s placement in pay 

status. These interest assumptions are 

unchanged from those in effect for June 

2004. 

For private-sector payments, the 

interest assumptions (set forth in 

Appendix C to part 4022) will be the 

same as those used by the PBGC for 

determining and paying lump sums (set 

forth in Appendix B to part 4022). 

The PBGC has determined that notice 

and public comment on this amendment 

are impracticable and contrary to the 

public interest. This finding is based on 

the need to determine and issue new 

interest assumptions promptly so that 

the assumptions can reflect, as 

accurately as possible, current market 

conditions. 

Because of the need to provide 

immediate guidance for the valuation 

and payment of benefits in plans with 

valuation dates during July 2004, the 

PBGC finds that good cause exists for 

making the assumptions set forth in this 

amendment effective less than 30 days 

after publication. 

The PBGC has determined that this 

action is not a ‘‘significant regulatory 

action’’ under the criteria set forth in 

Executive Order 12866. 

Because no general notice of proposed 

rulemaking is required for this 

amendment, the Regulatory Flexibility 

Act of 1980 does not apply. See 5 U.S.C. 

601(2).

List of Subjects 

29 CFR Part 4022 

Employee benefit plans, Pension 

insurance, Pensions, Reporting and 

recordkeeping requirements. 

29 CFR Part 4044 

Employee benefit plans, Pension 

insurance, Pensions.

■ In consideration of the foregoing, 29 

CFR parts 4022 and 4044 are amended as 

follows:

PART 4022—BENEFITS PAYABLE IN 

TERMINATED SINGLE-EMPLOYER 

PLANS

■ 1. The authority citation for part 4022 

continues to read as follows:

Authority: 29 U.S.C. 1302, 1322, 1322b, 

1341(c)(3)(D), and 1344.

■ 2. In appendix B to part 4022, Rate Set 

129, as set forth below, is added to the 

table. (The introductory text of the table 

is omitted.)

Appendix B to Part 4022—Lump Sum 

Interest Rates For PBGC Payments

* * * * *

Rate set 

For plans with a valuation 

date Immediate 

annuity rate 

(percent) 

Deferred annuities (percent) 

On or after Before i1 i2 i3 n1 n2

* * * * * * * 

129 7–1–04 8–1–04 3.50 4.00 4.00 4.00 7 8 

■ 3. In appendix C to part 4022, Rate Set 

129, as set forth below, is added to the 

table. (The introductory text of the table 

is omitted.)

Appendix C to Part 4022—Lump Sum 

Interest Rates for Private-Sector Payments

33304 Federal Register / Vol. 69, No. 114 / Tuesday, June 15, 2004 / Rules and Regulations 

* * * * *

Rate set 

For plans with a valuation 

date Immediate 

annuity rate 

(percent) 

Deferred annuities (percent) 

On or after Before i1 i2 i3 n1 n2

* * * * * * * 

129 7–1–04 8–1–04 3.50 4.00 4.00 4.00 7 8 

PART 4044—ALLOCATION OF 

ASSETS IN SINGLE-EMPLOYER 

PLANS

■ 4. The authority citation for part 4044 

continues to read as follows:

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

1341, 1344, 1362.

■ 5. In appendix B to part 4044, a new 

entry, as set forth below, is added to the 

table. (The introductory text of the table 

is omitted.)

Appendix B to Part 4044—Interest Rates 

Used to Value Benefits

* * * * *

For valuation dates occurring in the month—

The values of it are: 

it for t = it for t = it for t = 

* * * * * * * 

July 2004 .............................................................................. .0450 1–20 .0500 >20 N/A N/A 

Issued in Washington, DC, on this 9th day 

of June, 2004. 

Joseph H. Grant, 

Deputy Executive Director and Chief 

Operating Officer, Pension Benefit Guaranty 

Corporation.

[FR Doc. 04–13485 Filed 6–14–04; 8:45 am] 

BILLING CODE 7708–01–P

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 165 

[CGD09–04–028] 

RIN 1625–AA00 

Safety Zone; Fireworks Displays in the 

Captain of the Port Detroit Zone

AGENCY: Coast Guard, DHS.

ACTION: Notice of implementation of 

regulation. 

SUMMARY: Between June 23 and June 29, 

2004, the Coast Guard will enforce 

permanent safety zones for annual 

fireworks displays in the Captain of the 

Port Detroit Zone. This action is 

necessary to provide for the safety of life 

and property on navigable waters during 

these events. These zones will restrict 

vessel traffic from a portion of the 

Captain of the Port Detroit Zone.

DATES: The safety zones in 33 CFR 

165.907 will be enforced from June 23, 

2004, until June 30, 2004.

FOR FURTHER INFORMATION CONTACT: ENS 

Cynthia Lowry, U.S. Coast Guard 

Marine Safety Office Detroit, MI, at 

(313) 568–9580.

SUPPLEMENTARY INFORMATION: The safety 

zones in 33 CFR 165.907 were 

established to provide for the safety of 

vessels in the vicinity of fireworks 

displays in the Captain of the Port 

Detroit Zone. Entry into these zones is 

prohibited during the following 

enforcement periods unless authorized 

by the Captain of the Port or his 

designee: 

(1) The safety zone for the Bay-Rama 

Fishfly Festival, New Baltimore, MI, 

will be enforced June 24, 2004, from 9 

p.m. to 11 p.m. 

(2) The safety zone for the St. Clair 

Shores Fireworks, St. Clair Shores, MI, 

will be enforced on June 25, 2004, from 

10 p.m. to 10:35 p.m. 

(3) The safety zone for the Sigma 

Gamma Assoc., Grosse Pointe Farms, 

MI, will be enforced on June 28, 2004, 

from 8:30 p.m. to 10 p.m. 

In order to ensure the safety of 

spectators and transiting vessels, these 

safety zones will be in effect for the 

duration of the events. In cases where 

shipping is affected, commercial vessels 

may request permission from the 

Captain of the Port Detroit to transit the 

safety zone. Approval will be made on 

a case-by case basis. 

Requests must be made in advance 

and approved by the Captain of Port 

before transits will be authorized. The 

Captain of the Port may be contacted via 

U.S. Coast Guard Group Detroit on 

channel 16, VHF–FM.

Dated: June 2, 2004. 

P.G. Gerrity, 

Commander, U.S. Coast Guard, Captain of 

the Port Detroit.

[FR Doc. 04–13390 Filed 6–14–04; 8:45 am] 

BILLING CODE 4910–15–P

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 165 

[CGD01–03–020] 

RIN 1625–AA00 

Safety and Security Zones; New York 

Marine Inspection Zone and Captain of 

the Port Zone

AGENCY: Coast Guard, DHS.

ACTION: Final rule.

SUMMARY: The Coast Guard is 

establishing a permanent security zone 

in the Atlantic Ocean west of the 

Ambrose to Hudson Canyon Traffic 

Lane for high interest vessels during 

emergency situations. This action is 

necessary to protect the Port of New 

York/New Jersey against terrorism, 

sabotage or other subversive acts and 

incidents of a similar nature during 

emergency situations onboard high 

interest vessels. This action is intended 

to restrict vessel traffic in a portion of 

the Atlantic Ocean.