75160 Federal Register / Vol. 65, No. 232 / Friday, December 1, 2000 / Rules and Regulations

The system of records may contain

information which relates to official

federal investigation. The exemptions

are necessary to protect law

enforcement and investigatory

information and functions as described

in the proposed rule and will be applied

only to the investigatory information

contained in this system.

EFFECTIVE DATE: December 1, 2000.

FOR FURTHER INFORMATION CONTACT:

Mary Cahill at 202–307–1823.

SUPPLEMENTARY INFORMATION: On

September 5, 2000 (65 FR 53679) a

proposed rule was published in the

Federal Register with an invitation to

comment. No comments were received.

Regulatory Flexibility Act: This order

relates to individuals rather than small

business entities. Nevertheless,

pursuant to the requirements of the

Regulatory Flexibility Act, 5 U.S.C. 601–

612, this order will not have a

significant economic impact on a

substantial number of small entities.

Executive Order No. 12866: The

Attorney General has determined that

this rule is not a significant regulatory

action under Executive Order No.

12866, and accordingly, this rule has

not been reviewed by the Office of

Management and Budget.

List of Subjects in 28 CFR Part 16

Administrative Practices and

Procedures, Courts, Freedom of

Information Act, Privacy Act, and

Government in Sunshine Act.

Dated: November 21, 2000.

Stephen R. Colgate,

Assistant Attorney General for

Administration.

Pursuant to the authority vested in the

Attorney General by 5 U.S.C. 552a and

delegated to me by Attorney General

Order No. 793–78, CFR part 16 is

amended as follows:

1. The authority for Part 16 continues

to read as follows:

Authority: 5 U.S.C. 301, 552, 552a, 552b(g),

553; 18 U.S.C. 4203(a)(1); 28 U.S.C. 509, 510,

534; 31 U.S.C. 3717, 9701.

2. 28 CFR Part 16 is amended by

adding to Subpart E § 16.104 to read as

follows:

Subpart E—Exemption of Records

Systems Under the Privacy Act

§ 16.104 Exemption of Office of Special

Counsel—Waco System.

(a) The following system of records is

exempted from subsections (c)(3) and

(4); (d)(1), (2), (3), and (4); (e)(1), (2), (3),

(5) and (8); and (g) of the Privacy Act

pursuant to 5 U.S.C. 552a(j) and (k):

CaseLink Document Database for Office

of Special Counsel—Waco, JUSTICE/

OSCW–001. These exemptions apply

only to the extent that information in a

record is subject to exemption pursuant

to 5 U.S.C. 552a(j) and (k).

(b) Only that portion of this system

which consists of criminal or civil

investigatory information is exempted

for the reasons set forth from the

following subsections:

(1) Subsection (c)(3). To provide the

subject of a criminal or civil matter or

case under investigation with an

accounting of disclosures of records

concerning him or her would inform

that individual of the existence, nature,

or scope of that investigation and

thereby seriously impede law

enforcement efforts by permitting the

record subject and other persons to

whom he might disclose the records to

avoid criminal penalties and civil

remedies.

(2) Subsection (c)(4). This subsection

is inapplicable to the extent that an

exemption is being claimed for

subsection (d).

(3) Subsection (d)(1). Disclosure of

investigatory information could

interfere with the investigation, reveal

the identity of confidential sources, and

result in an unwarranted invasion of the

privacy of others.

(4) Subsection (d)(2). Amendment of

the records would interfere with

ongoing criminal law enforcement

proceedings and impose an impossible

administrative burden by requiring

criminal investigations to be

continuously reinvestigated.

(5) Subsections (d)(3) and (4). These

subsections are inapplicable to the

extent exemption is claimed from (d)(1)

and (2).

(6) Subsections (e)(1) and (5). It is

often impossible to determine in

advance if investigatory records

contained in this system are accurate,

relevant, timely and complete; but, in

the interests of effective law

enforcement, it is necessary to retain

this information to aid in establishing

patterns of activity and provide leads in

criminal investigations.

(7) Subsection (e)(2). To collect

information from the subject individual

would serve notice that he or she is the

subject of criminal investigative or law

enforcement activity and thereby

present a serious impediment to law

enforcement.

(8) Subsection (e)(3). To inform

individuals as required by this

subsection would reveal the existence of

an investigation and compromise law

enforcement efforts.

(9) Subsection (e)(8). To serve notice

would give persons sufficient warning

to evade law enforcement efforts.

(10) Subsection (g). This subsection is

inapplicable to the extent that the

system is exempt from other specific

subsections of the Privacy Act.

[FR Doc. 00–30608 Filed 11–30–00; 8:45 am]

BILLING CODE 4410–EW–M

PENSION BENEFIT GUARANTY

CORPORATION

29 CFR Parts 4006 and 4007

RIN 1212–AA58

Premium Rates; Payment of Premiums

AGENCY: Pension Benefit Guaranty

Corporation.

ACTION: Final rule.

SUMMARY: This final rule makes three

amendments to the PBGC’s premium

regulations. One amendment allows

plan administrators to pay a prorated

premium for a short plan year rather

than paying a full year’s premium and

requesting a refund. A second

amendment simplifies and narrows the

definition of ‘‘participant’’ for PBGC

premium purposes. A third amendment

simplifies the standard for claiming the

variable-rate premium exemption for

plans that are fully insured under

section 412(i) of the Internal Revenue

Code.

DATES: Effective January 1, 2001. The

amendments made by this rule apply to

plan years beginning after 2000.

FOR FURTHER INFORMATION CONTACT:

Harold J. Ashner, Assistant General

Counsel, or Deborah C. Murphy,

Attorney, Office of the General Counsel,

PBGC, 1200 K Street, NW., Washington,

DC 20005–4026; 202–326–4024. (For

TTY/TDD users, call the Federal relay

service toll-free at 1–800–877–8339 and

ask to be connected to 202–326–4024.)

SUPPLEMENTARY INFORMATION:

Background

Section 4007 of the Employee

Retirement Income Security Act of 1974

(ERISA) requires the payment of annual

premiums to the PBGC for pension

plans that Title IV of ERISA covers.

ERISA section 4006 establishes the

amount of the annual premium. For

single-employer plans, there is a flatrate premium of $19 per participant and

a variable-rate premium of $9 per $1,000

of unfunded vested benefits. For

multiemployer plans, there is only a

flat-rate premium of $2.60 per

participant.

Under the PBGC’s premium

regulations (29 CFR Parts 4006 and

4007), plan administrators count

participants and calculate unfunded

Federal Register / Vol. 65, No. 232 / Friday, December 1, 2000 / Rules and Regulations 75161

vested benefits as of a ‘‘snapshot date,’’

which in most cases is the last day of

the plan year preceding the premium

payment year. However, for certain

plans involved in mergers or spinoffs

and (in general) for new and newlycovered plans, the snapshot date is the

first day of the premium payment year.

On April 10, 1992, the PBGC

published in the Federal Register (at 57

FR 12666) a proposed amendment to its

premium regulation. Among other

things, the proposal would have revised

the rules on prorating premiums for

short plan years; would have redefined

the term ‘‘participant’’ for premium

purposes; and would have simplified

the requirement for exemption from the

variable-rate premium for fully insured

plans. The PBGC is now making

changes to its premium regulations in

these three areas. (The PBGC is also

eliminating an obsolete provision

governing the 1998 plan years of certain

public utility company plans.)

Short-Year Premiums

Section 4006.5(f) of the PBGC’s

regulation on Premium Rates (29 CFR

Part 4006) currently provides for

premium refunds for certain types of

short plan years, with the annual

premium prorated by months. The rule

covers (1) a short first year of a new or

newly-covered plan; (2) a short year

created by a change in plan year; (3) a

short year created by distribution of

plan assets pursuant to a plan

termination; and (4) a short year created

by the appointment of a trustee for a

single-employer plan under ERISA

section 4042. The regulation requires

the plan administrator to pay the full

12-month premium and then file for a

refund (or claim a credit against a future

premium payment).

The amendment adopted in this final

rule gives the plan administrator of a

plan that has a short plan year the

option to pay a prorated premium for

the short year (instead of paying a nonprorated premium and then requesting a

refund or claiming a credit against a

future premium payment). In most

cases, the short plan year will have

ended well before the premium due

date, and the plan administrator will

therefore know the length of the short

plan year when filing. However, this is

not required, and the plan administrator

may anticipate that the plan will have

a short plan year, estimate its length,

and pay a prorated premium

accordingly. For example, the plan

administrator may anticipate the

adoption of a plan amendment

shortening the plan year or the

distribution of plan assets in connection

with the plan’s termination. In such

circumstances, if it turns out—for

whatever reason—that the plan year is

longer than anticipated, the plan

administrator must make up any

premium underpayment (which is

subject to interest and penalties from

the due date forward).

The risk of error in anticipating the

length of a plan year is clearly greater

where the plan administrator of a plan

with 500 or more participants is paying

the flat-rate premium early in the plan

year (typically with Form 1–ES). To

address this, the amendment provides

‘‘safe harbor’’ penalty relief in certain

cases for an underpayment of the flatrate premium that is due by the early

filing due date (the end of February for

calendar-year plans). The safe harbor

applies where a plan amendment that

changes the plan year has been adopted,

but the short year has not ended, by the

early filing due date, and later events

result in a plan year longer than

anticipated because the expected change

in plan year does not take place. This

may happen, for example, if the

amendment changing the plan year is

rescinded before the end of the short

year provided for in the amendment. In

a situation of this kind, the new safe

harbor rule waives any underpayment

penalty accruing between the flat-rate

payment due date (the end of February

for calendar-year plans) and the due

date for the reconciliation filing

(October 15 for calendar-year plans)

where the penalty arises from reliance

on the short-year amendment.

The amendment clarifies that if a plan

is amended to provide for a change in

the plan year, the plan does not have a

short plan year for PBGC premium

purposes if the plan disappears in a

multiple-plan transaction (such as a

plan merger, consolidation, or spinoff)

at or before the time the new plan year

cycle begins.

The short-year proration amendment

adopted in this final rule will provide

broader relief than the PBGC’s 1992

short-year proposal. As an alternative to

refunds, that proposal would have

allowed (1) payment of a prorated

premium only for a short first year of a

new or newly covered plan, and (2) a

credit against the following year’s

premium for a short plan year created

by a change in plan year. The three

comments that addressed the proposal

all favored the revision of the short-year

rules.

Examples

The following examples illustrate the

operation of the new short-year rules.

Example 1. Suppose that calendar-year

Plan A, a small plan whose flat-rate and

variable-rate premiums are both due on

October 15, is amended on January 15, 2001,

to change to a plan year beginning March 15

and to provide for a short plan year

beginning January 1, 2001, and ending March

14, 2001. Plan A’s plan administrator may

pay a prorated premium for the short plan

year equal to 3⁄12 of the premium otherwise

payable for all of 2001 (i.e., a premium for

the months of January, February, and March).

A full year’s premium will be paid for the

new, full plan year beginning March 15,

2001, and ending March 14, 2002. However,

if Plan A merges into or consolidates with

Plan B effective March 15, 2001, it is not

eligible for payment of a prorated premium

for the plan year beginning January 1, 2001.

Example 2. Suppose that Plan A in

Example 1 is a large plan whose estimated

flat-rate premium must be paid by February

28, 2001, and that the plan administrator

pays a prorated estimated flat-rate premium

based on the assumption that the new plan

year cycle will begin in accordance with the

amendment (i.e., 31⁄12 of 90 percent of the

final flat-rate premium that would be due for

2001 in the absence of proration, or 31⁄12 of

100 percent of the flat-rate premium that

would be due for 2001 in the absence of

proration if the 2001 participant count were

the same as in 2000). If Plan A then merges

into Plan B effective March 15, 2001, Plan A

will not be eligible for payment of a prorated

premium, and the estimate paid will in

retrospect be insufficient. However, under

the new safe harbor test, the PBGC will not

assess a penalty if the estimated premium

paid would have been at least enough to

satisfy the safe harbor rules if the new plan

year cycle had begun as contemplated by the

plan year amendment.

‘‘Participant’’ Definition

A plan’s flat-rate premium is based on

the number of participants in the plan

on the premium snapshot date. The

definition of ‘‘participant’’ in the

premium rates regulation applies only

for premium purposes. Whether an

individual is a participant in a plan for

premium purposes has no bearing on

whether the individual is a participant

in the plan for any other purpose under

Title IV of ERISA, or for any purpose

under Title I of ERISA or the Internal

Revenue Code. Similarly, an individual

is not considered to be a participant in

a plan for premium purposes simply

because the individual is a participant

in the plan for other purposes.

The existing definition of

‘‘participant’’ in § 4006.2 of the

premium rates regulation breaks

participants down into three broad

categories: active, inactive, and

deceased (with surviving beneficiaries).

A person is counted as an active

participant if the person is ‘‘earning or

retaining credited service under the

plan,’’ without reference to whether the

plan is obligated to provide benefits

with respect to the person. In contrast,

a person is counted as an inactive

participant if the person is entitled to

75162 Federal Register / Vol. 65, No. 232 / Friday, December 1, 2000 / Rules and Regulations

receive benefits from the plan and as a

deceased participant if a beneficiary of

the deceased person is entitled to

receive benefits from the plan. Thus, the

test for including a person in either the

‘‘inactive’’ or the ‘‘deceased’’ category is

whether the plan has an obligation to

provide benefits with respect to the

person.

Amended Definition—In General

The amended definition counts as

participants those individuals with

respect to whom a plan has benefit

liabilities. The amendment represents

no substantive change regarding the

‘‘inactive’’ and ‘‘deceased’’ categories.

However, the amendment excludes from

the participant count—and thus

eliminates premiums for—individuals

who are earning or retaining credited

service (and thus would be included as

participants under the old definition) if,

on the snapshot date, they have no

accrued benefits (and the plan does not

have any other benefit liabilities with

respect to them). (An ongoing plan’s

liability for a benefit is not disregarded

solely because the plan provides that

the conditions for the benefit must be

satisfied before the plan terminates or

that the benefit will not be paid after the

plan terminates.)

For example, suppose a plan requires

an individual to perform 1,000 hours of

service in a service computation period

to earn any portion of an accrued benefit

for that period. If, on the snapshot date,

a new plan entrant has only 900 hours

of service in the current service

computation period, the PBGC would

treat the individual as not having an

accrued benefit under the plan for

purposes of the amended ‘‘participant’’

definition. If the plan has no other

benefit liabilities with respect to the

individual, the individual would not be

considered a participant.

Much of the discussion in this

preamble focuses on accrued benefits

rather than benefit liabilities because a

plan necessarily has benefit liabilities

for any individual who has an accrued

benefit. However, in rare cases, a plan

may have benefit liabilities for an

individual who has no accrued benefit

(e.g., because the individual has only an

ancillary death benefit). In

circumstances of that kind, the

individual would count as a participant

for PBGC premium purposes.

Under the new definition, the

participant count for premiums will

typically exclude plan participants in a

plan that is frozen for benefit accruals

either before their participation begins

or so soon thereafter that they have not

had time to accrue a benefit. It will also

typically exclude plan participants in

permanent part-time jobs who work too

few hours to meet their plans’ minimum

service requirements for accrual.

One result of this change is that newly

created plans that do not grant past

service credits will typically owe no

flat-rate premium for their first year.

This is because the premium snapshot

date for a new plan comes at the

beginning of the premium payment

year, when participants have not yet

earned ‘‘future service’’ credits (on

which accrued benefits would be

based).

When Individuals Are No Longer

Counted as Participants

The amendment also makes a change

in the rule governing when a non-vested

individual is considered to no longer be

a participant for premium purposes. The

existing definition requires that a

terminated non-vested participant who

has not received a deemed cashout (or

died) be included in the participant

count until the first anniversary of

separation from employment, even if

under plan terms the participant incurs

a one-year break in service before then.

(See the preamble to the PBGC’s 1989

final rule on premiums, 54 FR 28943,

28946 (July 10, 1989), where this is

discussed.)

Thus, under the existing definition, a

participant could incur a break in

service for plan purposes, but not be

considered to have incurred a break in

service for premium purposes, in a

situation where the participant’s service

computation period did not coincide

with the plan year. For example, under

the terms of a calendar-year plan, an

individual might incur a one-year break

in service before December 31, 2001 (the

premium snapshot date for the 2002

premium) if the individual left

employment on February 1, 2001, and

did not perform 500 hours of service

during a computation period ending on

November 30, 2001, even though

December 31, 2001, comes before the

first anniversary of the individual’s

separation from employment.

Under the amended definition, a nonvested individual is considered to no

longer be a participant after the

individual incurs a one-year break in

service as defined in the plan, regardless

of whether the individual has been

absent from employment until the first

anniversary of separation. (The

equivalent of a ‘‘one-year break in

service’’ for an elapsed time plan would

be a one-year period of severance,

which typically coincides with the

PBGC’s existing rule; thus, the change

would typically have no impact on

elapsed time plans.)

The amended definition also makes

clear that the PBGC treats a non-vested

individual as no longer being a

participant when the individual dies or

receives a deemed cashout under the

terms of the plan. Finally, the amended

definition explicitly provides that a

vested individual (or a deceased

individual who was vested at death)

ceases to be a participant in a plan when

all benefit liabilities with respect to the

individual have been provided for,

either by payment from the plan or

through purchase of an irrevocable

commitment by an insurer to provide

the benefits.

This amendment takes a different

approach than the 1992 proposal, but

addresses the concerns expressed in

comments on that proposal. Under the

1992 proposal, the entire definition of

‘‘participant’’ would have been replaced

by a cross-reference to the definition

used for purposes of filing the Form

5500 annual report. Most commenters

objected to this proposed change

because some non-vested individuals

who had incurred a one-year break in

service (and thus would not be

considered participants for PBGC

premium purposes under the PBGC’s

existing definition) would have to be

counted as participants under the Form

5500 definition.

Some commenters also argued that

premiums should not be charged for a

terminated non-vested individual who

had a break in service because neither

the plan nor the PBGC would ordinarily

have any liability to pay benefits to the

individual upon plan termination. The

commenters believed such individuals

would be included in the Form 5500

definition of ‘‘participant.’’ The

amendment that the PBGC is adopting is

responsive to these comments by

excluding from the definition of

‘‘participant’’ an individual with respect

to whom a plan does not have benefit

liablities.

Fully Insured Plans

Section 412(h)(2) of the Internal

Revenue Code exempts certain fully

insured plans from plan funding

requirements. To be exempt, a plan

must meet the requirements of Code

section 412(i). Section 4006.5(a)(3) of

the premium rates regulation currently

exempts a plan from the variable-rate

premium if the plan is described in

Code section 412(i) throughout the plan

year preceding the premium payment

year (or, in the case of a new or newly

covered plan, throughout the premium

payment year up to the premium due

date).

Under the amendment that the PBGC

is adopting in this final rule, the

Federal Register / Vol. 65, No. 232 / Friday, December 1, 2000 / Rules and Regulations 75163

exemption for section 412(i) plans

applies to a plan if it is described in

section 412(i) of the Code on the

premium snapshot date. This change

makes it simpler to determine whether

the exemption applies. The change is

identical to that proposed in 1992,

which generated no public comments.

Compliance With Rulemaking

Guidelines and Paperwork Reduction

Act

The PBGC has determined that this

action is not a ‘‘significant regulatory

action’’ under the criteria set forth in

Executive Order 12866.

The changes made by this rule will

have a modest positive economic impact

on plans that are affected by it. For the

vast majority of small plans, there will

be little or no impact. The greatest effect

will come from the change in the

‘‘participant’’ definition, which

eliminates premiums for the first year of

newly created plans that do not grant

past service credits. There are very few

small plans of this kind. Payment of a

prorated premium under the new short

plan year rules will save the interest on

the excess amount that would otherwise

have been paid and refunded, but for

small plans this amount will typically

be insignificant.

The PBGC therefore certifies under

section 605(b) of the Regulatory

Flexibility Act that this rule will not

have a significant economic impact on

a substantial number of small entities.

Accordingly, sections 603 and 604 of

the Regulatory Flexibility Act do not

apply.

This rule affects information

collection requirements under the

PBGC’s regulation on Payment of

Premiums (29 CFR Part 4007). A notice

regarding those information collection

requirements appears elsewhere in

today’s Federal Register.

List of Subjects

29 CFR Part 4006

Employee benefit plans, Pension

insurance.

29 CFR Part 4007

Employee benefit plans, Penalties,

Pension insurance, Reporting and

recordkeeping requirements.

For the foregoing reasons, 29 CFR

Parts 4006 and 4007 are amended as

follows:

PART 4006—PREMIUM RATES

1. The authority citation for part 4006

continues to read as follows:

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

1307.

2. In § 4006.2, the definition of

‘‘Participant’’ is revised to read as

follows:

§ 4006.2 Definitions.

* * * * *

Participant has the meaning described

in § 4006.6.

* * * * *

3. In § 4006.5, paragraph (a)(3) is

amended by removing the words ‘‘at all

times during’’ in the first sentence and

adding in their place the words ‘‘on the

last day of’’ and by removing the last

sentence; paragraph (g) is removed; and

paragraph (f) is revised to read as

follows:

§ 4006.5 Exemptions and special rules.

* * * * *

(f) Proration for certain short plan

years. The premium for a plan that has

a short plan year as described in this

paragraph (f) is prorated by the number

of months in the short plan year

(treating a part of a month as a month).

The proration applies whether or not

the short plan year ends by the premium

due date for the short plan year. For

purposes of this paragraph (f), there is

a short plan year in the following

circumstances:

(1) New plan. A new or newlycovered plan becomes effective for

premium purposes on a date other than

the first day of its first plan year.

(2) Change in plan year. A plan

amendment changes the plan year, but

only if the plan does not merge into or

consolidate with another plan or

otherwise cease its independent

existence either during the short plan

year or at the beginning of the full plan

year following the short plan year.

(3) Distribution of assets. The plan’s

assets (other than any excess assets) are

distributed pursuant to the plan’s

termination.

(4) Appointment of trustee. The plan

is a single-employer plan, and a plan

trustee is appointed pursuant to section

4042 of ERISA.

4. Section 4006.6 is added to read as

follows:

§ 4006.6 Definition of ‘‘participant.’’

(a) General rule. For purposes of this

part and part 4007 of this chapter, an

individual is considered to be a

participant in a plan on any date if the

plan has benefit liabilities with respect

to the individual on that date.

(b) Loss or distribution of benefit. For

purposes of this section, an individual

is treated as no longer being a

participant—

(1) In the case of an individual with

no vested accrued benefit, after—

(i) The individual incurs a one-year

break in service under the terms of the

plan,

(ii) The individual’s entire ‘‘zerodollar’’ vested accrued benefit is

deemed distributed under the terms of

the plan, or

(iii) The individual dies; and

(2) In the case of a living individual

whose accrued benefit is fully or

partially vested, or a deceased

individual whose accrued benefit was

fully or partially vested at the time of

death, after—

(i) An insurer makes an irrevocable

commitment to pay all benefit liabilities

with respect to the individual, or

(ii) All benefit liabilities with respect

to the individual are otherwise

distributed.

(c) Examples. The operation of this

section is illustrated by the following

examples:

Example 1. Participation under a calendaryear plan begins upon commencement of

employment, and the only benefit provided

by the plan is an accrued benefit (expressed

as a life annuity beginning at age 65) of $30

per month times full years of service. The

plan credits a ratable portion of a full year

of service for service of at least 1,000 hours

but less than 2,000 hours in a service

computation period that begins on the date

when the participant commences

employment and each anniversary of that

date. John and Mary both commence

employment on July 1, 2000. On December

31, 2000 (the snapshot date for the plan’s

2001 premium), John has credit for 988 hours

of service and Mary has credit for 1,006

hours of service. For purposes of this section,

Mary is considered to have an accrued

benefit, and John is considered not to have

an accrued benefit. Thus, the plan is

considered to have benefit liabilities with

respect to Mary, but not John, on December

31, 2000; and Mary, but not John, must be

counted as a participant for purposes of

computing the plan’s 2001 premium.

Example 2. The plan also provides that a

participant becomes vested five years after

commencing employment and defines a oneyear break in service as a service

computation period in which less than 500

hours of service is performed. On February

1, 2002, John has an accrued benefit of $18

per month beginning at age 65 based on

credit for 1,200 hours of service in the service

computation period that began July 1, 2000.

However, John has credit for only 492 hours

of service in the service computation period

that began July 1, 2001. On February 1, 2002,

John terminates his employment. On

December 31, 2002 (the snapshot date for the

2003 premium), John has incurred a one-year

break in service, and thus is not counted as

a participant for purposes of computing the

plan’s 2003 premium.

Example 3. On January 1, 2004, the plan

is amended to provide that if a vested

participant whose accrued benefit has a

present value of $5,000 or less leaves

employment, the benefit will be immediately

75164 Federal Register / Vol. 65, No. 232 / Friday, December 1, 2000 / Rules and Regulations

cashed out. On December 30, 2005, Jane, who

has a vested benefit with a present value of

less than $5,000, leaves employment.

Because of reasonable administrative delay in

determining the amount of the benefit to be

paid, the plan does not pay Jane the value of

her benefit until January 9, 2006. Under the

provisions of this section, Jane is treated as

not having an accrued benefit on December

31, 2005 (the snapshot date for the 2006

premium), because Jane’s benefit is treated as

having been paid on December 30, 2005.

Thus, Jane is not counted as a participant for

purposes of computing the plan’s 2006

premium.

Example 4. If the plan amendment had

instead provided for cashouts as of the first

of the month following termination of

employment, and the plan paid Jane the

value of her benefit on January 1, 2006, Jane

would be treated under the provisions of this

section as having an accrued benefit on

December 31, 2005, and would thus be

counted as a participant for purposes of

computing the plan’s 2006 premium.

PART 4007—PAYMENT OF PREMIUMS

5. The authority citation for part 4007

continues to read as follows:

Authority: 29 U.S.C. 1302(b)(3), 1303(a),

1306, 1307.

6. In section 4007.8, a new paragraph

(i) is added to read as follows:

§ 4007.8 Late payment penalty charges.

* * * * *

(i) Safe harbor relief for certain plan

amendments prospectively changing

plan year. This waiver applies in the

case of a plan for which a reconciliation

filing is required under

§ 4007.11(a)(2)(iii). The PBGC will

waive the penalty on any underpayment

of the flat-rate premium for the period

that ends on the date the reconciliation

filing is due if, by the date the flat-rate

premium for the premium payment year

is due under § 4007.11(a)(2)(i),—

(1) The plan has been amended to

change its plan year and the amendment

as in effect on that date makes the

premium payment year a short year that

will end after that date; and

(2) The plan administrator pays at

least the lesser of—

(i) The amount determined under

§ 4007.8(g) based on the actual length of

the premium payment year, or

(ii) The amount determined under

§ 4007.8(g) based on the length that the

premium payment year would have if

the new plan year cycle began as

anticipated by the amendment.

Issued in Washington, DC, this 22nd day

of November, 2000.

Alexis M. Herman,

Chairman, Board of Directors, Pension Benefit

Guaranty Corporation.

Issued on the date set forth above pursuant

to a resolution of the Board of Directors

authorizing its Chairman to issue this final

rule.

James J. Keightley,

Secretary, Board of Directors, Pension Benefit

Guaranty Corporation.

[FR Doc. 00–30322 Filed 11–30–00; 8:45 am]

BILLING CODE 7708–01–P

PENSION BENEFIT GUARANTY

CORPORATION

29 CFR Parts 4011 and 4022

Disclosure to Participants; Benefits

Payable in Terminated SingleEmployer Plans

AGENCY: Pension Benefit Guaranty

Corporation.

ACTION: Final rule.

SUMMARY: This rule amends the

appendix to the Pension Benefit

Guaranty Corporation’s regulation on

Benefits Payable in Terminated SingleEmployer Plans by adding the

maximum guaranteeable pension benefit

that may be paid by the PBGC with

respect to a plan participant in a singleemployer pension plan that terminates

in 2001. This rule also amends the

PBGC’s regulation on Disclosure to

Participants by adding information on

2001 maximum guaranteed benefit

amounts to Appendix B (and updating

the Internet address for obtaining the

PBGC booklet ‘‘Your Guaranteed

Pension’’). The amendment is necessary

because the maximum guarantee

amount changes each year, based on

changes in the contribution and benefit

base under section 230 of the Social

Security Act. The effect of the

amendment is to advise plan

participants and beneficiaries of the

increased maximum guarantee amount

for 2001.

EFFECTIVE DATE: January 1, 2001.

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

20005–4026; 202–326–4024. (For TTY/

TDD users, call the Federal relay service

toll-free at 1–800–877–8339 and ask to

be connected to 202–326–4024.)

SUPPLEMENTARY INFORMATION: Section

4022(b) of the Employee Retirement

Income Security Act of 1974 provides

for certain limitations on benefits

guaranteed by the PBGC in terminating

single-employer pension plans covered

under Title IV of ERISA. One of the

limitations, set forth in section

4022(b)(3)(B), is a dollar ceiling on the

amount of the monthly benefit that may

be paid to a plan participant (in the

form of a life annuity beginning at age

65) by the PBGC. The ceiling is equal to

‘‘$750 multiplied by a fraction, the

numerator of which is the contribution

and benefit base (determined under

section 230 of the Social Security Act)

in effect at the time the plan terminates

and the denominator of which is such

contribution and benefit base in effect in

calendar year 1974 [$13,200].’’ This

formula is also set forth in § 4022.22(b)

of the PBGC’s regulation on Benefits

Payable in Terminated Single-Employer

Plans (29 CFR Part 4022). The appendix

to Part 4022 lists, for each year

beginning with 1974, the maximum

guaranteeable benefit payable by the

PBGC to participants in single-employer

plans that have terminated in that year.

Section 230(d) of the Social Security

Act (42 U.S.C. 430(d)) provides special

rules for determining the contribution

and benefit base for purposes of ERISA

section 4022(b)(3)(B). Each year the

Social Security Administration

determines, and notifies the PBGC of,

the contribution and benefit base to be

used by the PBGC under these

provisions, and the PBGC publishes an

amendment to the appendix to Part

4022 to add the guarantee limit for the

coming year.

The PBGC has been notified by the

Social Security Administration that,

under section 230 of the Social Security

Act, $59,700 is the contribution and

benefit base that is to be used to

calculate the PBGC maximum

guaranteeable benefit for 2001.

Accordingly, the formula under section

4022(b)(3)(B) of ERISA and 29 CFR

§ 4022.22(b) is: $750 multiplied by

$59,700/$13,200. Thus, the maximum

monthly benefit guaranteeable by the

PBGC in 2001 is $3,392.05 per month in

the form of a life annuity beginning at

age 65. This amendment updates the

appendix to Part 4022 to add this

maximum guaranteeable amount for

plans that terminate in 2001. (If a

benefit is payable in a different form or

begins at a different age, the maximum

guaranteeable amount is the actuarial

equivalent of $3,392.05 per month.)

Section 4011 of ERISA requires plan

administrators of certain underfunded

plans to provide notice to plan

participants and beneficiaries of the

plan’s funding status and the limits of

the PBGC’s guarantee. The PBGC’s

regulation on Disclosure to Participants

(29 CFR Part 4011) implements the

statutory notice requirement. This rule

amends Appendix B to the regulation on

Disclosure to Participants by adding

information on 2001 maximum

guaranteed benefit amounts. Plan

administrators may, subject to the

requirements of that regulation, include