Page 387 TITLE 29—LABOR § 1054

1986, and not applicable to employees who do not have

1 hour of service in any plan year to which the amendment applies, see section 1113(f) of Pub. L. 99–514, as

amended, set out as a note under section 411 of Title 26,

Internal Revenue Code.

Amendment by section 1139(c)(1) of Pub. L. 99–514 applicable to distributions in plan years beginning after

Dec. 31, 1984, except that such amendments shall not

apply to any distributions in plan years beginning after

Dec. 31, 1984, and before Jan. 1, 1987, if such distributions were made in accordance with the requirements

of the regulations issued under the Retirement Equity

Act of 1984, Pub. L. 98–397, with additional provisions

relating to reductions in accrued benefits, see section

1139(d) of Pub. L. 99–514, set out as a note under section

411 of Title 26.

Amendment by section 1898(a)(1)(B) of Pub. L. 99–514

applicable to contributions made for plan years beginning after Oct. 22, 1986, except that in the case of a plan

described in section 302(b) of Pub. L. 98–397, set out as

a note under section 1001 of this title, such amendments shall not apply to any plan year to which

amendments made by Pub. L. 98–397 do not apply by

reason of such section 302(b), see section 1898(a)(1)(C) of

Pub. L. 99–514, set out as a note under section 411 of

Title 26.

Amendment by section 1898(a)(4)(B)(i), (d)(1)(B),

(2)(B), of Pub. L. 99–514 effective as if included in the

provision of the Retirement Equity Act of 1984, Pub. L.

98–397, to which such amendment relates, except as

otherwise provided, see section 1898(j) of Pub. L. 99–514,

set out as a note under section 401 of Title 26.

EFFECTIVE DATE OF 1984 AMENDMENT

Amendment by Pub. L. 98–397 applicable to plan years

beginning after Dec. 31, 1984, except as otherwise provided, see sections 302 and 303 of Pub. L. 98–397, set out

as a note under section 1001 of this title.

EFFECTIVE DATE OF 1980 AMENDMENT

Amendment by Pub. L. 96–364 effective Sept. 26, 1980,

except as specifically provided, see section 1461(e) of

this title.

REGULATIONS

Secretary of the Treasury or his delegate to issue before Feb. 1, 1988, final regulations to carry out amendments made by section 1113 of Pub. L. 99–514, see section 1141 of Pub. L. 99–514, set out as a note under section 401 of Title 26, Internal Revenue Code.

Secretary authorized, effective Sept. 2, 1974, to promulgate regulations wherever provisions of this subchapter call for the promulgation of regulations, see

section 1031 of this title.

PLAN AMENDMENTS NOT REQUIRED UNTIL

JANUARY 1, 1998

For provisions directing that if any amendments

made by subtitle D [§§1401–1465] of title I of Pub. L.

104–188 require an amendment to any plan or annuity

contract, such amendment shall not be required to be

made before the first day of the first plan year beginning on or after Jan. 1, 1998, see section 1465 of Pub. L.

104–188, set out as a note under section 401 of Title 26,

Internal Revenue Code.

PLAN AMENDMENTS NOT REQUIRED UNTIL

JANUARY 1, 1989

For provisions directing that if any amendments

made by subtitle A or subtitle C of title XI [§§1101–1147

and 1171–1177] or title XVIII [§§1800–1899A] of Pub. L.

99–514 require an amendment to any plan, such plan

amendment shall not be required to be made before the

first plan year beginning on or after Jan. 1, 1989, see

section 1140 of Pub. L. 99–514, as amended, set out as a

note under section 401 of Title 26, Internal Revenue

Code.

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 623, 1002, 1052,

1054, 1055, 1056, 1057, 1059, 1060, 1061, 1222, 1344, 1425, 1426,

1441 of this title; title 26 section 6057.

§ 1054. Benefit accrual requirements

(a) Satisfaction of requirements by pension plans

Each pension plan shall satisfy the requirements of subsection (b)(3) of this section, and—

(1) in the case of a defined benefit plan, shall

satisfy the requirements of subsection (b)(1) of

this section; and

(2) in the case of a defined contribution plan,

shall satisfy the requirements of subsection

(b)(2) of this section.

(b) Enumeration of plan requirements

(1)(A) A defined benefit plan satisfies the requirements of this paragraph if the accrued benefit to which each participant is entitled upon

his separation from the service is not less than—

(i) 3 percent of the normal retirement benefit to which he would be entitled at the normal retirement age if he commenced participation at the earliest possible entry age under

the plan and served continuously until the

earlier of age 65 or the normal retirement age

specified under the plan, multiplied by

(ii) the number of years (not in excess of

331

⁄3) of his participation in the plan.

In the case of a plan providing retirement benefits based on compensation during any period,

the normal retirement benefit to which a participant would be entitled shall be determined

as if he continued to earn annually the average

rate of compensation which he earned during

consecutive years of service, not in excess of 10,

for which his compensation was the highest. For

purposes of this subparagraph, social security

benefits and all other relevant factors used to

compute benefits shall be treated as remaining

constant as of the current year for all years

after such current year.

(B) A defined benefit plan satisfies the requirements of this paragraph of a particular plan

year if under the plan the accrued benefit payable at the normal retirement age is equal to

the normal retirement benefit and the annual

rate at which any individual who is or could be

a participant can accrue the retirement benefits

payable at normal retirement age under the

plan for any later plan year is not more than

1331

⁄3 percent of the annual rate at which he can

accrue benefits for any plan year beginning on

or after such particular plan year and before

such later plan year. For purposes of this subparagraph—

(i) any amendment to the plan which is in

effect for the current year shall be treated as

in effect for all other plan years;

(ii) any change in an accrual rate which does

not apply to any individual who is or could be

a participant in the current year shall be disregarded;

(iii) the fact that benefits under the plan

may be payable to certain employees before

normal retirement age shall be disregarded;

and

(iv) social security benefits and all other relevant factors used to compute benefits shall
§ 1054 TITLE 29—LABOR Page 388

be treated as remaining constant as of the current year for all years after the current year.

(C) A defined benefit plan satisfies the requirements of this paragraph if the accrued benefit to

which any participant is entitled upon his separation from the service is not less than a fraction of the annual benefit commencing at normal retirement age to which he would be entitled under the plan as in effect on the date of his

separation if he continued to earn annually

until normal retirement age the same rate of

compensation upon which his normal retirement

benefit would be computed under the plan, determined as if he had attained normal retirement age on the date any such determination is

made (but taking into account no more than the

10 years of service immediately preceding his

separation from service). Such fraction shall be

a fraction, not exceeding 1, the numerator of

which is the total number of his years of participation in the plan (as of the date of his separation from the service) and the denominator of

which is the total number of years he would

have participated in the plan if he separated

from the service at the normal retirement age.

For purposes of this subparagraph, social security benefits and all other relevant factors used

to compute benefits shall be treated as remaining constant as of the current year for all years

after such current year.

(D) Subparagraphs (A), (B), and (C) shall not

apply with respect to years of participation before the first plan year to which this section applies but a defined benefit plan satisfies the requirements of this subparagraph with respect to

such years of participation only if the accrued

benefit of any participant with respect to such

years of participation is not less than the greater of—

(i) his accrued benefit determined under the

plan, as in effect from time to time prior to

September 2, 1974, or

(ii) an accrued benefit which is not less than

one-half of the accrued benefit to which such

participant would have been entitled if subparagraph (A), (B), or (C) applied with respect

to such years of participation.

(E) Notwithstanding subparagraphs (A), (B),

and (C) of this paragraph, a plan shall not be

treated as not satisfying the requirements of

this paragraph solely because the accrual of benefits under the plan does not become effective

until the employee has two continuous years of

service. For purposes of this subparagraph, the

term ‘‘year of service’’ has the meaning provided

by section 1052(a)(3)(A) of this title.

(F) Notwithstanding subparagraphs (A), (B),

and (C), a defined benefit plan satisfies the requirements of this paragraph if such plan

(i) is funded exclusively by the purchase of

insurance contracts, and

(ii) satisfies the requirements of paragraphs

(2) and (3) of section 1081(b) of this title (relating to certain insurance contract plans),

but only if an employee’s accrued benefit as of

any applicable date is not less than the cash surrender value his insurance contracts would have

on such applicable date if the requirements of

paragraphs (4), (5), and (6) of section 1081(b) of

this title were satisfied.

(G) Notwithstanding the preceding subparagraphs, a defined benefit plan shall be treated as

not satisfying the requirements of this paragraph if the participant’s accrued benefit is reduced on account of any increase in his age or

service. The preceding sentence shall not apply

to benefits under the plan commencing before

benefits payable under title II of the Social Security Act [42 U.S.C. 401 et seq.] which benefits

under the plan—

(i) do not exceed social security benefits, and

(ii) terminate when such social security benefits commence.

(H)(i) Notwithstanding the preceding subparagraphs, a defined benefit plan shall be treated as

not satisfying the requirements of this paragraph if, under the plan, an employee’s benefit

accrual is ceased, or the rate of an employee’s

benefit accrual is reduced, because of the attainment of any age.

(ii) A plan shall not be treated as failing to

meet the requirements of this subparagraph

solely because the plan imposes (without regard

to age) a limitation on the amount of benefits

that the plan provides or a limitation on the

number of years of service or years of participation which are taken into account for purposes

of determining benefit accrual under the plan.

(iii) In the case of any employee who, as of the

end of any plan year under a defined benefit

plan, has attained normal retirement age under

such plan—

(I) if distribution of benefits under such plan

with respect to such employee has commenced

as of the end of such plan year, then any requirement of this subparagraph for continued

accrual of benefits under such plan with respect to such employee during such plan year

shall be treated as satisfied to the extent of

the actuarial equivalent of in-service distribution of benefits, and

(II) if distribution of benefits under such

plan with respect to such employee has not

commenced as of the end of such year in accordance with section 1056(a)(3) of this title,

and the payment of benefits under such plan

with respect to such employee is not suspended during such plan year pursuant to section 1053(a)(3)(B) of this title, then any requirement of this subparagraph for continued

accrual of benefits under such plan with respect to such employee during such plan year

shall be treated as satisfied to the extent of

any adjustment in the benefit payable under

the plan during such plan year attributable to

the delay in the distribution of benefits after

the attainment of normal retirement age.

The preceding provisions of this clause shall

apply in accordance with regulations of the Secretary of the Treasury. Such regulations may

provide for the application of the preceding provisions of this clause, in the case of any such

employee, with respect to any period of time

within a plan year.

(iv) Clause (i) shall not apply with respect to

any employee who is a highly compensated employee (within the meaning of section 414(q) of

title 26) to the extent provided in regulations

prescribed by the Secretary of the Treasury for

purposes of precluding discrimination in favor of
Page 389 TITLE 29—LABOR § 1054

highly compensated employees within the meaning of subchapter D of chapter 1 of title 26.

(v) A plan shall not be treated as failing to

meet the requirements of clause (i) solely because the subsidized portion of any early retirement benefit is disregarded in determining benefit accruals.

(vi) Any regulations prescribed by the Secretary of the Treasury pursuant to clause (v) of

section 411(b)(1)(H) of title 26 shall apply with

respect to the requirements of this subparagraph in the same manner and to the same extent as such regulations apply with respect to

the requirements of such section 411(b)(1)(H).

(2)(A) A defined contribution plan satisfies the

requirements of this paragraph if, under the

plan, allocations to the employee’s account are

not ceased, and the rate at which amounts are

allocated to the employee’s account is not reduced, because of the attainment of any age.

(B) A plan shall not be treated as failing to

meet the requirements of subparagraph (A) solely because the subsidized portion of any early

retirement benefit is disregarded in determining

benefit accruals.

(C) Any regulations prescribed by the Secretary of the Treasury pursuant to subparagraphs (B) and (C) of section 411(b)(2) of title 26

shall apply with respect to the requirements of

this paragraph in the same manner and to the

same extent as such regulations apply with respect to the requirements of such section

411(b)(2).

(3) A plan satisfies the requirements of this

paragraph if—

(A) in the case of a defined benefit plan, the

plan requires separate accounting for the portion of each employee’s accrued benefit derived from any voluntary employee contributions permitted under the plan; and

(B) in the case of any plan which is not a defined benefit plan, the plan requires separate

accounting for each employee’s accrued benefit.

(4)(A) For purposes of determining an employee’s accrued benefit, the term ‘‘year of participation’’ means a period of service (beginning at

the earliest date on which the employee is a participant in the plan and which is included in a

period of service required to be taken into account under section 1052(b) of this title, determined without regard to section 1052(b)(5) of this

title) as determined under regulations prescribed by the Secretary which provide for the

calculation of such period on any reasonable and

consistent basis.

(B) For purposes of this paragraph, except as

provided in subparagraph (C), in the case of any

employee whose customary employment is less

than full time, the calculation of such employee’s service on any basis which provides less

than a ratable portion of the accrued benefit to

which he would be entitled under the plan if his

customary employment were full time shall not

be treated as made on a reasonable and consistent basis.

(C) For purposes of this paragraph, in the case

of any employee whose service is less than 1,000

hours during any calendar year, plan year or

other 12-consecutive-month period designated by

the plan (and not prohibited under regulations

prescribed by the Secretary) the calculation of

his period of service shall not be treated as not

made on a reasonable and consistent basis merely because such service is not taken into account.

(D) In the case of any seasonal industry where

the customary period of employment is less

than 1,000 hours during a calendar year, the

term ‘‘year of participation’’ shall be such period as determined under regulations prescribed

by the Secretary.

(E) For purposes of this subsection in the case

of any maritime industry, 125 days of service

shall be treated as a year of participation. The

Secretary may prescribe regulations to carry

out the purposes of this subparagraph.

(c) Employee’s accrued benefits derived from employer and employee contributions

(1) For purposes of this section and section

1053 of this title an employee’s accrued benefit

derived from employer contributions as of any

applicable date is the excess (if any) of the accrued benefit for such employee as of such applicable date over the accrued benefit derived from

contributions made by such employee as of such

date.

(2)(A) In the case of a plan other than a defined benefit plan, the accrued benefit derived

from contributions made by an employee as of

any applicable date is—

(i) except as provided in clause (ii), the balance of the employee’s separate account consisting only of his contributions and the income, expenses, gains, and losses attributable

thereto, or

(ii) if a separate account is not maintained

with respect to an employee’s contributions

under such a plan, the amount which bears the

same ratio to his total accrued benefit as the

total amount of the employee’s contributions

(less withdrawals) bears to the sum of such

contributions and the contributions made on

his behalf by the employer (less withdrawals).

(B) DEFINED BENEFIT PLANS.—In the case of a

defined benefit plan, the accrued benefit derived

from contributions made by an employee as of

any applicable date is the amount equal to the

employee’s accumulated contributions expressed

as an annual benefit commencing at normal retirement age, using an interest rate which would

be used under the plan under section 1055(g)(3) of

this title (as of the determination date).

(C) For purposes of this subsection, the term

‘‘accumulated contributions’’ means the total

of—

(i) all mandatory contributions made by the

employee,

(ii) interest (if any) under the plan to the

end of the last plan year to which section

1053(a)(2) of this title does not apply (by reason of the applicable effective date), and

(iii) interest on the sum of the amounts determined under clauses (i) and (ii) compounded

annually—

(I) at the rate of 120 percent of the Federal

mid-term rate (as in effect under section 1274

of title 26 for the 1st month of a plan year

for the period beginning with the 1st plan

year to which subsection (a)(2) of this section applies by reason of the applicable ef-
§ 1054 TITLE 29—LABOR Page 390

fective date) and ending with the date on

which the determination is being made, and

(II) at the interest rate which would be

used under the plan under section 1055(g)(3)

of this title (as of the determination date)

for the period beginning with the determination date and ending on the date on which

the employee attains normal retirement age.

For purposes of this subparagraph, the term

‘‘mandatory contributions’’ means amounts contributed to the plan by the employee which are

required as a condition of employment, as a condition of participation in such plans, or as a condition of obtaining benefits under the plan attributable to employer contributions.

(D) The Secretary of the Treasury is authorized to adjust by regulation the conversion factor described in subparagraph (B) from time to

time as he may deem necessary. No such adjustment shall be effective for a plan year beginning

before the expiration of 1 year after such adjustment is determined and published.

(3) For purposes of this section, in the case of

any defined benefit plan, if an employee’s accrued benefit is to be determined as an amount

other than an annual benefit commencing at

normal retirement age, or if the accrued benefit

derived from contributions made by an employee is to be determined with respect to a benefit other than an annual benefit in the form of

a single life annuity (without ancillary benefits)

commencing at normal retirement age, the employee’s accrued benefit, or the accrued benefits

derived from contributions made by an employee, as the case may be, shall be the actuarial equivalent of such benefit or amount determined under paragraph (1) or (2).

(4) In the case of a defined benefit plan which

permits voluntary employee contributions, the

portion of an employee’s accrued benefit derived

from such contributions shall be treated as an

accrued benefit derived from employee contributions under a plan other than a defined benefit

plan.

(d) Employee service which may be disregarded

in determining employee’s accrued benefits

under plan

Notwithstanding section 1053(b)(1) of this title,

for purposes of determining the employee’s accrued benefit under the plan, the plan may disregard service performed by the employee with

respect to which he has received—

(1) a distribution of the present value of his

entire nonforfeitable benefit if such distribution was in an amount (not more than the dollar limit under section 1053(e)(1) of this title)

permitted under regulations prescribed by the

Secretary of the Treasury, or

(2) a distribution of the present value of his

nonforfeitable benefit attributable to such

service which he elected to receive.

Paragraph (1) shall apply only if such distribution was made on termination of the employee’s

participation in the plan. Paragraph (2) shall

apply only if such distribution was made on termination of the employee’s participation in the

plan or under such other circumstances as may

be provided under regulations prescribed by the

Secretary of the Treasury.

(e) Opportunity to repay full amount of distributions which have been reduced through disregarded employee service

For purposes of determining the employee’s

accrued benefit, the plan shall not disregard

service as provided in subsection (d) of this section unless the plan provides an opportunity for

the participant to repay the full amount of a

distribution described in subsection (d) of this

section with, in the case of a defined benefit

plan, interest at the rate determined for purposes of subsection (c)(2)(C) of this section and

provides that upon such repayment the employee’s accrued benefit shall be recomputed by taking into account service so disregarded. This

subsection shall apply only in the case of a participant who—

(1) received such a distribution in any plan

year to which this section applies which distribution was less than the present value of

his accrued benefit,

(2) resumes employment covered under the

plan, and

(3) repays the full amount of such distribution with, in the case of a defined benefit plan,

interest at the rate determined for purposes of

subsection (c)(2)(C) of this section.

The plan provision required under this subsection may provide that such repayment must

be made (A) in the case of a withdrawal on account of separation from service, before the earlier of 5 years after the first date on which the

participant is subsequently re-employed by the

employer, or the close of the first period of 5

consecutive 1-year breaks in service commencing after the withdrawal; or (B) in the case of

any other withdrawal, 5 years after the date of

the withdrawal.

(f) Employer treated as maintaining a plan

For the purposes of this part, an employer

shall be treated as maintaining a plan if any employee of such employer accrues benefits under

such plan by reason of service with such employer.

(g) Decrease of accrued benefits through amendment of plan

(1) The accrued benefit of a participant under

a plan may not be decreased by an amendment

of the plan, other than an amendment described

in section 1082(c)(8) or 1441 of this title.

(2) For purposes of paragraph (1), a plan

amendment which has the effect of—

(A) eliminating or reducing an early retirement benefit or a retirement-type subsidy (as

defined in regulations), or

(B) eliminating an optional form of benefit,

with respect to benefits attributable to service

before the amendment shall be treated as reducing accrued benefits. In the case of a retirementtype subsidy, the preceding sentence shall apply

only with respect to a participant who satisfies

(either before or after the amendment) the preamendment conditions for the subsidy. The Secretary of the Treasury may by regulations provide that this subparagraph shall not apply to a

plan amendment described in subparagraph (B)

(other than a plan amendment having an effect

described in subparagraph (A)).
Page 391 TITLE 29—LABOR § 1054

(3) For purposes of this subsection, any—

(A) tax credit employee stock ownership

plan (as defined in section 409(a) of title 26, or

(B) employee stock ownership plan (as defined in section 4975(e)(7) of title 26),

shall not be treated as failing to meet the requirements of this subsection merely because it

modifies distribution options in a nondiscriminatory manner.

(h) Notice of significant reduction in benefit accruals

(1) A plan described in paragraph (2) may not

be amended so as to provide for a significant reduction in the rate of future benefit accrual, unless, after adoption of the plan amendment and

not less than 15 days before the effective date of

the plan amendment, the plan administrator

provides a written notice, setting forth the plan

amendment and its effective date, to—

(A) each participant in the plan,

(B) each beneficiary who is an alternate

payee (within the meaning of section

1056(d)(3)(K) of this title) under an applicable

qualified domestic relations order (within the

meaning of section 1056(d)(3)(B)(i) of this

title), and

(C) each employee organization representing

participants in the plan,

except that such notice shall instead be provided

to a person designated, in writing, to receive

such notice on behalf of any person referred to

in subparagraph (A), (B), or (C).

(2) A plan is described in this paragraph if such

plan is—

(A) a defined benefit plan, or

(B) an individual account plan which is subject to the funding standards of section 1082 of

this title.

(i) Prohibition on benefit increases where plan

sponsor is in bankruptcy

(1) In the case of a plan described in paragraph

(3) which is maintained by an employer that is

a debtor in a case under title 11 or similar Federal or State law, no amendment of the plan

which increases the liabilities of the plan by

reason of—

(A) any increase in benefits,

(B) any change in the accrual of benefits, or

(C) any change in the rate at which benefits

become nonforfeitable under the plan,

with respect to employees of the debtor, shall be

effective prior to the effective date of such employer’s plan of reorganization.

(2) Paragraph (1) shall not apply to any plan

amendment that—

(A) the Secretary of the Treasury determines to be reasonable and that provides for

only de minimis increases in the liabilities of

the plan with respect to employees of the

debtor,

(B) only repeals an amendment described in

section 1082(c)(8) of this title,

(C) is required as a condition of qualification

under part I of subchapter D of chapter 1 of

title 26, or

(D) was adopted prior to, or pursuant to a

collective bargaining agreement entered into

prior to, the date on which the employer became a debtor in a case under title 11 or similar Federal or State law.

(3) This subsection shall apply only to plans

(other than multiemployer plans) covered under

section 1321 of this title for which the funded

current liability percentage (within the meaning

of section 1082(d)(8) of this title) is less than 100

percent after taking into account the effect of

the amendment.

(4) For purposes of this subsection, the term

‘‘employer’’ has the meaning set forth in section

1082(c)(11)(A) of this title, without regard to section 1082(c)(11)(B) of this title.

(j) Cross reference

For special rules relating to plan provisions

adopted to preclude discrimination, see section

1053(c)(2) of this title.

(Pub. L. 93–406, title I, §204, Sept. 2, 1974, 88 Stat.

858; Pub. L. 98–397, title I, §§102(e)(3), (f), 105(b),

title III, §301(a)(2), Aug. 23, 1984, 98 Stat. 1429,

1436, 1451; Pub. L. 99–272, title XI, §11006(a), Apr.

7, 1986, 100 Stat. 243; Pub. L. 99–509, title IX,

§9202(a), Oct. 21, 1986, 100 Stat. 1975; Pub. L.

99–514, title XI, §1113(e)(4)(B), title XVIII,

§§1879(u)(1), 1898(a)(4)(B)(ii), (f)(1)(B), (2), Oct. 22,

1986, 100 Stat. 2448, 2913, 2944, 2956; Pub. L.

100–203, title IX, §9346(a), Dec. 22, 1987, 101 Stat.

1330–374; Pub. L. 101–239, title VII, §§7862(b)(1)(A),

(2), 7871(a)(1), (3), 7881(m)(2)(A)–(C), 7891(a)(1),

7894(c)(4)–(6), Dec. 19, 1989, 103 Stat. 2432, 2434,

2435, 2444, 2445, 2449; Pub. L. 103–465, title VII,

§766(a), Dec. 8, 1994, 108 Stat. 5036; Pub. L. 105–34,

title X, §1071(b)(2), Aug. 5, 1997, 111 Stat. 948.)

REFERENCES IN TEXT

The Social Security Act, referred to in subsec.

(b)(1)(G), is act Aug. 14, 1935, ch. 531, 49 Stat. 620, as

amended. Title II of the Social Security Act is classified generally to subchapter II (§401 et seq.) of chapter

7 of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see section

1305 of Title 42 and Tables.

AMENDMENTS

1997—Subsec. (d)(1). Pub. L. 105–34 substituted ‘‘the

dollar limit under section 1053(e)(1) of this title’’ for

‘‘$3,500’’.

1994—Subsecs. (i), (j). Pub. L. 103–465 added subsec. (i)

and redesignated former subsec. (i) as (j).

1989—Subsec. (b)(1)(A). Pub. L. 101–239, §7894(c)(4),

substituted ‘‘subparagraph’’ for ‘‘suparagraph’’ in last

sentence.

Subsec. (b)(1)(E). Pub. L. 101–239, §7894(c)(5), substituted ‘‘term ‘year of service’’’ for ‘‘term ‘years of

service’’’.

Subsec. (b)(2)(B). Pub. L. 101–239, §7871(a)(1), redesignated subpar. (C) as (B) and struck out former subpar.

(B) which read as follows: ‘‘Subparagraph (A) shall not

apply with respect to any employee who is a highly

compensated employee (within the meaning of section

414(q) of title 26) to the extent provided in regulations

prescribed by the Secretary of the Treasury for purposes of precluding discrimination in favor of highly

compensated employees within the meaning of subchapter D of chapter 1 of title 26.’’

Subsec. (b)(2)(C). Pub. L. 101–239, §7871(a)(3), substituted ‘‘subparagraphs (B) and (C)’’ for ‘‘subparagraphs (C) and (D)’’.

Pub. L. 101–239, §7871(a)(1), redesignated subpar. (D)

as (C). Former subpar. (C) redesignated (B).

Subsec. (b)(2)(D). Pub. L. 101–239, §7871(a)(1), redesignated subpar. (D) as (C).

Subsec. (c)(2)(B). Pub. L. 101–239, §7881(m)(2)(B), inserted heading and amended text generally. Prior to

amendment, text read as follows:
§ 1054 TITLE 29—LABOR Page 392

‘‘(i) In the case of a defined benefit plan providing an

annual benefit in the form of a single life annuity

(without ancillary benefits) commencing at normal retirement age, the accrued benefit derived from contributions made by an employee as of any applicable

date is the annual benefit equal to the employee’s accumulated contributions multiplied by the appropriate

conversion factor.

‘‘(ii) For purposes of clause (i), the term ‘appropriate

conversion factor’ means the factor necessary to convert an amount equal to the accumulated contributions

to a single life annuity (without ancillary benefits)

commencing at normal retirement age and shall be 10

percent for a normal retirement age of 65 years. For

other normal retirement ages the conversion factor

shall be determined in accordance with regulations prescribed by the Secretary of the Treasury or his delegate.’’

Subsec. (c)(2)(C)(iii). Pub. L. 101–239, §7881(m)(2)(A),

amended cl. (iii) generally. Prior to amendment, cl.

(iii) read as follows: ‘‘interest on the sum of the

amounts determined under clauses (i) and (ii) compounded annually at the rate of 120 percent of the Federal mid-term rate (as in effect under section 1274 of

title 26 for the 1st month of a plan year) from the beginning of the first plan year to which section 1053(a)(2)

of this title applies (by reason of the applicable effective date) to the date upon which the employee would

attain normal retirement age.’’

Subsec. (c)(2)(E). Pub. L. 101–239, §7881(m)(2)(C),

struck out subpar. (E) which read as follows: ‘‘The accrued benefit derived from employee contributions

shall not exceed the greater of—

‘‘(i) the employee’s accrued benefit under the plan,

or

‘‘(ii) the accrued benefit derived from employee

contributions determined as though the amounts calculated under clauses (ii) and (iii) of subparagraph (C)

were zero.’’

Subsec. (d). Pub. L. 101–239, §7894(c)(6), removed the

indentation of the term ‘‘Paragraph’’ where first appearing in concluding provisions.

Subsec. (g)(3)(A). Pub. L. 101–239, §7891(a)(1), substituted ‘‘Internal Revenue Code of 1986’’ for ‘‘Internal

Revenue Code of 1954’’, which for purposes of codification was translated as ‘‘title 26’’ thus requiring no

change in text.

Subsec. (h). Pub. L. 101–239, §7862(b)(1)(A), made technical correction to directory language of Pub. L. 99–514,

§1879(u)(1), see 1986 Amendment note below.

Subsec. (h)(2). Pub. L. 101–239, §7862(b)(2), adjusted

left-hand margin of introductory provisions to full

measure.

1987—Subsec. (c)(2)(C)(iii). Pub. L. 100–203, §9346(a)(1),

substituted ‘‘120 percent of the Federal mid-term rate

(as in effect under section 1274 of title 26 for the 1st

month of a plan year)’’ for ‘‘5 percent per annum’’.

Subsec. (c)(2)(D). Pub. L. 100–203, §9346(a)(2), struck

out ‘‘, the rate of interest described in clause (iii) of

subparagraph (C), or both,’’ before ‘‘from time to time’’

in first sentence and struck out second sentence which

read as follows: ‘‘The rate of interest shall bear the relationship to 5 percent which the Secretary of the

Treasury determines to be comparable to the relationship which the long-term money rates and investment

yields for the last period of 10 calendar years ending at

least 12 months before the beginning of the plan year

bear to the long-term money rates and investment

yields for the 10-calendar year period 1964 through

1973.’’

1986—Subsec. (a). Pub. L. 99–509, §9202(a)(1), amended

subsec. (a) generally. Prior to amendment, subsec. (a)

read as follows: ‘‘Each pension plan shall satisfy the requirements of subsection (b)(2) of this section, and in

the case of a defined benefit plan shall also satisfy the

requirements of subsection (b)(1) of this section.’’

Subsec. (b)(1)(H). Pub. L. 99–509, §9202(a)(2), added

subpar. (H).

Subsec. (b)(2) to (4). Pub. L. 99–509, §9202(a)(3), added

par. (2) and redesignated former pars. (2) and (3) as (3)

and (4), respectively.

Subsec. (e). Pub. L. 99–514, §1898(a)(4)(B)(ii), inserted

last sentence and struck out former last sentence

which read as follows: ‘‘In the case of a defined contribution plan, the plan provision required under this

subsection may provide that such repayment must be

made before the participant has 5 consecutive 1-year

breaks in service commencing after such withdrawal’’.

Subsec. (g)(1). Pub. L. 99–514, §1898(f)(2), inserted reference to section 1441.

Subsec. (g)(3). Pub. L. 99–514, §1898(f)(1)(B), added par.

(3).

Subsec. (h). Pub. L. 99–514, §1879(u)(1), as amended by

Pub. L. 101–239, §7862(b)(1)(A), designated existing provisions as par. (1), substituted ‘‘plan described in paragraph (2)’’ for ‘‘single-employer plan’’, redesignated

former pars. (1) to (3) as subpars. (A) to (C), respectively, substituted ‘‘subparagraph (A), (B), or (C)’’ for

‘‘paragraph (1), (2), or (3)’’ in concluding provisions, and

added par. (2).

Pub. L. 99–272 added subsec. (h). Former subsec. (h)

redesignated (i).

Subsec. (i). Pub. L. 99–514, §1113(e)(4)(B), amended

subsec. (i) generally, striking out reference to class

year plans under section 1053(c)(3) of this title.

Pub. L. 99–272 redesignated former subsec. (h) as (i).

1984—Subsec. (b)(3)(A). Pub. L. 98–397, §102(e)(3), inserted ‘‘, determined without regard to section

1052(b)(5) of this title’’ after ‘‘section 1052(b) of this

title’’.

Subsec. (d)(1). Pub. L. 98–397, §105(b), substituted

‘‘$3,500’’ for ‘‘$1,750’’.

Subsec. (e). Pub. L. 98–397, §102(f), substituted ‘‘5 consecutive 1-year breaks in service’’ for ‘‘any 1-year break

in service’’.

Subsec. (g). Pub. L. 98–397, §301(a)(2), designated existing provisions as par. (1) and added par. (2).

EFFECTIVE DATE OF 1997 AMENDMENT

Amendment by Pub. L. 105–34 applicable to plan years

beginning after Aug. 5, 1997, see section 1071(c) of Pub.

L. 105–34, set out as a note under section 411 of Title 26,

Internal Revenue Code.

EFFECTIVE DATE OF 1994 AMENDMENT

Amendment by Pub. L. 103–465 applicable to plan

amendments adopted on or after Dec. 8, 1994, see section 766(d) of Pub. L. 103–465, set out as a note under

section 401 of Title 26, Internal Revenue Code.

EFFECTIVE DATE OF 1989 AMENDMENT

Amendment by section 7862(b)(1)(A), (2) of Pub. L.

101–239 effective as if included in the provision of the

Tax Reform Act of 1986, Pub. L. 99–514, to which such

amendment relates, see section 7863 of Pub. L. 101–239,

set out as a note under section 106 of Title 26, Internal

Revenue Code.

Amendment by section 7871(a)(1), (3) of Pub. L. 101–239

effective as if included in the amendments made by section 9202 of the Omnibus Budget Reconciliation Act of

1986, Pub. L. 99–509, see section 7871(a)(4) of Pub. L.

101–239, set out as a note under section 411 of Title 26.

Amendment by section 7881(m)(2)(A)–(C) of Pub. L.

101–239 effective, except as otherwise provided, as if included in the provision of the Pension Protection Act,

Pub. L. 100–203, §§9302–9346, to which such amendment

relates, see section 7882 of Pub. L. 101–239, set out as a

note under section 401 of Title 26.

Amendment by section 7891(a)(1) of Pub. L. 101–239 effective, except as otherwise provided, as if included in

the provision of the Tax Reform Act of 1986, Pub. L.

99–514, to which such amendment relates, see section

7891(f) of Pub. L. 101–239, set out as a note under section

1002 of this title.

Amendment by section 7894(c)(4)–(6) of Pub. L. 101–239

effective, except as otherwise provided, as if originally

included in the provision of the Employee Retirement

Income Security Act of 1974, Pub. L. 93–406, to which

such amendment relates, see section 7894(i) of Pub. L.

101–239, set out as a note under section 1002 of this title.
Page 393 TITLE 29—LABOR § 1055

EFFECTIVE DATE OF 1987 AMENDMENT

Section 9346(c) of Pub. L. 100–203 provided that:

‘‘(1) IN GENERAL.—The amendments made by this section [amending this section and section 411 of Title 26,

Internal Revenue Code] shall apply to plan years beginning after December 31, 1987.

‘‘(2) PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY

1, 1989.—If any amendment made by this section requires

an amendment to any plan, such plan amendment shall

not be required to be made before the first plan year beginning on or after January 1, 1989, if—

‘‘(A) during the period after such amendments made

by this section take effect and before such first plan

year, the plan is operated in accordance with the requirements of such amendments or in accordance

with an amendment prescribed by the Secretary of

the Treasury and adopted by the plan, and

‘‘(B) such plan amendment applies retroactively to

the period after such amendments take effect and

such first plan year.

A plan shall not be treated as failing to provide definitely determinable benefits or contributions, or to be

operated in accordance with the provisions of the plan,

merely because it operates in accordance with this subsection.’’

EFFECTIVE DATE OF 1986 AMENDMENTS

Amendment by section 1113(e)(4)(B) of Pub. L. 99–514

applicable to plan years beginning after Dec. 31, 1988,

with special rule for plans maintained pursuant to collective bargaining agreements ratified before Mar. 1,

1986, and not applicable to employees who do not have

1 hour of service in any plan year to which the amendment applies, see section 1113(f) of Pub. L. 99–514, as

amended, set out as a note under section 411 of Title 26,

Internal Revenue Code.

Section 1879(u)(5), formerly section 1879(u)(4), of Pub.

L. 99–514, as redesignated and amended by Pub. L.

101–239, title VII, §7862(b)(1)(A), (B), Dec. 19, 1989, 103

Stat. 2432, provided that:

‘‘(A) GENERAL RULE.—Except as provided in subparagraph (B), the preceding provisions of this subsection

[amending this section and sections 1002 and 1349 of this

title] shall be effective as if such provisions were included in the enactment of the Single-Employer Pension Plan Amendments Act of 1986 [Pub. L. 99–272, title

XI].

‘‘(B) SPECIAL RULE.—Subparagraph (B) of section

204(h)(2) of the Employee Retirement Income Security

Act of 1974 (as amended by paragraph (1)) [29 U.S.C.

1054(h)(2)(B)] shall apply only with respect to plan

amendments adopted on or after the date of the enactment of this Act [Oct. 22, 1986].’’

Amendment by section 1898(a)(4)(B)(ii), (f)(1)(B), (2) of

Pub. L. 99–514 effective as if included in the provision

of the Retirement Equity Act of 1984, Pub. L. 98–397, to

which such amendment relates, except as otherwise

provided, see section 1898(j) of Pub. L. 99–514, set out as

a note under section 401 of this title.

Amendment by Pub. L. 99–509 applicable only with respect to plan years beginning on or after Jan. 1, 1988,

and only to employees who have 1 hour of service in

any plan year to which amendment applies, with special rule for collectively bargained plans, see section

9204 of Pub. L. 99–509, set out as an Effective and Termination Dates of 1986 Amendments note under section

623 of this title.

Section 11006(b) of Pub. L. 99–272 provided that: ‘‘The

amendments made by subsection (a) [amending this

section] shall apply with respect to plan amendments

adopted on or after January 1, 1986, except that, in the

case of plan amendments adopted on or after January

1, 1986, and on or before the date of the enactment of

this Act [Apr. 7, 1986], the requirements of section

204(h) of the Employee Retirement Income Security

Act of 1974 [subsec. (h) of this section] (as added by this

section) shall be treated as met if the written notice required under such section 204(h) is provided before 60

days after the date of the enactment of this Act.’’

EFFECTIVE DATE OF 1984 AMENDMENT

Amendment by sections 102(e)(3), (f), and 105(b) of

Pub. L. 98–397 applicable to plan years beginning after

Dec. 31, 1984, except as otherwise provided, see sections

302 and 303 of Pub. L. 98–397, set out as a note under section 1001 of this title.

Amendment by section 301(a)(2) of Pub. L. 98–397 not

applicable to the termination of a certain defined benefit plan, see section 303(f) of Pub. L. 98–397.

REGULATIONS

Secretary of Labor, Secretary of the Treasury, and

Equal Employment Opportunity Commission each to

issue before Feb. 1, 1988, final regulations to carry out

amendments made by Pub. L. 99–509, see section 9204 of

Pub. L. 99–509, set out as an Effective and Termination

Dates of 1986 Amendment note under section 623 of this

title.

Secretary authorized, effective Sept. 2, 1974, to promulgate regulations wherever provisions of this subchapter call for the promulgation of regulations, see

section 1031 of this title.

PLAN AMENDMENTS REFLECTING AMENDMENTS BY SECTION 7881(m) OF PUB. L. 101–239 NOT TREATED AS

REDUCING ACCRUED BENEFIT

Section 7881(m)(3) of Pub. L. 101–239 provided

that:‘‘If—

‘‘(A) during the period beginning December 22, 1987,

and ending June 21, 1988, a plan was amended to reflect the amendments made by section 9346 of the

Pension Protection Act [Pub. L. 100–203, amending

this section and section 411 of Title 26, Internal Revenue Code], and

‘‘(B) such plan is amended to reflect the amendments made by this subsection [amending this section, section 1002 of this title, and section 411 of Title

26],

any plan amendment described in subparagraph (B)

shall not be treated as reducing accrued benefits for

purposes of section 411(d)(6) of the Internal Revenue

Code of 1986 [section 411(d)(6) of Title 26] or section

204(g) of ERISA [subsec. (g) of this section].’’

PLAN AMENDMENTS NOT REQUIRED UNTIL

JANUARY 1, 1989

For provisions directing that if any amendments

made by subtitle A or subtitle C of title XI [§§1101–1147

and 1171–1177] or title XVIII [§§1800–1899A] of Pub. L.

99–514 require an amendment to any plan, such plan

amendment shall not be required to be made before the

first plan year beginning on or after Jan. 1, 1989, see

section 1140 of Pub. L. 99–514, as amended, set out as a

note under section 401 of Title 26, Internal Revenue

Code.

For provisions directing that if any amendments

made by Pub. L. 99–509 require an amendment to any

plan, such plan amendment shall not be required to be

made before the first plan year beginning on or after

Jan. 1, 1989, see section 9204 of Pub. L. 99–509, set out as

an Effective and Termination Dates of 1986 Amendment

note under section 623 of this title.

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1002, 1053, 1056,

1057, 1060, 1061, 1322, 1425, 1426, 1441 of this title.

§ 1055. Requirement of joint and survivor annuity and preretirement survivor annuity

(a) Required contents for applicable plans

Each pension plan to which this section applies shall provide that—

(1) in the case of a vested participant who

does not die before the annuity starting date,

the accrued benefit payable to such participant shall be provided in the form of a qualified joint and survivor annuity, and