Pension Benefit Guaranty Corporation 

76-71 

May 26, 1976 

REFERENCE: 

 [*1] 4043(b)(2) Reportable Events. Amendment Decreasing Benefits

4048 Date of Termination 

OPINION: 

 This is in response to your letter to Mr. * * * of the Pension Benefit Guaranty Corporation (the "PBGC") and

subsequent telephone conversation with * * * of my staff concerning the * * * Retirement Plan (the "Plan"). 

As I understand the pertinent facts, the Plan is a tax-qualified, defined benefit pension plan maintained by * * * (the

"Company") for its employees. You indicated in your letter that, effective December 31, 1975, the Plan was amended

to increase benefit levels, to fully vest all participants in their accrued benefit, and to cease further accruals. As a result

of these amendments, you received a determination letter from the Internal Revenue Service (the "IRB") stating that

although the Plan was curtailed, the Plan's tax-qualification would not be affected. Your letter indicated that, pursuant

to IRS regulations governing curtailments, the Company will continue to make the contributions required by Internal

Revenue Code § 412 to fully fund the Plan. You indicated, however, that as the result of substantial appreciation, the

fair market value of the Plan's assets exceeded the present [*2] value of all accrued benefits, and that therefore, no

further funding was anticipated. 

In light of the foregoing, you requested a determination by the PBGC in regard to whether, for purposes of Title IV

of the Employee Retirement Income Security Act of 1974 (the "Act"), the amendments described above either resulted

in a plan termination or constituted a reportable event. You also requested information concerning whether participants

in the Plan are considered "active participants" in a qualified plan for purposes of IRC § 219 which would prevent them

from establishing Individual Retirement Accounts ("IRA's"). 

 Based on the information you provided, it is the opinion of this Office that although the Plan was amended to cease

further accruals, since all participants in the Plan were fully vested in their accrued benefit and since the Company will

continue to make contributions to the Plan to the extent required under IRC § 412, that the amendments to the Plan did

not cause the Plan to terminate for purposes of Title IV of the Act. However, the Plan amendment which ceased further

accruals by Plan participants is an event described in § 4043(b)(2) of the Act, which, pursuant to § [*3] 4043(a), must

be reported to the PBGC by the plan administrator within 30 days after its occurrence. In this regard, we will accept your

letter of January 27, 1976, in satisfaction of this requirement. 

The PBGC's role in relation to IRA's is limited to the provision of ". . . advice and assistance to individuals with

respect to evaluating the economic desirability of establishing individual retirement accounts . . ." and evaluating the

desirability ". . . of transferring amounts representing an employee's interest in a qualified plan to an . . . [IRA] upon the

employee's separation from service with an employer." (Act, § 4009, emphasis added.) Since your question concerns

whether the Internal Revenue Code permits certain individuals to establish IRA's, you may wish to request a ruling from

the IRS on this question. 

Henry Rose 

General Counsel