46642 Federal Register / Vol. 83, No. 179 / Friday, September 14, 2018 / Rules and Regulations 

Rate 

set 

For plans with a valuation date Immediate 

annuity rate 

(percent) 

Deferred annuities 

(percent) 

On or after Before i1 i2 i3 n1 n2

*******

300 .... 10–1–18 11–1–18 1.25 4.00 4.00 4.00 7 8 

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

300 is added at the end of the table to 

read as follows: 

Appendix C to Part 4022—Lump Sum 

Interest Rates For Private-Sector 

Payments 

* * * * * 

Rate 

set 

For plans with a valuation date Immediate 

annuity rate 

(percent) 

Deferred annuities 

(percent) 

On or after Before i1 i2 i3 n1 n2

*******

300 .... 10–1–18 11–1–18 1.25 4.00 4.00 4.00 7 8 

PART 4044—ALLOCATION OF 

ASSETS IN SINGLE-EMPLOYER 

PLANS 

■ 4. The authority citation for part 4044 

continues to read as follows: 

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

1341, 1344, 1362. 

■ 5. In appendix B to part 4044, an entry 

for ‘‘October–December 2018’’ is added 

at the end of the table to read as follows: 

Appendix B to Part 4044—Interest 

Rates Used to Value Benefits 

* * * * * 

For valuation dates occurring in the 

month— 

The values of it are: 

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

*******

October–December 2018 ......................... 0.0284 1–20 0.0276 >20 N/A N/A 

Issued in Washington, DC. 

Hilary Duke, 

Assistant General Counsel, Pension Benefit 

Guaranty Corporation. 

[FR Doc. 2018–19835 Filed 9–13–18; 8:45 am] 

BILLING CODE 7709–02–P 

PENSION BENEFIT GUARANTY 

CORPORATION 

29 CFR Part 4231 

RIN 1212–AB31 

Mergers and Transfers Between 

Multiemployer Plans 

AGENCY: Pension Benefit Guaranty 

Corporation. 

ACTION: Final rule. 

SUMMARY: PBGC is issuing a final rule 

amending its regulation on Mergers and 

Transfers Between Multiemployer Plans 

to implement procedures and 

information requirements for a request 

for a facilitated merger. This final rule 

also reorganizes and updates provisions 

in the existing regulation. 

DATES: This rule is effective October 15, 

2018. 

FOR FURTHER INFORMATION CONTACT: 

Theresa B. Anderson 

(anderson.theresa@pbgc.gov), Deputy 

Assistant General Counsel, Office of the 

General Counsel, Pension Benefit 

Guaranty Corporation, 1200 K Street 

NW, Washington DC 20005–4026; 202– 

326–4400, ext. 6353. (TTY users may 

call the Federal relay service toll-free at 

800–877–8339 and ask to be connected 

to 202–326–4400, extension 6353.) 

SUPPLEMENTARY INFORMATION: 

Executive Summary 

Purpose of the Regulatory Action 

This final rule is needed to implement 

statutory changes under the 

Multiemployer Pension Reform Act of 

2014 (MPRA) affecting mergers of 

multiemployer plans under title IV of 

the Employee Retirement Income 

Security Act of 1974 (ERISA) and to 

update PBGC’s existing regulatory 

requirements applicable to mergers and 

transfers between multiemployer plans. 

On June 6, 2016, PBGC published a 

proposed rule to amend its regulation 

on Mergers and Transfers Between 

Multiemployer Plans (81 FR 36229). In 

this final rule, PBGC adopts its 

proposed changes implementing MPRA, 

with some modifications in response to 

public comments, and some of its 

proposed changes updating and 

reorganizing the existing regulation. To 

allow more consideration of the 

concerns raised by the public 

comments, PBGC is not adopting its 

proposed changes to provisions of the 

existing regulation related to plan 

solvency. 

PBGC’s legal authority for this action 

is based on section 4002(b)(3) of ERISA, 

which authorizes PBGC to issue 

regulations to carry out the purposes of 

title IV of ERISA, and section 4231 of 

ERISA, which sets forth the statutory 

requirements for mergers and transfers 

between multiemployer plans. 

Major Provisions of the Regulatory 

Action 

This final rule makes one major and 

numerous minor changes to PBGC’s 

regulation on Mergers and Transfers 


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Federal Register / Vol. 83, No. 179 / Friday, September 14, 2018 / Rules and Regulations 46643 

1Section 122 of MPRA amended section 4233 of 

ERISA to provide a new statutory framework for 

partitions. PBGC issued an interim final rule under 

section 4233 of ERISA on June 19, 2015 (80 FR 

35220), and a final rule on December 23, 2015 (80 

FR 79687). 

2The Participant and Plan Sponsor Advocate 

position was created in 2012 by the Moving Ahead 

for Progress in the 21st Century Act (MAP–21), 

Public Law 112–141 (126 Stat. 405 (2012)). See 

section 4004 of ERISA for the rules governing this 

position. PBGC is not defining the Participant and 

Plan Sponsor Advocate’s consultative role in 

determining how the merger affects the interests of 

the participants and beneficiaries of the plans 

involved but believes that role should evolve based 

on experience in implementing this rule. 

Between Multiemployer Plans. The 

major change is the addition of 

procedures and information 

requirements for a voluntary request for 

a facilitated merger to implement 

MPRA’s changes to section 4231 of 

ERISA. This final rule also reorganizes 

and updates existing provisions of 

PBGC’s regulation. The changes to part 

4231 and the related public comments 

are discussed below. 

Background 

In General 

The Pension Benefit Guaranty 

Corporation (PBGC) is a Federal 

corporation created under title IV of 

Employee Retirement Income Security 

Act of 1974 (ERISA) to guarantee the 

payment of pension benefits under 

private-sector defined benefit pension 

plans. 

PBGC administers two insurance 

programs—one for single-employer 

pension plans, and one for 

multiemployer pension plans. This final 

rule applies only to the multiemployer 

program. 

Under section 4231(b) of ERISA, 

mergers of two or more multiemployer 

plans and transfers of assets and 

liabilities between multiemployer plans 

must comply with four requirements: 

(1) The plan sponsor must notify 

PBGC at least 120 days before the 

effective date of the merger or transfer; 

(2) No participant’s or beneficiary’s 

accrued benefit may be lower 

immediately after the effective date of 

the merger or transfer than the benefit 

immediately before that date; 

(3) The benefits of participants and 

beneficiaries must not be reasonably 

expected to be subject to suspension as 

a result of plan insolvency under 

section 4245 of ERISA; and 

(4) An actuarial valuation of the assets 

and liabilities of each of the affected 

plans must have been performed during 

the plan year preceding the effective 

date of the merger or transfer, based 

upon the most recent data available as 

of the day before the start of that plan 

year, or as prescribed by PBGC’s 

regulation. 

Section 4231(a) of ERISA grants PBGC 

authority to vary these requirements by 

regulation. Part 4231 of PBGC’s 

regulations implements and interprets 

these requirements by providing a 

procedure under which plan sponsors 

must notify PBGC of any merger or 

transfer between multiemployer plans 

and may request a compliance 

determination from PBGC. 

Under section 4261 of ERISA, PBGC 

provides financial assistance to 

multiemployer plans that are or will be 

insolvent under section 4245 of ERISA. 

Generally, a plan is insolvent when it is 

unable to pay benefits when due during 

the plan year. PBGC provides financial 

assistance to an insolvent plan in the 

form of a loan sufficient to pay its 

participants’ and beneficiaries’ 

guaranteed benefits. 

In a few cases before the enactment of 

MPRA, PBGC provided financial 

assistance (within the meaning of 

section 4261 of ERISA) to facilitate the 

merger of a soon-to-be insolvent 

multiemployer plan into a larger, more 

financially secure multiemployer plan. 

The financial assistance provided was a 

single payment that generally covered 

the cost of guaranteed benefits under the 

failing plan. In exchange, the larger, 

more financially secure plan assumed 

responsibility for paying the full plan 

benefits of the participants and 

beneficiaries in the failing plan with 

which it merged. As a result, the 

participants and beneficiaries in the 

failing plan received more than they 

would have in the absence of a 

facilitated merger from a financially 

secure plan that was more likely to 

remain ongoing. In addition, the 

financial assistance provided was 

generally less than PBGC’s valuation of 

the present value of future financial 

assistance to the failing plan. 

Multiemployer Pension Reform Act of 

2014 

MPRA was enacted in December 2014 

and contains several statutory reforms to 

assist financially troubled 

multiemployer plans and to improve the 

financial condition of PBGC’s 

multiemployer insurance program. 

Sections 121 and 122 of MPRA provide 

that PBGC may assist financially 

troubled multiemployer plans under 

certain conditions.1 This rule is 

necessitated by section 121 of MPRA. 

Section 121 of MPRA authorizes 

PBGC to facilitate multiemployer plan 

mergers. Facilitation includes various 

forms of technical assistance as well as 

financial assistance (within the meaning 

of section 4261) if certain statutory 

conditions are met. The decision to 

facilitate a merger is within PBGC’s 

discretion. Furthermore, before PBGC 

may exercise this discretion, it must 

first determine—in consultation with 

the Participant and Plan Sponsor 

Advocate 2—that the merger is in the 

interests of the participants and 

beneficiaries of at least one of the plans 

and is not reasonably expected to be 

adverse to the overall interests of the 

participants and beneficiaries of any of 

the plans. 

As added by MPRA, section 

4231(e)(1) of ERISA provides that, upon 

request by the plan sponsors, PBGC may 

take such actions as it deems 

appropriate to promote and facilitate the 

merger of two or more multiemployer 

plans. Facilitation may include training, 

technical assistance, mediation, 

communication with stakeholders, and 

support with related requests to other 

government agencies. 

Under section 4231(e)(2), PBGC may 

also provide financial assistance (within 

the meaning of section 4261) to facilitate 

a merger that it determines is necessary 

to enable one or more of the plans 

involved to avoid or postpone 

insolvency, if the following statutory 

conditions are satisfied: 

• Critical and declining status. Under 

section 4231(e)(2)(A) of ERISA, one or 

more of the plans involved in the 

merger must be in critical and declining 

status as defined in section 305(b)(6). 

Generally, a plan is in critical and 

declining status if it is in critical status 

under any subparagraph of section 

305(b)(2) and is projected to become 

insolvent within 15–20 years. 

• Long-term loss and plan solvency. 

Under section 4231(e)(2)(B), PBGC must 

reasonably expect that— 

• Financial assistance will reduce 

PBGC’s expected long-term loss with 

respect to the plans involved; and 

• Financial assistance is necessary for 

the merged plan to become or remain 

solvent. 

• Certification. Under section 

4231(e)(2)(C), PBGC must certify to 

Congress that its ability to meet existing 

financial assistance obligations to other 

plans will not be impaired by the 

financial assistance. 

• Source of funding. Under section 

4231(e)(2)(D), financial assistance must 

be paid exclusively from the PBGC fund 

for basic benefits guaranteed for 

multiemployer plans. 

In addition, section 4231(e)(2) 

requires that, not later than 14 days after 

the provision of financial assistance, 

PBGC provide notice of the financial 

assistance to the Committee on 


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46644 Federal Register / Vol. 83, No. 179 / Friday, September 14, 2018 / Rules and Regulations 

3The RFI and comments are accessible at http:// 

www.pbgc.gov/prac/pg/other/guidance/ 

multiemployer-notices.html. 

4The proposed rule and comments are accessible 

at https://www.pbgc.gov/prac/pg/other/guidance/ 

pending-proposed-rules. 

5PBGC also proposed to transpose § 4231.6(a)(1) 

and (2). 

6See section 304(b) of ERISA. 

Education and the Workforce of the 

House of Representatives; the 

Committee on Ways and Means of the 

House of Representatives; the 

Committee on Finance of the Senate; 

and the Committee on Health, 

Education, Labor, and Pensions of the 

Senate. 

RFI and Proposed Rule 

On February 18, 2015, PBGC 

published in the Federal Register (80 

FR 8712) a request for information (RFI) 

to solicit information on issues PBGC 

should consider for a proposed rule; 

PBGC received 20 comments in 

response to the RFI.3 In general, 

commenters expressed strong support 

for MPRA’s changes to the merger rules 

under section 4231 of ERISA, and urged 

PBGC to issue timely guidance to the 

public on the types of information, 

documents, data, and actuarial 

projections needed for a request to be 

complete. 

On June 6, 2016, PBGC published (81 

FR 36229) a proposed rule to amend 

PBGC’s regulation on Mergers and 

Transfers Between Multiemployer Plans 

(29 CFR part 4231) to implement 

MPRA’s changes to section 4231 of 

ERISA.4 PBGC also proposed to 

reorganize and update provisions of the 

existing regulation to reflect other 

changes in law. 

PBGC provided a 60-day comment 

period for the proposed rule and 

received 10 comments from: Employers 

contributing to multiemployer plans; a 

union; and associations representing 

multiemployer plans, pension 

practitioners, and employers 

contributing to multiemployer plans. 

With some modifications in response to 

public comments it received, PBGC 

adopts in this final rule its proposed 

changes implementing MPRA. PBGC 

also adopts some of its proposed 

changes updating and reorganizing the 

existing regulation. To allow more 

consideration of public comments, 

PBGC is not adopting its proposed 

changes to provisions of the existing 

regulation related to plan solvency. The 

comments, PBGC’s responses to the 

comments, and the changes adopted in 

this final rule are discussed below. 

Overview 

This final rule makes one major and 

numerous minor changes to PBGC’s 

regulation on Mergers and Transfers 

Between Multiemployer Plans. The 

major change is the addition of 

procedures and information 

requirements for a voluntary request for 

a facilitated merger under section 

4231(e) of ERISA, added by MPRA. This 

final rule also reorganizes and updates 

existing provisions of PBGC’s 

regulation. The changes and the related 

public comments are discussed below. 

Under this final rule, like the 

proposed, part 4231 provides guidance 

on: (1) The process for submitting a 

notice of merger or transfer, and a 

request for a compliance determination 

or facilitated merger; (2) the information 

required in such notices and requests; 

(3) the notification process for PBGC 

decisions on requests for facilitated 

mergers; and (4) the scope of PBGC’s 

jurisdiction over a merged plan that has 

received financial assistance. This final 

rule reorganizes part 4231 by dividing it 

into subparts. Subpart A contains the 

general merger and transfer rules. 

Subpart B provides guidance on 

procedures and information 

requirements for facilitated mergers, 

including those involving financial 

assistance. 

Section 4231 of ERISA and part 4231 

do not address the requirements of title 

I of ERISA (other than section 406(a) 

and (b)(2), in the event of a compliance 

determination). In most instances, 

implementation of the mergers and 

transfers addressed in this final rule, 

including facilitated mergers, will 

involve conduct that is also subject to 

the fiduciary responsibility standards of 

part 4 of subtitle B of title I of ERISA. 

Among other things, these standards, 

which are enforced by the Department 

of Labor (DOL), require that a fiduciary 

with respect to a plan act prudently, 

solely in the interest of the participants 

and beneficiaries, and for the exclusive 

purpose of providing benefits to 

participants and their beneficiaries and 

defraying reasonable expenses of 

administering the plan. The fact that a 

merger or transfer, including a 

facilitated merger, may satisfy title IV of 

ERISA and the regulations thereunder is 

not determinative of whether it satisfies 

the requirements of part 4 of subtitle B 

of title I of ERISA (other than section 

406(a) and (b)(2), in the event of a 

compliance determination). 

Discussion of Comments 

Plan Solvency Demonstrations 

Most comments to PBGC’s proposed 

rule addressed PBGC’s proposed 

changes to provisions in its existing 

regulation—in particular, changes to the 

safe harbor solvency tests and to which 

plans must satisfy the more rigorous test 

for ‘‘significantly affected plans.’’ 

PBGC’s regulation provides ‘‘plan 

solvency’’ tests under § 4231.6 that 

operate as regulatory safe harbors under 

section 4231(b)(3) of ERISA. Section 

4231(b)(3) of ERISA prohibits a merger 

or transfer unless ‘‘the benefits of 

participants and beneficiaries are not 

reasonably expected to be subject to 

suspension under section 4245.’’ 

Section 4245, in turn, provides that an 

insolvent plan must suspend benefits 

that are above the level guaranteed by 

PBGC to the extent the plan has 

insufficient assets to pay such benefits. 

PBGC’s experience suggests that its 

proposed changes to the ‘‘plan 

solvency’’ tests would result in a more 

reliable demonstration that benefits are 

not reasonably expected to be subject to 

suspension under section 4245 of ERISA 

because of insolvency. 

For a plan that is not a significantly 

affected plan, § 4231.6(a) provides two 

alternative ‘‘plan solvency’’ tests. PBGC 

proposed to change the test in 

§ 4231.6(a)(1) by increasing the multiple 

by which plan assets after the 

transaction must equal or exceed benefit 

payments for the plan year before the 

transaction from ‘‘five times the benefit 

payments’’ to ‘‘ten times the benefit 

payments.’’ PBGC also proposed to 

change the test in § 4231.6(a)(2) by 

increasing the number of years after the 

transaction for which assets, 

contributions, and investment earnings 

must cover expenses and benefit 

payments from ‘‘five plan years’’ to ‘‘ten 

plan years.’’ 5

PBGC proposed similar changes to the 

‘‘plan solvency’’ test in § 4231.6(b) for 

significantly affected plans. PBGC 

proposed to change the requirement in 

§ 4231.6(b)(1) that contributions satisfy 

the minimum funding requirement for 

the first ‘‘five plan years’’ after the 

transaction to the first ‘‘ten plan years.’’ 

PBGC also proposed to change the 

requirement in § 4231.6(b)(2) that assets 

cover the total benefit payments for the 

first ‘‘five plan years’’ after the 

transaction to ‘‘ten plan years.’’ Finally, 

PBGC proposed to change the 

amortization period in § 4231.6(b)(4)(i) 

from 25 to 15 years to reflect the 

amortization period generally applicable 

to changes in funding of multiemployer 

plans under PPA.6

PBGC also proposed to change which 

plans would be subject to the more 

rigorous test for significantly affected 

plans. PBGC proposed to amend the 

definition of ‘‘significantly affected 

plan’’ in § 4231.2 to include a plan in 

endangered or critical status, as defined 


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Federal Register / Vol. 83, No. 179 / Friday, September 14, 2018 / Rules and Regulations 46645 

7 ‘‘Endangered’’ and ‘‘critical’’ are plan categories 

established by the Pension Protection Act of 2006, 

Public Law 109–280 (120 Stat. 780 (2006) (PPA)). 

in section 305(b) of ERISA,7 that 

engages in a transfer (other than a de 

minimis transfer). In PBGC’s view, 

endangered and critical status plans 

generally present a greater risk of 

insolvency, and when these plans 

engage in non-de minimis transfers their 

risk of insolvency may increase. 

Eight commenters responded to 

PBGC’s proposed changes to the ‘‘plan 

solvency’’ tests and to the definition of 

a ‘‘significantly affected plan.’’ The 

commenters stated, in part, that PBGC’s 

proposed changes to the ‘‘plan 

solvency’’ tests would make mergers 

and transfers more difficult or prohibit 

them, would substantially expand 

burden for plan sponsors, and would 

restrict options for plans. For example, 

commenters stated that two critical and 

declining status plans engaging in a 

merger, resulting in a merged plan 

projected to become insolvent in more 

than five but less than 10 years, would 

likely satisfy the applicable ‘‘plan 

solvency’’ test in § 4231.6(a) of the 

existing regulation but not the proposed 

regulation. In addition, commenters 

stated that a critical status plan engaging 

in a transfer would be unlikely to satisfy 

PBGC’s proposed changes to the ‘‘plan 

solvency’’ test for a significantly 

affected plan—specifically, the 

requirement in § 4231.6(b)(1) that 

contributions satisfy the minimum 

funding requirement for 10 plan years 

after the transaction. 

These commenters also considered 

PBGC’s proposed change to the 

definition of a ‘‘significantly affected 

plan’’ unduly restrictive. Some 

commenters agreed with PBGC’s 

assessment of the heightened risk of 

insolvency associated with transfers by 

endangered and critical status plans. 

But commenters suggested that PBGC 

could address this risk directly by 

requiring that the transaction postpone 

the date when the plan is projected to 

become insolvent. 

In addition, these commenters stated 

that PBGC’s proposed change to the 

definition of a ‘‘significantly affected 

plan’’ would prohibit transfers 

permitted under PBGC’s existing 

regulation, even if the transfers would 

be beneficial for the plans and their 

participants. For example, a critical and 

declining status plan engaging in a nonde minimis transfer of accrued benefits 

and less than 15% of its assets would 

not be a significantly affected plan 

under PBGC’s existing regulation and 

would likely satisfy the applicable 

‘‘plan solvency’’ test in § 4231.6(a). But 

under PBGC’s proposed changes, a 

critical and declining status plan that 

engages in a non-de minimis transfer 

would be a significantly affected plan 

and would not satisfy the applicable 

‘‘plan solvency’’ test in § 4231.6(b). 

According to commenters, such a 

transfer from a critical and declining 

status plan could postpone the date the 

plan is projected to become insolvent 

and would effectively eliminate the risk 

of loss associated with the transferred 

benefits. 

Moreover, four commenters stated 

that PBGC should otherwise update the 

solvency test for significantly affected 

plans. According to one commenter, the 

solvency test in § 4231.6(b) of the 

existing regulation is very difficult to 

demonstrate for most significantly 

affected plans. These commenters 

agreed that the requirement in 

§ 4231.6(b)(3)—that contributions cover 

benefit payments in the first plan year 

after the transaction—could not be 

demonstrated for most mature plans, 

including plans that are well funded 

and projected to remain solvent 

indefinitely. 

Four commenters also requested 

guidance on how an enrolled actuary 

may ‘‘otherwise demonstrate’’ solvency. 

PBGC’s existing regulation provides that 

an enrolled actuary may ‘‘otherwise 

demonstrate’’ under § 4231.3(a)(3)(ii) 

that benefits under the plan are not 

reasonably expected to be subject to 

suspension under section 4245 of 

ERISA. This option is an alternative to 

the applicable ‘‘plan solvency’’ test 

under § 4231.6. Three of these 

commenters requested this guidance 

even if PBGC doesn’t adopt its proposed 

changes. PBGC is considering these 

comments and whether to propose 

guidance on how an enrolled actuary 

may ‘‘otherwise demonstrate’’ solvency. 

Seven commenters advocated for 

PBGC to change its existing regulation 

to provide a means for plans facing 

insolvency to satisfy the solvency 

requirement under section 4231(b)(3) of 

ERISA. According to commenters, PBGC 

could exercise its regulatory authority 

under section 4231(a) of ERISA to allow 

these plans to engage in transactions 

that may be beneficial. For example, as 

two commenters stated, a critical and 

declining status plan that cannot show 

that it will avoid insolvency with 

benefit suspensions under section 

305(e)(9) of ERISA may be able to make 

that showing after it engages in a 

transfer (or the transfer might lessen the 

amount of benefit suspensions needed 

to avoid insolvency). A critical and 

declining status plan (which, among 

other criteria, is projected to become 

insolvent) may not, however, satisfy the 

solvency requirement under section 

4231(b)(3) of ERISA and PBGC’s 

regulation for a transfer. Even so, as one 

commenter stated, most plans can 

satisfy the solvency test in PBGC’s 

regulation for plans that are not 

significantly affected—that assets equal 

or exceed five times the benefit 

payments—including many plans that 

are projected to be insolvent several 

years in the future. 

PBGC continues to consider these 

comments to its proposed changes and 

to provisions of the existing regulation 

interpreting the solvency requirement 

under section 4231(b)(3) of ERISA. To 

allow more consideration of the 

concerns raised by the public 

comments, PBGC will not adopt its 

proposed changes to the ‘‘plan 

solvency’’ tests under § 4231.6 and to 

the definition of a ‘‘significantly affected 

plan’’ under § 4231.2. PBGC may 

eventually re-propose changes to 

provisions in the existing regulation 

interpreting the solvency requirement 

under section 4231(b)(3) of ERISA in 

consideration of these comments. 

In addition, PBGC proposed to amend 

§ 4231.3 to provide that plan sponsors 

may engage in informal consultations 

with PBGC to discuss proposed mergers 

and transfers. Two commenters 

supported this change. One of the 

commenters stated that having access to 

PBGC for informal consultation will be 

extremely helpful and may result in a 

more efficient process. Thus, PBGC is 

adopting its proposed voluntary option 

for assistance in this final rule. 

Facilitated Mergers 

PBGC proposed new rules to 

implement the facilitated merger 

provisions added by MPRA. Two 

commenters requested examples of the 

types of facilitation, other than financial 

assistance, that PBGC might approve for 

a facilitated merger. Section 4231(e)(1) 

of ERISA provides examples of 

facilitation that PBGC may provide if it 

makes a determination, in consultation 

with the Participant and Plan Sponsor 

Advocate, about the interests of the 

participants and beneficiaries. One 

example of facilitation is 

‘‘communication with stakeholders.’’ In 

that regard, PBGC could, for example, 

participate in meetings or a town hall to 

discuss or answer questions about a 

potential merger with stakeholders. 

The other comments to the facilitated 

merger provisions in PBGC’s proposed 

rule addressed mergers facilitated with 

financial assistance (financial assistance 

mergers). In the preamble of the 

proposed rule, PBGC discussed the 

amount of financial assistance it 

generally expects to be available for 


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46646 Federal Register / Vol. 83, No. 179 / Friday, September 14, 2018 / Rules and Regulations 

8See sections 4231(e)(2)(C) and 4233(b)(4) of 

ERISA. PBGC may approve a partition of an eligible 

multiemployer plan under section 4233 of ERISA to 

provide for a transfer of liabilities from an original 

plan to a successor plan that is created by a 

partition order. PBGC provides financial assistance 

to pay for the guaranteed benefits under the 

successor plan. 

9Section 4231(e)(2)(B)(i) of ERISA. 

10See ‘‘Partition FAQs for Practitioners,’’ 

accessible at https://www.pbgc.gov/prac/pg/mpra/ 

partition-faqs-for-practitioners#impairment. 11See section 4231(e)(2) of ERISA. 

financial assistance mergers. PBGC 

stated that, while it imposes no 

additional limitations on the amount of 

financial assistance available, MPRA 

requires PBGC to certify that its ability 

to meet existing financial obligations to 

other plans will not be impaired by the 

financial assistance provided for a 

merger or partition.8 In addition, PBGC 

stated that it anticipates that the amount 

of financial assistance available to a 

critical and declining status plan for a 

financial assistance merger generally 

will not exceed the amount available to 

that plan for a partition (and could be 

less). This is because the funds available 

for financial assistance mergers under 

section 4231(e), partitions under section 

4233, and financial assistance to 

insolvent plans under 4261, are derived 

from the same source—the revolving 

fund for basic benefits guaranteed under 

section 4022A (the multiemployer 

revolving fund). Finally, although PBGC 

will decide the structure of financial 

assistance on a case-by-case basis, PBGC 

stated that it expects that in most cases 

the financial assistance it provides in a 

facilitated merger will be in the form of 

periodic payments. 

One commenter requested a more 

complete discussion of PBGC’s rationale 

for linking the amount of financial 

assistance available to a critical and 

declining status plan for a financial 

assistance merger to the amount 

available to that plan for a partition. The 

commenter noted that the financial 

assistance available to a plan for a 

partition ‘‘relates only to a portion of the 

plan’s liabilities.’’ The commenter 

suggested that it would be more 

appropriate to limit financial assistance 

to an amount generally less than the 

present value of the amount of future 

financial assistance to the critical and 

declining status plan. 

This comment overlooks a statutory 

condition on PBGC’s provision of 

financial assistance for a merger. While 

MPRA requires PBGC to reasonably 

expect that the financial assistance 

provided for a merger will reduce 

PBGC’s expected long-term loss with 

respect to the plans involved,9 MPRA 

also requires that the financial 

assistance provided for a merger not 

impair PBGC’s ability to meet existing 

financial obligations to other plans. 

Since publication of the proposed 

rule, PBGC has provided its 

interpretation of the statutory condition 

that the financial assistance provided 

for a merger will not impair PBGC’s 

ability to meet existing financial 

obligations to other plans.10 Looking at 

the statute as a whole, PBGC interprets 

this condition to require that the 

financial assistance provided for a 

merger not materially advance the date 

when PBGC’s multiemployer insurance 

fund is projected to become insolvent. 

This interpretation is based on PBGC’s 

current understanding of the universe of 

potentially eligible multiemployer 

plans, and the financial condition of the 

multiemployer insurance program, 

which can change over time. 

Although application of the nonimpairment condition may result in 

limiting financial assistance for a merger 

to the amount available for a partition, 

there may be situations where it does 

not. Therefore, PBGC will rely on the 

non-impairment test described above. 

PBGC’s analysis of the non-impairment 

condition is highly fact-specific. PBGC 

encourages plans to engage in informal 

consultation with PBGC to help 

determine how much financial 

assistance would be permitted by the 

statute. 

Under §§ 4231.12 through 4231.16, 

PBGC proposed information 

requirements for a request for a 

facilitated merger. PBGC requires the 

information proposed so that it could 

determine whether the statutory 

conditions are satisfied. One commenter 

stated that a plan would incur 

considerable cost to provide the 

information PBGC requires for a 

financial assistance merger ‘‘solely for 

purposes of showing PBGC that the 

financial assistance is no more than the 

cost of a hypothetical partition.’’ 

Financial assistance mergers, unlike 

partitions, seek assistance to continue to 

pay plan benefits. Accordingly, the 

commenter suggested that plans 

shouldn’t have to provide the same 

substantiation as with partition, unless 

the request is coupled with a request to 

the Department of the Treasury 

(Treasury) for approval of benefit 

suspensions. 

In consideration of this comment, 

PBGC will not adopt its proposed 

information requirements about the 

maximum benefit suspensions 

permissible under section 305(e)(9) of 

ERISA, which are required for partition. 

Thus, PBGC will not adopt its proposed 

requirement under § 4231.15 that each 

critical and declining status plan 

provide a projection of benefit 

disbursements reflecting maximum 

benefit suspensions. Also, PBGC will 

not adopt its proposed requirement 

under § 4231.16 to include with 

participant census data the monthly 

benefit reduced by the maximum benefit 

suspension. If the amount of financial 

assistance requested for a merger is at 

the margins of satisfying the statutory 

condition that PBGC’s ability to meet 

existing financial obligations to other 

plans will not be impaired, PBGC may 

request this information to help the 

critical and declining status plan(s) 

determine whether a partition is more 

likely to satisfy this statutory condition. 

Under § 4231.15, PBGC proposed 

guidance on the required demonstration 

that financial assistance is necessary for 

the merged plan to become or remain 

solvent. One commenter stated that 

requiring a merged plan to project 

solvency for a minimum of 20–30 years 

for a financial assistance merger is 

inconsistent with MPRA’s purpose. The 

commenter suggested that the 

demonstration should be that the plans 

will postpone insolvency with the 

financial assistance merger. While PBGC 

may exercise its discretion to approve a 

financial assistance merger that it 

determines necessary to allow one or 

more of the plans to avoid or postpone 

insolvency,11 section 4231(e)(2)(B)(ii) of 

ERISA requires that PBGC reasonably 

expect that the financial assistance is 

necessary for the merged plan to 

become or remain solvent. PBGC 

interprets the requirement that the 

merged plan become or remain solvent 

to mean that solvency must be 

demonstrated for the merged plan over 

a period, not that insolvency is 

postponed. 

PBGC proposed differentiated 

solvency demonstrations based on the 

financial health of the merged plan, 

allowing flexibility for healthier merged 

plans. Under § 4231.15, the type of 

projection required depends on whether 

the merged plan would be in critical 

status under section 305(b) of ERISA 

immediately after the merger (without 

taking the proposed financial assistance 

into account), as reasonably determined 

by the actuary. For example, if a critical 

and declining status plan merges into an 

endangered status plan, and the actuary 

anticipates that the merged plan would 

be in critical status under section 

305(b)(2) of ERISA immediately after the 

merger without financial assistance, 

then the merged plan would be in 

critical status for purposes of the 

projections. Alternatively, if the actuary 


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12The required projection under Treasury’s 

regulation is that ‘‘[t]he plan would not be projected 

Continued 

anticipates that the merged plan would 

not satisfy the criteria for critical status 

under section 305(b)(2) of ERISA 

immediately after the merger, then the 

merged plan would not be in critical 

status for purposes of the projections 

(even if the merged plan could elect to 

be in critical status). 

PBGC proposed that the plan’s 

enrolled actuary may use any reasonable 

estimation method for determining the 

expected funded status of the merged 

plan. The preamble of the proposed rule 

also suggested that the funded status of 

the merged plan could be determined 

based on the combined data and 

projections underlying the status 

certifications of each of the plans for the 

plan year immediately preceding the 

merger (including any selected updates 

in the data based on the experience of 

the plans in the immediately preceding 

plan year). PBGC requested comments 

on this issue. Two commenters 

responded in favor of each approach. 

One commenter suggested that PBGC 

should take care to allow the enrolled 

actuary to make reasonable adjustments 

to the data and projections from the 

most recent status certifications if the 

above alternative is included in the final 

regulations. PBGC agrees with these 

comments. Because the use of status 

certifications for the preceding year is 

intended to provide a simpler and costeffective alternative, PBGC will allow, 

but not require, reasonable adjustments 

to be made. Thus, § 4231.15 of this final 

rule adopts the option, supported by 

commenters, for the enrolled actuary to 

base the determination on the combined 

data and projections underlying the 

status certifications of each of the plans 

for the plan year immediately preceding 

the merger, including any selected 

updates in the data based on the 

experience of the plans in the 

immediately preceding plan year 

(reasonable adjustments are permitted 

but not required). 

To encourage the merger of critical 

and declining status plans into 

financially stable plans, PBGC proposed 

a solvency demonstration based on the 

circumstances and challenges specific to 

the merged plan. For a merged plan that 

would not be in critical status and for 

which solvency could be demonstrated 

for 20 years without taking financial 

assistance into account (or with less 

than the full amount taken into 

account), PBGC proposed a 

demonstration that financial assistance 

is necessary to mitigate the adverse 

effects of the merger on the merged 

plan’s ability to remain solvent. In the 

preamble of the proposed rule, PBGC 

provided as examples that the merger 

might have an impact on the plan’s 

funding requirements, increase the ratio 

of inactive to active participants, or 

decrease the funded percentage of the 

healthy plan in a manner that can be 

demonstrated to adversely affect the 

merged plan’s ability to remain solvent 

long-term. PBGC requested comments 

on this issue. 

One commenter stated that, ‘‘the 

solvency measure should be that the 

merger does not increase the risk of 

insolvency for the merged plan.’’ If the 

merger would have no effect on the 

merged plan’s ability to remain solvent, 

financial assistance would not be 

necessary for the merged plan to become 

or remain solvent as required by the 

statute. 

Two commenters were concerned that 

a financially stable plan for which 

solvency is projected after the merger 

(without taking financial assistance into 

account) would not be able to show 

adverse effects of the merger on the 

merged plan’s ability to remain solvent. 

One of these commenters provided the 

example of a financially stable plan that 

would have a lower funded percentage 

after the merger but for which solvency 

would still be projected. The commenter 

stated that the financially stable plan 

would likely not agree to that merger 

without financial assistance, because 

the merger would increase the plan’s 

risk of insolvency if there were adverse 

plan experience in the future. The 

commenters suggested that the 

demonstration focus on the merger’s 

impact on metrics such as the 

financially stable plan’s ability to satisfy 

funding requirements or its funded 

percentage. The commenters also 

suggested permitting consideration of 

unfavorable future experience. One of 

these commenters suggested that PBGC 

provide that the demonstration may be 

based on stress testing over a long-term 

period (which could consider 

unfavorable future experience). 

To demonstrate that financial 

assistance is necessary for the merged 

plan to become or remain solvent, the 

enrolled actuary must show that the 

merger has adverse effects on the 

merged plan’s ability to remain solvent. 

If no adverse effect on solvency can be 

demonstrated, financial assistance is not 

necessary. In response to the above 

comments, PBGC will allow this 

demonstration to consider unfavorable 

future experience. Thus, PBGC will add 

in this final rule that the demonstration 

that financial assistance is necessary to 

mitigate the adverse effects of the 

merger on the merged plan’s ability to 

remain solvent may be based on stress 

testing over a long-term period (and may 

reflect reasonable future adverse 

experience), using a reasonable method 

in accordance with generally accepted 

actuarial standards. 

For example, one possible 

demonstration that financial assistance 

is necessary to mitigate the adverse 

effects of the merger on the merged 

plan’s ability to remain solvent could be 

based on a projection of the merged 

plan’s insolvency within 30 years using 

an investment return assumption no less 

than one-half of a standard deviation 

less than the best estimate assumption, 

and using a current set of capital market 

assumptions from a recognized 

investment consultant and the plans’ 

current asset allocation. 

This demonstration may also be based 

on stochastic modeling. For example, 

while not a threshold, a possible 

demonstration may be based on 

stochastic modeling showing that the 

merged plan’s probability of insolvency 

within 30 years of the merger exceeds 

65% without the requested financial 

assistance. 

Interaction Between Benefit Suspension 

and Merger 

Plans in critical and declining status 

may suspend benefits under section 

305(e)(9) of ERISA under certain 

conditions. Treasury has interpretative 

jurisdiction over the subject matter in 

section 305. In the preamble of the 

proposed rule, PBGC suggested that 

plan sponsors must carefully consider 

how the various requirements under 

sections 305(e)(9) and 4231 would 

apply. 

For example, a critical and declining 

status plan could merge into a large, 

well-funded multiemployer plan. In 

such a case, to the extent any of the 

benefits previously provided by the 

critical and declining status plan had 

been subject to suspension under 

section 305(e)(9) or become subject to 

suspension concurrently with the 

merger, the plan sponsor of the merged 

plan would become responsible for 

making the annual determinations 

necessary for continued benefit 

suspensions under section 305(e)(9) and 

the implementing regulations. Under 

section 305(e)(9)(C)(ii) of ERISA, 

benefits may continue to be suspended 

for a plan year only if the plan sponsor 

determines, in a written record to be 

maintained throughout the period of the 

benefit suspension, that although all 

reasonable measures to avoid 

insolvency have been and continue to 

be taken, the plan is still projected to 

become insolvent unless benefits are 

suspended.12 PBGC suggested that, 


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to avoid insolvency . . . if no suspension of 

benefits were applied under the plan.’’ 26 CFR 

1.432(e)(9)–1(c)(4)(i)(B). 

13PBGC proposed to remove the reference in 

§ 4231.1(a) of the existing regulation to the OMB 

control number 1212–0022 under which 

information collection in part 4231 has been 

approved. PBGC also proposed to reorganize 

§ 4231.1 and to refer in paragraph (b) of this section 

to the additional requirements and procedures in 

subpart B of part 4231 for a request for a facilitated 

merger. 

14This final rule, like the proposed, also changes 

§ 4231.2 of the existing regulation to add the 

following to the terms defined in § 4001.2 of PBGC’s 

regulations: Annuity, guaranteed benefit, normal 

retirement age, and plan sponsor. In addition, this 

final rule, like the proposed, adds in § 4231.2 

definitions for the following terms: Advocate, 

critical and declining status, critical status, 

facilitated merger, financial assistance, financial 

assistance merger, insolvent, and merged plan. 

Furthermore, this final rule, like the proposed, adds 

in § 4231.2 the terms ‘‘de minimis merger,’’ and ‘‘de 

minimis transfer’’ and refers to their existing 

definitions in § 4231.7(b) and (c), respectively. 

Finally, this final rule, like the proposed, moves the 

definition of ‘‘certified change of collective 

bargaining representative’’ from § 4231.2 of the 

existing regulation to § 4231.3(c). 

15This final rule also incorporates by reference in 

§ 4231.3(a)(1) the waiver to the preservation of 

accrued benefits added under a new § 4231.4(b) in 

the event of a contemporaneous suspension of 

benefits under section 305(e)(9) of ERISA. In 

addition, this final rule, like the proposed, moves 

the definition of ‘‘certified change of collective 

bargaining representative’’ from § 4231.2 of the 

existing regulation to § 4231.3(c). Finally, this final 

rule, like the proposed, changes § 4231.3 to conform 

references to other sections of part 4231 to the 

reorganization of this final rule. 16See section 304(c)(7) of ERISA. 

absent these determinations, restoration 

of the suspended benefits would be 

required. 

Four commenters stated that it is 

contrary to MPRA’s remedial intent to 

restore suspended benefits following a 

merger if the merged plan could not 

demonstrate that continued suspensions 

are required to avoid insolvency. The 

commenters urged PBGC to work with 

Treasury to issue guidance so that the 

statute is not interpreted to require 

restoration under these circumstances. 

In addition, the commenters stated that 

critical and declining status plans that 

suspend benefits would be significantly 

more likely to attract merger partners, 

who may view benefit suspensions as a 

necessary condition to merger. 

Commenters suggested that, for 

purposes of the annual determination 

required for suspensions, Treasury 

could permit a separate accounting of 

assets and liabilities attributable to the 

‘‘plan’’ that suspended benefits before 

the merger. The suspended benefits 

would be restored only if the annual 

determination couldn’t be made for this 

notional plan. These comments are 

beyond the scope of this final rule and 

should be addressed to Treasury, which 

has jurisdiction over section 305 of 

ERISA. 

One of these commenters stated that 

section 4231(b)(2) of ERISA isn’t 

implicated if the benefit suspensions 

under section 305(e)(9) of ERISA occur 

before a merger. Section 4231(b)(2) of 

ERISA requires that no accrued benefit 

is lower immediately after a merger or 

transfer than the benefit immediately 

before the transaction. This requirement 

would, however, prohibit a merger or 

transfer that is contemporaneous with 

benefit suspensions. To allow this 

transaction, PBGC adds in this final rule 

under § 4231.4 that it may waive this 

requirement to the extent the accrued 

benefit is suspended under section 

305(e)(9) of ERISA contemporaneously 

with a merger or transfer. 

Section-by-Section Discussion 

Subpart A—General Provisions 

Section 4231.1 

Section 4231.1 describes the purpose 

and scope of part 4231, which is to 

prescribe notice requirements for 

mergers and transfers of assets or 

liabilities among multiemployer plans 

and to interpret other requirements 

under section 4231 of ERISA. In this 

final rule, PBGC adopts the minor 

changes it proposed to § 4231.1.13

Section 4231.2 

Section 4231.2 defines terms for 

purposes of part 4231. In this final rule, 

like the proposed, PBGC amends the 

existing regulation by adding new 

definitions, and by moving existing 

definitions elsewhere in the regulation 

to § 4231.2. For example, this final rule 

moves the existing definition of 

‘‘effective date’’ from § 4231.8(a) to 

§ 4231.2.14 In response to comments and 

pending further consideration, PBGC 

will not adopt its proposed change to 

the existing definition of a ‘‘significantly 

affected plan’’ (see above, ‘‘Discussion 

of Comments’’). 

Section 4231.3 

Section 4231.3 provides guidance on 

the statutory requirements for mergers 

and transfers. PBGC proposed to clearly 

provide that plan sponsors may engage 

in informal consultations with PBGC to 

discuss proposed mergers and transfers. 

Two commenters supported this change. 

PBGC agrees with those comments. 

Thus, PBGC is adopting its proposed 

voluntary option for assistance in this 

final rule.15

Section 4231.4 

PBGC did not propose any changes to 

§ 4231.4 of the existing regulation. That 

section provides guidance on the 

requirement under section 4231(b)(2) of 

ERISA that no participant’s or 

beneficiary’s accrued benefit may be 

lower immediately after the effective 

date of a merger or transfer than the 

benefit immediately before that date. 

In this final rule, PBGC maintains this 

existing guidance without change in a 

new paragraph (a). To allow a merger or 

transfer that is coupled with benefit 

suspensions under section 305(e)(9) of 

ERISA, PBGC provides in a new 

paragraph (b) that it may waive the 

requirement under section 4231(b)(2) of 

ERISA to the extent the participant’s or 

beneficiary’s accrued benefit is 

suspended under section 305(e)(9) of 

ERISA contemporaneously with a 

merger or transfer (see above, 

‘‘Discussion of Comments’’). Section 

4231.4(b) also provides that, if PBGC 

grants this waiver, the plan provision 

described under § 4231.4(a) may 

exclude accrued benefits only to the 

extent those benefits are suspended 

under section 305(e)(9) of ERISA 

contemporaneously with the merger or 

transfer. 

Section 4231.5 

Section 4231.5 provides guidance on 

the actuarial valuation requirement 

under section 4231(b)(4) of ERISA. 

Under § 4231.5(a) of the existing 

regulation, a plan that is not a 

significantly affected plan (or that is a 

significantly affected plan only because 

the transaction involves a plan 

terminated by mass withdrawal under 

section 4041A(a)(2) of ERISA) satisfies 

this requirement if an actuarial 

valuation has been performed for the 

plan based on the plan’s assets and 

liabilities as of a date not more than 

three years before the date on which the 

notice of the merger or transfer is filed. 

Under § 4231.5(b) of the existing 

regulation, a significantly affected plan 

(other than a plan that is a significantly 

affected plan only because the 

transaction involves a plan terminated 

by mass withdrawal) must have an 

actuarial valuation performed for the 

plan year preceding the proposed 

effective date of the merger or transfer. 

Multiemployer plans are now 

generally required to perform actuarial 

valuations not less frequently than once 

every year.16 Thus, PBGC proposed to 

amend § 4231.5 to require, as section 

4231(b)(4) of ERISA states, that each 

plan involved in a merger or transfer 

have an actuarial valuation performed 

for the plan year preceding the proposed 

effective date of the merger or transfer. 

PBGC also proposed to provide that if 


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17This final rule, like the proposed, also 

reorganizes § 4231.5 of the existing regulation by 

removing its division into paragraphs (a) and (b). 

18For example, PBGC proposed to update a 

statutory reference in § 4231.6(b)(1) of the existing 

regulation. 

19PBGC also proposed to clarify that a request for 

a compliance determination or facilitated merger 

must be filed within the timing specified in 

§ 4231.8(a) for a notice. In addition, PBGC proposed 

to clarify that a request for a compliance 

determination or facilitated merger, like a notice, is 

not considered filed until all the required 

information is submitted. PBGC also proposed to 

clarify that the waiver provided in § 4231.8(f) of the 

existing regulation relates to the timing 

requirements in § 4231.8(a). Furthermore, PBGC 

proposed to move the definition of ‘‘effective date’’ 

from § 4231.8(a)(1) of the existing regulation to 

§ 4231.2, and to move the information requirements 

contained in § 4231.8(e) of the existing regulation 

to § 4231.9. Finally, PBGC proposed to reorganize 

§ 4231.8 of the existing regulation, to conform 

references to other sections of part 4231 to the 

reorganization of this final rule, and to add that the 

guidance on who must file is applicable to a request 

for a facilitated merger. 

20PBGC also proposed to add that the statement 

required in § 4231.8(e)(5)(i) of the existing 

regulation about the plan’s satisfaction of the 

applicable solvency test must include the 

supporting data, calculations, assumptions, and 

methods. 

21PBGC proposed to move these requirements 

from § 4231.9 of the existing regulation, except 

certain information requirements. 

22PBGC also proposed to delete the ‘‘place of 

filing’’ provision under § 4231.9(a)(1) of the existing 

regulation. Section 4231.8(e) of this final rule, like 

the proposed, provides guidance about where to 

file. In addition, PBGC proposed to delete certain 

information requirements under § 4231.9(b) of the 

existing regulation because those requirements are 

contained in § 4231.9(e) of this final rule. Finally, 

PBGC proposed to conform references to other 

sections of part 4231 to the reorganization of this 

final rule. 

23PBGC proposed to move these requirements 

from § 4231.10 of the existing regulation. 

the valuation is not complete as of the 

date the plan sponsors file the notice of 

merger or transfer, the plan sponsors 

may provide the most recent actuarial 

valuation performed for the plans with 

the notice, and the required valuations 

when complete. PBGC received no 

comments on these proposed changes 

and adopts them in this final rule.17

Section 4231.6 

Section 4231.6 provides guidance on 

‘‘plan solvency’’ tests that operate as 

safe harbors under section 4231(b)(3) of 

ERISA. PBGC proposed changes to the 

tests in § 4231.6(a) and (b) (see above, 

‘‘Discussion of Comments’’). Pending 

further consideration, PBGC is not 

adopting in this final rule the major 

changes it proposed to the tests in 

§ 4231.6(a) and (b) (see above, 

‘‘Discussion of Comments’’). In this final 

rule, PBGC is adopting the minor 

changes it proposed to the tests in 

§ 4231.6(a) and (b); PBGC received no 

comments about these minor changes.18

Section 4231.6(c) provides rules for 

determinations about the requirements 

set forth under § 4231.6. PBGC proposed 

to amend § 4231.6(c)(1) by requiring 

withdrawal liability payments to be 

listed separately from contributions. 

PBGC received no comments on its 

proposed change to § 4231.6(c)(1) and 

adopts this change in this final rule. 

Section 4231.7 

PBGC did not propose any changes to 

§ 4231.7 of the existing regulation. That 

section continues to set forth special 

rules for de minimis mergers and 

transfers. 

Section 4231.8 

Section 4231.8 provides guidance on 

the requirement under section 

4231(b)(1) of ERISA that the plan 

sponsor notify PBGC of a merger or 

transfer, and on requests for compliance 

determinations under section 4231(c). In 

general, a notice of a merger or transfer 

must be filed well in advance of the 

transaction’s effective date (or not less 

than 45 days in advance in the case of 

a merger for which a compliance 

determination is not requested). Section 

4231.8(f) permits PBGC to waive the 

timing of the notice requirements under 

certain circumstances. 

In the case of a facilitated merger, 

PBGC proposed to amend § 4231.8(a) to 

require that notice of a proposed 

facilitated merger be filed not less than 

270 days before the proposed effective 

date of a facilitated merger. PBGC 

received no comments on its proposed 

changes to § 4231.8 and adopts them in 

this final rule.19

Section 4231.9 

Section 4231.9 of this final rule, like 

the proposed, generally retains the 

information requirements under 

§ 4231.8(e) of the existing regulation, 

with minor modifications. For example, 

the de minimis exception under 

§ 4231.8(e)(6) of the existing regulation 

does not apply to a request for a 

financial assistance merger. PBGC 

received no comments on its proposed 

changes to § 4231.9 and adopts them in 

this final rule.20

Section 4231.10 

Section 4231.10 of this final rule, like 

the proposed, describes the additional 

information required for a request for a 

compliance determination.21 In addition 

to some minor changes, PBGC proposed 

to amend this section to make clear that 

a request for a compliance 

determination must be filed 

contemporaneously with a notice of 

merger or transfer.22 PBGC received no 

comments on its proposed changes to 

§ 4231.10 and adopts them in this final 

rule. 

Section 4231.11 

Section 4231.11 of this final rule, like 

the proposed, describes the 

requirements for actuarial calculations 

and assumptions.23 PBGC proposed to 

conform these requirements to section 

304(c)(3) of ERISA, to specify that 

calculations must be performed by an 

enrolled actuary, and to expand the 

bases upon which PBGC may require 

updated calculations. PBGC received no 

comments on its proposed changes 

under § 4231.11 and adopts them in this 

final rule. 

Subpart B—Additional Rules for 

Facilitated Mergers 

Section 4231.12 

Section 4231.12 of this final rule, like 

the proposed, provides general guidance 

on a request for a facilitated merger. A 

request for a facilitated merger, 

including a financial assistance merger, 

must satisfy the requirements of section 

4231(b) of ERISA and the general 

provisions of subpart A of the 

regulation, in addition to section 

4231(e) of ERISA and the additional 

rules for facilitated mergers of subpart 

B. The procedures set forth in this final 

rule represent the exclusive means by 

which PBGC will approve a request for 

a facilitated merger, including a 

financial assistance merger. Any 

financial assistance provided by PBGC 

will be limited by section 4261 of ERISA 

and based on the guaranteed benefits of 

the plans involved in the merger that are 

in critical and declining status. 

Section 4231.12 of this final rule, like 

the proposed, states that a request must 

include the information required for a 

notice of merger or transfer (§ 4231.9) 

and request for compliance 

determination (§ 4231.10), as well as a 

detailed narrative description with 

supporting documentation 

demonstrating that the proposed merger 

is in the interests of participants and 

beneficiaries of at least one of the plans, 

and is not reasonably expected to be 

adverse to the overall interests of the 

participants and beneficiaries of any of 

the plans. The narrative description and 

supporting documentation should 

reflect, among other things, any material 

efficiencies expected as a result of the 

merger and the basis for those 

expectations. 

In addition, a request for a financial 

assistance merger must contain 

information about the plans (§ 4231.13), 

information about the proposed 

financial assistance merger (§ 4231.14), 

actuarial and financial information 


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46650 Federal Register / Vol. 83, No. 179 / Friday, September 14, 2018 / Rules and Regulations 

(§ 4231.15), and participant census data 

(§ 4231.16). This final rule, like the 

proposed, provides that PBGC may 

require additional information to 

determine whether the requirements of 

section 4231(e) of ERISA are met or to 

enable it to facilitate the merger. As 

with the proposed, this final rule also 

imposes an affirmative obligation on 

plan sponsors to promptly notify PBGC 

in writing if a plan sponsor discovers 

that any material fact or representation 

contained in or relating to the request 

for a facilitated merger, or in any 

supporting documents, is no longer 

accurate, or has been omitted. 

PBGC received no comments on its 

proposed § 4231.12 and adopts it in this 

final rule. 

Section 4231.13 

Section 4231.13 of this final rule, like 

the proposed, provides guidance on the 

various categories of plan-related 

information required for a request for a 

financial assistance merger, such as 

trust agreements, plan documents, 

summary plan descriptions, summaries 

of material modifications, and 

rehabilitation or funding improvement 

plans. PBGC expects that most, if not 

all, of the information required under 

this section should be readily available 

and accessible by plan sponsors. PBGC 

received no comments on its proposed 

§ 4231.13 and adopts it in this final rule. 

Section 4231.14 

Section 4231.14 of this final rule, like 

the proposed, sets forth information 

requirements relating to the proposed 

structure of a financial assistance 

merger. The information required 

includes a detailed description of the 

financial assistance merger, including 

any larger integrated transaction of 

which the proposed merger is a part 

(including, but not limited to, an 

application for suspension of benefits 

under section 305(e)(9)(G) of ERISA), 

and the estimated total amount of 

financial assistance the plan sponsors 

request for each year. It also requires a 

narrative description of the events that 

led to the sponsors’ decision to request 

a financial assistance merger, and the 

significant risks and assumptions 

relating to the proposed financial 

assistance merger and the projections 

provided. PBGC received no comments 

on its proposed § 4231.14 and adopts it 

in this final rule. 

Section 4231.15 

Section 4231.15 of this final rule, like 

the proposed, identifies the actuarial 

and financial information required for a 

request for a financial assistance merger. 

Section 4231.15(a) and (b) of this final 

rule, like the proposed, relate to plan 

actuarial reports and actuarial 

certifications, which should ordinarily 

be within the possession of the plan 

sponsors or plan actuaries. Section 

4231.15(c)–(e) of this final rule, like the 

proposed, requires the submission of 

certain actuarial and financial 

information specific to the proposed 

financial assistance merger, which are 

necessary for PBGC to evaluate the 

solvency requirements under section 

4231(e)(2) of ERISA. PBGC adopts its 

proposed § 4231.15 in this final rule 

with the modifications discussed below, 

which respond to comments it received 

(see above, ‘‘Discussion of Comments’’). 

Section 4231.15 of this final rule, like 

the proposed, provides that each critical 

and declining status plan must 

demonstrate that its projected date of 

insolvency without the merger is sooner 

than the projected date of insolvency of 

the merged plan. The plan(s) may take 

the proposed financial assistance into 

account in this demonstration. 

Section 4231.15 of this final rule, like 

the proposed, also provides guidance on 

the required demonstration that 

financial assistance is necessary for the 

merged plan to become or remain 

solvent. The type of projection required 

depends on whether the merged plan 

would be in critical status under section 

305(b) of ERISA immediately following 

the merger (without taking the proposed 

financial assistance into account), as 

reasonably determined by the actuary. 

This final rule adds the option, 

supported by commenters, for the 

enrolled actuary to base the 

determination of whether the merged 

plan would be in critical status on the 

combined data and projections 

underlying the status certifications of 

each of the plans for the plan year 

immediately preceding the merger, 

including any selected updates in the 

data based on the experience of the 

plans in the immediately preceding plan 

year (reasonable adjustments are 

permitted but not required) (see above, 

‘‘Discussion of Comments’’). This final 

rule also clarifies that the statement of 

whether the merged plan would be in 

critical status must be certified by an 

enrolled actuary. 

Under § 4231.15 of this final rule, like 

the proposed, if the merged plan would 

be in critical status under section 305(b) 

of ERISA (without taking the proposed 

financial assistance into account), the 

plans must demonstrate that financial 

assistance is necessary for the merged 

plan to ‘‘avoid insolvency’’ under 

section 305(e)(9)(D)(iv) of ERISA and 

the regulations thereunder (excluding 

stochastic projections). This solvency 

standard is consistent with the 

‘‘emergence’’ test under section 

305(e)(4)(B) of ERISA, which requires a 

plan in critical status to show that it is 

not projected to become insolvent for 

any of the 30 succeeding plan years. 

If the merged plan would not be in 

critical status under section 305(b) of 

ERISA (without taking the proposed 

financial assistance into account), under 

§ 4231.15 of this final rule, like the 

proposed, the plans must demonstrate 

that the merged plan is not projected to 

become insolvent during the 20 years 

beginning after the proposed effective 

date of the merger with the proposed 

financial assistance. In this final rule, 

like the proposed, if this demonstration 

can be satisfied without taking the 

proposed financial assistance into 

account, or if the amount of financial 

assistance requested exceeds the 

amount that satisfies this 

demonstration, the plan sponsors must 

demonstrate that financial assistance is 

necessary to mitigate the adverse effects 

of the merger on the merged plan’s 

ability to remain solvent. In response to 

comments, PBGC adds in this final rule 

that the demonstration that financial 

assistance is necessary to mitigate the 

adverse effects of the merger on the 

merged plan’s ability to remain solvent 

may be based on stress testing over a 

long-term period (and may reflect 

reasonable future adverse experience), 

using a reasonable method in 

accordance with generally accepted 

actuarial standards (see above, 

‘‘Discussion of Comments’’). 

In response to a comment, PBGC will 

not adopt in this final rule its proposed 

requirement that each critical and 

declining status plan provide a 

projection of benefit disbursements 

reflecting maximum benefit suspensions 

(see above, ‘‘Discussion of Comments’’). 

Finally, to provide a cost-effective 

alternative, PBGC adds the option to 

estimate benefit disbursements to satisfy 

the requirement that each critical and 

declining status plan provide a 

projection of benefit disbursements 

reflecting reduced benefit 

disbursements at the PBGC-guarantee 

level. This final rule also clarifies that 

the projection of benefit disbursements 

must include the supporting data, 

calculations, assumptions, and, if 

applicable, a description of estimates 

used. 

Section 4231.16 

Under § 4231.16, PBGC proposed that 

a request for a financial assistance 

merger include certain types of 

participant census data. In response to 

a comment, PBGC will not adopt in this 

final rule its proposed requirement that 

this participant census data include the 


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24As noted above, section 4231(e)(1) of ERISA 

requires a determination by PBGC in consultation 

with the Participant and Plan Sponsor Advocate to 

approve a facilitated merger. Section 4231(e)(2) of 

ERISA sets forth four additional statutory 

conditions that must be satisfied before PBGC may 

approve a request for a financial assistance merger. 

PBGC will review each request for a facilitated 

merger, including a financial assistance merger, on 

a case-by-case basis in accordance with the 

statutory criteria in section 4231(e) of ERISA. 

25See sections 4231(e)(2)(C) and 4233(b)(4) of 

ERISA. Under section 4231(e)(2) of ERISA, PBGC 

cannot provide financial assistance to facilitate a 

merger unless its expected long-term loss with 

respect to the plans involved will be reduced, and 

its ability to meet existing financial obligations to 

other plans will not be impaired by the financial 

assistance. 

monthly benefit reduced by the 

maximum benefit suspension 

permissible under section 305(e)(9) of 

ERISA (see above, ‘‘Discussion of 

Comments’’). Otherwise, in this final 

rule, PBGC adopts its proposed 

§ 4231.16 with the clarification that the 

projections for which the census data 

must be provided include the projection 

in § 4231.15(d). 

Section 4231.17 

Section 4231.17 of this final rule, like 

the proposed, describes how PBGC will 

notify a plan sponsor(s) of PBGC’s 

decision on a request for a facilitated 

merger. PBGC will approve or deny a 

request for a facilitated merger in 

writing and in accordance with the 

standards set forth in section 4231(e) of 

ERISA.24 If PBGC denies a request, 

PBGC’s written decision will state the 

reason(s) for the denial. If PBGC 

approves a request for a financial 

assistance merger, PBGC will provide a 

financial assistance agreement detailing 

the total amount and terms of the 

financial assistance as soon as 

practicable after notifying the plan 

sponsor(s) in writing of its approval. 

The decision to approve or deny a 

request for facilitated merger under 

section 4231(e) of ERISA is within 

PBGC’s discretion and constitutes a 

final agency action not subject to 

PBGC’s rules for reconsideration or 

administrative appeal. PBGC received 

no comments on its proposed § 4231.17 

and adopts it in this final rule. 

Section 4231.18 

Section 4231.18 of this final rule, like 

the proposed, describes PBGC’s 

jurisdiction over the merged plan 

resulting from a financial assistance 

merger. PBGC has determined that 

maintaining oversight is necessary to 

ensure compliance with financial 

assistance agreements, and proper 

stewardship of PBGC financial 

assistance. Based on the foregoing, 

§ 4231.18(a) provides that PBGC will 

continue to have jurisdiction over the 

merged plan resulting from a financial 

assistance merger to carry out the 

purposes, terms, and conditions of the 

financial assistance merger, sections 

4231 and 4261 of ERISA, and the 

regulations thereunder. Section 

4231.18(b) states that PBGC may, upon 

notice to the plan sponsor, make 

changes to the financial assistance 

agreement(s) in response to changed 

circumstances consistent with sections 

4231 and 4261 of ERISA and the 

regulations thereunder. PBGC received 

no comments on its proposed § 4231.18 

and adopts it in this final rule. 

Cost-Benefit Analysis 

In general 

Because this rulemaking relates to 

transfer payments, it is not subject to the 

requirements of Executive Order 13771. 

PBGC further notes that it results in no 

more than de minimis net costs. The 

rule has been determined to be 

‘‘significant’’ under Executive Order 

12866. Accordingly, the Office of 

Management and Budget (OMB) has 

reviewed this final rule under E.O. 

12866. 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, and public health and 

safety effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. 

Executive Orders 12866 and 13563 

require a comprehensive regulatory 

impact analysis to be performed for any 

economically significant regulatory 

action, defined as an action that would 

result in an annual effect of $100 

million or more on the national 

economy or that would have other 

substantial impacts. It has been 

determined that this final rule is not 

economically significant. Thus, a 

comprehensive regulatory impact 

analysis is not required. But PBGC has 

examined the economic and policy 

implications of this rule and has 

concluded that the net effect of the 

action is to reduce costs in relation to 

benefits. 

This final rule will enable plans to 

request a facilitated merger, including a 

request for financial assistance. Given 

the limits on PBGC’s financial 

assistance for mergers and partitions 

imposed by the requirement that such 

assistance not impair PBGC’s existing 

financial assistance obligations,25 PBGC 

expects that fewer than 20 plans would 

be approved for either financial 

assistance merger or partition over the 

next three years (about six plans per 

year), and that the total financial 

assistance PBGC would provide under 

both provisions for basic benefits 

guaranteed for multiemployer plans 

would be less than $60 million per year. 

Even with the limits on PBGC’s 

resources for multiemployer plans, 

which are financed by insurance 

premiums, facilitated mergers under 

this final rule will help plans preserve 

retirement benefits for America’s 

workers and retirees. In addition to 

receiving enough financial assistance to 

remain solvent, merged plans may gain 

efficiencies from lower administration 

and investment expenses. As a result, 

benefits in the merged plan would be 

more secure. 

This final rule has new information 

requirements pertaining to financial 

assistance mergers, but the benefits of 

these facilitated mergers greatly 

outweigh the costs of the new filing 

requirements. PBGC estimates that the 

transfer impacts of this final rule will be 

about $65.19 million, and the net costs 

of the final rule will be about $184,500, 

as shown in the following table and as 

explained in more detail below. 

Annual transfer amounts Before final rule After final rule Net transfer 

PBGC financial assistance ............................... $0 ............................................ $60 million .............................. $60 million. 

Benefits preserved above PBGC-guarantee .... $0, assumes plan insolvent .... $4.68 million ........................... $4.68 million.

Reduced basic plan administrative expenses .. ($60,000) ................................ ($30,000) ................................ $30,000. 

Reduced investment management fees ........... ($300,000) .............................. ($150,000) .............................. $150,000. 

Reduced valuation and actuarial fees .............. ($300,000) .............................. ($150,000) .............................. $150,000. 

Reduced plan audit and Form 5500 expenses ($360,000) .............................. ($180,000) .............................. $180,000. 

Total transfer amounts ...................................... ($1.02 million) ......................... $64.17 million ......................... $65.19 million. 


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26The collection of information under part 4231, 

before this final rule, is approved by OMB under 

control number 1212–0022. 

27See ‘‘PBGC’s Multiemployer Guarantee’’ 

(March 2015) at 7, Figure 6, accessible at https:// 

www.pbgc.gov/documents/2015-ME-GuaranteeStudy-Final.pdf. This PBGC study of its guarantee 

for multiemployer plans covered current plans, 

plans that are insolvent and receiving financial 

assistance, and plans that have terminated and 

which PBGC believes are likely to require future 

financial assistance (future plans). 

28See ‘‘Multiemployer Pension Plans: Report to 

Congress Required by the Pension Protection Act of 

2006’’ (Jan. 22, 2013) at 10, accessible at https://

www.pbgc.gov/documents/pbgc-reportmultiemployer-pension-plans.pdf. The average 

monthly benefit is determined by dividing benefits 

paid under all plans by the number of retired 

participants under all plans. The average is 

somewhat inflated because benefits paid during the 

year include lump sum payments (mostly de 

minimis lump sums of $5,000 or less). The average 

monthly benefit received in 2010 is higher in 

transportation industry plans ($1,324), where an 

annual benefit can reach $30,000 or more for a 

participant with 30 years of service, and in 

construction industry plans ($1,279); it is lower in 

retail trade and service industry plans ($620). 

29See ‘‘PBGC’s Multiemployer Guarantee’’ 

(March 2015) at 7, Figure 5, accessible at https:// 

www.pbgc.gov/documents/2015-ME-GuaranteeStudy-Final.pdf. Figure 5 shows that 49 percent of 

participants in future plans receive their full 

benefit, and 51 percent of participants in future 

plans face a benefit reduction. 

30PBGC estimates that the average plan has 1,300 

participants, based on PBGC’s experience and 

participant data from plans that merged in 2014. 

31 5 U.S.C. 601 et seq. 

32See, e.g., special rules for small plans under 

part 4007 (Payment of Premiums). 

33See, e.g., section 104(a)(2) of ERISA, which 

permits the Secretary of Labor to prescribe 

simplified annual reports for pension plans that 

cover fewer than 100 participants. 

34See, e.g., section 430(g)(2)(B) of the Code, 

which permits single-employer plans with 100 or 

fewer participants to use valuation dates other than 

the first day of the plan year. 

35See, e.g., DOL’s final rule on Prohibited 

Transaction Exemption Procedures, 76 FR 66637, 

66644 (Oct. 27, 2011). 

36See, 13 CFR 121.201. 

Annual transfer amounts Before final rule After final rule Net transfer 

Annual cost amounts Before final rule After final rule Net cost 

Filing requirements ........................................... 26 $43,550 ............................... $228,050 ................................. $184,500. 

The ‘‘net’’ column shows the effect of 

this final rule (the ‘‘after’’ column minus 

the ‘‘before’’ column). The estimated net 

transfer amounts and net costs of this 

final rule are based on financial 

assistance mergers. The benefits 

preserved, reduced expenses, and costs 

are explained in more detail below. 

In addition to preserving benefits and 

enabling administrative efficiencies, this 

final rule may provide qualitative 

benefits. First, the merged plan may be 

able to have additional investment 

diversification opportunities because of 

its larger pool of assets. Second, the 

employer contribution base generally 

expands and may be more diverse and, 

thus, less at risk to localized problems. 

Benefits Preserved 

This final rule preserves participants’ 

benefits that would be reduced if the 

plan did not merge and became 

insolvent. When a multiemployer plan 

becomes insolvent, PBGC guarantees 

benefits up to the legal limit of $12,870 

per year for an individual with 30 years 

of service. A PBGC study shows that, 54 

percent of the time, participants facing 

a benefit reduction, in plans that have 

terminated and that are expected to 

become insolvent, are projected to lose 

10 percent or more of their benefits.27 In 

2010, the average monthly benefit 

received by retirees in all 

multiemployer plans was $922.28 PBGC 

estimates $1,200/participant per year in 

benefits preserved based on an estimate 

of $100/participant per month—10 

percent of the $922 average monthly 

benefit (rounded). PBGC further 

estimates that about 50 percent of 

participants 29 in the merged plans, or 

about 650 participants 30 per plan, will 

have their benefits preserved for an 

estimated total of $4,680,000 per year 

($1,200 × 650 participants × 6 plans). 

Reduced Administrative and Investment 

Expenses 

Merged plans may gain administrative 

and investment efficiencies, preserving 

assets to pay plan benefits. While 

expenses vary depending on plan size, 

PBGC estimates the following expenses 

would be reduced for each financial 

assistance merger: 

• Basic administrative expenses 

(estimated $5,000) 

• Investment management fees and 

expenses (estimated $25,000–$35,000) 

• One plan valuation instead of two 

(estimated $10,500–$35,000) 

• One plan audit and Form 5500 filing 

instead of two (estimated $15,000– 

$40,000) 

Filing Requirements 

Plan sponsors are required under 

section 4231(b)(1) of ERISA to file with 

PBGC notices of proposed merger or 

transfer. As discussed in this final rule, 

plan sponsors requesting financial 

assistance mergers must prepare and file 

additional information, including the 

compilation of merger information, plan 

information, actuarial and financial 

information, and participant census data 

information. As discussed further in the 

Paperwork Reduction Act section (see 

below), the cost to prepare the notices 

to PBGC, excluding financial assistance 

mergers, is $43,550. PBGC assumes that 

it will receive a total of six requests for 

financial assistance mergers, with a cost 

of $184,500. 

Regulatory Flexibility Act 

The Regulatory Flexibility Act 31

imposes certain requirements with 

respect to rules that are subject to the 

notice and comment requirements of 

section 553(b) of the Administrative 

Procedure Act and that are likely to 

have a significant economic impact on 

a substantial number of small entities. 

Unless an agency determines that a final 

rule is not likely to have a significant 

economic impact on a substantial 

number of small entities, section 603 of 

the Regulatory Flexibility Act requires 

that the agency present a final 

regulatory flexibility analysis at the time 

of the publication of the final rule 

describing the impact of the rule on 

small entities and seeking public 

comment on such impact. Small entities 

include small businesses, organizations, 

and governmental jurisdictions. 

Small Entities 

For purposes of the Regulatory 

Flexibility Act requirements with 

respect to this final rule, PBGC 

considers a small entity to be a plan 

with fewer than 100 participants. This 

is substantially the same criterion PBGC 

uses in other regulations 32 and is 

consistent with certain requirements in 

title I of ERISA 33 and the Internal 

Revenue Code (Code),34 as well as the 

definition of a small entity that DOL has 

used for purposes of the Regulatory 

Flexibility Act.35

Thus, PBGC believes that assessing 

the impact of this final rule on small 

plans is an appropriate substitute for 

evaluating the effect on small entities. 

The definition of small entity 

considered appropriate for this purpose 

differs, however, from a definition of 

small business based on size standards 

promulgated by the Small Business 

Administration 36 under the Small 

Business Act. PBGC requested 


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comments on the appropriateness of the 

size standard used in evaluating the 

impact of its proposed rule on small 

entities. PBGC received no comments on 

this point. 

Certification 

Based on its definition of small entity, 

PBGC certifies under section 605(b) of 

the Regulatory Flexibility Act that the 

amendments in this rule will not have 

a significant economic impact on a 

substantial number of small entities. 

Based on data for the most recent 

premium filings, PBGC estimates that 

only 38 plans of the approximately 

1,400 plans covered by PBGC’s 

multiemployer program are small plans. 

Furthermore, plans may, but are not 

required to, merge or request financial 

assistance to merge. As discussed above, 

plans that merge will obtain economic 

benefits from reduced expenses and 

preserved plan benefits. A facilitated 

merger can improve the plans’ ability to 

remain solvent and to continue paying 

participants’ benefits. Merger may be 

particularly useful for small plans due 

to economies of scale. Accordingly, as 

provided in section 605 of the 

Regulatory Flexibility Act, sections 603 

and 604 do not apply. 

Paperwork Reduction Act 

PBGC is submitting the information 

collection requirements under part 4231 

to OMB for review and approval under 

the Paperwork Reduction Act. The 

collection of information under part 

4231 is currently approved under OMB 

control number 1212–0022 (expires 

September 30, 2020). An agency may 

not conduct or sponsor, and a person is 

not required to respond to, a collection 

of information unless it displays a 

currently valid OMB control number. 

Multiemployer plans requesting a 

merger or transfer are required to file a 

notice with PBGC with required 

information under part 4231. PBGC 

needs the information submitted by 

plans to provide a basis for determining 

whether a merger or transfer satisfies 

statutory requirements. Plans may also 

request a compliance determination by 

providing additional information to 

enable PBGC to make an explicit finding 

that the merger or transfer requirements 

have been satisfied. 

PBGC’s current approval for the 

collection of information under part 

4231 is for an estimated 14 transactions 

each year for which plan sponsors 

submit notices and requests for a 

compliance determination. Changes in 

this final rule that affect mergers and 

transfers that are not subject to the new 

requirements for facilitated mergers are 

not expected to have an impact on the 

burden of the information collection. 

The current approved annual burden for 

the collection of information is 10 hours 

in-house and $42,800 for work done by 

outside contractors, including attorneys 

and actuaries. 

Most of the information filing 

requirements under part 4231 are for 

financial assistance mergers. PBGC 

estimates that under this final rule there 

will be six requests for a financial 

assistance merger. The estimated annual 

burden is 60 hours in-house (10 hours 

per application) with an estimated 

dollar equivalent of $4,500, based on an 

assumed blended hourly rate of $75 for 

administrative, clerical, and supervisory 

time. The estimated annual cost burden 

is $180,000 ($30,000 per application) for 

work done by outside contractors, 

including attorneys and actuaries. This 

estimate is based on 450 contracted 

hours (six applications x 75 hours) and 

assumes an average hourly rate of $400. 

The total annual burden for the 

collection of information under part 

4231 to prepare the notices and comply 

with the additional requirements for 

financial assistance mergers is 70 hours 

and $222,800, as shown in the following 

table: 

Respondents Hour burden 

(hours) 

Hour burden— 

equivalent cost Cost burden 

Current approved respondents: 14 .............................................................................................. 10 $750 $42,800 

Facilitated mergers: 6 .................................................................................................................. 60 4,500 180,000 

Totals: 20 respondents ......................................................................................................... 70 5,250 222,800 

List of Subjects in 29 CFR Part 4231 

Employee benefit plans, Pension 

insurance, Reporting and recordkeeping 

requirements. 

■ For the reasons stated in the preamble, 

PBGC is amending 29 CFR chapter XL 

by revising part 4231 to read as follows: 

PART 4231—MERGERS AND 

TRANSFERS BETWEEN 

MULTIEMPLOYER PLANS 

Subpart A—General Provisions 

Sec. 

4231.1 Purpose and scope. 

4231.2 Definitions. 

4231.3 Requirements for mergers and 

transfers. 

4231.4 Preservation of accrued benefits. 

4231.5 Valuation requirement. 

4231.6 Plan solvency tests. 

4231.7 De minimis mergers and transfers. 

4231.8 Filing requirements; timing and 

method of filing. 

4231.9 Notice of merger or transfer. 

4231.10 Request for compliance 

determination. 

4231.11 Actuarial calculations and 

assumptions. 

Subpart B—Additional Rules for Facilitated 

Mergers 

4231.12 Request for facilitated merger. 

4231.13 Plan information for financial 

assistance merger. 

4231.14 Description of financial assistance 

merger. 

4231.15 Actuarial and financial information 

for financial assistance merger. 

4231.16 Participant census data for 

financial assistance merger. 

4231.17 PBGC action on a request for 

facilitated merger. 

4231.18 Jurisdiction over financial 

assistance merger. 

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

PART 4231—MERGERS AND 

TRANSFERS BETWEEN 

MULTIEMPLOYER PLANS 

Subpart A—General Provisions 

§ 4231.1 Purpose and scope. 

(a) General—(1) Purpose. The purpose 

of this part is to prescribe notice 

requirements under section 4231 of 

ERISA for mergers and transfers of 

assets or liabilities among 

multiemployer pension plans. This part 

also interprets the other requirements of 

section 4231 of ERISA and prescribes 

special rules for de minimis mergers 

and transfers. 

(2) Scope. This part applies to mergers 

and transfers among multiemployer 

plans where all of the plans 

immediately before and immediately 

after the transaction are multiemployer 

plans covered by title IV of ERISA. 

(b) Additional requirements. Subpart 

B of this part sets forth the additional 


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46654 Federal Register / Vol. 83, No. 179 / Friday, September 14, 2018 / Rules and Regulations 

requirements for and procedures 

specific to a request for a facilitated 

merger. 

§ 4231.2 Definitions. 

The following terms are defined in 

§ 4001.2 of this chapter: annuity, Code, 

EIN, ERISA, fair market value, 

guaranteed benefit, IRS, multiemployer 

plan, normal retirement age, PBGC, 

plan, plan sponsor, plan year, and PN. 

In addition, the following terms are 

defined for purposes of this part: 

Actuarial valuation means a valuation 

of assets and liabilities performed by an 

enrolled actuary using the actuarial 

assumptions used for purposes of 

determining the charges and credits to 

the funding standard account under 

section 304 of ERISA and section 431 of 

the Code. 

Advocate means the Participant and 

Plan Sponsor Advocate under section 

4004 of ERISA. 

Critical and declining status has the 

same meaning as the term has under 

section 305(b)(6) of ERISA and section 

432(b)(6) of the Code. 

Critical status has the same meaning 

as the term has under section 305(b)(2) 

of ERISA and section 432(b)(2) of the 

Code, and includes ‘‘critical and 

declining status’’ as defined in section 

305(b)(6) of ERISA and section 432(b)(6) 

of the Code. 

De minimis merger is defined in 

§ 4231.7(b). 

De minimis transfer is defined in 

§ 4231.7(c). 

Effective date means, with respect to 

a merger or transfer, the earlier of— 

(1) The date on which one plan 

assumes liability for benefits accrued 

under another plan involved in the 

transaction; or 

(2) The date on which one plan 

transfers assets to another plan involved 

in the transaction. 

Facilitated merger means a merger of 

two or more multiemployer plans 

facilitated by PBGC under section 

4231(e) of ERISA, including a merger 

that is facilitated with financial 

assistance under section 4231(e)(2) of 

ERISA. 

Fair market value of assets has the 

same meaning as the term has for 

minimum funding purposes under 

section 304 of ERISA and section 431 of 

the Code. 

Financial assistance means periodic 

or lump sum financial assistance 

payments from PBGC under section 

4261 of ERISA. 

Financial assistance merger means a 

merger facilitated by PBGC for which 

PBGC provides financial assistance 

(within the meaning of section 4261 of 

ERISA) under section 4231(e)(2) of 

ERISA. 

Insolvent has the same meaning as 

insolvent under section 4245(b) of 

ERISA. 

Merged plan means a plan that is the 

result of the merger of two or more 

multiemployer plans. 

Merger means the combining of two or 

more plans into a single plan. For 

example, a consolidation of two plans 

into a new plan is a merger. 

Significantly affected plan means a 

plan that— 

(1) Transfers assets that equal or 

exceed 15 percent of its assets before the 

transfer, 

(2) Receives a transfer of unfunded 

accrued benefits that equal or exceed 15 

percent of its assets before the transfer, 

(3) Is created by a spinoff from 

another plan, or 

(4) Engages in a merger or transfer 

(other than a de minimis merger or 

transfer) either— 

(i) After such plan has terminated by 

mass withdrawal under section 

4041A(a)(2) of ERISA, or 

(ii) With another plan that has so 

terminated. 

Transfer and transfer of assets or 

liabilities mean a diminution of assets or 

liabilities with respect to one plan and 

the acquisition of these assets or the 

assumption of these liabilities by 

another plan or plans (including a plan 

that did not exist prior to the transfer). 

However, the shifting of assets or 

liabilities pursuant to a written 

reciprocity agreement between two 

multiemployer plans in which one plan 

assumes liabilities of another plan is not 

a transfer of assets or liabilities. In 

addition, the shifting of assets between 

several funding media used for a single 

plan (such as between trusts, between 

annuity contracts, or between trusts and 

annuity contracts) is not a transfer of 

assets or liabilities. 

Unfunded accrued benefits means the 

excess of the present value of a plan’s 

accrued benefits over the plan’s fair 

market value of assets, determined on 

the basis of the actuarial valuation 

required under § 4231.5. 

§ 4231.3 Requirements for mergers and 

transfers. 

(a) General requirements. A plan 

sponsor may not cause a multiemployer 

plan to merge with one or more 

multiemployer plans or transfer assets 

or liabilities to or from another 

multiemployer plan unless the merger 

or transfer satisfies all of the following 

requirements: 

(1) No participant’s or beneficiary’s 

accrued benefit is lower immediately 

after the effective date of the merger or 

transfer than the benefit immediately 

before that date (except as provided 

under § 4231.4(b)). 

(2) Actuarial valuations of the plans 

that existed before the merger or transfer 

have been performed in accordance 

with § 4231.5. 

(3) For each plan that exists after the 

transaction, an enrolled actuary— 

(i) Determines that the plan meets the 

applicable plan solvency requirement 

set forth in § 4231.6; or 

(ii) Otherwise demonstrates that 

benefits under the plan are not 

reasonably expected to be subject to 

suspension under section 4245 of 

ERISA. 

(4) The plan sponsor notifies PBGC of 

the merger or transfer in accordance 

with §§ 4231.8 and 4231.9. 

(b) Compliance determination. If a 

plan sponsor requests a determination 

that a merger or transfer that may 

otherwise be prohibited by section 

406(a) or (b)(2) of ERISA satisfies the 

requirements of section 4231 of ERISA, 

the plan sponsor must submit the 

information described in § 4231.10 in 

addition to the information required by 

§ 4231.9. PBGC may request additional 

information if necessary to determine 

whether a merger or transfer complies 

with the requirements of section 4231 

and subpart A of this part. Plan 

sponsors are not required to request a 

compliance determination. Under 

section 4231(c) of ERISA, if PBGC 

determines that the merger or transfer 

complies with section 4231 of ERISA 

and subpart A of this part, the merger 

or transfer will not constitute a violation 

of the prohibited transaction provisions 

of section 406(a) and (b)(2) of ERISA. 

(c) Certified change in bargaining 

representative. Transfers of assets and 

liabilities pursuant to a change of 

collective bargaining representative 

certified under the Labor-Management 

Relations Act of 1947 or the Railway 

Labor Act, as amended, are governed by 

section 4235 of ERISA. Plan sponsors 

involved in such transfers are not 

required to comply with subpart A of 

this part. However, under section 

4235(f)(1) of ERISA, the plan sponsors 

of the plans involved in the transfer may 

agree to a transfer that complies with 

sections 4231 and 4234 of ERISA. Plan 

sponsors that elect to comply with 

sections 4231 and 4234 of ERISA must 

comply with the rules in subpart A of 

this part. 

(d) Informal consultation. A plan 

sponsor may contact PBGC on an 

informal basis to discuss a potential 

merger or transfer. 

§ 4231.4 Preservation of accrued benefits. 

(a) General. Section 4231(b)(2) of 

ERISA and § 4231.3(a)(1) require that no 

participant’s or beneficiary’s accrued 

benefit may be lower immediately after 


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the effective date of the merger or 

transfer than the benefit immediately 

before the merger or transfer. Except as 

provided in paragraph (b) of this 

section, a plan that assumes an 

obligation to pay benefits for a group of 

participants satisfies this requirement 

only if the plan contains a provision 

preserving all accrued benefits. The 

determination of what is an accrued 

benefit must be made in accordance 

with section 411 of the Code and the 

regulations thereunder. 

(b) Waiver. PBGC may waive the 

requirement of paragraph (a) of this 

section, § 4231.3(a)(1), and section 

4231(b)(2) of ERISA to the extent the 

accrued benefit is suspended under 

section 305(e)(9) of ERISA 

contemporaneously with the merger or 

transfer. If waived, the plan provision 

described under paragraph (a) of this 

section may exclude accrued benefits 

only to the extent those benefits are 

suspended under section 305(e)(9) of 

ERISA contemporaneously with the 

merger or transfer. 

§ 4231.5 Valuation requirement. 

The actuarial valuation requirement 

under section 4231(b)(4) of ERISA and 

§ 4231.3(a)(2) is satisfied if an actuarial 

valuation has been performed for the 

plan based on the plan’s assets and 

liabilities as of a date not earlier than 

the first day of the last plan year ending 

before the proposed effective date of the 

transaction. If the actuarial valuation 

required under this section is not 

complete when the notice of merger or 

transfer is filed, the plan sponsor may 

provide the most recent actuarial 

valuation for the plan with the notice, 

and the actuarial valuation required 

under this section when complete. For 

a significantly affected plan involved in 

a transfer (other than a plan that is a 

significantly affected plan only because 

the transfer involves a plan that has 

terminated by mass withdrawal under 

section 4041A(a)(2) of ERISA), the 

valuation must separately identify 

assets, contributions, and liabilities 

being transferred and must be based on 

the actuarial assumptions and methods 

that are expected to be used for the plan 

for the first plan year beginning after the 

transfer. 

§ 4231.6 Plan solvency tests. 

(a) General. For a plan that is not a 

significantly affected plan, the plan 

solvency requirement of section 

4231(b)(3) of ERISA and § 4231.3(a)(3)(i) 

is satisfied if— 

(1) The plan’s expected fair market 

value of assets immediately after the 

merger or transfer equals or exceeds five 

times the benefit payments for the last 

plan year ending before the proposed 

effective date of the merger or transfer; 

or 

(2) In each of the first five plan years 

beginning on or after the proposed 

effective date of the merger or transfer, 

the plan’s expected fair market value of 

assets as of the beginning of the plan 

year plus expected contributions and 

investment earnings equal or exceed 

expected expenses and benefit 

payments for the plan year. 

(b) Significantly affected plans. The 

plan solvency requirement of section 

4231(b)(3) of ERISA and § 4231.3(a)(3)(i) 

is satisfied for a significantly affected 

plan if all of the following requirements 

are met: 

(1) Expected contributions equal or 

exceed the estimated amount necessary 

to satisfy the minimum funding 

requirement of section 431 of the Code 

for the five plan years beginning on or 

after the proposed effective date of the 

transaction. 

(2) The plan’s expected fair market 

value of assets immediately after the 

transaction equals or exceeds the total 

amount of expected benefit payments 

for the first five plan years beginning on 

or after the proposed effective date of 

the transaction. 

(3) Expected contributions for the first 

plan year beginning on or after the 

proposed effective date of the 

transaction equal or exceed expected 

benefit payments for that plan year. 

(4) Expected contributions for the 

amortization period equal or exceed the 

unfunded accrued benefits plus 

expected normal costs for the period. 

The enrolled actuary may select as the 

amortization period either— 

(i) The first 25 plan years beginning 

on or after the proposed effective date 

of the transaction, or 

(ii) The amortization period for the 

resulting base when the combined 

charge base and the combined credit 

base are offset under section 431(b)(5) of 

the Code. 

(c) Rules for determinations. In 

determining whether a transaction 

satisfies the plan solvency requirements 

set forth in this section, the following 

rules apply: 

(1) Expected contributions after a 

merger or transfer must be determined 

by assuming that contributions for each 

plan year will equal contributions for 

the last full plan year ending before the 

date on which the notice of merger or 

transfer is filed with PBGC. If expected 

contributions include withdrawal 

liability payments, such payments must 

be shown separately. If the withdrawal 

liability payments are not the assessed 

amounts, or are not in accordance with 

the schedule of payments, or include 

future assessments, include the basis for 

such differences, with supporting data, 

calculations, assumptions, and methods. 

In addition, contributions must be 

adjusted to reflect— 

(i) The merger or transfer; 

(ii) Any change in the rate of 

employer contributions that has been 

negotiated (whether or not in effect); 

and 

(iii) Any trend of changing 

contribution base units over the 

preceding five plan years or other 

period of time that can be demonstrated 

to be more appropriate. 

(2) Expected normal costs must be 

determined under the funding method 

and assumptions expected to be used by 

the plan actuary for purposes of 

determining the minimum funding 

requirement under section 431 of the 

Code. If an aggregate funding method is 

used for the plan, normal costs must be 

determined under the entry age normal 

method. 

(3) Expected benefit payments must 

be determined by assuming that current 

benefits remain in effect and that all 

scheduled increases in benefits occur. 

(4) The plan’s expected fair market 

value of assets immediately after the 

merger or transfer must be based on the 

most recent data available immediately 

before the date on which the notice is 

filed. 

(5) Expected investment earnings 

must be determined using the same 

interest assumption to be used for 

determining the minimum funding 

requirement under section 431 of the 

Code. 

(6) Expected expenses must be 

determined using expenses in the last 

plan year ending before the notice is 

filed, adjusted to reflect any anticipated 

changes. 

(7) Expected plan assets for a plan 

year must be determined by adjusting 

the most current data on the plan’s fair 

market value of assets to reflect 

expected contributions, investment 

earnings, benefit payments and 

expenses for each plan year between the 

date of the most current data and the 

beginning of the plan year for which 

expected assets are being determined. 

§ 4231.7 De minimis mergers and 

transfers. 

(a) Special plan solvency rule. The 

determination of whether a de minimis 

merger or transfer satisfies the plan 

solvency requirement in § 4231.6(a) may 

be made without regard to any other de 

minimis mergers or transfers that have 

occurred since the most recent actuarial 

valuation. 

(b) De minimis merger defined. A 

merger is de minimis if the present 


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value of accrued benefits (whether or 

not vested) of one plan is less than 3 

percent of the other plan’s fair market 

value of assets. 

(c) De minimis transfer defined. A 

transfer of assets or liabilities is de 

minimis if— 

(1) The fair market value of assets 

transferred, if any, is less than 3 percent 

of the fair market value of assets of all 

of the transferor plan’s assets; 

(2) The present value of the accrued 

benefits transferred (whether or not 

vested) is less than 3 percent of the fair 

market value of assets of all of the 

transferee plan’s assets; and 

(3) The transferee plan is not a plan 

that has terminated under section 

4041A(a)(2) of ERISA. 

(d) Value of assets and benefits. For 

purposes of paragraphs (b) and (c) of 

this section, the value of plan assets and 

accrued benefits may be determined as 

of any date prior to the proposed 

effective date of the transaction, but not 

earlier than the date of the most recent 

actuarial valuation. 

(e) Aggregation required. In 

determining whether a merger or 

transfer is de minimis, the assets and 

accrued benefits transferred in previous 

de minimis mergers and transfers within 

the same plan year must be aggregated 

as described in paragraphs (e)(1) and (2) 

of this section. For the purposes of those 

paragraphs, the value of plan assets may 

be determined as of the date during the 

plan year on which the total value of the 

plan’s assets is the highest. 

(1) A merger is not de minimis if the 

total present value of accrued benefits 

merged into a plan, when aggregated 

with all prior de minimis mergers of and 

transfers to that plan effective within 

the same plan year, equals or exceeds 3 

percent of the value of the plan’s assets. 

(2) A transfer is not de minimis if, 

when aggregated with all previous de 

minimis mergers and transfers effective 

within the same plan year— 

(i) The value of all assets transferred 

from a plan equals or exceeds 3 percent 

of the value of the plan’s assets; or 

(ii) The present value of all accrued 

benefits transferred to a plan equals or 

exceeds 3 percent of the plan’s assets. 

§ 4231.8 Filing requirements; timing and 

method of filing. 

(a) When to file. Except as provided in 

paragraph (g) of this section, a notice of 

a proposed merger or transfer, and, if 

applicable, a request for a compliance 

determination or facilitated merger 

(which may be filed separately or 

combined), must be filed not less than 

the following number of days before the 

proposed effective date of the 

transaction— 

(1) 270 days in the case of a facilitated 

merger under § 4231.12; 

(2) 120 days in the case of a merger 

(other than a facilitated merger) for 

which a compliance determination 

under § 4231.10 is requested, or a 

transfer; or 

(3) 45 days in the case of a merger for 

which a compliance determination 

under § 4231.10 is not requested. 

(b) Method of filing. PBGC applies the 

rules in subpart A of part 4000 of this 

chapter to determine permissible 

methods of filing with PBGC under this 

part. 

(c) Computation of time. PBGC 

applies the rules in subpart D of part 

4000 of this chapter to compute any 

time period for filing under this part. 

(d) Who must file. The plan sponsors 

of all plans involved in a merger or 

transfer, or the duly authorized 

representative(s) acting on behalf of the 

plan sponsors, must jointly file the 

notice required by subpart A of this 

part, and, if applicable, a request for a 

facilitated merger under § 4231.12. 

(e) Where to file. See § 4000.4 of this 

chapter for information on where to file. 

(f) Date of filing. PBGC applies the 

rules in subpart C of part 4000 of this 

chapter to determine the date a 

submission under this part was filed 

with PBGC. For purposes of paragraph 

(a) of this section, the notice, and, if 

applicable, a request for a compliance 

determination or facilitated merger, is 

not considered filed until all of the 

information required under this part has 

been submitted. 

(g) Waiver of timing of notice. PBGC 

may waive the timing requirements of 

paragraph (a) of this section and section 

4231(b)(1) of ERISA if— 

(1) A plan sponsor demonstrates to 

the satisfaction of PBGC that failure to 

complete the merger or transfer in less 

than the applicable notice period set 

forth in paragraph (a) of this section will 

cause harm to participants or 

beneficiaries of the plans involved in 

the transaction; 

(2) PBGC determines that the 

transaction complies with the 

requirements of section 4231 of ERISA; 

or 

(3) PBGC completes its review of the 

transaction. 

§ 4231.9 Notice of merger or transfer. 

Each notice of proposed merger or 

transfer required under section 

4231(b)(1) of ERISA and this subpart 

must contain the following information: 

(a) For each plan involved in the 

merger or transfer— 

(1) The name of the plan; 

(2) The name, address and telephone 

number of the plan sponsor and of the 

plan sponsor’s duly authorized 

representative, if any; and 

(3) The plan sponsor’s EIN and the 

plan’s PN and, if different, the EIN or 

PN last filed with PBGC. If no EIN or PN 

has been assigned, the notice must so 

indicate. 

(b) Whether the transaction being 

reported is a merger or transfer, whether 

it involves any plan that has terminated 

under section 4041A(a)(2) of ERISA, 

whether any significantly affected plan 

is involved in the transaction (and, if so, 

identifying each such plan), and 

whether it is a de minimis transaction 

as defined in § 4231.7 (and, if so, 

including an enrolled actuary’s 

certification to that effect). 

(c) The proposed effective date of the 

transaction. 

(d) Except as provided under 

§ 4231.4(b), a copy of each plan 

provision stating that no participant’s or 

beneficiary’s accrued benefit will be 

lower immediately after the effective 

date of the merger or transfer than the 

benefit immediately before that date. 

(e) For each plan that exists after the 

transaction, one of the following 

statements, certified by an enrolled 

actuary: 

(1) A statement that the plan satisfies 

the applicable plan solvency test set 

forth in § 4231.6, indicating which is the 

applicable test, and including the 

supporting data, calculations, 

assumptions, and methods. 

(2) A statement of the basis on which 

the actuary has determined under 

§ 4231.3(a)(3)(ii) that benefits under the 

plan are not reasonably expected to be 

subject to suspension under section 

4245 of ERISA, including the supporting 

data, calculations, assumptions, and 

methods. 

(f) For each plan that exists before a 

transaction (unless the transaction is de 

minimis and does not involve either a 

request for financial assistance, or any 

plan that has terminated under section 

4041A(a)(2) of ERISA), a copy of the 

most recent actuarial valuation report 

that satisfies the requirements of 

§ 4231.5. 

(g) For each significantly affected plan 

that exists after the transaction, the 

following information used in making 

the plan solvency determination under 

§ 4231.6(b): 

(1) The present value of the accrued 

benefits and plan’s fair market value of 

assets under the valuation required by 

§ 4231.5, allocable to the plan after the 

transaction. 

(2) The fair market value of assets in 

the plan after the transaction 

(determined in accordance with 

§ 4231.6(c)(4)). 


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(3) The expected benefit payments for 

the plan for the first plan year beginning 

on or after the proposed effective date 

of the transaction (determined in 

accordance with § 4231.6(c)(3)). 

(4) The contribution rates in effect for 

the plan for the first plan year beginning 

on or after the proposed effective date 

of the transaction. 

(5) The expected contributions for the 

plan for the first plan year beginning on 

or after the proposed effective date of 

the transaction (determined in 

accordance with § 4231.6(c)(1)). 

§ 4231.10 Request for compliance 

determination. 

(a) General. The plan sponsor(s) of 

one or more plans involved in a merger 

or transfer, or the duly authorized 

representative(s) acting on behalf of the 

plan sponsor(s), may file a request for a 

determination that the transaction 

complies with the requirements of 

section 4231 of ERISA. If the plan 

sponsor(s) requests a compliance 

determination, the request must be filed 

with the notice of merger or transfer 

under § 4231.3(a)(4), and must contain 

the information described in paragraph 

(c) of this section, as applicable. 

(b) Single request permitted for all de 

minimis transactions. A plan sponsor 

may submit a single request for a 

compliance determination covering all 

de minimis mergers or transfers that 

occur between one plan valuation and 

the next. However, the plan sponsor 

must still notify PBGC of each de 

minimis merger or transfer separately, 

in accordance with §§ 4231.8 and 

4231.9. The single request for a 

compliance determination may be filed 

concurrently with any one of the notices 

of a de minimis merger or transfer. 

(c) Contents of request. A request for 

a compliance determination concerning 

a merger or transfer that is not de 

minimis must contain— 

(1) A copy of the merger or transfer 

agreement; and 

(2) For each significantly affected 

plan, other than a plan that is a 

significantly affected plan only because 

the merger or transfer involves a plan 

that has terminated by mass withdrawal 

under section 4041A(a)(2) of ERISA, 

copies of all actuarial valuations 

performed within the 5 years preceding 

the date of filing the notice required 

under § 4231.3(a)(4). 

§ 4231.11 Actuarial calculations and 

assumptions. 

(a) Most recent valuation. All 

calculations required by this part must 

be based on the most recent actuarial 

valuation as of the date of filing the 

notice, updated to show any material 

changes. 

(b) Assumptions. All calculations 

required by this part must be performed 

by an enrolled actuary based on 

methods and assumptions each of 

which is reasonable (taking into account 

the experience of the plan and 

reasonable expectations), and which, in 

combination, offer the actuary’s best 

estimate of anticipated experience 

under the plan. 

(c) Updated calculations. PBGC may 

require updated calculations and 

representations based on the actual 

effective date of a merger or transfer if 

that date is more than one year after the 

notice is filed, based on revised 

actuarial assumptions, or based on other 

good cause. 

Subpart B—Additional Rules for 

Facilitated Mergers 

§ 4231.12 Request for facilitated merger. 

(a) General. (1) The plan sponsors of 

the plans involved in a proposed merger 

may request that PBGC facilitate the 

merger. Facilitation may include 

training, technical assistance, 

mediation, communication with 

stakeholders, and support with related 

requests to other government agencies. 

Facilitation may also include financial 

assistance to the merged plan. PBGC has 

discretion under section 4231(e) of 

ERISA to take such actions as it deems 

appropriate to facilitate the merger of 

two or more multiemployer plans if it 

determines, after consultation with the 

Advocate, that the proposed merger is in 

the interests of the participants and 

beneficiaries of at least one of the plans, 

and is not reasonably expected to be 

adverse to the overall interests of the 

participants and beneficiaries of any of 

the plans involved in the proposed 

merger. For a facilitated merger, 

including a financial assistance merger, 

the requirements of section 4231(b) of 

ERISA and subpart A of this part must 

be satisfied in addition to the 

requirements of section 4231(e) of 

ERISA and this subpart. The procedures 

set forth in this subpart represent the 

exclusive means by which PBGC will 

approve a request for a facilitated 

merger under section 4231(e) of ERISA. 

(2) Financial assistance. Subject to the 

requirements in section 4231(e) of 

ERISA and this subpart, in the case of 

a request for a financial assistance 

merger, PBGC may in its discretion 

provide financial assistance (within the 

meaning of section 4261 of ERISA). 

Such financial assistance will be with 

respect to the guaranteed benefits 

payable under the critical and declining 

status plan(s) involved in the facilitated 

merger. 

(b) Information requirements. (1) A 

request for a facilitated merger, 

including a request for a financial 

assistance merger, must be filed with 

the notice of merger under 

§ 4231.3(a)(4), and must contain the 

information described in § 4231.10, and 

a detailed narrative description with 

supporting documentation 

demonstrating that the proposed merger 

is in the interests of participants and 

beneficiaries of at least one of the plans, 

and is not reasonably expected to be 

adverse to the overall interests of the 

participants and beneficiaries of any of 

the plans. If a financial assistance 

merger is requested, the narrative 

description and supporting 

documentation may consider the effect 

of financial assistance in making these 

demonstrations. 

(2) If a financial assistance merger is 

requested, the request must contain the 

information required in §§ 4231.13 

through 4231.16 in addition to the 

information required in paragraph (b)(1) 

of this section. 

(3) PBGC may require the plan 

sponsors to submit additional 

information to determine whether the 

requirements of section 4231(e) of 

ERISA are met or to enable it to 

facilitate the merger. 

(c) Duty to amend and supplement. 

During any time in which a request for 

a facilitated merger, including a request 

for a financial assistance merger, is 

pending final action by PBGC, the plan 

sponsors must promptly notify PBGC in 

writing of any material fact or 

representation contained in or relating 

to the request, or in any supporting 

documents, that is no longer accurate or 

was omitted. 

§ 4231.13 Plan information for financial 

assistance merger. 

A request for a financial assistance 

merger must include the following 

information for each plan involved in 

the merger: 

(a) The most recent trust agreement, 

including all amendments adopted 

since the last restatement. 

(b) The most recent plan document, 

including all amendments adopted 

since the last restatement. 

(c) The most recent summary plan 

description (SPD), and all summaries of 

material modification issued since the 

most recent SPD. 

(d) If applicable, the most recent 

rehabilitation plan (or funding 

improvement plan), including all 

subsequent amendments and updates, 

and the percentage of total contributions 

received under each schedule of the 

rehabilitation plan (or funding 


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improvement plan) for the most recent 

plan year available. 

(e) A copy of the plan’s most recent 

IRS determination letter. 

(f) A copy of the plan’s most recent 

Form 5500 (Annual Report Form) and 

all schedules and attachments 

(including the audited financial 

statement). 

(g) A current listing of employers who 

have an obligation to contribute to the 

plan, and the approximate number of 

participants for whom each employer is 

currently making contributions. 

(h) A schedule of withdrawal liability 

payments collected in each of the most 

recent five plan years. 

(i) If applicable, a copy of the plan 

sponsor’s application for suspension of 

benefits under section 305(e)(9)(G) of 

ERISA (including all attachments and 

exhibits). 

§ 4231.14 Description of financial 

assistance merger. 

A request for a financial assistance 

merger must include the following 

information about the proposed 

financial assistance merger: 

(a) A detailed description of the 

proposed financial assistance merger, 

including any larger integrated 

transaction of which the merger is a part 

(including, but not limited to, an 

application for suspension of benefits 

under section 305(e)(9)(G) of ERISA). 

(b) A narrative description of the 

events that led to the plan sponsors’ 

decision to submit a request for a 

financial assistance merger. 

(c) A narrative description of 

significant risks and assumptions 

relating to the proposed financial 

assistance merger and the projections 

provided in support of the request. 

(d) A detailed description of the 

estimated total amount of financial 

assistance the plan sponsors request for 

each year, including the supporting 

data, calculations, assumptions, and a 

description of the methodology used to 

determine the estimated amounts. 

§ 4231.15 Actuarial and financial 

information for financial assistance merger. 

A request for a financial assistance 

merger must include the following 

actuarial and financial information for 

the plans involved in the merger: 

(a) A copy of the actuarial valuation 

performed for each of the two plan years 

before the most recent actuarial 

valuation filed in accordance with 

§ 4231.9(f). 

(b) If applicable, a copy of the plan 

actuary’s most recent annual actuarial 

certification under section 305(b)(3) of 

ERISA, including a detailed description 

of the assumptions used in the 

certification, and the basis under which 

they were determined. The description 

must include information about the 

assumptions used for the projection of 

future contributions, withdrawal 

liability payments, and investment 

returns, and any other assumption that 

may have a material effect on 

projections. 

(c) A detailed statement certified by 

an enrolled actuary that the merger is 

necessary for one or more of the plans 

involved to avoid or postpone 

insolvency, including the basis for the 

conclusion, supporting data, 

calculations, assumptions, and a 

description of the methodology. This 

statement must demonstrate for each 

critical and declining status plan 

involved in the merger that the date the 

plan projects to become insolvent 

(without reflecting the merger) is earlier 

than the date the merged plan projects 

to become insolvent (the merged plan 

may reflect the proposed financial 

assistance). Include as an exhibit annual 

cash flow projections for each critical 

and declining status plan involved in 

the merger through the date the plan 

projects to become insolvent (using an 

open group valuation and without 

reflecting the merger). Annual cash flow 

projections must reflect the following 

information: 

(1) Fair market value of assets as of 

the beginning of the year. 

(2) Contributions and withdrawal 

liability payments. 

(3) Benefit payments organized by 

participant type (e.g., active, retiree, 

terminated vested). 

(4) Administrative expenses. 

(5) Fair market value of assets as of 

the end of the year. 

(d) For each critical and declining 

status plan involved in the merger, a 

long-term projection (at least 50 to 90 

years) of benefit disbursements by 

participant type (e.g., active, retiree, 

terminated vested) (without reflecting 

the merger) reflecting reduced benefit 

disbursements at the PBGC-guarantee 

level (which may be estimated) 

beginning with the proposed effective 

date of the merger (using a closed group 

valuation and no accruals after the 

proposed effective date of the merger). 

Include the supporting data, 

calculations, assumptions, and, if 

applicable, a description of estimates 

used for this projection. 

(e) A detailed statement certified by 

an enrolled actuary that financial 

assistance is necessary for the merged 

plan to become or remain solvent, 

including the basis for the conclusion, 

supporting data, calculations, 

assumptions, and a description of the 

methodology. Include as an exhibit 

annual cash flow projections for the 

merged plan with the proposed 

financial assistance (based on the 

actuarial assumptions and methods that 

will be used under the merged plan). 

Annual cash flow projections must 

reflect the information listed in 

paragraphs (c)(1) through (5) of this 

section. In addition, include as an 

exhibit a statement certified by an 

enrolled actuary of whether the merged 

plan would be in critical status for 

purposes of paragraph (e)(1) or (2) of 

this section, including the basis for the 

conclusion. 

(1) If the merged plan would be in 

critical status immediately following the 

merger without the proposed financial 

assistance (as reasonably determined by 

the enrolled actuary or as set forth in 

this paragraph), the enrolled actuary’s 

certified statement must demonstrate 

that the merged plan will avoid 

insolvency under section 

305(e)(9)(D)(iv) of ERISA and the 

regulations thereunder (excluding 

stochastic projections) with the 

proposed financial assistance. The 

enrolled actuary may determine 

whether the merged plan would be in 

critical status based on the combined 

data and projections underlying the 

status certifications of each of the plans 

for the plan year immediately preceding 

the merger, including any selected 

updates in the data based on the 

experience of the plans in the 

immediately preceding plan year 

(reasonable adjustments are permitted 

but not required). 

(2) If the merged plan would not be 

in critical status immediately following 

the merger without the proposed 

financial assistance (as reasonably 

determined by the enrolled actuary or as 

set forth in paragraph (e)(1) of this 

section), the enrolled actuary’s certified 

statement must demonstrate that the 

merged plan is not projected to become 

insolvent during the 20 plan years 

beginning after the proposed effective 

date of the merger with the proposed 

financial assistance (using the 

methodologies set forth under section 

305(b)(3)(B)(iv) of ERISA and the 

regulations thereunder). If such a 

demonstration is possible without the 

proposed financial assistance, or if the 

amount of financial assistance requested 

exceeds the amount needed to satisfy 

this demonstration, the enrolled 

actuary’s certified statement must 

demonstrate that financial assistance is 

necessary to mitigate the adverse effects 

of the merger on the merged plan’s 

ability to remain solvent. The 

demonstration that financial assistance 

is necessary to mitigate the adverse 

effects of the merger on the merged 


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Federal Register / Vol. 83, No. 179 / Friday, September 14, 2018 / Rules and Regulations 46659 

plan’s ability to remain solvent may be 

based on stress testing over a long-term 

period (and may reflect reasonable 

future adverse experience), using a 

reasonable method in accordance with 

generally accepted actuarial standards. 

(f) If applicable, a copy of the plan 

actuary’s certification under section 

305(e)(9)(C)(i) of ERISA. 

(g) The rules in § 4231.6(c) apply to 

the solvency projections described in 

paragraphs (c) and (e) of this section, 

unless section 305(e)(9)(D)(iv) of ERISA 

and the regulations thereunder apply 

and specify otherwise. 

§ 4231.16 Participant census data for 

financial assistance merger. 

A request for a financial assistance 

merger must include a copy of the 

census data used for the projections 

described in § 4231.15(c) through (e), 

including: 

(a) Participant type (retiree, 

beneficiary, disabled, terminated vested, 

active, alternate payee). 

(b) Gender. 

(c) Date of birth. 

(d) Credited service for guarantee 

calculation (i.e., number of years of 

participation). 

(e) Vested accrued monthly benefit. 

(f) Monthly benefit guaranteed by 

PBGC. 

(g) Benefit commencement date (for 

participants in pay status and others for 

which the reported benefit will not be 

payable at normal retirement age). 

(h) For each participant in pay 

status— 

(1) Form of payment, and 

(2) Data relevant to the form of 

payment, including: 

(i) For a joint-and-survivor benefit, the 

beneficiary’s benefit amount and the 

beneficiary’s date of birth; 

(ii) For a Social Security level income 

benefit, the date of any change in the 

benefit amount, and the benefit amount 

after such change; 

(iii) For a 5-year certain or 10-year 

certain benefit (or similar benefit), the 

relevant defined period; or 

(iv) For a form of payment not 

otherwise described in this section, the 

data necessary for the valuation of the 

form of payment. 

(i) If an actuarial increase for 

postponed retirement applies, or if the 

form of annuity is a Social Security 

level income benefit, the monthly 

vested benefit payable at normal 

retirement age in normal form of 

annuity. 

§ 4231.17 PBGC action on a request for 

facilitated merger. 

(a) General. PBGC may approve or 

deny a request for a facilitated merger, 

including a request for a financial 

assistance merger, at its discretion if the 

requirements of section 4231 of ERISA 

are satisfied. PBGC will notify the plan 

sponsor(s) in writing of its decision on 

a request. If PBGC denies the request, 

PBGC’s written decision will state the 

reason(s) for the denial. If PBGC 

approves a request for a financial 

assistance merger, PBGC will provide a 

financial assistance agreement detailing 

the total amount and terms of the 

financial assistance as soon as 

practicable after notifying the plan 

sponsor(s) in writing of its approval. 

(b) Final agency action. PBGC’s 

decision to approve or deny a request 

for a facilitated merger, including a 

request for a financial assistance merger, 

is a final agency action for purposes of 

judicial review under the 

Administrative Procedure Act (5 U.S.C. 

701 et seq.). 

§ 4231.18 Jurisdiction over financial 

assistance merger. 

(a) General. PBGC will retain 

jurisdiction over the merged plan 

resulting from a financial assistance 

merger to carry out the purposes, terms, 

and conditions of the financial 

assistance merger, the financial 

assistance agreement, sections 4231 and 

4261 of ERISA, and the regulations 

thereunder. 

(b) Financial assistance agreement. 

PBGC may, upon providing notice to the 

plan sponsor, make changes to the 

financial assistance agreement in 

response to changed circumstances 

consistent with sections 4231 and 4261 

of ERISA and the regulations 

thereunder. 

William Reeder, 

Director, Pension Benefit Guaranty 

Corporation. 

[FR Doc. 2018–19988 Filed 9–13–18; 8:45 am] 

BILLING CODE 7709–02–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 117 

[Docket No. USCG–2018–0871] 

Drawbridge Operation Regulation; 

Sacramento River, Sacramento, CA 

AGENCY: Coast Guard, DHS. 

ACTION: Notice of deviation from 

drawbridge regulation. 

SUMMARY: The Coast Guard has issued a 

temporary deviation from the operating 

schedule that governs the Tower 

Drawbridge across the Sacramento 

River, mile 59.0, at Sacramento, CA. The 

deviation is necessary to allow the 

community to participate in the Farmto-Fork Dinner event. This deviation 

allows the bridge to remain in the 

closed-to-navigation position during the 

deviation period. 

DATES: This deviation is effective from 

12 noon through 10 p.m. on September 

30, 2018. 

ADDRESSES: The docket for this 

deviation, USCG–2018–0871, is 

available at http://www.regulations.gov. 

Type the docket number in the 

‘‘SEARCH’’ box and click ‘‘SEARCH.’’ 

Click on Open Docket Folder on the line 

associated with this deviation. 

FOR FURTHER INFORMATION CONTACT: If 

you have questions on this temporary 

deviation, call or email Carl T. Hausner, 

Chief, Bridge Section, Eleventh Coast 

Guard District; telephone 510–437– 

3516; email Carl.T.Hausner@uscg.mil. 

SUPPLEMENTARY INFORMATION: The 

California Department of Transportation 

has requested a temporary change to the 

operation of the Tower Drawbridge over 

the Sacramento River, mile 59.0, at 

Sacramento, CA. The drawbridge 

navigation span provides a vertical 

clearance of 30 feet above Mean High 

Water in the closed-to-navigation 

position. The draw operates as required 

by 33 CFR 117.189(a). Navigation on the 

waterway is commercial and 

recreational. 

The drawspan will be secured in the 

closed-to-navigation position from 12 

noon through 10 p.m. on September 30, 

2018, to allow the community to 

participate in the Farm-to-Fork Dinner 

event. This temporary deviation has 

been coordinated with the waterway 

users. No objections to the proposed 

temporary deviation were raised. 

Vessels able to pass through the 

bridge in the closed position may do so 

at anytime. The bridge will be able to 

open for emergencies with a 2-hour 

notification to the bridge owner and 

there are no immediate alternate routes 

for vessels to pass. The Coast Guard will 

also inform the users of the waterway 

through our Local and Broadcast 

Notices to Mariners of the change in 

operating schedule for the bridge so that 

vessel operators can arrange their 

transits to minimize any impact caused 

by the temporary deviation. 

In accordance with 33 CFR 117.35(e), 

the drawbridge must return to its regular 

operating schedule immediately at the 

end of the effective period of this 

temporary deviation. This deviation 

from the operating regulations is 

authorized under 33 CFR 117.35. 


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