Federal Register / Vol. 87, No. 59 / Monday, March 28, 2022 / Proposed Rules 17225 

1Section 210 of the Employee Retirement Income 

Security Act of 1974, Public Law 93–406 (88 Stat. 

829), as amended (ERISA), also provides rules 

Continued 

carriers may comply with this 

requirement by ensuring that lavatory 

water temperature is adjusted to 

eliminate the risk of scalding for all 

passengers. Automatic or hand-operated 

faucets shall dispense water for a 

minimum of five seconds for each 

application or while the hand is below 

the faucet. 

(3) Attendant call buttons and door 

locks must be accessible to an 

individual seated within the lavatory. 

(4) Lavatory controls and dispensers 

must be discernible through the sense of 

touch. Operable parts within the 

lavatory must be operable with one 

hand and must not require tight 

grasping, pinching, or twisting of the 

wrist. 

(5) The lavatory door sill must 

provide minimum obstruction to the 

passage of the on-board wheelchair 

across the sill while preventing the 

leakage of fluids from the lavatory floor 

and trip hazards during an emergency 

evacuation. 

(6) Toe clearance must not be reduced 

from current measurements. 

(c) You are not required to retrofit 

cabin interiors of existing single-aisle 

aircraft to comply with the requirements 

of paragraph (a) of this section. 

(d) As a carrier, you must comply 

with the requirements of this section 

with respect to new aircraft that you 

operate that were originally ordered 

after [DATE 18 YEARS AFTER THE 

EFFECTIVE DATE OF THE FINAL 

RULE] or delivered after [DATE 20 

YEARS AFTER THE EFFECTIVE DATE 

OF THE FINAL RULE] or are part of a 

new type-certificated design filed with 

the FAA or a foreign carrier’s safety 

authority after [DATE ONE YEAR 

AFTER THE EFFECTIVE DATE OF THE 

FINAL RULE]. 

[FR Doc. 2022–05869 Filed 3–25–22; 8:45 am] 

BILLING CODE 4910–9X–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[REG–121508–18] 

RIN 1545–BO97 

Multiple Employer Plans 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Notice of proposed rulemaking 

and notice of public hearing; 

withdrawal of notice of proposed 

rulemaking. 

SUMMARY: This document sets forth 

proposed regulations relating to certain 

multiple employer plans (MEPs) 

described in the Internal Revenue Code 

(the ‘‘Code’’). The proposed regulations 

provide an exception, if certain 

requirements are met, to the application 

of the ‘‘unified plan rule’’ for MEPs in 

the event of a failure by one or more 

employers participating in the plan to 

take actions required of them to satisfy 

the applicable requirements of the Code. 

These proposed regulations would affect 

certain MEPs, participants in those 

MEPs (and their beneficiaries), 

employers participating in those MEPs, 

and plan administrators of those MEPs. 

This document also withdraws 

proposed regulations published in the 

Federal Register on July 3, 2019, 

amending the application of the unified 

plan rule to MEPs and provides a notice 

of a public hearing. 

DATES: Written or electronic comments 

must be received by May 27, 2022. A 

public hearing on these proposed 

regulations has been scheduled for 

Wednesday, June 22, 2022, at 10 a.m. 

EST. Requests to speak and outlines of 

topics to be discussed at the public 

hearing must be received by May 27, 

2022. If no outlines are received by May 

27, 2022, the public hearing will be 

cancelled. Requests to attend the public 

hearing must be received by 5 p.m. EST 

on Friday, June 17, 2022. The 

telephonic hearing will be made 

accessible to people with disabilities. 

Requests for special assistance during 

the telephonic hearing must be received 

by Thursday, June 16, 2022. 

ADDRESSES: Commenters are strongly 

encouraged to submit public comments 

electronically. Submit electronic 

submissions via the Federal 

eRulemaking Portal at 

www.regulations.gov (indicate IRS and 

REG–121508–18) by following the 

online instructions for submitting 

comments. Once submitted to the 

Federal eRulemaking Portal, comments 

cannot be edited or withdrawn. The IRS 

expects to have limited personnel 

available to process public comments 

that are submitted on paper through 

mail. Until further notice, any 

comments submitted on paper will be 

considered to the extent practicable. 

The Department of the Treasury 

(Treasury Department) and the IRS will 

publish for public availability any 

comment submitted electronically, and 

to the extent practicable on paper, to its 

public docket. Send paper submissions 

to: CC:PA:LPD:PR (REG–121508–18), 

Room 5203, Internal Revenue Service, 

P.O. Box 7604, Ben Franklin Station, 

Washington, DC 20044. 

For those requesting to speak during 

the hearing, send an outline of topic 

submissions electronically via the 

Federal eRulemaking Portal at 

www.regulations.gov (indicate IRS and 

REG–121508–18). 

Individuals who want to testify (by 

telephone) at the public hearing must 

send an email to publichearings@irs.gov 

to receive the telephone number and 

access code for the hearing. The subject 

line of the email must contain the 

regulation number REG–121508–18 and 

the word TESTIFY. For example, the 

subject line may say: Request to 

TESTIFY at Hearing for REG–121508– 

18. The email should include a copy of 

the speaker’s public comments and 

outline of topics. Individuals who want 

to attend the public hearing by 

telephone must also send an email to 

publichearings@irs.gov to receive the 

telephone number and access code for 

the hearing. The subject line of the 

email must contain the regulation 

number REG–121508–18 and the word 

ATTEND. For example, the subject line 

may say: Request to ATTEND Hearing 

for REG–121508–18. To request special 

assistance during the telephonic hearing 

contact the Publications and 

Regulations Branch of the Office of 

Associate Chief Counsel (Procedure and 

Administration) by sending an email to 

publichearings@irs.gov (preferred) or by 

telephone at (202) 317–5177 (not a tollfree number). 

FOR FURTHER INFORMATION CONTACT: 

Concerning the regulations, Pamela 

Kinard at (202) 317–6000 or Tom 

Morgan at (202) 317–6700; concerning 

submission of comments or requests for 

a public hearing, Regina Johnson (202) 

317–5177 (not toll-free numbers) or by 

sending an email to publichearings@

irs.gov. 

SUPPLEMENTARY INFORMATION: 

Background 

This document sets forth proposed 

amendments to the Income Tax 

Regulations (26 CFR part 1) under 

section 413(c) of the Code and proposed 

regulations under section 413(e) of the 

Code. This document also withdraws 

proposed regulations under section 

413(c) that were published in the 

Federal Register on July 3, 2019 (84 FR 

31777) (section 413(c) proposed 

regulations). 

I. General Rules Relating to MEPs 

Including the Unified Plan Rule 

Section 413(c) provides rules for a 

plan maintained by more than one 

employer.1 A plan described in section 


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relating to plans maintained by more than one 

employer. Similar to section 413(c) of the Code, 

section 210(a) of ERISA states that the minimum 

participation standards, minimum vesting 

standards, and benefit accrual requirements under 

sections 202, 203, and 204 of ERISA, respectively, 

shall be applied as if all employees of each of the 

employers were employed by a single employer. 

Under section 101 of Reorganization Plan No. 4 of 

1978 (5 U.S.C. App.), the Secretary of the Treasury 

has interpretive jurisdiction over section 413 of the 

Code, as well as ERISA section 210. 

2Although section 403(b) plans are defined 

contribution plans, they are not plans described in 

section 401(a) or 408. Therefore, section 413(e)(1) 

does not apply to section 403(b) plans. 

3Prior to the SECURE Act, section 413(c)(2) of the 

Code provided, ‘‘For purposes of section 401(a), in 

determining whether the plan of an employer is for 

the exclusive benefit of his employees and their 

beneficiaries all plan participants shall be 

considered his employees.’’ Section 101(a)(2) of the 

SECURE Act amended section 413(c)(2) of the Code 

so that it applies for purposes of section 408(c) of 

the Code in addition to section 401(a) of the Code. 

4Section 101(c) of the SECURE Act also amended 

title I of ERISA to introduce the term ‘‘pooled plan 

provider,’’ as well as the term ‘‘pooled employer 

plan’’ for a plan with a pooled plan provider. See 

ERISA sections 3(44) and 3(43), respectively. These 

ERISA provisions do not address compliance under 

the Code for plans described in section 401(a) or 

408, but the requirements for pooled plan providers 

and pooled employer plans are otherwise similar to 

the requirements in section 413(e). 

413(c) often is referred to as a multiple 

employer plan (MEP) or a section 413(c) 

plan. 

Final regulations under section 413 

were published in the Federal Register 

on November 9, 1979, 44 FR 65061 (the 

final section 413 regulations). The final 

section 413 regulations apply to MEPs 

described in section 413(c) and to 

collectively bargained plans described 

in section 413(b) (plans that are 

maintained pursuant to certain 

collective-bargaining agreements 

between employee representatives and 

one or more employers). 

Pursuant to section 413(c) and the 

final section 413 regulations, all of the 

employers maintaining a MEP 

(participating employers) are treated as 

a single employer for purposes of 

certain Code requirements, which 

include the following requirements: 

• Under section 413(c)(1) and 26 

CFR1.413–2(b), the rules addressing 

plan participation under section 410(a) 

and the regulations thereunder are 

applied as if all employees of each of 

the employers that maintain the plan are 

employed by a single employer; 

• under section 413(c)(2) and § 1.413– 

2(c), in determining whether a MEP is, 

with respect to each participating 

employer, a plan for the exclusive 

benefit of its employees (and their 

beneficiaries), all of the employees 

participating in the plan are treated as 

employees of each such employer; and 

• under section 413(c)(3) and § 1.413– 

2(d), the minimum vesting standards 

under section 411 are applied as if all 

employers that maintain the plan 

constitute a single employer. 

Other rules are applied separately to 

each participating employer. For 

example, under § 1.413–2(a)(3)(ii), the 

minimum coverage requirements of 

section 410(b) generally are applied to a 

MEP on an employer-by-employer basis. 

A plan is not described in section 

413(c) unless it is maintained by more 

than one employer and is a single plan 

under section 414(l). See §§ 1.413– 

2(a)(2)(i) and 1.413–1(a)(2). Under 

§ 1.414(l)–1(b), a plan is a single plan if 

and only if, on an ongoing basis, all of 

the plan assets are available to pay 

benefits to employees who are covered 

by the plan and their beneficiaries. 

Under § 1.413–2(a)(3)(iv), the 

qualification of a MEP ‘‘is determined 

with respect to all employers 

maintaining the section 413(c) plan’’ 

(sometimes referred to as the unified 

plan rule). Therefore, the failure by one 

employer maintaining the plan (or by 

the plan itself) to satisfy an applicable 

qualification requirement will result in 

the disqualification of the section 413(c) 

plan for all employers maintaining the 

plan. 

The section 413(c) proposed 

regulations, which are being withdrawn, 

would have created an exception to the 

unified plan rule for certain defined 

contribution MEPs. The exception 

generally would have been available, 

provided that certain conditions were 

satisfied, if a participating employer in 

a MEP was solely responsible for a 

qualification failure that the employer 

was unable or unwilling to correct, or if 

a participating employer failed to 

comply with a plan administrator’s 

request for information about a 

qualification failure that the plan 

administrator reasonably believed might 

exist. 

Written comments responding to the 

section 413(c) proposed regulations 

were received, and a public hearing was 

held on December 11, 2019. The 

provisions of these proposed regulations 

were informed by the comments 

received with respect to the section 

413(c) proposed regulations. 

II. SECURE Act Provisions Related to 

MEPs 

Section 101(a) of the Setting Every 

Community Up for Retirement 

Enhancement Act of 2019 (SECURE 

Act), which was enacted on December 

20, 2019, as Division O of the Further 

Consolidated Appropriations Act of 

2020, Public Law 116–94 (133 Stat. 

2534), added section 413(e) to the Code. 

Section 413(e) creates a statutory 

exception to the unified plan rule for 

certain types of MEPs and directs the 

Secretary to issue guidance that is 

appropriate to carry out that provision. 

A MEP is eligible for the exception to 

the unified plan rule if it is a section 

413(c) defined contribution plan 2

described in section 401(a) or consists of 

individual retirement accounts 

described in section 408 (including by 

reason of section 408(c)),3 provided that 

the MEP either is maintained by 

employers that have a ‘‘common 

interest’’ or has a ‘‘pooled plan 

provider.’’ 4 Section 413(e)(1) provides 

that, with certain exceptions, this type 

of MEP will not be treated as failing to 

meet the applicable requirements under 

the Code merely because one or more 

employers of employees covered by the 

plan fail to take actions that are required 

for the plan to meet those requirements. 

Section 413(e)(2)(A) provides that 

section 413(e)(1) will not apply unless 

the terms of the plan provide that, in the 

case of any employer in the plan failing 

to take the actions described in section 

413(e)(1), the assets of the plan 

attributable to employees of that 

employer (or beneficiaries of those 

employees) will be transferred to a plan 

maintained only by that employer (or its 

successor), to an eligible retirement plan 

as defined in section 402(c)(8)(B) for 

each individual whose account is 

transferred, or to any other arrangement 

that the Secretary determines is 

appropriate, unless the Secretary 

determines it is in the best interests of 

those employees (and their 

beneficiaries) to retain the assets in the 

plan. Section 413(e)(2)(A) also states 

that section 413(e)(1) will not apply 

unless the terms of the plan provide 

that, in the case of any employer failing 

to take the actions described in section 

413(e)(1), the employer (and not the 

plan or any other employer in the plan) 

will be liable for any liabilities with 

respect to the plan attributable to 

employees of that employer (or their 

beneficiaries), except to the extent 

provided by the Secretary. 

Section 413(e)(2)(B) provides that, if 

the pooled plan provider of a plan 

described in section 413(e)(1)(B) does 

not perform substantially all of the 

administrative duties required by 

section 413(e)(3)(A)(i) for any plan year, 

the Secretary may provide that the 

determination as to whether the plan 

meets the applicable Code requirements 

for a plan described in section 401(a) or 

a plan that consists of individual 

retirement accounts described in section 

408 (including by reason of section 

408(c)), whichever is applicable, will be 


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5The Department of Labor has issued guidance 

on the application of the bonding provision in its 

final rule on registration requirements for pooled 

plan providers. See 85 FR 72934, 72936 n.5 

(November 16, 2020). 

6For rules relating to section 413(c) plans, see 

§ 1.413–2. 

7The Department of Labor has advised the 

Treasury Department and the IRS that an 

arrangement with a pooled plan provider can 

qualify as a pooled employer plan under section 

3(43)(A) of ERISA without regard to whether the 

arrangement could be structured as a plan 

maintained by employers that have a common 

interest other than having adopted the plan. See 

also 86 FR 51488, 51490, n.12. 

made in the same manner as would be 

made without regard to section 

413(e)(1). 

Section 413(e)(3)(A) provides that, for 

purposes of section 413(e), the term 

pooled plan provider means, with 

respect to any plan, a person who: 

• Is designated by the terms of the 

plan as a named fiduciary (within the 

meaning of section 402(a)(2) of ERISA), 

as the plan administrator, and as the 

person responsible to perform specified 

administrative duties; 

• registers as a pooled plan provider 

with the Secretary, and provides such 

other information to the Secretary as the 

Secretary may require, before beginning 

operations as a pooled plan provider; 

• acknowledges in writing that such 

person is a named fiduciary (within the 

meaning of section 402(a)(2) of ERISA), 

and the plan administrator, with respect 

to the plan; and 

• is responsible for ensuring that all 

persons who handle assets of, or who 

are fiduciaries of, the plan are bonded 

in accordance with section 412 of 

ERISA.5

The administrative duties for which 

the pooled plan provider is responsible 

are the duties (including conducting 

proper testing with respect to the plan 

and the employees of each employer in 

the plan) that are reasonably necessary 

to ensure that (1) the plan meets any 

requirements under ERISA or the Code 

applicable to a plan described in section 

401(a) or to a plan that consists of 

individual retirement accounts 

described in section 408, whichever is 

applicable, and (2) each employer in the 

plan takes actions that the Secretary or 

the pooled plan provider determines are 

necessary for the plan to meet those 

requirements, including providing to 

the pooled plan provider any 

disclosures or other information that the 

Secretary may require or that the pooled 

plan provider otherwise determines are 

necessary to administer the plan or to 

allow the plan to meet the requirements 

of section 401(a) or 408. In determining 

whether a person meets the 

requirements to be a pooled plan 

provider with respect to any plan, all 

persons who perform services for the 

plan and who are treated as a single 

employer under section 414(b), (c), (m), 

or (o) are treated as one person. 

Section 413(e)(3)(B) provides that the 

Secretary may perform audits, 

examinations, and investigations of 

pooled plan providers as may be 

necessary to enforce and carry out the 

purposes of section 413(e). Section 

413(e)(3)(D) provides that each 

employer in a plan with a pooled plan 

provider is treated as the plan sponsor 

with respect to the portion of the plan 

attributable to employees of the 

employer (or their beneficiaries), except 

with respect to the administrative duties 

of the pooled plan provider described in 

section 413(e)(3)(A)(i). 

Section 413(e)(4)(A) directs the 

Secretary to issue guidance that the 

Secretary determines appropriate to 

carry out section 413(e), including 

guidance: (i) Identifying the 

administrative duties and other actions 

required to be performed by a pooled 

plan provider under section 413(e); (ii) 

describing the procedures to be taken to 

terminate a plan which fails to meet the 

requirements to be a plan described in 

section 413(e)(1), including the proper 

treatment of, and actions needed to be 

taken by, any employer in the plan and 

the assets and liabilities of the plan 

attributable to employees of the 

employer (or their beneficiaries); and 

(iii) identifying appropriate cases to 

which the rules of section 413(e)(2)(A) 

will apply to employers in the plan 

failing to take the actions described in 

section 413(e)(1), taking into account 

whether the failure of an employer or 

pooled plan provider to provide any 

disclosures or other information, or to 

take any other action, necessary to 

administer a plan or to allow a plan to 

meet requirements applicable to the 

plan under section 401(a) or 408, 

whichever is applicable, has continued 

over a period of time that demonstrates 

a lack of commitment to compliance. 

Section 413(e)(4)(B) states that an 

employer or pooled plan provider will 

not be treated as failing to meet a 

requirement of guidance issued 

pursuant to section 413(e)(4) if, before 

the guidance is issued, the employer or 

pooled plan provider complies in good 

faith with a reasonable interpretation of 

the provisions of section 413(e) to 

which the guidance relates. 

Section 413(e)(5) requires the 

Secretary to publish model plan 

language which meets the requirements 

of section 413(e) and section 3(43) and 

(44) of ERISA and which may be 

adopted in order for a plan to be treated 

as a plan that has a pooled plan 

provider. 

Section 101(e)(2) of the SECURE Act 

states that nothing in the amendments 

made by section 101(a) of the SECURE 

Act shall be construed as limiting the 

authority of the Secretary of the 

Treasury or the Secretary’s delegate 

(determined without regard to such 

amendments) to provide for the proper 

treatment of a failure to meet any 

requirement applicable under the Code 

with respect to one employer (and its 

employees) in a multiple employer plan. 

Explanation of Provisions 

I. Overview 

The proposed regulations provide 

guidance to implement the exception to 

the unified plan rule for section 413(e) 

plans (unified plan exception). The 

proposed regulations define a section 

413(e) plan as a defined contribution 

plan described in section 401(a), or a 

plan that consists of individual 

retirement accounts described in section 

408 (including accounts described in 

sections 408(c), 408(k), or 408(p)), that 

is a section 413(c) plan (as defined in 

§ 1.413–2(a)(2)) and that (1) is 

maintained by employers that have a 

common interest other than having 

adopted the plan or (2) has a pooled 

plan provider. Because a section 413(e) 

plan is a type of section 413(c) plan, a 

section 413(e) plan is subject to all of 

the rules of section 413(c), including the 

rules for participation in section 

413(c)(1) and the rules for vesting in 

section 413(c)(3).6

These proposed regulations do not 

provide guidance on whether a section 

413(e) plan is maintained by employers 

that have a common interest other than 

having adopted the plan. The Treasury 

Department and the IRS request 

comments on what (if any) guidance 

would be helpful regarding whether 

employers have such a common 

interest, including how any guidance 

should be coordinated with guidance 

issued by the Department of Labor. An 

employer that desires to participate in a 

section 413(e) plan may choose to 

participate in a defined contribution 

plan described in section 401(a) or 408 

with a pooled plan provider in order to 

ensure that the plan is a plan described 

in section 413(e).7

Under the unified plan exception, a 

section 413(e) plan is not treated as 

failing to meet the requirements under 

the Code applicable to a plan described 

in section 401(a) or to a plan that 

consists of individual retirement 

accounts described in section 408 

(including accounts described in section 

408(c), 408(k), or 408(p)), whichever is 

applicable, merely because of a 


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8Section 1.416–1, Q&A G–2, includes a rule 

similar to the unified plan rule, providing that a 

failure by a MEP to satisfy section 416 with respect 

to employees of one participating employer means 

that all participating employers in the MEP are 

maintaining a plan that is not a qualified plan. This 

rule is based on the unified plan rule in § 1.413– 

2(a)(3)(iv). Therefore, if a section 413(e) plan has an 

unresponsive employer that fails to satisfy section 

416 and the section 413(e) plan meets the 

conditions for the exception to the unified plan 

rule, the section 413(e) plan will not be disqualified 

for the section 416 failure. The rules in § 1.416–1 

are outside the scope of these proposed regulations, 

but the Treasury Department and the IRS intend to 

address the topic in a broader guidance project 

updating the regulations under section 416. 

9 In defining the amounts attributable to the 

employees of the unresponsive participating 

employer, the references in these proposed 

regulations to circumstances in which there is no 

‘‘separate accounting’’ are not intended to address 

the recordkeeping obligations under Title I of 

ERISA, including sections 107 and 209 of ERISA, 

of an employer, plan administrator, or other plan 

fiduciary. 

10 In determining whether a person meets the 

requirements to be a pooled plan provider with 

respect to any section 413(e) plan, all persons who 

perform services for the plan and who are treated 

as a single employer under section 414(b), (c), (m), 

or (o) are treated as one person. 

participating employer failure.8 For the 

unified plan exception to apply, the 

proposed regulations provide that 

certain conditions must be satisfied, 

including that the section 413(e) plan 

administrator must notify the 

participating employer of the 

participating employer failure and, in 

certain circumstances, transfer amounts 

attributable to the employees of the 

unresponsive participating employer to 

a separate plan maintained by the 

employer or provide an election to 

certain participants to remain in the 

plan or to have their accounts 

transferred to another eligible retirement 

plan. 

In addition to defining a section 

413(e) plan, the proposed regulations 

provide a number of other definitions, 

including the following: (1) A section 

413(e) plan administrator is the plan 

administrator, within the meaning of 

section 414(g), of a section 413(e) plan; 

(2) a participating employer is one of the 

employers maintaining a section 413(e) 

plan; (3) an unresponsive participating 

employer is a participating employer 

that has a participating employer 

failure; (4) an employee is a current or 

former employee of a participating 

employer; (5) a beneficiary is a 

beneficiary of a deceased employee or 

an alternate payee (as defined in section 

414(p)) with respect to an employee; 

and (6) a participating employer is one 

of the employers maintaining a section 

413(e) plan. As discussed in the 

following paragraphs, the proposed 

regulations also include definitions for 

the following terms: (1) Participating 

employer failure, (2) amounts 

attributable to the employees of the 

unresponsive participating employer, 

and (3) pooled plan provider. 

The proposed regulations define a 

participating employer failure in a 

section 413(e) plan as a failure to 

provide information or a failure to take 

action. A failure to provide information 

is defined as a failure of a participating 

employer (or any person that is treated 

as a single employer with that employer 

under section 414(b), (c), (m), or (o)) to 

respond in a timely manner to a 

reasonable request by the section 413(e) 

plan administrator for data, documents, 

or any other information that the plan 

administrator reasonably believes is 

necessary to determine whether a 

section 413(e) plan is in compliance 

with a requirement of section 401(a) or 

408 as it relates to the participating 

employer. A failure to take action is 

defined as a failure of a participating 

employer (or any person that is treated 

as a single employer with that employer 

under section 414(b), (c), (m), or (o)) to 

comply in a timely manner with a 

reasonable request by a section 413(e) 

plan administrator to take action needed 

for the section 413(e) plan to satisfy a 

requirement of section 401(a) or 408 as 

it relates to the participating employer. 

For purposes of these definitions, a 

section 413(e) plan administrator’s 

request would not be considered 

reasonable if it fails to give the employer 

sufficient time to provide information or 

take action (and, consequently, a 

participating employer’s failure to 

respond to an unreasonable request 

would not be considered a participating 

employer failure). 

The proposed regulations define 

amounts attributable to the employees 

of the unresponsive participating 

employer as plan assets and account 

balances held by a section 413(e) plan 

on behalf of employees of an 

unresponsive participating employer 

that are attributable to their employment 

with the unresponsive participating 

employer. The proposed regulations 

provide rules that apply if there is no 

separate accounting for amounts that are 

attributable to employment with the 

unresponsive participating employer 

and with other participating 

employers.9 If a participant’s account 

balance includes amounts that are 

attributable to current employment with 

the unresponsive participating employer 

and to previous employment with one 

or more other participating employers, 

the entire account balance is treated as 

attributable to employment with the 

unresponsive participating employer. 

On the other hand, if a participant’s 

account balance includes amounts that 

are attributable to current employment 

with a participating employer that is not 

the unresponsive participating employer 

and to previous employment with the 

unresponsive participating employer, 

none of the account balance is treated as 

attributable to employment with the 

unresponsive participating employer. 

For purposes of this definition, a 

participant’s most recent employment 

with a participating employer in the 

MEP will be treated as the participant’s 

current employment. 

Under the proposed regulations, the 

term pooled plan provider means, with 

respect to any plan, a person who: (1) 

Registers as a pooled plan provider with 

the Commissioner; (2) is designated by 

the terms of the plan as a named 

fiduciary (within the meaning of section 

402(a)(2) of ERISA), as the plan 

administrator, and as the person 

required to perform certain 

administrative duties; (3) acknowledges 

in writing that, with respect to the plan, 

it is a named fiduciary and the plan 

administrator; and (4) is responsible for 

ensuring that all persons who handle 

assets of, or who are fiduciaries of, the 

plan are bonded in accordance with 

section 412 of ERISA. 

The requirement to register as a 

pooled plan provider with the 

Commissioner is fulfilled by satisfying 

the parallel requirement under ERISA to 

register as a pooled plan provider with 

the Department of Labor. On November 

16, 2020, the Department of Labor 

issued final regulations under section 

3(44) of ERISA (29 CFR 2510.3–44) with 

respect to the registration requirement. 

See 85 FR 72934. 

Consistent with section 

413(e)(3)(A)(i), the proposed regulations 

require a pooled plan provider to 

perform all administrative duties that 

are reasonably necessary to ensure that: 

(1) The plan meets any applicable 

requirement under ERISA or the Code 

for a plan described in section 401(a) or 

for a plan that consists of individual 

retirement accounts described in section 

408 (including accounts described in 

section 408(c), 408(k), or 408(p)), 

whichever is applicable, and (2) each 

participating employer takes actions, 

including providing any disclosures or 

other information, that are necessary for 

the plan to meet those requirements.10

The administrative duties of a pooled 

plan provider include, but are not 

limited to, the following: 

(1) Monitoring compliance with the 

terms of the plan, and Code and ERISA 

requirements; 


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11As described in Part II.E.2 of this Explanation 

of Provisions, titled ‘‘Failure to Provide Information 

that Becomes a Failure to Take Action,’’ if the 

notices relate to a failure to provide information 

that becomes a failure to take action, then a new 

series of notices may be required. 

(2) Maintaining accurate plan data, 

including providing up-to-date 

participant and beneficiary information; 

(3) Performing and conducting 

coverage, top-heavy, and discrimination 

testing under sections 401(a)(4), (k), and 

(m), 408(k), 410, and 416, if applicable; 

(4) Processing all employee 

transactions (such as investment 

changes, loans, and distributions); 

(5) Satisfying Code and ERISA 

reporting and notice requirements (such 

as reporting requirements under 

sections 6047 (Form 1099–R, 

‘‘Distributions From Pensions, 

Annuities, Retirement or Profit-Sharing 

Plans, IRAs, Insurance Contracts, etc.’’) 

and 6058 (Form 5500, ‘‘Annual Return/ 

Report of Employee Benefit Plan’’), and 

notice requirements under sections 

401(k)(12)(D) and (13)(E) and 402(f)); 

and 

(6) Updating the plan to reflect 

statutory changes to the Code and 

ERISA, to the extent the responsibility 

for updating the plan document has 

been delegated to the section 413(e) 

plan administrator. 

II. Conditions for Application of 

Exception to Unified Plan Rule 

A. In General 

The proposed regulations provide 

that, under the unified plan exception, 

a section 413(e) plan is not disqualified 

on account of a participating employer 

failure, provided that the plan satisfies 

certain conditions, which are described 

in Parts II.B through II.G of this 

Explanation of Provisions. 

B. Plan Language 

The proposed regulations provide that 

the terms of the section 413(e) plan 

document must include language 

describing the procedures that will be 

followed to address a participating 

employer failure, including a 

description of the notices that the 

section 413(e) plan administrator will 

send in the case of a participating 

employer failure (described in Part II.C 

of this Explanation of Provisions, titled 

‘‘Notice Requirements’’). The plan must 

also state that the section 413(e) plan 

administrator will send the first notice 

(or, if applicable, the combined first and 

second notice) by specified deadlines 

that depend on the type of failure. With 

respect to a failure to provide 

information, the specified deadline for 

sending the first notice is 12 months 

following the end of the plan year for 

which the information is necessary to 

determine whether the section 413(e) 

plan is in compliance with a 

requirement of section 401(a) or 408. 

With respect to a failure to take action, 

the specified deadline is 24 months 

following the end of the plan year in 

which the failure to satisfy a 

requirement of section 401(a) or 408 

occurs. 

In addition, the plan terms must 

describe the actions that the section 

413(e) plan administrator will take if, by 

the end of the 60-day period following 

the date the final notice is provided, the 

unresponsive participating employer 

does not take appropriate remedial 

action with respect to the failure or 

initiate a spinoff of amounts attributable 

to the employees of the unresponsive 

participating employer to a separate 

single-employer plan that is maintained 

by the employer. The terms of the 

section 413(e) plan must also provide 

that if an unresponsive participating 

employer does not either take 

appropriate remedial action or initiate a 

spinoff by that deadline, participants 

who are employees of the unresponsive 

participating employer have a 

nonforfeitable right to the amounts 

credited to their accounts that are 

attributable to employment with the 

unresponsive participating employer, 

determined in the same manner as if the 

plan had terminated pursuant to section 

411(d)(3). In connection with the 

finalization of these proposed 

regulations, the Treasury Department 

and the IRS intend to publish guidance 

in the Internal Revenue Bulletin setting 

forth model language that may be used 

for this purpose. 

The section 413(c) proposed 

regulations provided that a plan was 

ineligible for the unified plan exception 

if the plan was under examination 

before the first notice with respect to a 

participating employer failure was 

provided to an unresponsive 

participating employer. These proposed 

regulations do not include that 

condition. However, see the discussion 

in Part VI of this Explanation of 

Provisions, titled ‘‘Coordination with 

EPCRS,’’ on correcting a failure to send 

the first notice by the specified 

deadline, including when a plan is 

under examination. 

C. Notice Requirements 

The proposed regulations require the 

section 413(e) plan administrator to 

provide up to three notices regarding a 

participating employer failure to the 

unresponsive participating employer; 

with the final notice, if applicable, also 

being provided to participants who are 

employees of the employer (and their 

beneficiaries) and the Department of 

Labor.11

The first notice must describe the 

participating employer failure (or 

failures), as well as the actions the 

unresponsive participating employer 

must take to remedy the failure, and the 

employer’s option to initiate a spinoff of 

amounts attributable to the employees 

of the unresponsive participating 

employer to a separate single-employer 

plan that is maintained by the employer. 

The first notice must also explain the 

consequences under the terms of the 

plan if the unresponsive participating 

employer neither takes appropriate 

remedial action with respect to the 

participating employer failure nor 

initiates a spinoff, including that 

participants who are employees of the 

employer will not have any further 

contributions made to the plan on their 

behalf and that individuals who are 

responsible for the failure may have 

adverse tax consequences. 

If, by the end of the 60-day period 

following the date the first notice is 

provided, the unresponsive 

participating employer neither takes 

appropriate remedial action with 

respect to the participating employer 

failure nor initiates a spinoff (as 

described in Part II.D of this 

Explanation of Provisions, titled 

‘‘Actions by Unresponsive Participating 

Employer’’), then the section 413(e) plan 

administrator must provide a second 

notice to the employer. The second 

notice must be provided no later than 30 

days after the expiration of the 60-day 

period following the date the first notice 

is provided. The second notice must 

include the information required to be 

included in the first notice. The second 

notice must also state that, if, within 60 

days following the date the second 

notice is provided, the unresponsive 

participating employer neither takes 

appropriate remedial action with 

respect to the participating employer 

failure nor initiates a spinoff, then a 

final notice describing the participating 

employer failure and the consequences 

of not correcting the failure will be 

provided to participants who are 

employees of the employer (and their 

beneficiaries) and to the Department of 

Labor. 

The proposed regulations provide that 

if, by the end of the 60-day period 

following the date the second notice is 

provided, the unresponsive 

participating employer neither takes 

appropriate remedial action with 

respect to the participating employer 

failure nor initiates a spinoff, then the 


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12The notice to the Department of Labor should 

be mailed to the Employee Benefits Security 

Administration’s Office of Enforcement (or its 

successor office). The Office of Enforcement is 

currently located at 200 Constitution Ave. NW, 

Suite 600, Washington, DC 20210. 

section 413(e) plan administrator must 

provide a final notice to the employer. 

The final notice must be provided no 

later than 30 days after the expiration of 

the 60-day period following the date the 

second notice is provided. Within this 

time period, the final notice must also 

be provided to participants who are 

employees of the unresponsive 

participating employer (and their 

beneficiaries) and to the Office of 

Enforcement of the Employee Benefits 

Security Administration in the 

Department of Labor (or its successor 

office).12 The final notice must include 

the information required to be included 

in the first notice and specify the final 

deadline for an unresponsive 

participating employer to take action 

(which is 60 days after the final notice 

is provided). The final notice must also 

state that the notice is being provided to 

participants who are employees of the 

unresponsive participating employer 

(and their beneficiaries) and to the 

Department of Labor. 

The section 413(c) proposed 

regulations also required plan 

administrators to send up to three 

notices with respect to a participating 

employer failure, but provided a 90-day 

period between notices. The shorter 60- 

day period between notices in these 

proposed regulations is provided in 

response to comments recommending 

that the overall notice period be 

shortened. 

D. Actions by Unresponsive 

Participating Employer 

The proposed regulations provide that 

after the unresponsive participating 

employer has received notice of the 

participating employer failure, the 

employer has the opportunity to either 

take appropriate remedial action or 

initiate a spinoff. The final deadline for 

the unresponsive participating employer 

to take one of these actions is 60 days 

after the final notice is provided. The 

consequences of the employer’s failure 

to meet this deadline are described in 

Part II.F of this Explanation of 

Provisions, titled ‘‘Required Actions 

Following Employer’s Failure to Meet 

Deadline.’’ 

The proposed regulations provide that 

if a participating employer failure is a 

failure to provide information, the 

unresponsive participating employer 

takes appropriate remedial action with 

respect to that failure if the employer (or 

any person that is treated as a single 

employer with the employer under 

section 414(b), (c), (m), or (o)) provides 

the data, documents, or other 

information requested by a section 

413(e) plan administrator (or arranges 

for that information to be provided to 

the section 413(e) plan administrator). If 

a participating employer failure is a 

failure to take action, the unresponsive 

participating employer takes 

appropriate remedial action with 

respect to the failure if the employer (or 

any person that is treated as a single 

employer with the employer under 

section 414(b), (c), (m), or (o)) takes all 

actions requested by the section 413(e) 

plan administrator, such as making 

corrective contributions, needed for the 

section 413(e) plan to satisfy the 

applicable requirements of section 

401(a) or 408. 

As an alternative to taking appropriate 

remedial action with respect to a failure 

to provide information or a failure to 

take action, the proposed regulations 

provide that an unresponsive 

participating employer may, after 

receiving notice of the participating 

employer failure, initiate a spinoff. An 

unresponsive participating employer 

initiates a spinoff by directing the 

section 413(e) plan administrator to spin 

off amounts attributable to the 

employees of the unresponsive 

participating employer to a separate 

single-employer plan that is maintained 

by the employer in a manner consistent 

with the terms of the section 413(e) 

plan. If the section 413(e) plan is 

described in section 401(a), then the 

spun-off plan must also be a section 

401(a) plan. If the section 413(e) plan 

consists of individual retirement 

accounts described in section 408 

(including accounts described in section 

408(c), (k), or (p)), then the spun-off 

plan must also consist of individual 

retirement accounts described in section 

408. The section 413(e) plan 

administrator must implement the 

spinoff, as described in Part II.E.2 of this 

Explanation of Provisions, titled 

‘‘Implementing a Spinoff.’’ 

E. Actions by Section 413(e) Plan 

Administrator Relating to Remedial 

Action or Employer-Initiated Spinoff 

1. Failure To Provide Information That 

Becomes a Failure To Take Action 

The proposed regulations describe 

when a failure to provide information 

becomes a failure to take action. This 

situation could occur if an unresponsive 

participating employer takes 

appropriate remedial action with 

respect to a failure to provide 

information, and the section 413(e) plan 

administrator determines that, based on 

the information provided by the 

employer, there is a failure to satisfy a 

requirement of section 401(a) or 408 as 

it relates to that employer’s 

participation in the section 413(e) plan. 

If the section 413(e) plan administrator 

makes a reasonable request for the 

employer to take the actions needed to 

satisfy the requirement, and the 

employer does not comply in a timely 

manner with that request, then the 

failure to provide information becomes 

a failure to take action. 

If a failure to provide information 

becomes a failure to take action, a 

section 413(e) plan will be eligible for 

the unified plan exception with respect 

to the failure to take action by satisfying 

the conditions set forth in the proposed 

regulations with respect to that failure. 

In satisfying those conditions, notices 

provided during the period that the 

failure was a failure to provide 

information are not taken into account. 

For example, a final notice that the 

section 413(e) plan administrator 

provided in connection with the failure 

to provide information would not satisfy 

the final notice requirement with 

respect to the failure to take action. 

However, in response to comments on 

the section 413(c) proposed regulations 

that there were too many notices 

required in cases in which the failure to 

provide information became a failure to 

take action, the proposed regulations 

permit the section 413(e) plan 

administrator to reduce the number of 

notices that it sends to the employer in 

this situation. Specifically, if the section 

413(e) plan administrator had provided 

the second notice with respect to a 

failure to provide information before it 

became a failure to take action, then the 

section 413(e) plan administrator may 

satisfy the requirement to send a first 

and second notice with respect to the 

failure to take action by sending a 

combined first and second notice to the 

unresponsive participating employer, 

provided that (1) the section 413(e) plan 

administrator’s request to take action 

(described in the first paragraph under 

this Part II.E of this Explanation of 

Provisions) is made as soon as 

reasonably practicable after the 

determination of the failure to satisfy a 

requirement of section 401(a) or 408 as 

it relates to that employer’s 

participation in the section 413(e) plan, 

and (2) the section 413(e) plan 

administrator provides the combined 

first and second notice with respect to 

the failure to take action not later than 

24 months following the end of the plan 

year in which the failure to satisfy a 

requirement of section 401(a) or 408 

occurs. The combined first and second 

notice must include information similar 


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13Whether an action is taken as soon as 

administratively feasible is determined under all 

the facts and circumstances. See Rev. Rul. 89–87, 

1989–2 CB 81 (Whether a distribution is made as 

soon as administratively feasible after the date of 

plan termination specified by an employer is to be 

determined under all the facts and circumstances of 

a given case but, generally, a distribution that is not 

completed within one year following the date of 

termination will be presumed not to have been 

made as soon as administratively feasible.) 

to the information required for the first 

and second notices described in Part 

II.C of this Explanation of Provisions, 

titled ‘‘Notice Requirements.’’ For 

example, the combined first and second 

notice must describe the participating 

employer failure, the actions the 

unresponsive participating employer 

would need to take to remedy the 

failure, and the consequences under the 

terms of the plan if the employer neither 

takes appropriate remedial action with 

respect to the failure nor initiates a 

spinoff of amounts attributable to the 

employees of the unresponsive 

participating employer. In addition, the 

combined first and second notice must 

specify that, if, within 60 days following 

the date the combined first and second 

notice is provided, the unresponsive 

participating employer neither takes 

appropriate remedial action with 

respect to the participating employer 

failure nor initiates a spinoff, then the 

final notice described in Part II.C of this 

Explanation of Provisions, titled ‘‘Notice 

Requirements,’’ will be provided to 

participants who are employees of the 

employer (and their beneficiaries) and 

to the Department of Labor. 

2. Implementing a Spinoff 

The proposed regulations provide that 

if, instead of taking appropriate 

remedial action (as described in Part 

II.D of this Explanation of Provisions, 

titled ‘‘Actions by Unresponsive 

Participating Employer’’), an 

unresponsive participating employer 

initiates a spinoff of amounts 

attributable to the employees of the 

unresponsive participating employer to 

a separate single-employer plan 

established and maintained by the 

employer, or to a separate plan 

sponsored by the employer that consists 

of individual retirement accounts, then 

the section 413(e) plan administrator 

must implement and complete the 

spinoff as soon as reasonably practicable 

after the employer initiates the spinoff. 

Under a safe harbor in the proposed 

regulations in § 1.413–3(d)(2), the 

section 413(e) plan administrator is 

treated as satisfying this requirement if 

the spinoff is completed within 180 

days of the date on which the 

unresponsive participating employer 

initiates the spinoff. Comments are 

requested on whether there are any 

circumstances in which it would be 

appropriate for any of the amounts 

attributable to the employees of the 

unresponsive participating employer to 

remain in the MEP after the employer 

has specifically directed that there be a 

spinoff, and, if so, what those 

circumstances are, and for which 

employees this treatment may be 

appropriate. 

F. Required Actions Following 

Employer’s Failure To Meet Deadline 

The proposed regulations provide that 

if, by the final deadline (60 days after 

the final notice is provided), an 

unresponsive participating employer 

neither takes appropriate remedial 

action nor initiates a spinoff, then as 

soon as reasonably practicable after that 

deadline, the section 413(e) plan 

administrator must: (1) Stop accepting 

contributions from the unresponsive 

participating employer and its 

employees; (2) provide notice to 

participants who are employees of the 

unresponsive participating employer 

(and their beneficiaries); and (3) to the 

extent provided in the proposed 

regulations, provide participants who 

are employees of the unresponsive 

participating employer (and their 

beneficiaries) with an election regarding 

treatment of their plan accounts. In 

addition, the section 413(e) plan 

administrator must distribute benefits as 

soon as administratively feasible 

following an individual’s election or 

following the section 413(e) plan 

administrator’s determination that it is 

not required to provide an individual 

with an election.13

The notice to participants required by 

§ 1.413–3(e)(1)(ii)(B) and (e)(2) of the 

proposed regulations must state that: (1) 

No further contributions will be made to 

the section 413(e) plan on behalf of 

participants who are employees of the 

unresponsive participating employer; 

(2) participants who are employees of 

the unresponsive participating employer 

have a nonforfeitable right to amounts 

credited to their accounts that are 

attributable to employment with the 

unresponsive participating employer; 

and (3) a participant who is an 

employee of the unresponsive 

participating employer (or, if applicable, 

any beneficiary of the participant) will 

receive additional information regarding 

the disposition of the participant’s or 

beneficiary’s account. 

To satisfy the election requirement in 

§ 1.413–3(e)(1)(ii)(C) of the proposed 

regulations, except as otherwise 

provided by the proposed regulations, a 

section 413(e) plan administrator must 

provide participants who are employees 

of the unresponsive participating 

employer (and their beneficiaries) with 

an election to have amounts attributable 

to the employees of the unresponsive 

participating employer (1) directly 

rolled over to an eligible retirement plan 

within the meaning of section 402(c)(8), 

or (2) remain in the section 413(e) plan. 

With respect to this election, under a 

default rule in § 1.413–3(e)(3)(ii) of the 

proposed regulations, an individual 

who fails to make an affirmative 

election is treated as having elected to 

have those amounts remain in the 

section 413(e) plan. 

The option to remain in the plan is 

consistent with section 413(e)(2)(A), 

which requires the terms of the plan to 

provide, in part, that the plan assets 

attributable to the employees of the 

unresponsive participating employer 

will be transferred to an eligible 

retirement plan or to another 

arrangement that the Secretary 

determines is appropriate, unless the 

Secretary determines that it is in their 

best interests to retain the assets in the 

plan. The Treasury Department and the 

IRS have determined that it is in the 

best interest of an individual who elects 

to remain in the section 413(e) plan to 

have that election followed. In addition, 

the default rule with respect to that 

election, under which the account of an 

individual who does not make an 

affirmative election will remain in the 

section 413(e) plan, is consistent with 

the consent requirements of section 

411(a)(11). 

The proposed regulations provide that 

if an individual elects to have amounts 

attributable to the employees of the 

unresponsive participating employer 

remain in the section 413(e) plan, those 

amounts must remain in the section 

413(e) plan until a distribution is made 

under the terms of the plan without 

regard to section 413(e). Although the 

terms of the section 413(e) plan 

continue to apply to a participant 

remaining in the plan, the section 413(e) 

plan administrator may not have contact 

with the participating employer after 

contributions have ceased (and, 

therefore, may not be notified about the 

individual’s severance from 

employment with the employer). 

Accordingly, the proposed regulations 

provide that, in determining whether a 

participant is entitled to a distribution 

upon severance from employment, a 

section 413(e) plan administrator may 

rely on the participant’s representation 

that the participant has experienced a 

severance from employment, unless the 

section 413(e) plan administrator has 

actual knowledge to the contrary. 


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The option to remain in the plan is 

not available to an individual if plan 

terms would have provided for a 

mandatory distribution of those 

amounts had the participant 

experienced a severance from 

employment. Instead, those amounts 

must be distributed from the section 

413(e) plan. In this situation, the 

proposed regulations provide rules for 

the disposition of the mandatory 

distribution, based on the applicability 

of section 401(a)(31) under the terms of 

the plan that would apply in the case of 

a severance from employment. 

Comments are requested on whether 

there should be special rules for 

mandatory distributions that apply in 

this situation, including in cases 

involving missing participants. 

The proposed regulations provide that 

the portion of the mandatory 

distribution that is an eligible rollover 

distribution subject to section 

401(a)(31)(B) must be directly rolled 

over to an eligible retirement plan. In 

accordance with section 401(a)(31)(B), 

the section 413(e) plan administrator 

must provide the individual with an 

election for the rollover to be made 

either to an eligible retirement plan 

chosen by the individual or to an 

individual retirement plan of a 

designated trustee or issuer. For 

example, a section 413(e) plan 

administrator is not required to provide 

the option to remain in the plan to an 

individual with an account balance of 

$3,000 if, consistent with sections 

401(a)(31)(B) and 411(a)(11), plan terms 

require mandatory distributions with 

respect to a participant who experiences 

a severance from employment with an 

account balance of up to $5,000 and 

automatic rollover of distributions with 

respect to an participant who 

experiences a severance from 

employment with an account balance 

that exceeds $1,000. 

For any portion of the mandatory 

distribution that is an eligible rollover 

distribution subject to section 

401(a)(31)(A) (but not section 

401(a)(31)(B)), the section 413(e) plan 

administrator must provide the 

individual with an election in 

accordance with section 401(a)(31)(A) 

for that portion to be rolled over directly 

to an eligible retirement plan chosen by 

the individual or, if no eligible 

retirement plan is chosen, paid directly 

to the individual. 

For the portion of a mandatory 

distribution that is not subject to the 

requirement to offer a direct rollover 

option under section 401(a)(31), the 

section 413(e) plan administrator must 

pay the individual. For example, a 

section 413(e) plan administrator is not 

required to provide an election to an 

individual with an account balance of 

less than $200 if, consistent with section 

411(a)(11) and § 1.401(a)(31), Q&A–11, 

plan terms require that mandatory 

distributions of less than $200 be paid 

directly to distributees. 

Giving an individual an election to 

have amounts transferred to an 

individual retirement plan generally 

does not mean that a distribution may 

be paid directly to the individual. 

However, if, pursuant to the proposed 

regulations, an individual makes an 

election to have an amount directly 

rolled over to an eligible retirement 

plan, and a portion of the amount is not 

an eligible rollover distribution 

described in section 402(c)(4), then that 

portion must be paid directly to the 

individual. For example, the portion of 

a distribution that would be a required 

minimum distribution under section 

401(a)(9) must be paid directly to the 

individual rather than directly rolled 

over. In addition, if an individual is 

otherwise entitled to a distribution from 

the section 413(e) plan without regard to 

section 413(e), the individual may elect 

to have amounts paid directly to the 

individual. 

Any election that is provided to an 

individual pursuant to the proposed 

regulations must include an effective 

opportunity for the individual to make 

the election. Whether an individual has 

an effective opportunity is determined 

based on all the relevant facts and 

circumstances, including the adequacy 

of notice of the availability of the 

election, the period of time during 

which the election may be made, and 

any other conditions on the election. 

G. Duties of a Pooled Plan Provider 

The proposed regulations provide 

that, if a section 413(e) plan has a 

pooled plan provider during the plan 

year of a participating employer failure, 

the unified plan exception will not 

apply unless the pooled plan provider 

performs substantially all of the 

administrative duties that are required 

of the pooled plan provider for that 

year. 

III. Other Rules 

A. Form of Notices and Elections 

Any notice required to be provided or 

election required to be made under the 

proposed regulations must be in written 

or electronic form. For notices and 

elections provided to or made by 

participants and beneficiaries, see 

generally § 1.401(a)–21 for rules 

permitting the use of electronic media to 

provide applicable notices and make 

participant elections with respect to 

retirement plans. 

B. Status of Spun-Off Plan 

In the case of any plan that is spun 

off in accordance with the proposed 

regulations, any participating employer 

failure that would have caused the 

section 413(e) plan to fail to meet the 

requirements of section 401(a) or 408, as 

applicable, but for the application of the 

unified plan exception, will result in the 

spun-off plan failing to meet those 

requirements. 

C. Responsible Parties 

The proposed regulations provide that 

a participating employer demonstrates a 

lack of commitment to compliance if the 

participating employer fails to take 

appropriate remedial action or initiate a 

spinoff by the final deadline (60 days 

after the final notice). The IRS reserves 

the right to pursue appropriate remedies 

under the Code against any party (such 

as the owner of the participating 

employer) who is responsible for the 

failure to satisfy the requirements of 

section 401(a) or 408, as applicable, 

even in the party’s capacity as a 

participant or beneficiary (such as by 

not treating a section 413(e) plan 

distribution made with respect to the 

owner of a participating employer as an 

eligible rollover distribution). 

IV. Updates to Section 413(c) 

Regulations 

The proposed regulations update 

existing § 1.413–2 to reflect legislation 

enacted after the regulations were 

issued. The proposed regulations update 

the rules for determining the number of 

employers maintaining a plan for 

purposes of the requirement in § 1.413– 

2(a)(2)(i)(B) of the proposed regulations 

that a section 413(c) plan must be 

maintained by more than one employer. 

For purposes of that requirement, the 

proposed regulations include a rule that 

the number of employers maintaining a 

plan is determined by treating any 

employers described in section 414(m) 

(relating to affiliated service groups) as 

if such employers are a single employer. 

The existing regulations in § 1.413– 

2(a)(2) were issued in 1979 and, 

therefore, did not address section 

414(m), which was added by section 

201(a) of the Miscellaneous Revenue 

Act of 1980, Public Law 96–605 (94 Stat. 

3521). Section 414(m) provides that all 

employers in an affiliated service group 

shall be treated as a single employer for 

certain purposes. 

The proposed regulations also modify 

the definition of a section 413(c) plan 

and the unified plan rule in the final 

section 413(c) regulations to apply to a 


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14Section 414(l) does not apply to a plan that 

consists of individual retirement accounts 

described in section 408. Therefore, in § 1.413– 

2(a)(2)(i)(A), the proposed regulations limit the 

cross references to section 413(a) and § 1.413– 

1(a)(2) to apply only to qualified plans. 

15The Employee Plans Compliance Resolution 

System (EPCRS) is a comprehensive system of 

correction programs for sponsors of certain 

retirement plans, including plans that are intended 

to satisfy the requirements of sections 401(a), 

408(k), and 408(p). EPCRS provides procedures for 

an employer to correct a plan’s failure to satisfy an 

applicable qualification requirement so that the 

failure does not result in disqualification of the 

plan. EPCRS has been updated and expanded 

several times, most recently in Rev. Proc. 2021–30, 

2021–I.R.B. 324. The discussion in this Part VI of 

this Explanation of Provisions is limited to the 

application of EPCRS to qualified plans under 

section 401(a). See Rev. Proc. 2021–30 for rules 

under sections 408(k) and 408(p). 

16See section 4.03 of Rev. Proc. 2021–30. 

17Section 9 of Rev. Proc. 2021–30 addresses the 

period for correcting significant operational failures 

under SCP, including some exceptions to this 

general rule. 

18Under examination is defined in section 5.08 

of Rev. Proc. 2021–30. 

19 If correction has been substantially completed 

(as described in section 9.03 of Rev. Proc. 2021–30) 

before the end of the correction period, correction 

is permitted to be completed after the end of the 

correction period. 

20See section 14 of Rev. Proc. 2021–30. 

plan that consists of individual 

retirement accounts under section 408, 

remove a reference to section 405(a) 

from the final section 413(c) regulations 

(because that section was repealed), and 

modify the final section 413(c) 

regulations to add that the exclusive 

benefit provision in section 413(c)(2) 

applies for purposes of section 408(c).14

V. Withdrawal of Section 413(c) 

Proposed Regulations 

Because section 101 of the SECURE 

Act amended the Code with respect to 

the unified plan rule after the issuance 

of the section 413(c) proposed 

regulations, the Treasury Department 

and the IRS withdraw the section 413(c) 

proposed regulations. 

VI. Coordination With EPCRS 

A. In General 

Under EPCRS,15 a failure to follow 

plan terms is an operational failure that 

adversely affects plan qualification. An 

operational failure would include, for 

example, a section 413(e) plan 

administrator’s failure to provide the 

first notice by the applicable deadline 

included in plan terms, discussed in 

Part II.B of this Explanation of 

Provisions, titled ‘‘Plan Language.’’ 

EPCRS sets forth three programs for 

correcting operational failures. 

Under the Self-Correction Program 

(SCP), a plan sponsor that follows 

established compliance practices and 

procedures may correct operational 

failures without paying a fee or 

sanction. A plan sponsor of a qualified 

plan (for example, a plan that is 

intended to satisfy section 401(a)) may 

correct significant operational failures 

under SCP if the plan has a favorable 

determination letter or a favorable 

opinion or advisory letter.16 In general, 

correction of a significant operational 

failure through SCP must be completed 

by the last day of the correction period, 

which generally ends on the last day of 

the third plan year following the plan 

year for which the failure occurred.17

However, the correction period for a 

significant operational failure that 

occurs for any plan year ends on the 

first date the plan or plan sponsor is 

under examination 18 for that plan 

year.19

Under the Voluntary Correction 

Program (VCP), a plan sponsor, at any 

time before audit, may file a VCP 

submission, pay an applicable user fee, 

implement corrective actions, and 

satisfy any other conditions in an IRS 

compliance statement for correction of 

an operational failure in a qualified 

plan, SEP, or SIMPLE IRA Plan. In 

general, if the plan or plan sponsor is 

under examination, VCP is not 

available. 

Under the Audit Closing Agreement 

Program (Audit CAP), if an operational 

failure (other than a failure corrected 

through SCP or VCP) is identified on 

audit, the plan sponsor may correct the 

failure and pay a sanction. The sanction 

imposed will bear a reasonable 

relationship to the nature, extent, and 

severity of the failure, and will be based 

on a number of factors,20 including the 

maximum payment amount (which is 

approximately equal to the tax the IRS 

could collect upon plan 

disqualification). 

B. Using EPCRS To Correct an 

Operational Failure to Timely Provide 

the First Notice 

A section 413(e) plan administrator’s 

failure to provide the first notice with 

respect to a participating employer 

failure by the applicable deadline 

included in plan terms would not affect 

the section 413(e) plan’s eligibility for 

the unified plan exception. However, 

the failure to follow plan terms would 

result in an operational failure treated as 

a significant operational failure under 

EPCRS that is independent of any 

underlying participating employer 

failure. 

Whether SCP, VCP, or Audit CAP is 

available to correct an operational 

failure to provide the first notice by the 

applicable deadline will be determined 

under the rules of EPCRS. Because the 

failure is a significant operational 

failure, the failure may be corrected 

under SCP only if correction is 

completed (or substantially completed) 

by the end of the correction period, and 

the correction period generally ends on 

the last day of the third plan year 

following the plan year containing the 

deadline for sending the first notice. For 

example, if the deadline for sending the 

first notice is December 31, 2024, a 

failure to provide notice by that 

deadline generally may be corrected 

through SCP until December 31, 2027 

(assuming the plan year is the calendar 

year). If, however, the plan or plan 

sponsor comes under examination for 

2024 beginning on July 1, 2026, the 

correction period for SCP ends on July 

1, 2026, and SCP is no longer available 

(unless the correction had been 

substantially completed by that date). 

A failure to provide the first notice by 

the deadline included in the terms of 

the plan may also be corrected under 

VCP. If, for example, the deadline for 

sending the first notice is December 31, 

2024, and the correction period under 

SCP ends on December 31, 2027, then 

a VCP application may be submitted 

with respect to the failure in 2028 or in 

a later year, provided that neither the 

plan nor the plan sponsor is under 

examination for the plan year ending 

December 31, 2024. If SCP and VCP are 

not available with respect to a failure, 

the failure may be corrected under 

Audit CAP. 

C. Resolution of Participating Employer 

Failure 

If the unresponsive participating 

employer provides the information 

requested by the section 413(e) plan 

administrator in connection with a 

failure to provide information, there is 

no longer a failure to provide 

information. If the unresponsive 

participating employer takes the action 

requested by the plan administrator in 

connection with a failure to take action 

(and the plan satisfies the requirements 

of SCP, VCP, or Audit CAP, as 

applicable, with respect to the 

underlying failure), there is no longer a 

failure to take action. In either case, if 

a participating employer failure no 

longer exists, an operational failure to 

provide the first notice by the deadline 

included in plan terms with respect to 

that participating employer failure is 

treated as corrected. 

Proposed Applicability Date 

These regulations are proposed to 

apply beginning on the date of 

publication of the Treasury decision 

adopting these rules as final regulations 

in the Federal Register. Pursuant to 

section 413(e)(4)(B), until the final 


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21This calculation uses data from the 2018 Form 

5500, ‘‘Annual Return/Report of Employee Benefit 

Plan.’’ These filings indicate that there are 

approximately 4,523 defined contribution MEPs. 

See 2018 Form 5500 Annual Reports Abstract 

(dol.gov). We estimate that 4,500 defined 

contribution MEPs will satisfy the requirements to 

be a section 413(e) plan. 

regulations are published, an employer 

or pooled plan provider may rely on a 

good faith, reasonable interpretation of 

the provisions of section 413(e) to 

which the final regulations relate. 

Compliance with these proposed 

regulations is considered reliance on a 

good faith, reasonable interpretation of 

the provisions of section 413(e) to 

which the final regulations relate. 

Availability of IRS Documents 

For copies of recently issued revenue 

procedures, revenue rulings, notices and 

other guidance published in the Internal 

Revenue Bulletin, please visit the IRS 

website at www.irs.gov or contact the 

Superintendent of Documents, U.S. 

Government Printing Office, 

Washington, DC 20402. 

Special Analyses 

I. Regulatory Impact Analysis 

These regulations are not subject to 

review under section 6(b) of Executive 

Order 12866 pursuant to the 

Memorandum of Agreement (April 11, 

2018) between the Treasury Department 

and the Office of Management and 

Budget regarding review of tax 

regulations. 

II. Paperwork Reduction Act 

The following provisions of the 

proposed regulations contain a 

collection of information: (1) § 1.413– 

3(a)(2)(i) (requirement to adopt plan 

language); (2) § 1.413–3(a)(2)(ii)(A), (b), 

and (d)(1)(ii) (requirement to provide 

notice with respect to a participating 

employer failure); (3) § 1.413–3(a)(3) 

(requirements to be a pooled plan 

provider); (4) § 1.413–3(e)(1)(ii)(B) and 

(e)(2) (requirement to provide notice to 

certain participants and beneficiaries; 

and (5) § 1.413–3(e)(1)(ii)(C), (e)(3), and 

(e)(4) (requirement to provide an 

election to certain participants and 

beneficiaries). The collection of 

information contained in proposed 

§ 1.413–3 will generally be carried out 

by section 413(e) plan administrators 

seeking to satisfy the conditions for the 

exception to the unified plan rule. The 

collection of information in this notice 

of proposed rulemaking has been 

submitted to the Office of Management 

and Budget for review in accordance 

with the Paperwork Reduction Act of 

1995 (44 U.S.C. 3507(d)). 

1. Plan Language Requirement, § 1.413– 

3(a)(2)(i) 

Section 1.413–3(a)(2)(i) states that, as 

one of the conditions of the exception 

to the unified plan rule, a section 413(e) 

plan must include plan language that 

sets forth the procedures that will be 

followed to address participating 

employer failures. Thus, a section 413(e) 

plan will not be eligible for the 

exception to the unified plan rule if it 

does not satisfy this plan-language 

requirement. In general, the plan 

language requirement is a one-time 

paperwork burden for each section 

413(e) plan. In addition, after final 

regulations are issued, the IRS intends 

to publish model plan language, which 

will help to minimize the burden. 

We estimate that the burden for this 

requirement under the Paperwork 

Reduction Act of 1995 will be 3 hours 

per section 413(e) plan. Given the 

potential benefits of satisfying the 

conditions for the unified plan 

exception, we assume that 

approximately 95 percent of section 

413(e) plans (4,275 section 413(e) 

plans 21) will be amended to satisfy this 

condition. Therefore, the total burden of 

this requirement is estimated to be 

12,825 hours (4,275 section 413(e) plans 

times 3 hours). However, because a 

section 413(e) plan that adopts an 

amendment will generally do so on a 

one-time basis, to determine an annual 

estimate, the total time is divided by 

three, or 4,275 hours annually (section 

413(e) plans times 1 hour). 

2. Notice Requirements, § 1.413– 

3(a)(2)(ii)(A), (b), and (d)(1)(ii) 

Section 1.413–3(a)(ii)(A) of the 

proposed regulations provide that notice 

is another condition of the exception to 

the unified plan rule. In most cases, 

§ 1.413–3(b) of the proposed regulations 

would require a section 413(e) plan 

administrator to send up to three notices 

informing an unresponsive participating 

employer of a participating employer 

failure and the consequences if the 

employer fails to take remedial action or 

initiate a spinoff from the section 413(e) 

plan. After each notice is provided, the 

employer has 60 days to take 

appropriate remedial action or initiate a 

spinoff from the section 413(e) plan. If 

the employer takes those actions after 

the first or second notice is provided, 

subsequent notices are not required. 

Thus, it is possible that a section 413(e) 

plan administrator will send fewer than 

three notices to an employer. However, 

because the notice requirements only 

apply if an employer has already been 

unresponsive to the section 413(e) plan 

administrator’s requests, we assume that 

in most cases, all three notices will be 

provided. 

Section 1.413–3(d)(1)(ii) of the 

proposed regulations provide that if a 

failure to provide information becomes 

a failure to take action, the section 

413(e) plan administrator may be 

required to send up to two (rather than 

three) notices with respect to the failure 

to take action by combining the first and 

second notices. This rule applies if the 

section 413(e) plan administrator had 

provided the second notice with respect 

to the failure to provide information and 

certain other conditions are satisfied. 

We estimate that the burden of 

preparing the notices will be an average 

of 3 hours per unresponsive 

participating employer. We estimate 

that approximately 450 section 413(e) 

plans (10 percent of the 4,500 total 

estimated section 413(e) plans described 

in footnote 20) will provide notice with 

respect to one unresponsive 

participating employer per year. We 

estimate that approximately 10 percent 

of section 413(e) plans (10 percent of 

4,500 section 413(e) plans is 450 section 

413(e) plans) will provide notice with 

respect to one unresponsive 

participating employer per year. 

Therefore, we estimate a burden of 

1,350 hours (450 section 413(e) plans 

times 3 hours). As with all estimates in 

this collection of information, we expect 

to be able to adjust these estimates 

based on experience after the 

regulations are finalized. 

The notices must be sent to the 

unresponsive participating employer 

and the final notice will also be sent to 

plan participants who are employees of 

the unresponsive participating employer 

(and their beneficiaries) and to the 

Department of Labor. We estimate that, 

on average, a section 413(e) plan 

administrator will send the final notice 

to approximately 50 plan participants 

who are employees of the unresponsive 

participating employer (and their 

beneficiaries). Based on the estimate in 

the previous paragraph that 450 section 

413(e) plans will provide notice with 

respect to one unresponsive 

participating employer per year, we 

estimate the burden of distributing these 

notices to be an average of 2 hours per 

section 413(e) plan, for a total burden of 

900 hours (450 section 413(e) plans 

times 2 hours). 

3. Requirements for Pooled Plan 

Providers, § 1.413–3(a)(3) 

Under the proposed regulations, the 

term pooled plan provider means, with 

respect to any plan, a person who 

satisfies the following requirements: (1) 

Registers as a pooled plan provider with 

the Commissioner (§ 1.413– 


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22This estimate was informed by the Department 

of Labor’s estimate of the number of pooled 

employer plans expected to commence operations. 

See 85 FR 72952–3 

3(a)(3)(i)(A)); (2) is designated by the 

terms of the plan as a named fiduciary 

(within the meaning of section 402(a)(2) 

of ERISA), as the plan administrator, 

and as the person required to perform 

certain administrative duties (§ 1.413– 

3(a)(3)(i)(B)); (3) acknowledges in 

writing that, with respect to the plan, it 

is a named fiduciary and the plan 

administrator (§ 1.413–3(a)(3)(i)(C)); and 

(4) is responsible for ensuring that all 

persons who handle assets of, or who 

are fiduciaries of, the plan are bonded 

in accordance with section 412 of 

ERISA (§ 1.413–3(a)(3)(i)(D)). 

Pursuant to proposed § 1.413– 

3(a)(3)(i)(A), the requirement to register 

as a pooled plan provider under section 

413(e) is fulfilled by satisfying the 

parallel requirement under ERISA to 

register as a pooled plan provider with 

the Department of Labor. On November 

16, 2020, the Department of Labor 

issued final regulations under section 

3(44) of ERISA (29 CFR 2510.3–44) with 

respect to the registration requirement. 

See 85 FR 72934. The OMB Control 

Number associated with the 

requirement in those regulations is 

1210–0164. 

With respect to § 1.413–3(a)(3)(i)(B) 

and (C), the Department of Labor 

estimates that roughly 3,200 pooled 

plan providers will file an original 

registration, and that there will be 3,460 

supplemental filings in the first year. 

See 85 FR 72952. A supplemental filing 

may amend the original registration to 

include information for pooled 

employer plans that either begin or 

cease operations, or it can be used to 

make certain other changes to the initial 

filing. Based on this data, we estimate 

that in the first year a large number of 

the estimated supplemental filings, or 

3,000, will be used to report the 

beginning of pooled employer plan 

operations. In subsequent years, we 

estimate that approximately 450 plans 

with pooled plan providers will 

commence operations.22 We estimate 

the combined burden of § 1.413– 

3(a)(3)(i)(B) and (C) to be an average of 

15 minutes per section 413(e) plan, for 

a total initial burden of 750 hours (3,000 

section 413(e) plans times 15 minutes) 

and a total annual burden of 112.5 hours 

(450 section 413(e) plans times 15 

minutes). 

4. Notice to Participants, § 1.413– 

3(e)(1)(ii)(B) and (e)(2) 

If an unresponsive participating 

employer neither takes appropriate 

remedial action nor initiates a spinoff by 

the deadline in the proposed 

regulations, then the section 413(e) plan 

administrator must provide notice to 

participants who are employees of the 

unresponsive participating employer 

(and their beneficiaries) stating the 

following: (1) No further contributions 

will be made to the section 413(e) plan 

on their behalf; (2) they have a 

nonforfeitable right to amounts credited 

to their accounts that are attributable to 

employment with the unresponsive 

participating employer; and (3) they will 

receive additional information regarding 

the disposition of their accounts. We 

estimate that in a given year, 5 percent 

of all section 413(e) plans (225 section 

413(e) plans) will provide this notice, 

and that each notice will be sent to 

approximately 50 individuals. We also 

estimate that the burden for this 

requirement is 1 hour. Based on this 

number, we estimate that the burden of 

preparing and distributing the notices 

will be 225 hours (225 section 413(e) 

plans times 1 hour). 

5. Election, § 1.413–3(e)(1)(ii)(C), (e)(3) 

and (4) 

If an unresponsive participating 

employer neither takes appropriate 

remedial action nor initiates a spinoff by 

the deadline in the proposed 

regulations, then the section 413(e) plan 

administrator generally must provide 

participants who are employees of the 

unresponsive participating employer 

(and their beneficiaries) with an election 

to have amounts attributable to the 

employees of the unresponsive 

participating employer directly rolled 

over to an eligible retirement plan 

within the meaning of section 402(c)(8) 

or remain in the section 413(e) plan. A 

participant whose account is subject to 

the mandatory distribution rules will 

have an alternative election. We 

estimate that in a given year, 5 percent 

of all section 413(e) plans (225 section 

413(e) plans) will provide an election, 

and that each election will be sent to 

approximately 50 individuals. We also 

estimate that the burden for this 

requirement is 3 hours. Based on this 

number, we estimate that the burden for 

this requirement will be 675 hours (225 

section 413(e) plans times 3 hours). 

Comments on the collection of 

information should be sent to the Office 

of Management and Budget, Attn: Desk 

Officer for the Department of the 

Treasury, Office of Information and 

Regulatory Affairs, Washington, DC 

20503, with copies to the Internal 

Revenue Service, Attn: IRS Reports 

Clearance Officer, 

SE:W:CAR:MP:T:T:SP; Washington, DC 

20224. Comments on the collection of 

information should be received by May 

27, 2022. Comments are specifically 

requested concerning: 

Whether the proposed collection of 

information is necessary for the proper 

performance of the functions of the IRS, 

including whether the information will 

have practical utility; 

The accuracy of the estimated burden 

associated with the proposed collection 

of information; 

How the quality, utility, and clarity of 

the information to be collected may be 

enhanced; 

How the burden of complying with 

the proposed collections of information 

may be minimized, including through 

the application of automated collection 

techniques or other forms of information 

technology; and 

Estimates of capital or start-up costs 

and costs of operation, maintenance, 

and purchase of service to provide 

information. 

Estimated total average annual 

recordkeeping burden: 7,750 hours. 

Estimated average annual burden per 

response: 1 hour, 43 minutes. 

Estimated number of recordkeepers: 

4,500. 

An agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

unless it displays a valid control 

number assigned by the Office of 

Management and Budget. 

Books or records relating to a 

collection of information must be 

retained as long as their contents may 

become material in the administration 

of any internal revenue law. Generally, 

tax returns and tax return information 

are confidential, as required by 26 

U.S.C. 6103. 

III. Regulatory Flexibility Act 

It is hereby certified that these 

proposed regulations will not have a 

significant economic impact on a 

substantial number of small entities 

pursuant to the Regulatory Flexibility 

Act (5 U.S.C. chapter 6). This 

certification is based on the fact that the 

proposed regulations reflect the 

statutory changes to section 413 made 

by section 101 of the SECURE Act. More 

specifically, these regulations merely 

conform existing regulations under 

section 413(c) and implement new 

regulations under section 413(e) in a 

manner that is consistent with the new 

statutory language. 

Although these proposed regulations 

might affect a substantial number of 

small entities, the economic impact of 

these proposed regulations is not 

expected to be significant. These 

regulations are not expected to result in 

economically meaningful changes in 


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behavior for MEPs and participating 

employers. While MEPs may be an 

efficient way to reduce costs and 

complexity associated with establishing 

and maintaining defined contribution 

plans, some employers may be reluctant 

to join a MEP because of the potential 

adverse impact of the unified plan rule. 

These proposed regulations will 

implement a statutory exception to the 

unified plan rule, thus eliminating a 

potential barrier to an employer joining 

a MEP. 

It is unlikely that the exception to the 

unified plan rule will be used often in 

a section 413(e) MEP. In general, it is 

expected that participating employers in 

defined contribution MEPs will comply 

with applicable requirements for a 

defined contribution plan. Accordingly, 

the use of the exception to the unified 

plan rule by a section 413(e) plan is 

expected to be rare. 

For the reasons stated, a regulatory 

flexibility analysis under the Regulatory 

Flexibility Act is not required. The 

Treasury Department and the IRS invite 

comments on the impact of these 

regulations on small entities. Pursuant 

to section 7805(f) of the Code, this 

notice of proposed rulemaking has been 

submitted to the Chief Counsel of 

Advocacy of the Small Business 

Administration for comment on its 

impact on small business. 

Comments and Public Hearing 

Before these proposed amendments to 

the regulations are adopted as final 

regulations, consideration will be given 

to comments that are submitted timely 

to the IRS as prescribed in the preamble 

under the ADDRESSES section. The 

Treasury Department and the IRS 

request comments on all aspects of the 

proposed regulations. Comments are 

specifically requested on what (if any) 

guidance would be helpful regarding 

whether employers have a common 

interest other than having adopted a 

plan, as described in Part I.A of the 

Explanation of Provisions, titled 

‘‘Overview.’’ Comments are also 

specifically requested on the rules for 

mandatory distributions for employees 

of an unresponsive participating 

employer, as described in Part II.F of the 

Explanation of Provisions, titled 

‘‘Required Actions Following 

Employer’s Failure to Meet Deadline.’’ 

Any electronic comments submitted, 

and to the extent practicable any paper 

comments submitted, will be made 

available at www.regulations.gov or 

upon request. 

A telephonic public hearing has been 

scheduled for June 22, 2022, beginning 

at 10 a.m. EST. The rules of 26 CFR 

601.601(a)(3) apply to the hearing. 

Persons who wish to present oral 

comments by telephone at the hearing 

must submit electronic or written 

comments and an outline of the topics 

to be addressed and the time to be 

devoted to each topic by May 27, 2022 

as prescribed in the preamble under the 

ADDRESSES section. 

A period of 10 minutes will be 

allocated to each person for making 

comments. After the deadline for 

receiving outlines has passed, the IRS 

will prepare an agenda containing the 

schedule of speakers. Copies of the 

agenda will be made available at 

www.regulations.gov, search IRS and 

REG–121508–18. Copies of the agenda 

will also be available by emailing a 

request to publichearings@irs.gov. 

Please put ‘‘REG–121508–18 Agenda 

Request’’ in the subject line of the email. 

Drafting Information 

The principal authors of these 

regulations are Jamie Dvoretzky and 

Pamela Kinard, Office of Associate Chief 

Counsel (Employee Benefits, Exempt 

Organizations, and Employment Taxes 

(EEE)). However, other personnel from 

the IRS and the Treasury Department 

participated in the development of these 

regulations. 

Withdrawal of Proposed Amendments 

to the Regulations 

Under the authority of 26 U.S.C. 7805, 

the notice of proposed rulemaking that 

was published in the Federal Register 

on Wednesday, July 3, 2019 (84 FR 

31777) is withdrawn. 

List of Subjects in 26 CFR Part 1 

Income taxes, Reporting and 

recordkeeping requirements. 

Proposed Amendments to the 

Regulations 

Accordingly, 26 CFR part 1 is 

proposed to be amended as follows: 

PART 1—INCOME TAXES 

■ Paragraph 1. The authority citation 

for part 1 continues to read in part as 

follows: 

Authority: 26 U.S.C. 7805 * * * 

■ Par. 2. Amend § 1.413–2 by revising 

paragraph (a)(2), (a)(3)(iv), (a)(4), and (c) 

to read as follows: 

§ 1.413–2 Special rules for plans 

maintained by more than one employer. 

(a) * * * 

(2) Section 413(c) plan—(i) Definition 

of section 413(c) plan. A plan (and each 

trust which is part of such plan) is a 

section 413(c) plan if— 

(A) The plan is a single plan (which 

for a qualified plan is a single plan 

within the meaning of section 413(a) 

and § 1.413–1(a)(2)); and 

(B) The plan is maintained by more 

than one employer. 

(ii) Determining the number of 

employers maintaining the plan. For 

purposes of paragraph (a)(2)(i)(B) of this 

section, the number of employers 

maintaining a plan is determined by 

treating any employers described in 

section 414(b) (relating to a controlled 

group of corporations), any employers 

described in section 414(c) (relating to 

trades or businesses under common 

control), or any employers described in 

section 414(m) (relating to affiliated 

service groups), whichever is 

applicable, as if such employers are a 

single employer. 

(iii) Master or prototype plans and 

common trust funds. A master or 

prototype plan is not a section 413(c) 

plan unless such a plan is described in 

this paragraph (a)(2). Similarly, the mere 

fact that a plan, or plans, utilize a 

common trust fund or otherwise pool 

plan assets for investment purposes 

does not, by itself, result in a particular 

plan being treated as a section 413(c) 

plan. 

(3) * * * 

(iv) Whether a section 413(c) plan 

complies with the requirements of 

section 401(a), 403(a), or 408 is 

determined with respect to all 

participating employers. Consequently, 

the failure by one participating 

employer (or by the plan itself) to satisfy 

an applicable requirement of those 

sections will result in the section 413(c) 

plan failing to satisfy that requirement 

with respect to all employers 

maintaining the section 413(c) plan. 

However, the rules in this paragraph 

(a)(3)(iv) do not apply to the extent 

provided in section 413(e) and § 1.413– 

3. 

(4) Applicability dates—(i) General 

applicability date. Except as otherwise 

provided in paragraph (a)(4)(ii) of this 

section, section 413(c) and this section 

apply to a plan for plan years beginning 

after December 31, 1953. 

(ii) Special applicability date. 

Paragraphs (a)(2), (a)(3)(iv), and (c) of 

this section apply beginning on the date 

of publication of the Treasury decision 

adopting these rules as final regulations 

in the Federal Register. For earlier 

periods, the rules of paragraphs (a)(2), 

(a)(3)(iv), and (c) of 26 CFR 1.413–2 

(revised as of April 1, 2021) apply. 

* * * * * 

(c) Exclusive benefit. In the case of a 

plan subject to this section, in 

determining whether the plan of an 

employer is for the exclusive benefit of 

its employees (and their beneficiaries) 


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for purposes of sections 401(a) and 

408(c), all of the employees 

participating in the plan shall be treated 

as employees of the employer. 

* * * * * 

■ Par. 3. Section 1.413–3 is added to 

read as follows: 

§ 1.413–3 Special Rules for Section 413(e) 

Plans 

(a) Exception to unified plan rule for 

section 413(e) plans—(1) In general. 

Notwithstanding § 1.413–2(a)(3)(iv), a 

section 413(e) plan will not be treated 

as failing to meet the requirements 

under the Code applicable to a plan 

described in section 401(a) or to a plan 

that consists of individual retirement 

accounts described in section 408 

(including accounts described in section 

408(c), 408(k), or 408(p)), whichever is 

applicable, merely because of a 

participating employer failure, provided 

that the conditions in paragraph (a)(2) of 

this section are satisfied. 

(2) Conditions for exception to general 

rule. The conditions for the exception to 

the unified plan rule in paragraph (a)(1) 

of this section are set forth in 

paragraphs (a)(2)(i) through (iii) of this 

section. 

(i) Plan language. The terms of the 

section 413(e) plan must set forth the 

procedures that will be followed to 

address a participating employer failure, 

including: 

(A) A description of the notices that 

the section 413(e) plan administrator 

will send in the case of a participating 

employer failure, pursuant to paragraph 

(b) of this section; 

(B) A statement that the section 413(e) 

plan administrator will send the first 

notice described in paragraph (b)(1) of 

this section (or, if applicable, the 

combined first and second notice 

described in paragraph (d)(1)(ii) of this 

section) by a specified deadline (which, 

for a failure to provide information, is 

12 months following the end of the plan 

year for which the information is 

necessary to determine whether the 

section 413(e) plan is in compliance 

with a requirement of section 401(a) or 

408 and which, for a failure to take 

action, is 24 months following the end 

of the plan year in which the failure to 

satisfy a requirement of section 401(a) or 

408) occurs; 

(C) A description of the actions that 

the section 413(e) plan administrator 

will take if, by the final deadline 

described in paragraph (c)(1) of this 

section, an unresponsive participating 

employer does not either take 

appropriate remedial action pursuant to 

paragraph (c)(2) of this section or 

initiate a spinoff pursuant to paragraph 

(c)(3) of this section; and 

(D) A statement that if an 

unresponsive participating employer 

does not either take appropriate 

remedial action or initiate a spinoff by 

the final deadline described in 

paragraph (c)(1) of this section, 

participants who are employees of the 

unresponsive participating employer 

have a nonforfeitable right to the 

amounts credited to their accounts that 

are attributable to employment with the 

unresponsive participating employer, 

determined in the same manner as if the 

plan had terminated pursuant to section 

411(d)(3). 

(ii) Section 413(e) plan administrator 

obligations. A section 413(e) plan 

administrator must— 

(A) Satisfy the notice requirements 

described in paragraph (b) of this 

section with respect to the participating 

employer failure (taking into account 

the rules for a combined first and 

second notice described in paragraph 

(d)(1)(ii) of this section); 

(B) Implement a spinoff in accordance 

with paragraph (d)(2) of this section if 

an unresponsive participating employer 

initiates a spinoff pursuant to paragraph 

(c)(3) of this section; and 

(C) Take the actions required in 

paragraph (e) of this section if an 

unresponsive participating employer 

fails either to take appropriate remedial 

action with respect to the participating 

employer failure (as described in 

paragraph (c)(2) of this section) or 

initiate a spinoff (as described in 

paragraph (c)(3) of this section) by the 

final deadline described in paragraph 

(c)(1) of this section. 

(iii) Pooled plan providers. If the 

section 413(e) plan has a pooled plan 

provider during the plan year of the 

participating employer failure, the 

pooled plan provider must perform 

substantially all of the administrative 

duties that are required of the pooled 

plan provider pursuant to paragraph 

(a)(3)(ii) of this section for the plan year. 

(3) Section 413(e) plans administered 

by pooled plan providers—(i) 

Requirements to be a pooled plan 

provider. With respect to a section 

413(e) plan, for purposes of this section, 

a pooled plan provider is a person 

who— 

(A) Registers as a pooled plan 

provider with the Commissioner by 

satisfying the registration requirements 

in section 3(44)(A)(ii) of the Employee 

Retirement Income Security Act of 1974, 

Public Law 93–406 (88 Stat. 829), as 

amended (ERISA), in accordance with 

guidance issued by the Department of 

Labor, 

(B) Is designated by the terms of the 

plan as a named fiduciary (within the 

meaning of section 402(a)(2) of ERISA), 

as the plan administrator, and as the 

person required to perform the 

administrative duties described in 

paragraph (a)(3)(ii) of this section, 

(C) Acknowledges in writing that, 

with respect to the plan, it is a named 

fiduciary and the plan administrator, 

and 

(D) Is responsible for ensuring that all 

persons who handle assets of, or who 

are fiduciaries of, the plan are bonded 

in accordance with section 412 of 

ERISA. 

(ii) Administrative duties required of 

pooled plan provider—(A) In general. A 

pooled plan provider is required to 

perform all administrative duties that 

are reasonably necessary to ensure that 

the plan meets any applicable 

requirement under ERISA or the Code 

for a plan described in section 401(a) or 

for a plan that consists of individual 

retirement accounts described in section 

408 (including accounts described in 

section 408(c), 408(k), or 408(p)), 

whichever is applicable, and each 

participating employer takes actions, 

including providing any disclosures or 

other information, that are necessary for 

the plan to meet the requirements 

described in this paragraph (a)(3)(ii)(A). 

(B) Administrative duties. The 

administrative duties of a pooled plan 

provider include, but are not limited to, 

the following: 

(1) Monitoring compliance with the 

terms of the plan, and Code and ERISA 

requirements; 

(2) Maintaining accurate plan data, 

including up-to-date participant and 

beneficiary information; 

(3) Performing and conducting 

coverage, top-heavy, and discrimination 

testing under sections 401(a)(4), (k), and 

(m), 408(k), 410, and 416, if applicable; 

(4) Processing all employee 

transactions (such as investment 

changes, loans, and distributions); 

(5) Satisfying Code and ERISA 

reporting and notice requirements (such 

as reporting requirements under 

sections 6047 and 6058 and notice 

requirements under sections 

401(k)(12)(D) and (13)(E) and 402(f)); 

and 

(6) Updating the plan to reflect 

statutory changes to the Code and 

ERISA, to the extent the responsibility 

for updating the plan document has 

been delegated to the section 413(e) 

plan administrator. 

(iii) Aggregation rules. In determining 

whether a person meets the 

requirements to be a pooled plan 

provider with respect to any section 

413(e) plan, all persons who perform 

services for the plan and who are treated 

as a single employer under section 


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414(b), (c), (m), or (o) are treated as one 

person. 

(4) Definitions. The following 

definitions apply for purposes of this 

section: 

(i) Amounts attributable to the 

employees of the unresponsive 

participating employer. Amounts 

attributable to the employees of the 

unresponsive participating employer are 

plan assets and account balances held 

by a section 413(e) plan on behalf of 

employees of an unresponsive 

participating employer that are 

attributable to their employment with 

the unresponsive participating 

employer. If there is no separate 

accounting for amounts that are 

attributable to employment with the 

unresponsive participating employer 

and with other participating employers, 

and a participant’s account balance 

includes amounts that are attributable to 

current employment with the 

unresponsive participating employer 

and to previous employment with one 

or more other participating employers, 

the entire account balance is treated as 

attributable to employment with the 

unresponsive participating employer. 

On the other hand, if a participant’s 

account balance includes amounts that 

are attributable to current employment 

with a participating employer that is not 

the unresponsive participating employer 

and to previous employment with the 

unresponsive participating employer, 

none of the account balance is treated as 

attributable to employment with the 

unresponsive participating employer. 

For purposes of this paragraph (a)(4)(i), 

a participant’s most recent employment 

with a participating employer in the 

section 413(e) plan will be treated as the 

participant’s current employment. 

(ii) Beneficiary. A beneficiary is a 

beneficiary of a deceased employee or 

an alternate payee (as defined in section 

414(p)) with respect to an employee. 

(iii) Employee. An employee is a 

current or former employee of a 

participating employer. 

(iv) Failure to provide information. A 

failure to provide information is a 

failure of a participating employer (or 

any person that is treated as a single 

employer with that employer under 

section 414(b), (c), (m), or (o)) to 

respond in a timely manner to a 

reasonable request by the section 413(e) 

plan administrator for data, documents, 

or any other information that the plan 

administrator reasonably believes is 

necessary to determine whether a 

section 413(e) plan is in compliance 

with a requirement of section 401(a) or 

408 as it relates to the participating 

employer. 

(v) Failure to take action. A failure to 

take action is a failure of a participating 

employer (or any person that is treated 

as a single employer with that employer 

under section 414(b), (c), (m), or (o)) to 

comply in a timely manner with a 

reasonable request by a section 413(e) 

plan administrator to take action needed 

for the section 413(e) plan to satisfy a 

requirement of section 401(a) or 408 as 

it relates to the participating employer. 

(vi) Participating employer. A 

participating employer is one of the 

employers maintaining a section 413(e) 

plan. 

(vii) Participating employer failure. A 

participating employer failure in a 

section 413(e) plan is a failure to 

provide information (as defined in 

paragraph (a)(4)(iv) of this section) or a 

failure to take action (as defined in 

paragraph (a)(4)(v) of this section). 

(viii) Section 413(e) plan. A section 

413(e) plan is a defined contribution 

plan described in section 401(a) or a 

plan that consists of individual 

retirement accounts described in section 

408 (including accounts described in 

section 408(c), (k), or (p)) that— 

(A) Is a section 413(c) plan (as defined 

in § 1.413–2(a)(2)), and 

(B) Is maintained by employers that 

all have a common interest other than 

having adopted the plan or has a pooled 

plan provider as described in paragraph 

(a)(3) of this section. 

(ix) Section 413(e) plan administrator. 

A section 413(e) plan administrator is 

the plan administrator, within the 

meaning of section 414(g), of a section 

413(e) plan. 

(x) Unresponsive participating 

employer. An unresponsive 

participating employer is a participating 

employer that has a participating 

employer failure. 

(b) Notice. The section 413(e) plan 

administrator satisfies the notice 

requirements with respect to a 

participating employer failure if it 

satisfies the requirements of this 

paragraph (b). 

(1) First notice. The section 413(e) 

plan administrator must provide notice 

to the unresponsive participating 

employer describing the participating 

employer failure, the actions the 

employer must take to remedy the 

failure, and the employer’s option to 

initiate a spinoff of amounts attributable 

to the employees of the unresponsive 

participating employer to a separate 

single-employer plan that is maintained 

by the employer. In addition, the notice 

must explain the consequences under 

the terms of the plan if the unresponsive 

participating employer neither takes 

appropriate remedial action with 

respect to the participating employer 

failure nor initiates a spinoff, including 

that participants who are employees of 

the employer will not have any further 

contributions made to the plan on their 

behalf and that individuals who are 

responsible for the failure may have 

adverse tax consequences. 

(2) Second notice. If, by the end of the 

60-day period following the date the 

first notice described in paragraph (b)(1) 

of this section is provided, the 

unresponsive participating employer 

neither takes appropriate remedial 

action with respect to the participating 

employer failure nor initiates a spinoff, 

then the section 413(e) plan 

administrator must provide a second 

notice to the employer. The second 

notice must be provided no later than 30 

days after the expiration of the 60-day 

period described in the preceding 

sentence. The second notice must 

include the information required to be 

included in the first notice. The second 

notice must also state that if, within 60 

days following the date the second 

notice is provided, the unresponsive 

participating employer neither takes 

appropriate remedial action with 

respect to the participating employer 

failure nor initiates a spinoff, then a 

final notice describing the participating 

employer failure and the consequences 

of not correcting the failure will be 

provided to participants who are 

employees of the employer (and their 

beneficiaries) and to the Department of 

Labor. 

(3) Final notice. If, by the end of the 

60-day period following the date the 

second notice described in paragraph 

(b)(2) of this section is provided, the 

unresponsive participating employer 

neither takes appropriate remedial 

action with respect to the participating 

employer failure nor initiates a spinoff, 

then the section 413(e) plan 

administrator must provide a final 

notice to the employer. The final notice 

must be provided no later than 30 days 

after the expiration of the 60-day period 

described in the preceding sentence. 

Within this time period, the final notice 

must also be provided to participants 

who are employees of the unresponsive 

participating employer (and their 

beneficiaries) and to the Office of 

Enforcement of the Employee Benefits 

Security Administration in the 

Department of Labor (or its successor 

office). The final notice must include 

the information required to be included 

in the first notice and specify the final 

deadline for an unresponsive 

participating employer to take action set 

forth in paragraph (c)(1) of this section. 

The final notice must also state that the 

notice is being provided to participants 

who are employees of the unresponsive 


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participating employer (and their 

beneficiaries) and to the Department of 

Labor. 

(c) Actions by unresponsive 

participating employer—(1) In general. 

An unresponsive participating employer 

takes appropriate remedial action with 

respect to a participating employer 

failure if it satisfies the requirements of 

paragraph (c)(2) of this section. 

Alternatively, an unresponsive 

participating employer initiates a 

spinoff for purposes of paragraph (a)(2) 

of this section if the employer satisfies 

the requirements of paragraph (c)(3) of 

this section. The final deadline for an 

unresponsive participating employer to 

take one of these actions is 60 days after 

the final notice described in paragraph 

(b)(3) of this section is provided to the 

employer. 

(2) Appropriate remedial action—(i) 

Appropriate remedial action with 

respect to a failure to provide 

information. If a participating employer 

failure is a failure to provide 

information, the unresponsive 

participating employer takes 

appropriate remedial action with 

respect to that failure if the employer 

provides the data, documents, or other 

information requested by a section 

413(e) plan administrator (or arranges 

for that information to be provided to 

the section 413(e) plan administrator). 

(ii) Appropriate remedial action with 

respect to a failure to take action. If a 

participating employer failure is a 

failure to take action, the unresponsive 

participating employer takes 

appropriate remedial action with 

respect to the failure if the employer (or 

any person that is treated as a single 

employer with the employer under 

section 414(b), (c), (m), or (o)), takes all 

actions requested by the section 413(e) 

plan administrator, such as making 

corrective contributions, needed for the 

section 413(e) plan to satisfy the 

applicable requirements of section 

401(a) or 408. 

(3) Employer-initiated spinoff. After 

receiving a notice described in 

paragraph (b) of this section, an 

unresponsive participating employer 

initiates a spinoff pursuant to this 

paragraph (c)(3) by directing the section 

413(e) plan administrator to spin off 

amounts attributable to the employees 

of the unresponsive participating 

employer to a separate single-employer 

plan that is maintained by the employer 

in a manner consistent with the terms 

of the section 413(e) plan. If the section 

413(e) plan is described in section 

401(a), then the spun-off plan must also 

be a section 401(a) plan. If the section 

413(e) plan consists of individual 

retirement accounts described in section 

408 (including accounts described in 

section 408(c), 408(k), or 408(p)), then 

the spun-off plan must also consist of 

individual retirement accounts 

described in section 408. 

(d) Section 413(e) plan 

administrator’s response to employer’s 

remedial action—(1) Rules for a failure 

to provide information that becomes a 

failure to take action—(i) In general. 

This paragraph (d)(1) provides rules that 

apply if a failure to provide information 

becomes a failure to take action. This 

situation could occur if the 

unresponsive participating employer 

takes appropriate remedial action by 

providing the information described in 

paragraph (c)(2)(i) of this section and, 

based on this information, the section 

413(e) plan administrator determines 

that there is a failure to satisfy a 

requirement of section 401(a) or 408 as 

it relates to that employer’s 

participation in the section 413(e) plan. 

If the section 413(e) plan administrator 

makes a reasonable request for the 

employer to take the actions needed to 

satisfy the requirement, and the 

employer does not comply in a timely 

manner with that request, then, in 

accordance with paragraph (a)(4)(v) of 

this section, the failure to provide 

information becomes a failure to take 

action. In that case, the section 413(e) 

plan will be eligible for the exception in 

paragraph (a)(1) of this section with 

respect to the failure to take action by 

satisfying the conditions set forth in 

paragraph (a)(2) of this section with 

respect to that failure, taking into 

account the rules of this paragraph 

(d)(1). 

(ii) Ability to combine first and 

second notices in certain circumstances. 

For purposes of applying paragraph 

(a)(2)(ii)(A) of this section in the case of 

a failure to provide information that 

becomes a failure to take action, notices 

provided during the period that the 

failure was a failure to provide 

information are not taken into account. 

For example, a final notice that the 

section 413(e) plan administrator 

provided in connection with the failure 

to provide information would not satisfy 

the final notice requirement with 

respect to the failure to take action. 

However, if the section 413(e) plan 

administrator had provided the second 

notice described in paragraph (b)(2) of 

this section with respect to a failure to 

provide information before it became a 

failure to take action, then the section 

413(e) plan administrator may satisfy 

the requirement to send a first and 

second notice with respect to the failure 

to take action by sending a combined 

first and second notice that includes the 

information described in paragraph 

(d)(1)(iii) of this section to the 

unresponsive participating employer, 

provided that— 

(A) The section 413(e) plan 

administrator’s request to take action 

described in paragraph (d)(1)(i) of this 

section is made as soon as reasonably 

practicable after the determination of 

the failure to satisfy a requirement of 

section 401(a) or 408 as it relates to that 

employer’s participation in the section 

413(e) plan; and 

(B) The section 413(e) plan 

administrator provides the combined 

first and second notice with respect to 

the failure to take action not later than 

24 months following the end of the plan 

year in which the failure to satisfy a 

requirement of section 401(a) or 408 

occurs. 

(iii) Contents of combined first and 

second notice. To satisfy the 

requirements of a combined first and 

second notice described in paragraph 

(d)(1)(ii) of this section, the notice 

must— 

(A) Describe the participating 

employer failure, the actions the 

unresponsive participating employer 

would need to take to remedy the 

failure, and the employer’s option to 

initiate a spinoff of amounts attributable 

to the employees of the unresponsive 

participating employer to a separate 

single-employer plan that is maintained 

by the employer, 

(B) Explain the consequences under 

the terms of the plan if the unresponsive 

participating employer neither takes 

appropriate remedial action with 

respect to the participating employer 

failure nor initiates a spinoff, including 

that participants who are employees of 

the employer will not have any further 

contributions made to the plan on their 

behalf and that individuals who are 

responsible for the failure may have 

adverse tax consequences, and 

(C) Specify that if, within 60 days 

following the date the combined first 

and second notice is provided, the 

unresponsive participating employer 

neither takes appropriate remedial 

action with respect to the participating 

employer failure nor initiates a spinoff, 

then a notice describing the 

participating employer failure and the 

consequences of not correcting the 

failure will be provided to participants 

who are employees of the employer (and 

their beneficiaries) and to the 

Department of Labor. 

(2) Implementing employer-initiated 

spinoff. If an unresponsive participating 

employer initiates a spinoff pursuant to 

paragraph (c)(3) of this section by 

directing the section 413(e) plan 

administrator to spin off amounts 

attributable to the employees of the 


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unresponsive participating employer to 

a separate single-employer plan 

established and maintained by the 

employer, or to a separate plan 

sponsored by the employer that consists 

of individual retirement accounts, then 

the section 413(e) plan administrator 

must implement and complete the 

spinoff as soon as reasonably practicable 

after the employer initiates the spinoff. 

The section 413(e) plan administrator is 

treated as satisfying the requirement of 

the prior sentence if the spinoff is 

completed within 180 days of the date 

on which the unresponsive participating 

employer initiates the spinoff. 

(e) Required actions following 

employer’s failure to meet deadline—(1) 

In general—(i) Deadline for action. If, by 

the final deadline described in 

paragraph (c)(1) of this section, the 

unresponsive participating employer 

neither takes appropriate remedial 

action pursuant to paragraph (c)(2) of 

this section nor initiates a spinoff 

pursuant to paragraph (c)(3) of this 

section, then the requirements of 

paragraph (e)(1)(ii) and (iii) of this 

section must be satisfied. 

(ii) Requirements for section 413(e) 

plan administrator. As soon as 

reasonably practicable after the final 

deadline described in paragraph (e)(1)(i) 

of this section, the section 413(e) plan 

administrator must— 

(A) Stop accepting contributions from 

the unresponsive participating employer 

and its employees; 

(B) Provide notice to participants who 

are employees of the unresponsive 

participating employer (and their 

beneficiaries) as described in paragraph 

(e)(2) of this section; and 

(C) Provide participants who are 

employees of the unresponsive 

participating employer (and their 

beneficiaries) with an election regarding 

treatment of their plan accounts to the 

extent provided in paragraph (e)(3) or 

(4) of this section. 

(iii) Timing of distributions. The 

section 413(e) plan administrator must 

distribute benefits as soon as 

administratively feasible following an 

individual’s election that is made 

pursuant to paragraph (e)(3) or (4) of 

this section or following the section 

413(e) plan administrator’s 

determination that it is not required to 

provide an individual with an election 

pursuant to paragraph (e)(4)(iv) of this 

section. 

(2) Contents of notification. The 

notice required under paragraph 

(e)(1)(ii)(B) of this section must include 

the information described in this 

paragraph (e)(2). 

(i) No contributions. The notice must 

state that no further contributions will 

be made to the section 413(e) plan on 

behalf of participants who are 

employees of the unresponsive 

participating employer. 

(ii) Full vesting. The notice must state 

that participants who are employees of 

the unresponsive participating employer 

have a nonforfeitable right to amounts 

credited to their accounts that are 

attributable to employment with the 

unresponsive participating employer. 

(iii) Information about disposition of 

accounts. The notice must state that a 

participant who is an employee of the 

unresponsive participating employer 

(or, if applicable, any beneficiary of the 

participant) will receive additional 

information regarding the disposition of 

the participant’s or beneficiary’s 

account. 

(3) Election for direct rollover or to 

remain in section 413(e) plan—(i) 

General rule. Except as provided in 

paragraph (e)(4) of this section, a section 

413(e) plan administrator must provide 

participants who are employees of the 

unresponsive participating employer 

(and their beneficiaries) with an election 

to have amounts attributable to the 

employees of the unresponsive 

participating employer— 

(A) Subject to the rules of paragraph 

(e)(5) of this section, directly rolled over 

to an eligible retirement plan within the 

meaning of section 402(c)(8); or 

(B) Remain in the section 413(e) plan. 

(ii) Default. An individual who fails 

to make an affirmative election 

described in paragraph (e)(3)(i)(A) of 

this section is treated as having elected 

to have the amounts described in 

paragraph (e)(3)(i) of this section remain 

in the section 413(e) plan. 

(iii) Individuals remaining in section 

413(e) plan. If, pursuant to paragraph 

(e)(3)(i)(B) of this section, an individual 

elects to have the amounts described in 

paragraph (e)(3)(i) of this section remain 

in the section 413(e) plan, those 

amounts must remain in the section 

413(e) plan until a distribution is made 

under the terms of the plan without 

regard to section 413(e). To determine 

whether a participant is entitled to a 

distribution upon severance from 

employment under the terms of the plan 

without regard to section 413(e), a 

section 413(e) plan administrator may 

rely on the participant’s representation 

that the participant has experienced a 

severance from employment unless the 

plan administrator has actual 

knowledge to the contrary. 

(4) Rules for individuals subject to 

mandatory distributions—(i) No election 

to remain in plan. The option to remain 

in the plan described in paragraph 

(e)(3)(i)(B) of this section with respect to 

amounts described in paragraph (e)(3)(i) 

of this section is not available to an 

individual if the terms of the plan 

would have provided for a mandatory 

distribution of those amounts had the 

participant experienced a severance 

from employment. Instead, those 

amounts must be distributed from the 

section 413(e) plan. 

(ii) Mandatory distributions subject to 

automatic rollover. The portion of the 

mandatory distribution that is an 

eligible rollover distribution subject to 

section 401(a)(31)(B) must be directly 

rolled over to an eligible retirement 

plan. In accordance with section 

401(a)(31)(B), the section 413(e) plan 

administrator must provide the 

individual with an election for the 

eligible retirement plan to be— 

(A) An eligible retirement plan chosen 

by the individual, or 

(B) An individual retirement plan of 

a designated trustee or issuer. 

(iii) Mandatory distributions not 

subject to automatic rollover. For the 

portion of the mandatory distribution 

that is an eligible rollover distribution 

subject to section 401(a)(31)(A) (but not 

section 401(a)(31)(B)), the section 413(e) 

plan administrator must provide the 

individual with an election in 

accordance with section 401(a)(31)(A) 

for that portion to be— 

(A) Rolled over directly to an eligible 

retirement plan chosen by the 

individual; or 

(B) If no eligible retirement plan is 

chosen pursuant to paragraph 

(e)(4)(iii)(A) of this section, paid directly 

to the individual. 

(iv) Individuals who are ineligible for 

direct rollover. For any portion of a 

mandatory distribution that is not 

subject to the requirement to offer a 

direct rollover option under section 

401(a)(31), the section 413(e) plan 

administrator must pay the individual. 

For example, a section 413(e) plan 

administrator is not required to provide 

an election to an individual with an 

account balance of less than $200 if, 

consistent with section 411(a)(11) and 

§ 1.401(a)(31)–1, Q&A–11, plan terms 

require that mandatory distributions of 

less than $200 be paid directly to 

distributees. 

(5) Amounts not eligible for rollover. 

If an individual makes an election to 

have an amount described in paragraph 

(e)(3)(i) of this section directly rolled 

over to an eligible retirement plan 

pursuant to paragraph (e)(3) or (4) of 

this section, and a portion of the amount 

is not an eligible rollover distribution 

described in section 402(c)(4), then that 

portion must be paid directly to the 

individual. For example, the portion of 

a distribution that would be a required 

minimum distribution under section 


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401(a)(9) must be paid directly to the 

individual. 

(6) Effective opportunity to make 

election. Any election that is provided 

to an individual pursuant to paragraph 

(e)(3) or (4) of this section must include 

an effective opportunity for the 

individual to make the election. 

Whether an individual has an effective 

opportunity to make an election is 

determined based on all the relevant 

facts and circumstances, including the 

adequacy of notice of the availability of 

the election, the period of time during 

which the election may be made, and 

any other conditions on the election. 

(f) Other rules—(1) Form of notices 

and elections. Any notice provided or 

election made pursuant to paragraph (b) 

or (e) of this section must be in written 

or electronic form. For notices and 

elections provided to or made by 

participants and beneficiaries, see 

generally § 1.401(a)–21 for rules 

permitting the use of electronic media to 

provide applicable notices and make 

participant elections with respect to 

retirement plans. 

(2) Status of spun-off plan. In the case 

of any plan that is spun off in 

accordance with paragraph (d)(2) of this 

section, any participating employer 

failure that would have caused the 

section 413(e) plan to fail to meet the 

requirements of section 401(a) or 408, as 

applicable, but for the application of the 

exception set forth in paragraph (a)(1) of 

this section, will result in the spun-off 

plan failing to meet those requirements. 

(3) Responsible parties. A 

participating employer demonstrates a 

lack of commitment to compliance if the 

participating employer fails to take 

appropriate remedial action pursuant to 

paragraph (c)(2) of this section or 

initiate a spinoff pursuant to paragraph 

(c)(3) of this section by the final 

deadline described in paragraph (c)(1) of 

this section. The IRS reserves the right 

to pursue appropriate remedies under 

the Code against any party (such as the 

owner of the participating employer) 

who is responsible for the failure to 

satisfy the requirements of section 

401(a) or 408, as applicable, even in the 

party’s capacity as a participant or 

beneficiary (such as by not treating a 

section 413(e) plan distribution made 

with respect to the owner of a 

participating employer as an eligible 

rollover distribution). 

(g) Applicability date. This section 

applies beginning on [PUBLICATION 

DATE OF FINAL RULE]. 

Douglas W. O’Donnell, 

Deputy Commissioner for Services and 

Enforcement. 

[FR Doc. 2022–06005 Filed 3–25–22; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 164 

46 CFR Parts 25, 26, 28, 32, 35, 77, 78, 

96, 97, 108, 109, 121, 130, 140, 167, 169, 

184, 195, and 196 

[Docket No. USCG–2021–0291] 

RIN 1625–AC74 

Electronic Chart and Navigational 

Equipment Carriage Requirements 

AGENCY: Coast Guard, Homeland 

Security (DHS). 

ACTION: Advance notice of proposed 

rulemaking. 

SUMMARY: The Coast Guard seeks public 

input regarding the modification of the 

chart and navigational equipment 

carriage requirements in the Code of 

Federal Regulations (CFR). This advance 

notice of proposed rulemaking 

(ANPRM) outlines the Coast Guard’s 

broad strategy to revise its CFR chart 

and navigational equipment carriage 

requirements to implement statutory 

electronic-chart-use provisions for 

commercial U.S.-flagged vessels and 

certain foreign-flagged vessels operating 

in the waters of the United States. This 

ANPRM is necessary to obtain 

additional information from the public 

before issuing a notice of proposed 

rulemaking. It will allow us to verify the 

extent of the requirements for the rule, 

such as how widely electronic charts 

currently are used, which types of 

vessels are using them, the appropriate 

equipment requirements for different 

vessel classes, and where the vessels 

operate, and will thereby allow us to 

tailor electronic chart requirements to 

vessel class and location. 

DATES: Comments and related material 

must be received by the Coast Guard on 

or before June 27, 2022. 

ADDRESSES: You may submit comments 

identified by docket number USCG– 

2021–0291 using the Federal 

eRulemaking Portal at 

www.regulations.gov. See the ‘‘Public 

Participation and Request for 

Comments’’ portion of the 

SUPPLEMENTARY INFORMATION section for 

further instructions on submitting 

comments. 

FOR FURTHER INFORMATION CONTACT: For 

information about this document, call or 

email John Stone, Office of Navigation 

Systems (CG–NAV–2), Coast Guard; 

telephone 202–372–1093, email 

John.M.Stone2@uscg.mil. 

SUPPLEMENTARY INFORMATION: 

Table of Contents for Preamble 

I. Public Participation and Request for 

Comments 

II. Abbreviations 

III. Basis and Purpose 

A. Purpose of the Advance Notice of 

Proposed Rulemaking (ANPRM) 

B. Statutory Authority 

IV. Background 

A. ‘‘Sunsetting’’ of Raster Navigational 

Charts 

B. Transition to Electronic Navigational 

Charts, and Electronic Chart Display and 

Information Systems 

C. Existing Chart Carriage and Associated 

Navigational Equipment Carriage 

Regulations 

D. Current Electronic Chart Systems 

Carriage and Equivalency Guidance 

V. ANPRM Discussion 

VI. Information Requested 

I. Public Participation and Request for 

Comments 

The Coast Guard views public 

participation as essential to effective 

rulemaking, and will consider all 

comments and material received during 

the comment period. Your comment can 

help shape the outcome of this 

rulemaking. If you submit a comment, 

please include the docket number for 

this rulemaking, indicate the specific 

section of this document to which each 

comment applies, and provide a reason 

for each suggestion or recommendation. 

Submitting comments. We encourage 

you to submit comments through the 

Federal Decision Making Portal at 

www.regulations.gov. To do so, go to 

www.regulations.gov, type USCG–2021– 

0291 in the search box and click 

‘‘Search.’’ Next, look for this document 

in the Search Results column, and click 

on it. Then click on the Comment 

option. If you cannot submit your 

material by using www.regulations.gov, 

call or email the person in the FOR

FURTHER INFORMATION CONTACT section of 

this advance notice of proposed 

rulemaking document (ANPRM) for 

alternate instructions. 

Viewing material in docket. To view 

documents mentioned in this ANPRM 

as being available in the docket, find the 

docket as described in the previous 

paragraph, and then select ‘‘Supporting 

& Related Material’’ in the Document 


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