§ 1344 TITLE 29—LABOR Page 528

Paragraph (6) of section 1322(b) of this title, referred

to in subsec. (c)(7), was redesignated as par. (5) by Pub.

L. 96–364, title IV, §403(c)(4), Sept. 26, 1980, 94 Stat. 1301.

AMENDMENTS

1994—Subsec. (a). Pub. L. 103–465, §771(a), (e)(1), in

first sentence, inserted ‘‘or the contributing sponsor’’

after ‘‘administrator’’, substituted ‘‘subsection (c)’’ for

‘‘subsection (b)’’, and inserted before period at end

‘‘, unless a notice otherwise required under this subsection has already been provided with respect to such

event’’, and struck out last sentence which read as follows: ‘‘Whenever an employer making contributions

under a plan to which section 1321 of this title applies

knows or has reason to know that a reportable event

has occurred he shall notify the plan administrator immediately.’’

Subsec. (b). Pub. L. 103–465, §771(b), added subsec. (b).

Former subsec. (b) redesignated (c).

Subsec. (c). Pub. L. 103–465, §771(b), redesignated subsec. (b) as (c). Former subsec. (c) redesignated (d).

Subsec. (c)(8) to (13). Pub. L. 103–465, §771(c), struck

out ‘‘or’’ at end of par. (8), added pars. (9) to (13), and

struck out former par. (9) which read as follows: ‘‘when

any other event occurs which the corporation determines may be indicative of a need to terminate the

plan.’’.

Subsecs. (d), (e). Pub. L. 103–465, §771(b), (e)(1), redesignated subsecs. (c) and (d) as (d) and (e), respectively,

and substituted ‘‘subsection (c)’’ for ‘‘subsection (b)’’ in

par. (1) of each subsec.

Subsec. (f). Pub. L. 103–465, §771(d), added subsec. (f).

1989—Subsec. (b)(4). Pub. L. 101–239 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.

EFFECTIVE DATE OF 1994 AMENDMENT

Amendment by Pub. L. 103–465 effective for events occurring 60 days or more after Dec. 8, 1994, see section

771(f) of Pub. L. 103–465, set out as a note under section

1342 of this title.

EFFECTIVE DATE OF 1989 AMENDMENT

Amendment by 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.

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1342, 1345, 1365

of this title.

§ 1344. Allocation of assets

(a) Order of priority of participants and beneficiaries

In the case of the termination of a single-employer plan, the plan administrator shall allocate the assets of the plan (available to provide

benefits) among the participants and beneficiaries of the plan in the following order:

(1) First, to that portion of each individual’s

accrued benefit which is derived from the participant’s contributions to the plan which

were not mandatory contributions.

(2) Second, to that portion of each individual’s accrued benefit which is derived from the

participant’s mandatory contributions.

(3) Third, in the case of benefits payable as

an annuity—

(A) in the case of the benefit of a participant or beneficiary which was in pay status

as of the beginning of the 3-year period ending on the termination date of the plan, to

each such benefit, based on the provisions of

the plan (as in effect during the 5-year period ending on such date) under which such

benefit would be the least,

(B) in the case of a participant’s or beneficiary’s benefit (other than a benefit described in subparagraph (A)) which would

have been in pay status as of the beginning

of such 3-year period if the participant had

retired prior to the beginning of the 3-year

period and if his benefits had commenced (in

the normal form of annuity under the plan)

as of the beginning of such period, to each

such benefit based on the provisions of the

plan (as in effect during the 5-year period

ending on such date) under which such benefit would be the least.

For purposes of subparagraph (A), the lowest

benefit in pay status during a 3-year period

shall be considered the benefit in pay status

for such period.

(4) Fourth—

(A) to all other benefits (if any) of individuals under the plan guaranteed under this

subchapter (determined without regard to

section 1322b(a) of this title), and

(B) to the additional benefits (if any)

which would be determined under subparagraph (A) if section 1322(b)(5) of this title did

not apply.

For purposes of this paragraph, section 1321 of

this title shall be applied without regard to

subsection (c) thereof.

(5) Fifth, to all other nonforfeitable benefits

under the plan.

(6) Sixth, to all other benefits under the

plan.

(b) Adjustment of allocations; reallocations; mandatory contributions; establishment of subclasses and categories

For purposes of subsection (a) of this section—

(1) The amount allocated under any paragraph of subsection (a) of this section with respect to any benefit shall be properly adjusted

for any allocation of assets with respect to

that benefit under a prior paragraph of subsection (a) of this section.

(2) If the assets available for allocation

under any paragraph of subsection (a) of this

section (other than paragraphs (5) and (6)) are

insufficient to satisfy in full the benefits of all

individuals which are described in that paragraph, the assets shall be allocated pro rata

among such individuals on the basis of the

present value (as of the termination date) of

their respective benefits described in that

paragraph.

(3) This paragraph applies if the assets available for allocation under paragraph (5) of subsection (a) of this section are not sufficient to

satisfy in full the benefits of individuals described in that paragraph.

(A) If this paragraph applies, except as

provided in subparagraph (B), the assets

shall be allocated to the benefits of individuals described in such paragraph (5) on the

basis of the benefits of individuals which

would have been described in such paragraph
Page 529 TITLE 29—LABOR § 1344

(5) under the plan as in effect at the beginning of the 5-year period ending on the date

of plan termination.

(B) If the assets available for allocation

under subparagraph (A) are sufficient to satisfy in full the benefits described in such

subparagraph (without regard to this subparagraph), then for purposes of subparagraph (A), benefits of individuals described

in such subparagraph shall be determined on

the basis of the plan as amended by the most

recent plan amendment effective during

such 5-year period under which the assets

available for allocation are sufficient to satisfy in full the benefits of individuals described in subparagraph (A) and any assets

remaining to be allocated under such subparagraph shall be allocated under subparagraph (A) on the basis of the plan as amended by the next succeeding plan amendment

effective during such period.

(4) If the Secretary of the Treasury determines that the allocation made pursuant to

this section (without regard to this paragraph)

results in discrimination prohibited by section

401(a)(4) of title 26 then, if required to prevent

the disqualification of the plan (or any trust

under the plan) under section 401(a) or 403(a) of

title 26, the assets allocated under subsections

(a)(4)(B), (a)(5), and (a)(6) of this section shall

be reallocated to the extent necessary to avoid

such discrimination.

(5) The term ‘‘mandatory contributions’’

means amounts contributed to the plan by a

participant which are required as a condition

of employment, as a condition of participation

in such plan, or as a condition of obtaining

benefits under the plan attributable to employer contributions. For this purpose, the

total amount of mandatory contributions of a

participant is the amount of such contributions reduced (but not below zero) by the sum

of the amounts paid or distributed to him

under the plan before its termination.

(6) A plan may establish subclasses and categories within the classes described in paragraphs (1) through (6) of subsection (a) of this

section in accordance with regulations prescribed by the corporation.

(c) Increase or decrease in value of assets

Any increase or decrease in the value of the

assets of a single-employer plan occurring during the period beginning on the later of (1) the

date a trustee is appointed under section 1342(b)

of this title or (2) the date on which the plan is

terminated is to be allocated between the plan

and the corporation in the manner determined

by the court (in the case of a court-appointed

trustee) or as agreed upon by the corporation

and the plan administrator in any other case.

Any increase or decrease in the value of the assets of a single-employer plan occurring after

the date on which the plan is terminated shall

be credited to, or suffered by, the corporation.

(d) Distribution of residual assets; restrictions

on reversions pursuant to recently amended

plans; assets attributable to employee contributions; calculation of remaining assets

(1) Subject to paragraph (3), any residual assets of a single-employer plan may be distributed to the employer if—

(A) all liabilities of the plan to participants

and their beneficiaries have been satisfied,

(B) the distribution does not contravene any

provision of law, and

(C) the plan provides for such a distribution

in these circumstances.

(2)(A) In determining the extent to which a

plan provides for the distribution of plan assets

to the employer for purposes of paragraph (1)(C),

any such provision, and any amendment increasing the amount which may be distributed to the

employer, shall not be treated as effective before

the end of the fifth calendar year following the

date of the adoption of such provision or amendment.

(B) A distribution to the employer from a plan

shall not be treated as failing to satisfy the requirements of this paragraph if the plan has

been in effect for fewer than 5 years and the plan

has provided for such a distribution since the effective date of the plan.

(C) Except as otherwise provided in regulations of the Secretary of the Treasury, in any

case in which a transaction described in section

1058 of this title occurs, subparagraph (A) shall

continue to apply separately with respect to the

amount of any assets transferred in such transaction.

(D) For purposes of this subsection, the term

‘‘employer’’ includes any member of the controlled group of which the employer is a member. For purposes of the preceding sentence, the

term ‘‘controlled group’’ means any group treated as a single employer under subsection (b), (c),

(m) or (o) of section 414 of title 26.

(3)(A) Before any distribution from a plan pursuant to paragraph (1), if any assets of the plan

attributable to employee contributions remain

after satisfaction of all liabilities described in

subsection (a) of this section, such remaining assets shall be equitably distributed to the participants who made such contributions or their

beneficiaries (including alternate payees, within

the meaning of section 1056(d)(3)(K) of this title).

(B) For purposes of subparagraph (A), the portion of the remaining assets which are attributable to employee contributions shall be an

amount equal to the product derived by multiplying—

(i) the market value of the total remaining

assets, by

(ii) a fraction—

(I) the numerator of which is the present

value of all portions of the accrued benefits

with respect to participants which are derived from participants’ mandatory contributions (referred to in subsection (a)(2) of

this section), and

(II) the denominator of which is the

present value of all benefits with respect to

which assets are allocated under paragraphs

(2) through (6) of subsection (a) of this section.

(C) For purposes of this paragraph, each person who is, as of the termination date—

(i) a participant under the plan, or

(ii) an individual who has received, during

the 3-year period ending with the termination

date, a distribution from the plan of such individual’s entire nonforfeitable benefit in the
§ 1344 TITLE 29—LABOR Page 530

form of a single sum distribution in accordance with section 1053(e) of this title or in the

form of irrevocable commitments purchased

by the plan from an insurer to provide such

nonforfeitable benefit,

shall be treated as a participant with respect to

the termination, if all or part of the nonforfeitable benefit with respect to such person is or

was attributable to participants’ mandatory

contributions (referred to in subsection (a)(2) of

this section).

(4) Nothing in this subsection shall be construed to limit the requirements of section

4980(d) of title 26 (as in effect immediately after

the enactment of the Omnibus Budget Reconciliation Act of 1990) or section 1104(d) of this title

with respect to any distribution of residual assets of a single-employer plan to the employer.

(Pub. L. 93–406, title IV, §4044, Sept. 2, 1974, 88

Stat. 1025; Pub. L. 96–364, title IV, §402(a)(7),

Sept. 26, 1980, 94 Stat. 1299; Pub. L. 99–272, title

XI, §11016(c)(12), (13), Apr. 7, 1986, 100 Stat. 274;

Pub. L. 100–203, title IX, §9311(a)(1), (b), (c), Dec.

22, 1987, 101 Stat. 1330–359, 1330–360; Pub. L.

101–239, title VII, §§7881(e)(3), 7891(a)(1),

7894(g)(2), Dec. 19, 1989, 103 Stat. 2440, 2445, 2451;

Pub. L. 101–508, title XII, §12002(b)(2)(B), Nov. 5,

1990, 104 Stat. 1388–566.)

REFERENCES IN TEXT

The enactment of the Omnibus Budget Reconciliation

Act of 1990, referred to in subsec. (d)(4), is the enactment of Pub. L. 101–508, which was approved Nov. 5,

1990.

AMENDMENTS

1990—Subsec. (d)(4). Pub. L. 101–508 added par. (4).

1989—Subsec. (a)(1). Pub. L. 101–239, §7894(g)(2), substituted ‘‘accrued’’ for ‘‘accured’’.

Subsec. (b)(4). 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. (d)(3). Pub. L. 101–239, §7881(e)(3), made technical correction to directory language of Pub. L.

100–203, §9311(b)(2), see 1987 Amendment note below.

1987—Subsec. (b)(4). Pub. L. 100–203, §9311(c), struck

out reference to section 405(a) of title 26.

Subsec. (d)(1). Pub. L. 100–203, §9311(b)(1), substituted

‘‘Subject to paragraph (3), any’’ for ‘‘Any’’.

Subsec. (d)(2). Pub. L. 100–203, §9311(a)(1)(B), added

par. (2). Former par. (2) redesignated (3).

Subsec. (d)(3). Pub. L. 100–203, §9311(b)(2), as amended

by Pub. L. 101–239, §7881(e)(3), added par. (3), and struck

out former par. (3) which read as follows: ‘‘Notwithstanding the provisions of paragraph (1), if any assets

of the plan attributable to employee contributions, remain after all liabilities of the plan to participants and

their beneficiaries have been satisfied, such assets shall

be equitably distributed to the employees who made

such contributions (or their beneficiaries) in accordance with their rate of contributions.’’

Pub. L. 100–203, §9311(a)(1)(A), redesignated former

par. (2) as (3).

1986—Subsec. (a). Pub. L. 99–272, §11016(c)(12), in provision preceding par. (1) struck out ‘‘defined benefit’’

after ‘‘single-employer’’.

Subsec. (a)(4)(A). Pub. L. 99–272, §11016(c)(13)(A), substituted ‘‘section 1322b(a)’’ for ‘‘section 1322(b)(5)’’.

Subsec. (a)(4)(B). Pub. L. 99–272, §11016(c)(13)(B), substituted ‘‘section 1322(b)(5)’’ for ‘‘section 1322(b)(6)’’.

1980—Subsec. (a). Pub. L. 96–364, §402(a)(7)(A), inserted ‘‘single-employer’’ before ‘‘defined benefit’’.

Subsec. (c). Pub. L. 96–364, §402(a)(7)(B), inserted ‘‘single-employer’’ before ‘‘plan occurring’’ wherever appearing.

Subsec. (d)(1). Pub. L. 96–364, §402(a)(7)(C), inserted

‘‘single-employer’’ after ‘‘assets of a’’.

EFFECTIVE DATE OF 1990 AMENDMENT

Amendment by Pub. L. 101–508 applicable to reversions occurring after Sept. 30, 1990, but not applicable

to any reversion after Sept. 30, 1990, if (1) in the case of

plans subject to subchapter III of this chapter, notice of

intent to terminate under such subchapter was provided to participants (or if no participants, to Pension

Benefit Guaranty Corporation) before Oct. 1, 1990, (2) in

the case of plans subject to subchapter I of this chapter

(and not subchapter III), notice of intent to reduce future accruals under section 1054(h) of this title was provided to participants in connection with termination

before Oct. 1, 1990, (3) in the case of plans not subject

to subchapter I or III of this chapter, a request for a determination letter with respect to termination was

filed with Secretary of the Treasury or Secretary’s

delegate before Oct. 1, 1990, or (4) in the case of plans

not subject to subchapter I or III of this chapter and

having only one participant, a resolution terminating

the plan was adopted by employer before Oct. 1, 1990,

see section 12003 of Pub. L. 101–508, set out as a note

under section 4980 of Title 26, Internal Revenue Code.

EFFECTIVE DATE OF 1989 AMENDMENT

Amendment by section 7881(e)(3) 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, Internal Revenue Code.

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(g)(2) 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.

EFFECTIVE DATE OF 1987 AMENDMENT

Section 9311(d) of Pub. L. 100–203, as amended by Pub.

L. 101–239, title VII, §7881(e)(2), Dec. 19, 1989, 103 Stat.

2439, provided that: ‘‘The amendments made by this

section [amending this section] shall apply with respect to—

‘‘(1) plan terminations under section 4041 of ERISA

[29 U.S.C. 1341] with respect to which notices of intent to terminate are provided under section

4041(a)(2) of ERISA after December 17, 1987, and

‘‘(2) plan terminations with respect to which proceedings are instituted by the Pension Benefit Guaranty Corporation under section 4042 of ERISA [29

U.S.C. 1342] after December 17, 1987.

Except as provided in subsection (a)(2) [set out below],

the amendments made by subsection (a) [amending this

section] shall apply to any provision of the plan or plan

amendment adopted after December 17, 1987.’’

EFFECTIVE DATE OF 1986 AMENDMENT

Amendment by Pub. L. 99–272 effective Jan. 1, 1986,

with certain exceptions, see section 11019 of Pub. L.

99–272, set out as a note under section 1341 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.

TRANSITIONAL RULE RELATING TO RESTRICTIONS ON

EMPLOYER REVERSIONS UPON PLAN TERMINATION

PURSUANT TO RECENTLY AMENDED PLANS

Section 9311(a)(2) of Pub. L. 100–203, as amended by

Pub. L. 101–239, title VII, §7881(e)(1), (4), Dec. 19, 1989,
Page 531 TITLE 29—LABOR § 1346

1See References in Text note below.

103 Stat. 2439, 2440, provided that: ‘‘The amendments

made by paragraph (1) [amending this section] shall

apply, in the case of plans which, as of December 17,

1987, have no provision relating to the distribution of

residual plan assets upon termination, only with respect to plan amendments providing for the distribution of plan assets to the employer which are adopted

after December 17, 1988.’’

SPECIAL TEMPORARY RULE FOR TERMINATION OF

SINGLE-EMPLOYER PLAN

For special temporary rule relating to requirements

to be met before the final distribution of assets in the

case of the termination of certain single-employer

plans with respect to which the amount payable to the

employer pursuant to subsec. (d) of this section exceeds

$1,000,000, see section 11008(d) of Pub. L. 99–272, set out

as a note under section 1341 of this title.

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1103, 1104, 1108,

1301, 1305, 1322, 1341, 1346 of this title; title 26 section

4975.

§ 1345. Recapture of payments

(a) Authorization to recover benefits

Except as provided in subsection (c) of this

section, the trustee is authorized to recover for

the benefit of a plan from a participant the recoverable amount (as defined in subsection (b) of

this section) of all payments from the plan to

him which commenced within the 3-year period

immediately preceding the time the plan is terminated.

(b) Recoverable amount

For purposes of subsection (a) of this section

the recoverable amount is the excess of the

amount determined under paragraph (1) over the

amount determined under paragraph (2).

(1) The amount determined under this paragraph is the sum of the amount of the actual

payments received by the participant within

the 3-year period.

(2) The amount determined under this paragraph is the sum of—

(A) the sum of the amount such participant would have received during each consecutive 12-month period within the 3 years

if the participant received the benefit in the

form described in paragraph (3),

(B) the sum for each of the consecutive 12-

month periods of the lesser of—

(i) the excess, if any, of $10,000 over the

benefit in the form described in paragraph

(3), or

(ii) the excess of the actual payment, if

any, over the benefit in the form described

in paragraph (3), and

(C) the present value at the time of termination of the participant’s future benefits

guaranteed under this subchapter as if the

benefits commenced in the form described in

paragraph (3).

(3) The form of benefit for purposes of this

subsection shall be the monthly benefit the

participant would have received during the

consecutive 12-month period, if he had elected

at the time of the first payment made during

the 3-year period, to receive his interest in the

plan as a monthly benefit in the form of a life

annuity commencing at the time of such first

payment.

(c) Payments made on or after death or disability

of participant; waiver of recovery in case of

hardship

(1) In the event of a distribution described in

section 1343(b)(7) 1 of this title the 3-year period

referred to in subsection (b) of this section shall

not end sooner than the date on which the corporation is notified of the distribution.

(2) The trustee shall not recover any payment

made from a plan after or on account of the

death of a participant, or to a participant who is

disabled (within the meaning of section 72(m)(7)

of title 26).

(3) The corporation is authorized to waive, in

whole or in part, the recovery of any amount

which the trustee is authorized to recover for

the benefit of a plan under this section in any

case in which it determines that substantial

economic hardship would result to the participant or his beneficiaries from whom such

amount is recoverable.

(Pub. L. 93–406, title IV, §4045, Sept. 2, 1974, 88

Stat. 1027; Pub. L. 101–239, title VII, §7891(a)(1),

Dec. 19, 1989, 103 Stat. 2445.)

REFERENCES IN TEXT

Section 1343(b)(7) of this title, referred to in subsec.

(c)(1), was redesignated section 1343(c)(7) of this title by

Pub. L. 103–465, title VII, §771(b), Dec. 8, 1994, 108 Stat.

5042.

AMENDMENTS

1989—Subsec. (c)(2). Pub. L. 101–239 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.

EFFECTIVE DATE OF 1989 AMENDMENT

Amendment by 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.

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 1342 of this title;

title 26 section 6511.

§ 1346. Reports to trustee

The corporation and the plan administrator of

any plan to be terminated under this subtitle

shall furnish to the trustee such information as

the corporation or the plan administrator has

and, to the extent practicable, can obtain regarding—

(1) the amount of benefits payable with respect to each participant under a plan to be

terminated,

(2) the amount of basic benefits guaranteed

under section 1322 or 1322a of this title which

are payable with respect to each participant in

the plan,

(3) the present value, as of the time of termination, of the aggregate amount of basic benefits payable under section 1322 or 1322a of this

title (determined without regard to section

1322b of this title),

(4) the fair market value of the assets of the

plan at the time of termination,