12508 Federal Register / Vol. 62, No. 50 / Friday, March 14, 1997 / Proposed Rules

PENSION BENEFIT GUARANTY

CORPORATION

29 CFR Parts 4001, 4006, 4041, 4050

RIN 1212–AA82

Termination of Single Employer Plans

AGENCY: Pension Benefit Guaranty

Corporation.

ACTION: Proposed rule.

SUMMARY: In order to extend deadlines

and otherwise to simplify the standard

termination process, the Pension Benefit

Guaranty Corporation is proposing

amendments to its termination

regulation. The amendments also

require that plan administrators provide

participants and beneficiaries with

information on state guaranty

association coverage.

DATES: Comments must be received on

or before May 13, 1997.

ADDRESSES: Comments may be mailed to

the Office of the General Counsel,

Pension Benefit Guaranty Corporation,

1200 K Street NW., Washington, DC

20005–4026, or delivered to Suite 340 at

the above address. Comments also may

be sent by Internet e-mail to

reg.comments@pbgc.gov. Comments

will be available for public inspection at

the PBGC’s Communications and Public

Affairs Department, Suite 240.

FOR FURTHER INFORMATION CONTACT:

Harold J. Ashner, Assistant General

Counsel, or Catherine B. Klion,

Attorney, Office of the General Counsel,

PBGC, 1200 K Street NW., Washington,

DC 20005-4026, 202–326–4024 (202–

326–4179 for TTY and TDD).

SUPPLEMENTARY INFORMATION:

Background

A single-employer plan covered by

the PBGC’s insurance program may be

voluntarily terminated only in a

standard or distress termination. The

rules governing voluntary terminations

are in section 4041 of the Employee

Retirement Income Security Act of 1974

and part 4041 of the PBGC’s regulations.

Once the decision is made to

terminate a plan in a standard

termination, the plan administrator

must meet specific statutory and

regulatory requirements. These

requirements have caused difficulty for

some plan administrators and

participants. For example, a plan

administrator who misses a deadline

must restart the termination process,

resulting in additional cost for the plan

administrator and delayed distributions

for participants.

The PBGC proposes to amend its

regulations in order to extend certain

deadlines and otherwise to simplify the

termination process. The proposal was

developed after conducting focus groups

with plan practitioners and takes into

account participant concerns and the

PBGC’s experience.

The amendment lessens the

likelihood of errors, thereby reducing

burdens on plan administrators and

expediting distributions to participants.

The amendment also implements a

General Accounting Office

recommendation that plan

administrators provide information on

state guaranty association coverage to

participants, and makes a limited

number of conforming changes to the

distress termination and premium

regulations, along with some

conforming and simplifying changes to

the missing participants regulations.

The major changes in the amendment

are discussed below.

Standard Termination Process

Notice of intent to terminate: The

amendment expands the notice to

include information on state guaranty

association coverage. The amendment

also clarifies the language in the notice

on freezing of benefit accruals to better

coordinate with section 204(h) of

ERISA. The PBGC’s standard

termination forms and instructions

package will include a model notice of

intent to terminate, along with state

guaranty association coverage

information.

Notice of plan benefits: The

amendment simplifies and clarifies the

information requirements.

Standard termination notice: The

amendment extends the deadline for

filing the standard termination notice

with the PBGC from 120 days to 180

days after the proposed termination

date. Upon review of the standard

termination notice, the PBGC may

require the submission of additional

information relevant to the termination

proceeding (e.g., where there is a

question whether the plan is sufficient

for all benefit liabilities). Such

information will normally be due within

30 days after the date of the PBGC’s

request. The PBGC may shorten the time

period where it determines that the

interests of the PBGC or participants

may be prejudiced by a delay in receipt

of the information.

Close-out of plan: The amendment

extends the close-out period for plan

administrators that timely apply for an

IRS determination letter from 60 to 120

days after receipt of a favorable letter,

and eliminates the requirement that

plan administrators notify the PBGC of

the need for the extension.

In the case of benefits that must be

provided in annuity form, the

distribution must be made by

purchasing irrevocable commitments

from an insurer. In order to have a valid

standard termination under Title IV of

ERISA, the plan administrator must

select the insurer in accordance with the

fiduciary standards of Title I of ERISA

(see Department of Labor Interpretive

Bulletin 95–1, 60 FR 12328 (March 6,

1995)). The PBGC intends, as part of its

standard termination audit program, to

audit insurer selections for compliance

with these standards and to take

appropriate corrective action.

Post-distribution certification: The

amendment provides that the PBGC will

not assess a penalty if the postdistribution certification, which ERISA

requires be filed within 30 days after the

final distribution, is filed within 90 days

after the distribution deadline. As

discussed elsewhere in today’s Federal

Register, the PBGC is implementing this

penalty policy immediately.

Extension of deadlines: The PBGC

may in its discretion grant case-by-case

extensions in narrow circumstances.

The PBGC will grant an extension where

it finds compelling reasons why it is not

administratively feasible for the plan

administrator (or other persons acting

on behalf of the plan administrator) to

take the action until the later date and

the delay is brief. The PBGC will

consider the length of the delay and

whether ordinary business care and

prudence in attempting to meet the

deadline is exercised.

PBGC discretion not to nullify: The

amendment also incorporates section

778(a) of the Retirement Protection Act

of 1994, which gives the PBGC

discretion not to nullify defective

standard terminations in certain

circumstances if it determines that

nullification ‘‘would be inconsistent

with the interests of participants and

beneficiaries.’’

Distress Termination Process

A plan that is sufficient for at least

guaranteed benefits closes out under

procedures that parallel those used in a

standard termination. The amendment

makes conforming changes to the

distress termination procedures,

primarily with respect to the rules that

apply after the PBGC issues a

distribution notice authorizing a plan to

close out in the private sector. The time

limits governing the initial processing of

a distress termination are not changed.

The PBGC may address other distress

termination issues in a separate

rulemaking.
Federal Register / Vol. 62, No. 50 / Friday, March 14, 1997 / Proposed Rules 12509

General Provisions

Filing rules: The amendment changes

the date of filing a notice with the PBGC

from the date of receipt to the date of

mailing with the United States Postal

Service (as evidenced by a postmark) or

deposit with a commercial delivery

service (provided the notice is received

by the PBGC within two regular

business days). The amendment also

allows electronic filing with the PBGC

and, in certain circumstances, electronic

issuance to third parties.

Maintenance of plan records. The

amendment clarifies that, while the plan

administrator and each contributing

sponsor of a terminating plan are subject

to the requirement to maintain records

used to compute benefits, if any one of

them complies with that requirement,

the others need not comply.

Post-termination amendments: The

amendment provides that, except to the

extent necessary to meet a qualification

requirement under section 401 of the

Code, a plan amendment adopted or

effective after a plan’s termination date

is disregarded with respect to a

participant or beneficiary to the extent

the amendment (1) decreases the

amount or value of the participant’s or

beneficiary’s benefits (e.g., by adopting

less favorable assumptions for

calculating a lump sum distribution or

by eliminating an ancillary benefit such

as a Social Security supplement under

section 204(b)(1)(G) of ERISA), or (2)

eliminates or restricts an optional form

of benefit for the participant or

beneficiary.

Missing Participants: The amendment

provides that the diligent search

procedures for a missing participant

whose designated benefit is paid to the

PBGC also apply for a missing

participant for whom the plan

administrator purchases an annuity. The

amendment requires plan

administrators who purchase an annuity

for a missing participant to provide the

PBGC with the amount of the

participant’s normal retirement benefit

(to the extent that information is

known). This information will facilitate

the PBGC’s ability to respond to

participant inquiries and to target its

search efforts.

The amendment eliminates detailed

rules that apply in the unusual

circumstance of an individual located or

discovered to be missing late in the

distribution process. The PBGC can

more effectively deal with such

situations by granting discretionary

extensions as appropriate on a case-bycase basis in order to ensure that

adequate time is available.

The amendment also provides penalty

relief for the late filing of certain

information about missing participants

comparable to that provided for late

post-distribution certifications.

Effective Date

While the changes will generally

apply to new terminations initiated on

or after the effective date of the final

rule, the PBGC intends to allow plan

administrators to apply certain portions

of the final rule to terminations in

process.

Paperwork Reduction Act

The information requirements

contained in this proposed rule have

been submitted to the Office of

Management and Budget for review

under the Paperwork Reduction Act of

1995, with a request for a three-year

approval. As part of this request, the

PBGC has made clarifying and other

changes (related to the proposed rule) to

its implementing forms and instructions

under its regulations on termination of

single-employer plans and missing

participants. Copies of the PBGC’s

request may be obtained free of charge

by writing to the PBGC Communications

and Public Affairs Department, suite

240, 1200 K Street, NW., Washington,

DC 20005, or by visiting that office

between the hours of 9 a.m. and 4 p.m.

The PBGC needs the information

required to be submitted to ensure that

a voluntary termination is completed in

accordance with statutory and

regulatory requirements and to facilitate

the payment of benefits to missing

participants. Participants need the

information required to be disclosed so

that they will be informed about the

status of the proposed termination of

their plan and about their benefits upon

termination.

Much of the work associated with

terminating a plan is performed for

purposes other than meeting the

collection of information requirements

in the PBGC’s termination and missing

participants regulations. The PBGC

estimates that 3,640 plan administrators

will be subject to these requirements

each year, and that the total annual

burden of complying with these

requirements is 4,983 hours and

$3,139,560.

Comments on the paperwork

provisions under this proposed rule

should be mailed to the Office of

Information and Regulatory Affairs,

Office of Management and Budget,

Attention: Desk Officer for the Pension

Benefit Guaranty Corporation,

Washington, DC 20503. Comments may

address (among other things)—

• Whether the proposed collection of

information is needed for the proper

performance of the PBGC’s functions

and will have practical utility;

• The accuracy of the PBGC’s

estimate of the burden of the proposed

collection of information, including the

validity of the methodology and

assumptions used;

• Enhancement of the quality, utility,

and clarity of the information to be

collected; and

• Minimizing the burden of the

collection of information on those who

are to respond, including through the

use of appropriate automated,

electronic, mechanical, or other

technological collection techniques or

other forms of information technology,

e.g., permitting electronic submission of

responses.

The PBGC already allows electronic

submission of participant and

beneficiary data in a distress

termination and has been actively

considering whether to allow other

information to be provided

electronically. In certain circumstances,

this proposed rule allows electronic

filing with the PBGC and electronic

issuance of notices to third parties. The

PBGC welcomes comments on

electronic filing and issuance

requirements, particularly on how to

ensure that notices issued electronically

to third parties are actually received by

the persons entitled to receive them.

The PBGC also invites comments on

whether, given the PBGC’s limited role

in standard terminations, the burden of

the standard termination filing process

could be further reduced.

Compliance With Rulemaking

Guidelines

The PBGC has determined that this

action is not a ‘‘significant regulatory

action’’ under the criteria set forth in

Executive Order 12866.

The PBGC certifies under section

605(b) of the Regulatory Flexibility Act

that this rule will not have a significant

economic impact on a substantial

number of small entities. While this rule

simplifies procedures and extends

deadlines, the actions required to

terminate a plan are essentially

unchanged. Accordingly, sections 603

and 604 of the Regulatory Flexibility

Act do not apply.

List of Subjects

29 CFR Part 4001

Pension insurance, Pensions,

Reporting and recordkeeping

requirements.
12510 Federal Register / Vol. 62, No. 50 / Friday, March 14, 1997 / Proposed Rules

29 CFR Part 4006

Penalties, Pension insurance,

Pensions, Reporting and recordkeeping

requirements.

29 CFR Part 4041

Pension insurance, Pensions,

Reporting and recordkeeping

requirements.

29 CFR Part 4050

Pensions, Reporting and

recordkeeping requirements.

For the reasons set forth above, the

PBGC proposes to amend parts 4001,

4006, 4041, and 4050 of 29 CFR chapter

LX as follows.

PART 4041—TERMINATION OF

SINGLE-EMPLOYER PLANS

1. The authority citation for Part 4041

continues to read as follows:

Authority: 29 U.S.C. 1302(b)(3), 1341,

1344, 1350.

§§ 4041.46 and 4041.48 [Removed]

2. Section 4041.46 is removed.

§ 4041.47 and §§ 4041.41 Through 4041.45

[Redesignated as §§ 4041.49 and 4041.43

through 4041.47]

3. § 4041.47 is redesignated as

§ 4041.49; and §§ 4041.41 through

4041.45 are redesignated as §§ 4041.43

through 4041.47.

§ 4041.3 [Amended and Redesignated as

§ 4041.41]

4. In § 4041.3, the section heading is

amended by removing the words ‘‘a

standard termination or’’; paragraphs (a)

and (b) are removed; paragraphs (c)

through (g) are redesignated as

paragraphs (a) through (e); and as so

amended, § 4041.3 is redesignated as

§ 4041.41. (Redesignated § 4041.41 is

the first section under Subpart C.)

§ 4041.4 [Amended and Redesignated]

5. In 4041.4, paragraphs (b), (d) and

(e) are removed; paragraphs (c) and (f)

through (h) are redesignated as

paragraphs (b) through (e); and as so

amended, § 4041.4 is redesignated as

§ 4041.42.

Subparts A and B [Amended]

6. Subparts A and B of Part 4041 are

revised to read as follows:

PART 4041—TERMINATION OF

SINGLE-EMPLOYER PLANS

Subpart A—General Provisions

Sec.

4041.1 Purpose and scope.

4041.2 Definitions.

4041.3 Computation of time; filing and

issuance rules.

4041.4 Disaster relief.

4041.5 Maintenance of plan records.

4041.6 Effect of failure to provide required

information.

4041.7 Collective bargaining agreement

challenges.

4041.8 Post-termination amendments.

Subpart B—Standard Termination

Process

4041.21 Requirements for a standard

termination.

4041.22 Administration of plan during

termination process.

4041.23 Notice of intent to terminate.

4041.24 Notices of plan benefits.

4041.25 Standard termination notice.

4041.26 PBGC review of standard

termination notice.

4041.27 Notice of annuity information.

4041.28 Closeout of plan.

4041.29 Post-distribution certification.

4041.30 Requests for deadline extensions.

4041.31 Notice of noncompliance.

Subpart A—General Provisions.

§ 4041.1 Purpose and scope.

This part sets forth the rules and

procedures for terminating a singleemployer plan in a standard or distress

termination under section 4041 of

ERISA, the exclusive means of

voluntarily terminating a plan.

§ 4041.2 Definitions.

The following terms are defined in

§ 4001.2 of this chapter: affected party,

annuity, benefit liabilities, Code,

contributing sponsor, controlled group,

distress termination, distribution date,

EIN, employer, ERISA, guaranteed

benefit, insurer, irrevocable

commitment, IRS, mandatory employee

contributions, normal retirement age,

notice of intent to terminate, PBGC,

person, plan administrator, plan year,

PN, single-employer plan, standard

termination, termination date, and title

IV benefit. In addition, for purposes of

this part:

Distress termination notice means the

notice filed with the PBGC pursuant to

§ 4041.45.

Distribution notice means the notice

issued to the plan administrator by the

PBGC pursuant to § 4041.47(c) upon the

PBGC’s determination that the plan has

sufficient assets to pay at least

guaranteed benefits.

Majority owner means an individual

who owns, directly or indirectly, 50

percent or more (taking into account the

constructive ownership rules of section

414 (b) and (c) of the Code) of—

(1) An unincorporated trade or

business;

(2) The capital interest or the profits

interest in a partnership; or

(3) Either the voting stock of a

corporation or the value of all of the

stock of a corporation.

Notice of noncompliance means a

notice issued to a plan administrator by

the PBGC pursuant to § 4041.31

advising the plan administrator that the

requirements for a standard termination

have not been satisfied and that the plan

is an ongoing plan.

Notice of plan benefits means the

notice to each participant and

beneficiary required by § 4041.24.

Participant means—

(1) Any individual who is currently in

employment covered by the plan and

who is earning or retaining credited

service under the plan, including any

individual who is considered covered

under the plan for purposes of meeting

the minimum participation

requirements but who, because of offset

or similar provisions, does not have any

accrued benefits;

(2) Any nonvested individual who is

not currently in employment covered by

the plan but who is earning or retaining

credited service under the plan; and

(3) Any individual who is retired or

separated from employment covered by

the plan and who is receiving benefits

under the plan or is entitled to begin

receiving benefits under the plan in the

future, excluding any such individual to

whom an insurer has made an

irrevocable commitment to pay all the

benefits to which the individual is

entitled under the plan.

Plan benefits means the benefits to

which a participant is, or may become,

entitled under the plan’s provisions in

effect as of the termination date, based

on the participant’s benefit under the

plan as of that date. Each participant’s

‘‘plan benefits’’ equals that participant’s

‘‘benefit liabilities,’’ and the sum of all

‘‘plan benefits’’ equals the plan’s

‘‘benefit liabilities.’’

Proposed termination date means the

date specified as such by the plan

administrator in the notice of intent to

terminate or, if later, in the standard or

distress termination notice.

Residual assets means the plan assets

remaining after all benefit liabilities and

other liabilities (e.g., PBGC premiums)

of the plan have been satisfied.

Standard termination notice means

the notice filed with the PBGC pursuant

to § 4041.25.

State guaranty association means an

association of insurers created by a

State, the District of Columbia, or the

Commonwealth of Puerto Rico to pay

benefits and to continue coverage,

within statutory limits, under life and

health insurance policies and annuity

contracts when an insurer fails.
Federal Register / Vol. 62, No. 50 / Friday, March 14, 1997 / Proposed Rules 12511

§ 4041.3 Computation of time; filing and

issuance rules.

(a) Computation of time. In computing

any period of time under this part, the

day of the event from which the period

begins is not counted. The last day of

the period is included. If the last day

falls on a Saturday, Sunday, or Federal

holiday, the period runs until the end of

the next regular business day. A

proposed termination date may be any

day, including a Saturday, Sunday, or

Federal holiday.

(b) Filing with the PBGC.

(1) Method of filing. Any document to

be filed under this part shall be

delivered to the PBGC in accordance

with the applicable PBGC termination

forms and instructions package.

(2) Date of filing. Any information

required or permitted to be filed with

the PBGC shall be deemed filed—

(i) On the date of the United States

postmark, if the postmark was made by

the United States Postal Service and the

document was mailed postage prepaid

to the PBGC;

(ii) On the date it is deposited for

delivery to the PBGC with a commercial

delivery service, provided it is received

by the PBGC within two regular

business days; or

(iii) Except as provided in paragraphs

(b)(2)(i) or (b)(2)(ii), on the date it is

received by the PBGC. Information

received on a weekend or Federal

holiday or after 5:00 p.m. on a weekday

is considered filed on the next regular

business day.

(c) Issuance to other parties. The

following rules apply to affected parties

(other than the PBGC). For purposes of

this paragraph (c), a person entitled to

notice under the spin-off/termination

transaction rules of §§ 4041.23(c) or

4041.24(f) is treated as an affected party.

(1) Permissible methods of issuance.

The plan administrator shall issue any

notice to an affected party

individually—

(i) By hand delivery;

(ii) By first-class mail or commercial

delivery service to the affected party’s

last known address; or

(iii) By electronic means reasonably

calculated to ensure actual receipt by

the affected party.

(2) Date of issuance. Any notice is

deemed issued to an affected party on

the date on which it is—

(i) Handed to the affected party;

(ii) Deposited with the mail or a

commercial delivery service (as

evidenced by a postmark or written

receipt); or

(iii) Transmitted electronically to the

affected party.

(3) Omission of affected parties. The

failure to issue any notice to an affected

party (other than any employee

organization) within the specified time

period will not cause the notice to be

untimely if—

(i) After-discovered affected parties.

The plan administrator could not

reasonably have been expected to know

of the affected party, and issues the

notice promptly after discovering the

affected party; or

(ii) De minimis administrative errors.

The failure was due to administrative

error involving only a de minimis

percentage of affected parties, and the

plan administrator issues the notice to

each such affected party promptly after

discovering the error.

(4) Form of notices to affected parties.

All notices to affected parties shall be

readable and written in a manner

calculated to be understood by the

average plan participant.

(5) Foreign languages. The plan

administrator of a plan that (as of the

proposed termination date) covers the

numbers or percentages in § 2520.104b10(e) of this title of participants literate

only in the same non-English language

shall, for any notice to affected parties—

(i) Include a prominent legend in that

common non-English language advising

them how to obtain assistance in

understanding the notice; or

(ii) Provide the notice in that common

non-English language to those affected

parties literate only in that language.

§ 4041.4 Disaster relief.

When the President of the United

States declares that, under the Disaster

Relief Act (42 U.S.C. 5121, 5122(2),

5141(b)), a major disaster exists, the

Executive Director of the PBGC (or his

or her designee) may, by issuing one or

more notices of disaster relief, extend by

up to 180 days any due date under this

part.

§ 4041.5 Maintenance of plan records.

(a) Retention requirement.

(1) Persons subject to requirement.

Each contributing sponsor and the plan

administrator of a plan terminating in a

standard termination, or in a distress

termination that closes out in

accordance with § 4041.50, shall

maintain all records used to compute

benefits with respect to each individual

who is a plan participant or a

beneficiary of a deceased participant as

of the termination date. If a contributing

sponsor or the plan administrator

complies with part or all of the

requirements of this paragraph (a), the

other(s) need not comply with respect to

such information.

(2) Retention period. The records

described in paragraph (a)(1) shall be

preserved for six years after the date

when the post-distribution certification

under this part is filed with the PBGC.

(b) Availability of records. The

contributing sponsor or plan

administrator shall make records related

to the termination available to the PBGC

upon request for inspection and

photocopying, and shall submit such

records to the PBGC within 30 days after

the date of a written request by the

PBGC or by a later date specified

therein.

§ 4041.6 Effect of failure to provide

required information.

If a plan administrator fails to provide

any information required under this part

within the specified time limit, the

PBGC may assess a penalty under

section 4071 of ERISA of up to $1,000

a day for each day that the failure

continues. The PBGC may also pursue

any other equitable or legal remedies

available to it under the law, including,

if appropriate, the issuance of a notice

of noncompliance under § 4041.31.

§ 4041.7 Challenges to plan termination

under collective bargaining agreement.

(a) Suspension upon formal challenge

to termination.

(1) Notice of formal challenge.

(i) If the PBGC is advised, before its

review period under § 4041.26(a) ends,

or before issuance of a notice of inability

to determine sufficiency or a

distribution notice under § 4041.47 (b)

or (c), that a formal challenge to the

termination has been initiated as

described in paragraph (c), the PBGC

shall suspend the termination

proceeding and so advise the plan

administrator in writing.

(ii) If the PBGC is advised of a

challenge described in paragraph

(a)(1)(i) of this section after the time

specified therein, the PBGC may

suspend the termination proceeding and

shall so advise the plan administrator in

writing.

(2) Standard terminations. During any

period of suspension in a standard

termination—

(i) The running of all time periods

specified in ERISA or this part relevant

to the termination shall be suspended;

and

(ii) The plan administrator shall

comply with the prohibitions in

§ 4041.22.

(3) Distress terminations. During any

period of suspension in a distress

termination—

(i) The issuance by the PBGC of any

notice of inability to determine

sufficiency or distribution notice shall

be stayed or, if any such notice was

previously issued, its effectiveness shall

be stayed;
12512 Federal Register / Vol. 62, No. 50 / Friday, March 14, 1997 / Proposed Rules

(ii) The plan administrator shall

comply with the prohibitions in

§ 4041.42; and

(iii) The plan administrator shall file

a distress termination notice with the

PBGC pursuant to § 4041.45.

(b) Existing collective bargaining

agreement. For purposes of this section,

an existing collective bargaining

agreement means a collective bargaining

agreement that has not been made

inoperative by a judicial ruling and, by

its terms, either has not expired or is

extended beyond its stated expiration

date because neither of the collective

bargaining parties took the required

action to terminate it. When a collective

bargaining agreement no longer meets

these conditions, it ceases to be an

‘‘existing collective bargaining

agreement,’’ whether or not any or all of

its terms may continue to apply by

operation of law.

(c) Formal challenge to termination. A

formal challenge to a plan termination

asserting that the termination would

violate the terms and conditions of an

existing collective bargaining agreement

is initiated when—

(1) Any procedure specified in the

collective bargaining agreement for

resolving disputes under the agreement

commences; or

(2) Any action before an arbitrator,

administrative agency or board, or court

under applicable labor-management

relations law commences.

(d) Resolution of challenge.

Immediately upon the final resolution of

the challenge, the plan administrator

shall notify the PBGC in writing of the

outcome of the challenge, provide the

PBGC with a copy of any award or

order, and, if the validity of the

proposed termination has been upheld,

advise the PBGC whether the proposed

termination is to proceed. The final

resolution ends the suspension period

under paragraph (a) of this section.

(1) Challenge sustained. If the final

resolution is that the proposed

termination violates an existing

collective bargaining agreement, the

PBGC shall dismiss the termination

proceeding, all actions taken to effect

the plan termination shall be null and

void, and the plan shall be an ongoing

plan. In this event, in a distress

termination, § 4041.42(d) shall apply as

of the date of the dismissal by the PBGC.

(2) Termination sustained. If the final

resolution is that the proposed

termination does not violate an existing

collective bargaining agreement and the

plan administrator has notified the

PBGC that the termination is to proceed,

the PBGC shall reactivate the

termination proceeding by sending a

written notice thereof to the plan

administrator, and—

(i) The termination proceeding shall

continue from the point where it was

suspended;

(ii) All actions taken to effect the

termination before the suspension shall

be effective;

(iii) Any time periods that were

suspended shall resume running from

the date of the PBGC’s notice of the

reactivation of the proceeding;

(iv) Any time periods that had fewer

than 15 days remaining shall be

extended to the 15th day after the date

of the PBGC’s notice, or such later date

as the PBGC may specify; and

(v) In a distress termination, the PBGC

shall proceed to issue a notice of

inability to determine sufficiency or a

distribution notice (or reactivate any

such notice stayed under paragraph

(a)(3) of this section), either with or

without first requesting updated

information from the plan administrator

pursuant to § 4041.45(c).

(e) Final resolution of challenge. A

formal challenge to a proposed

termination is finally resolved when—

(1) The parties involved in the

challenge enter into a settlement that

resolves the challenge;

(2) A final award, administrative

decision, or court order is issued that is

not subject to review or appeal; or

(3) A final award, administrative

decision, or court order is issued that is

not appealed, or review or enforcement

of which is not sought, within the time

for filing an appeal or requesting review

or enforcement.

(f) Involuntary termination by the

PBGC. Notwithstanding any other

provision of this section, the PBGC

retains the authority in any case to

initiate a plan termination in

accordance with the provisions of

section 4042 of ERISA.

§ 4041.8 Post-termination amendments.

Except to the extent necessary to meet

a qualification requirement under

section 401 of the Code, a plan

amendment that is adopted or effective

after a plan’s termination date shall be

disregarded with respect to a participant

or beneficiary to the extent the

amendment—

(a) Decreases the amount or value of

the participant’s or beneficiary’s

benefits (e.g., by adopting less favorable

assumptions for calculating a lump sum

distribution or by eliminating an

ancillary benefit such as a Social

Security supplement under section

204(b)(1)(G) of ERISA); or

(b) Eliminates or restricts an optional

form of benefit for the participant or

beneficiary.

Subpart B—Standard Termination

Process

§ 4041.21 Requirements for a standard

termination.

(a) Notice and distribution

requirements. A standard termination is

valid if the plan administrator—

(1) Issues a notice of intent to

terminate to all affected parties (other

than the PBGC) in accordance with

§ 4041.23;

(2) Issues notices of plan benefits to

all affected parties entitled to plan

benefits in accordance with § 4041.24;

(3) Files a standard termination notice

with the PBGC in accordance with

§ 4041.25;

(4) Distributes the plan’s assets in

satisfaction of all of the plan’s benefit

liabilities in accordance with

§ 4041.28(a); and

(5) In the case of a spin-off/

termination transaction (as defined in

§ 4041.23(c)), provides the notices

required by § 4041.23(c), § 4041.24(f),

and § 4041.27(a)(2).

(b) Plan sufficiency.

(1) Commitment to make plan

sufficient. A contributing sponsor of a

plan or any other member of the plan’s

controlled group may make a

commitment to contribute any

additional sums necessary to enable the

plan to satisfy benefit liabilities in

accordance with § 4041.28(a). A

commitment shall be valid only if—

(i) It is made to the plan;

(ii) It is in writing, signed by the

contributing sponsor or controlled

group member(s); and

(iii) In any case in which the person

making the commitment is the subject of

a bankruptcy liquidation or

reorganization proceeding, as described

in § 4041.41(c) (1) or (c)(2), the

commitment is approved by the court

before which the liquidation or

reorganization proceeding is pending or

a person not in bankruptcy

unconditionally guarantees to meet the

commitment at or before the time

distribution of assets is required.

(2) Alternative treatment of majority

owner’s benefit. A majority owner may

elect to forego receipt of his or her

benefit to the extent necessary to enable

the plan to satisfy all other benefit

liabilities in accordance with

§ 4041.28(a). Any such alternative

treatment of the majority owner’s

benefit is valid only if—

(i) The election is in writing;

(ii) In any case in which section

205(g) of ERISA requires spousal

consent to the majority owner’s receipt

of his or her benefit in a form other than

a qualified joint and survivor annuity,

the spouse of the majority owner
Federal Register / Vol. 62, No. 50 / Friday, March 14, 1997 / Proposed Rules 12513

consents in accordance with such

section; and

(iii) The majority owner’s election is

not inconsistent with a qualified

domestic relations order (as defined in

section 206(d)(3) of ERISA).

§ 4041.22 Administration of plan during

pendency of termination process.

(a) In general. A plan administrator

may distribute plan assets in connection

with the termination of the plan only in

accordance with the provisions of this

part. From the first day the plan

administrator issues a notice of intent to

terminate to the last day of the PBGC’s

review period under § 4041.26(a), the

plan administrator shall continue to

carry out the normal operations of the

plan. During that time period, except as

provided in paragraph (b), the plan

administrator shall not—

(1) Purchase irrevocable commitments

to provide any plan benefits; or

(2) Pay benefits attributable to

employer contributions, other than

death benefits, in any form other than

an annuity.

(b) Exception. The plan administrator

may pay benefits attributable to

employer contributions either through

the purchase of irrevocable

commitments or in a form other than an

annuity if—

(1) The participant has separated from

active employment;

(2) The distribution is consistent with

prior plan practice; and

(3) The distribution is not reasonably

expected to jeopardize the plan’s

sufficiency for benefit liabilities.

§ 4041.23 Notice of intent to terminate.

(a) Notice requirement.

(1) In general. At least 60 days and no

more than 90 days before the proposed

termination date, the plan administrator

shall issue a notice of intent to

terminate to each person (other than the

PBGC) that is, as of the proposed

termination date, an affected party. (The

PBGC’s standard termination forms and

instructions package includes a model

notice of intent to terminate.)

(2) Early issuance of NOIT. The PBGC

may consider a notice of intent to

terminate to be timely under paragraph

(a)(1) if the notice was early by a de

minimis number of days and the PBGC

finds that the early issuance was the

result of administrative error.

(b) Contents of notice. The notice of

intent to terminate shall include—

(1) Identifying information. The name

and PN of the plan, the name and EIN

of each contributing sponsor, and the

name, address, and telephone number of

the person who may be contacted by an

affected party with questions

concerning the plan’s termination;

(2) Intent to terminate plan. A

statement that the plan administrator

intends to terminate the plan in a

standard termination as of a specified

proposed termination date and will

notify the affected party if the proposed

termination date is changed to a later

date or if the termination does not

occur;

(3) Sufficiency requirement. A

statement that, in order to terminate in

a standard termination, plan assets must

be sufficient to provide all benefit

liabilities under the plan;

(4) Cessation of accruals. A statement

(as applicable) informing affected

parties that—

(i) Benefit accruals will cease as of the

termination date, but will continue if

the plan does not terminate;

(ii) A plan amendment has been

adopted under which benefit accruals

will cease, in accordance with section

204(h) of ERISA, as of the proposed

termination date or a specified date

before the proposed termination date,

whether or not the plan is terminated;

or

(iii) Benefit accruals ceased, in

accordance with section 204(h) of

ERISA, as of a specified date before the

notice of intent to terminate was issued;

(5) Annuity information. If required

under § 4041.27, the annuity

information described therein;

(6) Benefit information. A statement

that each affected party entitled to plan

benefits will receive a written

notification regarding his or her

benefits;

(7) Continuation of monthly benefits.

For those persons who are (as of the

proposed termination date) in pay

status, a statement that their monthly (or

other periodic) benefit amounts will not

be affected by the plan’s termination;

and

(8) Extinguishment of guarantee. A

statement that after plan assets have

been distributed in full satisfaction of

all pension benefits under the plan with

respect to a participant or a beneficiary

of a deceased participant, either by the

purchase of irrevocable commitments

(annuity contracts) or by an alternative

form of distribution provided for under

the plan, the PBGC no longer guarantees

that participant’s or beneficiary’s plan

benefits.

(c) Spin-off/termination transactions.

In the case of a transaction in which a

single defined benefit plan is split into

two or more plans and there is a

reversion of residual assets to an

employer upon the termination of one

or more but fewer than all of the

resulting plans (a ‘‘spin-off/termination

transaction’’), the plan administrator

shall, within the time period specified

in paragraph (a), provide all

participants, beneficiaries of deceased

participants, and alternate payees in the

original plan who are (as of the

proposed termination date) covered by

an ongoing plan with a notice

describing the transaction.

§ 4041.24 Notices of plan benefits.

(a) Notice requirement. The plan

administrator shall, no later than the

time the plan administrator files the

standard termination notice with the

PBGC, issue a notice of plan benefits to

each person (other than the PBGC and

any employee organization) who is, as

of the proposed termination date, an

affected party.

(b) Contents of notice. The plan

administrator shall include in each

notice of plan benefits—

(1) The name and PN of the plan, the

name and EIN of each contributing

sponsor, and the name, address, and

telephone number of an individual who

may be contacted to answer questions

concerning a benefit;

(2) The proposed termination date

given in the notice of intent to terminate

and any extended proposed termination

date under § 4041.25(b);

(3) If the amount of the plan benefits

set forth in the notice is an estimate, a

statement that the amount is an estimate

and that benefits paid may be greater

than or less than the estimate;

(4) Except in the case of an affected

party in pay status for more than one

year as of the proposed termination

date—

(i) The personal data used to calculate

the affected party’s plan benefits; and

(ii) A statement requesting that the

affected party review the personal data

and notify the plan administrator of any

incorrect data; and

(5) The information in paragraph (c),

(d), or (e), as applicable.

(c) Benefits of persons in pay status.

For an affected party in pay status as of

the proposed termination date, the plan

administrator shall include in the notice

of plan benefits—

(1) The amount and form of the

participant’s or beneficiary’s plan

benefits payable as of the proposed

termination date;

(2) The amount and form of benefit,

if any, payable to a beneficiary upon the

participant’s death and the name of the

beneficiary; and

(3) The amount and date of any

increase or decrease in the benefit

scheduled to occur (or that has already

occurred) after the proposed termination

date and an explanation of the increase

or decrease, including, where

applicable, a reference to the pertinent

plan provision.
12514 Federal Register / Vol. 62, No. 50 / Friday, March 14, 1997 / Proposed Rules

(d) Benefits of persons with valid

elections or de minimis benefits. For an

affected party who is not in pay status

as of the proposed termination date, but

who has, as of that date, validly elected

a form and starting date, or with respect

to whom the plan administrator has

determined that a nonconsensual lump

sum distribution will be made, the plan

administrator shall include in the notice

of plan benefits—

(1) The amount and form of the

person’s plan benefits payable as of the

projected benefit starting date, and what

that date is;

(2) The information in paragraphs

(c)(2) and (c)(3);

(3) If the plan benefits will be paid in

any form other than a lump sum and the

age at which, or form in which, the plan

benefits will be paid differs from the

normal retirement benefit—

(i) The age or form stated in the plan;

and

(ii) The age or form adjustment

factors; and

(4) If the plan benefits will be paid in

a lump sum—

(i) An explanation of when a lump

sum may be paid without the consent of

the participant or the participant’s

spouse;

(ii) The interest rate used to convert

to the lump sum benefit and a reference

to the pertinent plan provisions;

(iii) An explanation of how the

interest rate is used to calculate the

lump sum;

(iv) A statement that the use of a

higher interest rate results in a smaller

lump sum amount; and

(v) A statement that the applicable

interest rate may change before the

distribution date.

(e) Benefits of all other persons not in

pay status. For any other affected party

not described in paragraph (c) or (d), the

plan administrator shall include in the

notice of plan benefits—

(1) The amount and form of the

person’s plan benefits payable at normal

retirement age in any form permitted

under the plan;

(2) Any alternative benefit forms,

including those payable to a beneficiary

upon the person’s death either before or

after benefits commence;

(3) If the person is or may become

entitled to a benefit that would be

payable before normal retirement age,

the amount and form of benefit that

would be payable at the earliest benefit

commencement date (or, if more than

one such form is payable at the earliest

benefit commencement date, any one of

those forms) and whether the benefit

commencing on such date would be

subject to future reduction; and

(4) If the plan benefits may be paid in

a lump sum, the information in

paragraph (d)(4).

(f) Spin-off/termination transactions.

In the case of a spin-off/termination

transaction (as defined in § 4041.23(c)),

the plan administrator shall, no later

than the time the plan administrator

files the standard termination notice for

any terminating plan, provide all

participants, beneficiaries of deceased

participants, and alternate payees in the

original plan who are (as of the

proposed termination date) covered by

an ongoing plan with a notice of plan

benefits containing the information in

paragraphs (b) through (e).

§ 4041.25 Standard termination notice.

(a) Notice requirement. The plan

administrator shall file with the PBGC a

standard termination notice, consisting

of the PBGC Form 500, completed in

accordance with the instructions

thereto, on or before the 180th day after

the proposed termination date.

(b) Change of proposed termination

date. The plan administrator may, in the

standard termination notice, select a

proposed termination date that is later

than the date specified in the notice of

intent to terminate, provided it is not

later than 90 days after the earliest date

on which a notice of intent to terminate

was issued to any affected party.

(c) Request for IRS determination

letter. To qualify for the distribution

deadline in § 4041.28(a)(1)(ii), the plan

administrator shall submit to the IRS a

valid request for a determination of the

plan’s qualification status upon

termination (‘‘determination letter’’) by

the time the standard termination notice

is filed.

§ 4041.26 PBGC review of standard

termination notice.

(a) Review period.

(1) In general. The PBGC shall notify

the plan administrator in writing of the

date on which it received a complete

standard termination notice at the

address provided in the PBGC’s

standard termination forms and

instructions package. If the PBGC does

not issue a notice of noncompliance

during its 60-day review period

following such date, the plan

administrator shall proceed to close out

the plan in accordance with § 4041.28.

(2) Extension of review period. The

PBGC and the plan administrator may,

before the expiration of the PBGC

review period in paragraph (a)(1), agree

in writing to extend that period.

(b) If standard termination notice is

incomplete.

(1) For purposes of timely filing. If the

standard termination notice is

incomplete, the PBGC may, based on the

nature and extent of the omission,

provide the plan administrator an

opportunity to complete the notice. In

such a case, the standard termination

notice shall be deemed to have been

complete as of the date when originally

filed for purposes of § 4041.25(a),

provided the plan administrator

provides the missing information by the

later of—

(i) The 180th day after the proposed

termination date; or

(ii) The 30th day after the date of the

PBGC notice that the filing was

incomplete.

(2) For purposes of PBGC review

period. If the standard termination

notice is completed under paragraph

(b)(1), the PBGC shall determine

whether the notice shall be deemed to

have been complete as of the date when

originally filed for purposes of

determining when the PBGC’s review

period begins under § 4041.26(a)(1).

(c) Additional information.

(1) Deadline for providing additional

information. The PBGC may in any case

require the submission of additional

information relevant to the termination

proceeding. Any such additional

information becomes part of the

standard termination notice and shall be

submitted within 30 days after the date

of a written request by the PBGC, or

within a different time period specified

therein. The PBGC may in its discretion

shorten the time period where it

determines that the interests of the

PBGC or participants may be prejudiced

by a delay in receipt of the information.

(2) Effect on termination proceeding.

A request for additional information

shall suspend the running of the PBGC’s

60-day review period. The review

period shall begin running again on the

day the required information is received

and continue for the greater of—

(i) The number of days remaining in

the review period; or

(ii) Five regular business days.

§ 4041.27 Notice of annuity information.

(a) Notice requirement.

(1) In general. The plan administrator

shall provide notices in accordance with

this section to each affected party other

than—

(i) An affected party whose plan

benefits will be distributed in the form

of a nonconsensual lump sum; and

(ii) The PBGC.

(2) Spin-off/termination transactions.

The plan administrator shall provide the

information in paragraph (d) to a person

entitled to notice under §§ 4041.23(c) or

4041.24(f), at the same time and in the

same manner as required for an affected

party other than the PBGC.
Federal Register / Vol. 62, No. 50 / Friday, March 14, 1997 / Proposed Rules 12515

(b) Content of notice. The plan

administrator shall include, as part of

the notice of intent to terminate—

(1) Identity of insurers. The name and

address of the insurer or insurers from

whom (if known), or (if not) from among

whom, the plan administrator intends to

purchase irrevocable commitments

(annuity contracts);

(2) Change in identity of insurers. A

statement that if the plan administrator

later decides to select a different

insurer, affected parties will receive a

supplemental notice no later than 45

days before the distribution date; and

(3) State guaranty association

coverage information. The information

on state guaranty association coverage of

annuities described in paragraphs (a)(3)

(i) and (ii) of this section:

(i) The following notice:

Under your pension plan, your benefits

may be paid in the form of an annuity

purchased from a licensed insurance

company. If we purchase an annuity for you

to provide all your pension benefits under

the plan, the insurance company will be

responsible for paying your benefits.

All states, the District of Columbia, and the

Commonwealth of Puerto Rico have

established ‘‘guaranty associations’’ to

protect policyholders in the event of an

insurance company’s financial failure. All

insurance companies licensed to sell

insurance in a state are required to be

members of that state’s guaranty association.

If a member insurance company fails, the

association collects money from the other

member insurance companies to continue

coverage up to statutory limits, as specified

by law, for its policyholders.

State guaranty association coverage of your

annuity means that the guaranty association

may pay part or all of your annuity if the

insurance company responsible for the

annuity cannot pay. How much of your

annuity the fund would pay, if any, may

depend on factors such as the amount of your

annuity, the state in which you reside at the

time the insurance company fails to pay, and

the state in which the insurance company is

located. Since state laws vary, you will need

to see what the law in your state says at the

relevant time.

State guaranty association coverage is

limited by statute in total dollar amount. In

most states, the maximum amount of annuity

coverage is stated in terms of the present

value of the annuity. The maximum amount

and how it is stated varies from state to state

and may change over time.

This notice is intended to help you

understand the general nature of state

guaranty association protection of the

annuity you may receive. It is only a

summary. Listings of state guaranty

associations and their addresses and

telephone numbers, and of their general

coverage limits are attached.

(ii) Listings of the addresses and

telephone numbers of the state guaranty

association offices in all 50 states, the

District of Columbia, and the

Commonwealth of Puerto Rico, and of

the dollar coverage limitations

applicable to each state, along with the

date as of which the listings were

prepared. The plan administrator shall

use listings that are at least as current

as those included as sample listings in

the standard termination forms and

instructions package applicable to the

plan termination proceeding.

(c) Where insurer(s) not known.

(1) Extension of deadline for notice. If

the identity-of-insurer information in

paragraph (b)(1) is not known at the

time the plan administrator is required

to provide it to an affected party as part

of a notice of intent to terminate, the

plan administrator shall instead provide

it in a supplemental notice under

paragraph (d).

(2) Alternative NOIT information. A

plan administrator that qualifies for the

extension in paragraph (c)(1) with

respect to a notice of intent to terminate

shall include therein (in lieu of the

information in paragraph (b)) a

statement that—

(i) Irrevocable commitments (annuity

contracts) may be purchased from an

insurer to provide some or all of the

benefits under the plan;

(ii) The insurer or insurers have not

yet been identified; and

(iii) Affected parties will be notified at

a later date (but no later than 45 days

before the distribution date) of the name

and address of the insurer or insurers

from whom (if known), or (if not) from

among whom, the plan administrator

intends to purchase irrevocable

commitments (annuity contracts).

(d) Supplemental notice. The plan

administrator shall provide a

supplemental notice to an affected party

in accordance with this paragraph (d) if

the plan administrator did not

previously notify the affected party of

the identity of insurer(s) or, after having

previously notified the affected party of

the identity of insurer(s), decides to

select a different insurer. A failure to

provide a required supplemental notice

to an affected party shall be deemed to

be a failure to comply with the notice

of intent to terminate requirements.

(1) Deadline for supplemental notice.

The deadline for issuing the

supplemental notice is 45 days before

the affected party’s distribution date (or,

in the case of an employee organization,

45 days before the earliest distribution

date for any affected party that it

represents).

(2) Content of supplemental notice.

The supplemental notice shall

include—

(i) The identity-of-insurer information

in paragraph (b)(1);

(ii) The information regarding change

of identity of insurer(s) in paragraph

(b)(2); and

(iii) Unless the state guaranty

association coverage information in

paragraph (b)(3) was previously

provided to the affected party, such

information and the extinguishment-ofguarantee information in

§ 4041.23(b)(8).

§ 4041.28 Closeout of plan.

(a) Distribution deadline.

(1) In general. Unless a notice of

noncompliance is issued under

§ 4041.31(a), the plan administrator

shall complete the distribution of plan

assets in accordance with paragraph (c)

by the later of—

(i) 180 days after the expiration of the

PBGC’s 60-day (or extended) review

period under § 4041.26(a); or

(ii) If the plan administrator meets the

requirements of § 4041.25(c), 120 days

after receipt of a favorable

determination from the IRS.

(2) Revocation of notice of

noncompliance. If the PBGC revokes a

notice of noncompliance issued under

§ 4041.31(a), the distribution deadline is

extended until the 180th day after the

date of the revocation.

(b) Assets insufficient to satisfy

benefit liabilities. If the plan

administrator determines that plan

assets are not sufficient to satisfy all

benefit liabilities at the time of any

distribution (with assets determined net

of other liabilities, including PBGC

premiums), the plan administrator shall

not make any further distribution of

assets to effect the plan’s termination

and shall promptly notify the PBGC.

(c) Method of distribution.

(1) In general. The plan administrator

shall, in accordance with all applicable

requirements under the Code and

ERISA, distribute plan assets in

satisfaction of all benefit liabilities

(determined as of the termination date).

In the case of benefit liabilities that

must be provided in annuity form, the

distribution shall be made by

purchasing irrevocable commitments

from an insurer selected in accordance

with the fiduciary standards of Title I of

ERISA.

(2) Participating annuity contracts. In

the case of a plan in which any residual

assets are to be distributed to

participants, a participating annuity

contract may be purchased to satisfy the

requirement that annuities be provided

by the purchase of irrevocable

commitments only if the portion of the

price of the contract that is attributable

to the participation feature—
12516 Federal Register / Vol. 62, No. 50 / Friday, March 14, 1997 / Proposed Rules

(i) Is not taken into account in

determining the amount of residual

assets; and

(ii) Is not paid from residual assets

allocable to participants.

(3) Missing participants. The plan

administrator shall distribute benefits to

missing participants in accordance with

part 4050.

(d) Notice of annuity contract. If

benefit liabilities are provided through

the purchase of irrevocable

commitments—

(1) Either the plan administrator or

the insurer shall, within 30 days after it

is available, provide each participant

and beneficiary with a copy of the

annuity contract or certificate showing

the insurer’s name and address and

clearly reflecting the insurer’s obligation

to provide the participant’s or

beneficiary’s benefit; and

(2) If such a contract or certificate is

not available on or before the date on

which the post-distribution certificate is

required to be filed in order to avoid the

assessment of penalties under

§ 4041.29(b), the plan administrator

shall, no later than such date, provide

each participant and beneficiary with a

written notice stating—

(i) That the obligation for providing

the participant’s or beneficiary’s plan

benefits has transferred to the insurer;

(ii) The name and address of the

insurer;

(iii) The name, address, and telephone

number of the person designated by the

insurer to answer questions concerning

the annuity; and

(iv) That the participant or beneficiary

will receive from the plan administrator

or insurer a copy of the annuity contract

or a certificate showing the insurer’s

name and address and clearly reflecting

the insurer’s obligation to provide the

participant’s or beneficiary’s benefit.

§ 4041.29 Post-distribution certification.

(a) Deadline. Within 30 days after the

last distribution date for any affected

party, the plan administrator shall file

with the PBGC a post-distribution

certification consisting of the PBGC

Form 501, completed in accordance

with the instructions thereto.

(b) Assessment of penalties. The

PBGC will assess a penalty for late filing

of a post-distribution certification only

to the extent the certification is filed

more than 90 days after the distribution

deadline (including extensions) under

§ 4041.28(a).

§ 4041.30 Requests for deadline

extensions.

(a) In general. In narrow

circumstances, the PBGC may in its

discretion extend a deadline for taking

action under this subpart to a later date.

The PBGC will grant such an extension

where it finds compelling reasons why

it is not administratively feasible for the

plan administrator (or other persons

acting on behalf of the plan

administrator) to take the action until

the later date and the delay is brief. The

PBGC shall consider—

(1) The length of the delay; and

(2) Whether ordinary business care

and prudence in attempting to meet the

deadline is exercised.

(b) Time of extension request. Any

request for an extension under

paragraph (a) that is filed later than the

15th day before the applicable deadline

shall include a justification for not filing

the request earlier.

(c) IRS determination letter requests.

Any request for an extension under

paragraph (a) of the deadline in

§ 4041.25(c) for submitting a

determination letter request to the IRS

(in order to qualify for the distribution

deadline in § 4041.28(a)(1)(ii)) shall be

deemed to be granted unless the PBGC

notifies the plan administrator

otherwise within 60 days after receipt of

the request (or, if later, by the end of the

PBGC’s review period under

§ 4041.26(a)). The PBGC shall notify the

plan administrator in writing of the date

on which it receives such request.

(d) Statutory deadlines not

extendable. The PBGC may not—

(1) Extend the 60-day time limit under

§ 4041.23(a) for issuing the notice of

intent to terminate;

(2) Waive the requirement in

§ 4041.24(a) that the notice of plan

benefits be issued by the time the plan

administrator files the standard

termination notice with the PBGC; or

(3) Extend the deadline under

§ 4041.29(a) for filing the postdistribution certification. However, the

PBGC will assess a penalty for late filing

of a post-distribution certification only

under the circumstances described in

§ 4041.29(b).

§ 4041.31 Notice of noncompliance.

(a) Failure to meet pre-distribution

requirements.

(1) In general. Except as provided in

paragraphs (a)(2) and (c), the PBGC shall

issue a notice of noncompliance within

the 60-day (or extended) time period

prescribed by § 4041.26(a) whenever it

determines that—

(i) The plan administrator failed to

issue the notice of intent to terminate to

all affected parties (other than the

PBGC) in accordance with §§ 4041.23;

(ii) The plan administrator failed to

issue notices of plan benefits to all

affected parties entitled to plan benefits

in accordance with § 4041.24;

(iii) The plan administrator failed to

file the standard termination notice in

accordance with § 4041.25;

(iv) As of the distribution date

proposed in the standard termination

notice, plan assets will not be sufficient

to satisfy all benefit liabilities under the

plan; or

(v) In the case of a spin-off/

termination transaction (as described in

§ 4041.23(c)), the plan administrator

failed to issue the notices required by

§ 4041.23(c), § 4041.24(f), and

§ 4041.27(a)(2).

(2) Interests of participants. The PBGC

may decide not to issue a notice of

noncompliance based on a failure to

meet a requirement under paragraphs

(a)(1)(i) through (a)(1)(iii) or (a)(1)(v) of

this section if it determines that

issuance of the notice would be

inconsistent with the interests of

participants and beneficiaries.

(3) Continuing authority. The PBGC

may issue a notice of noncompliance or

suspend the termination proceeding

based on a failure to meet a requirement

under paragraphs (a)(1)(i) through

(a)(1)(v) of this section after expiration

of the 60-day (or extended) time period

prescribed by § 4041.26(a) (including

upon audit) if the PBGC determines

such action is necessary to carry out the

purposes of Title IV.

(b) Failure to meet distribution

requirements.

(1) In general. If the PBGC determines,

as part of an audit or otherwise, that the

plan administrator has not satisfied any

distribution requirement of § 4041.28(a),

it may issue a notice of noncompliance.

(2) Criteria. In deciding whether to

issue a notice of noncompliance under

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

PBGC may consider—

(i) The nature and extent of the failure

to satisfy a requirement of § 4041.28(a);

(ii) Any corrective action taken by the

plan administrator; and

(iii) The interests of participants and

beneficiaries.

(3) Late distributions. The PBGC shall

not issue a notice of noncompliance for

failure to distribute timely based on any

facts disclosed in the post-distribution

certification if 60 or more days have

passed from the PBGC’s receipt of the

post-distribution certification.

(c) Correction of errors. The PBGC

shall not issue a notice of

noncompliance based solely on the plan

administrator’s inclusion of erroneous

information (or omission of correct

information) in a notice required to be

provided to any person under this part

if—

(1) The PBGC determines that the

plan administrator acted in good faith in

connection with the error;
Federal Register / Vol. 62, No. 50 / Friday, March 14, 1997 / Proposed Rules 12517

(2) The plan administrator corrects

the error no later than—

(i) In the case of an error in the notice

of plan benefits under § 4041.24, the

latest date an election notice may be

provided to the person; or

(ii) In any other case, as soon as

practicable after the plan administrator

knows or should know of the error, or

by any later date specified by the PBGC;

and

(3) The PBGC determines that the

delay in providing the correct

information will not substantially harm

any person.

(d) Reconsideration. A plan

administrator may request

reconsideration of a notice of

noncompliance in accordance with the

rules prescribed in part 4003, subpart C.

(e) Consequences of notice of

noncompliance.

(1) Effect on termination. A notice of

noncompliance ends the standard

termination proceeding, nullifies all

actions taken to terminate the plan, and

renders the plan an ongoing plan. A

notice of noncompliance is effective

upon the expiration of the period within

which the plan administrator may

request reconsideration under paragraph

(d) of this section or, if reconsideration

is requested, a decision by the PBGC

upholding the notice. However, once a

notice is issued, the plan administrator

shall take no further action to terminate

the plan (except by initiation of a new

termination) unless and until the notice

is revoked pursuant to a decision by the

PBGC on reconsideration. A plan

administrator that still desires to

terminate a plan shall initiate the

termination process again, starting with

the issuance of a new notice of intent to

terminate.

(2) Effect on plan administration. If

the PBGC issues a notice of

noncompliance, the prohibitions in

§ 4041.22(a) shall cease to apply—

(i) Upon expiration of the period

during which reconsideration may be

requested or, if earlier, at the time the

plan administrator decides not to

request reconsideration; or

(ii) If reconsideration is requested,

upon PBGC issuance of decision on

reconsideration upholding the notice of

noncompliance.

(f) If no notice of noncompliance is

issued. A standard termination is

deemed to be valid if—

(1) The plan administrator files a

standard termination notice under

§ 4041.25 and the PBGC does not issue

a notice of noncompliance pursuant to

§ 4041.31(a); and

(2) The plan administrator files a postdistribution certification under

§ 4041.29 and the PBGC does not issue

a notice of noncompliance pursuant to

§ 4041.31(b).

(g) Notice to affected parties. Upon a

decision by the PBGC on

reconsideration affirming the issuance

of a notice of noncompliance or, if

earlier, upon the plan administrator’s

decision not to request reconsideration,

the plan administrator shall notify the

affected parties (other than the PBGC),

and any persons who were provided

notice under § 4041.23(c), in writing

that the plan is not going to terminate

or, if applicable, that the termination

was invalid but that a new notice of

intent to terminate is being issued.

§ 4041.41 [Amended]

7. Paragraph (a) of redesignated

§ 4041.41 is amended by removing the

words ‘‘Requirements for a distress

termination’’ and adding in their place,

‘‘Distress requirements’’ in the title.

8. Paragraph (a)(1) of redesignated

§ 4041.41 is amended by removing

‘‘4041.41’’ and adding in its place

‘‘4041.43’’ and by adding the words

‘‘(except with PBGC approval)’’ after

‘‘and’’ and before ‘‘not’’.

9. Paragraph (a)(2) of redesignated

§ 4041.41 is amended by removing

‘‘4041.43’’ and adding in its place

‘‘4041.45’’ and by removing the words

‘‘or, if applicable, no later than the due

date established in an extension notice

issued under § 4041.8’’.

10. Paragraphs (a)(3) and (e) of

redesignated § 4041.41 are amended by

removing ‘‘paragraph (e)’’ and adding in

its place ‘‘paragraph (c)’’.

11. Paragraph (b)(1) of redesignated

§ 4041.41 is amended by removing the

word ‘‘If’’ and adding in its place

‘‘Except as provided in paragraph

(b)(2)(i) of this section, if’’; and by

removing the words ‘‘of paragraph (b) of

this section for a standard termination

or, except as provided in paragraph

(d)(2)(i) of this section, all of the

requirements of paragraph (c) of this

section’’

12. Paragraph (b)(2)(i) of redesignated

§ 4041.41 is amended by removing

‘‘(c)(1)’’ and adding in its place ‘‘(a)(1)’’;

and by removing ‘‘(c)(2)’’ and adding in

its place ‘‘(a)(2)’’.

13. Paragraphs (d)(1) and (d)(2) of

redesignated § 4041.41 are amended by

removing ‘‘(e)(2)’’ and adding in its

place ‘‘(c)(2)’’.

14. Paragraphs(d)(1)(i), (d)(1)(iii), and

(d)(2) of redesignated § 4041.41 are

amended by removing ‘‘(e)(3)’’ and

adding in its place ‘‘(c)(3)’’.

§ 4041.42 [Amended]

15. Redesignated § 4041.42 is

amended by removing the words

‘‘pendency of termination proceedings’’

and adding in their place ‘‘termination

process’’ in the title.

16. Paragraph (a) of redesignated

§ 4041.42 is amended by adding the

word ‘‘and’’ after ‘‘due the plan,’’; and

by removing the words ‘‘and, during the

pendency of a standard termination,

making loans to participants,’’.

17. Paragraph (b) of redesignated

§ 4041.42 is amended by removing the

words ‘‘in a distress termination’’ in the

title; and by removing ‘‘4041.48’’ and

adding in its place ‘‘4041.50’’.

18. Paragraph (c) of redesignated

§ 4041.42 is amended by removing the

words ‘‘in a distress termination’’ in the

title.

19. Paragraph (d) of redesignated

§ 4041.42 is amended by removing

‘‘4041.42(c)’’ and adding in its place

‘‘4041.44(c)’’; and by removing

‘‘4041.44(c)(1)’’ and adding in its place

‘‘4041.46(c)(1)’’.

20. Paragraph (d)(1) of redesignated

§ 4041.42 is amended by removing ‘‘(c)’’

and adding in its place ‘‘(b)’’; and by

removing ‘‘(c)(1)’’ and adding in its

place ‘‘(b)(1)’’.

21. Paragraph (d)(1)(i) of redesignated

§ 4041.42 is amended by removing

‘‘4041.42(e) and 4041.44(d)’’ and adding

in its place ‘‘4041.44(e) and 4041.46(e)’’.

22. Paragraph (d)(2) of redesignated

§ 4041.42 is amended by removing ‘‘(f)’’

and adding in its place ‘‘(c)’’.

23. Paragraph (e) of redesignated

§ 4041.42 is amended by removing

‘‘4041.47(b)’’ and adding in its place

‘‘4041.49(b)’’; by removing ‘‘4041.47(d)’’

and adding in its place ‘‘4041.49(d)’’; by

removing ‘‘(c)’’ and adding in its place

‘‘(b)’’; and by removing ‘‘4041.47(e)’’

and adding in its place ‘‘4041.49(e)’’.

§ 4041.43 [Amended]

24. Paragraph (a)(3) of redesignated

§ 4041.43 is amended by removing ‘‘(d)’’

and adding in its place ‘‘(b)’’.

25. Paragraphs (b) and (c) of

redesignated § 4041.43 are removed.

26. Paragraph (d) of redesignated

§ 4041.43 is redesignated as paragraph

(b), and as so redesignated is amended

by removing the words ‘‘employer

identification number (‘‘EIN’)’’ and

adding in their place ‘‘EIN’’; and by

removing the words ‘‘plan number

(‘PN’)’’ and adding in their place ‘‘PN’’

in paragraph (d)(2); by removing ‘‘.’’ and

adding in its place ‘‘;’’ in paragraph

(d)(4); and by removing the words ‘‘A

statement that benefit and service

accruals will continue until the

termination date or, if applicable, that

benefit accruals were or will be frozen

as of a specific date in accordance with

section 204(h) of ERISA’’ and by adding

in their place ‘‘The cessation of accruals
12518 Federal Register / Vol. 62, No. 50 / Friday, March 14, 1997 / Proposed Rules

information in § 4041.23(b)(4)’’ in

paragraph (d)(5).

27. Paragraph (e) of redesignated

§ 4041.43 is redesignated as paragraph

(c) and as so redesignated is amended

by removing ‘‘4041.21(f)’’ and adding in

its place ‘‘4041.23(c)’’.

§ 4041.44 [Amended]

28. In redesignated § 4041.44,

paragraphs (a)(1), (b), and (c) are

amended by removing ‘‘4041.41’’ and

adding in its place ‘‘4041.43’’.

29. Paragraph (b)(3) of redesignated

§ 4041.44 is amended by removing

‘‘4041.43’’ and adding in its place

‘‘4041.45’’.

30. Paragraph (c) of redesignated

§ 4041.44 is amended by removing

‘‘4041.3(d)(2)(i)’’ and adding in its place

‘‘4041.41(b)(2)(i)’’.

31. Paragraph (f) of redesignated

§ 4041.44 is amended by removing

‘‘4041.41(e))’’ and adding in its place

‘‘4041.43(e))’’; and by removing the

sentence ‘‘The notice required by this

paragraph shall be provided in the

manner described in § 4041.26(d)(2).’’.

§ 4041.45 [Amended]

32. Paragraph (b)(1)(ii) of redesignated

§ 4041.45 is amended by removing

‘‘4041.44(b)’’ and adding in its place

‘‘4041.46(b)’’.

33. Redesignated § 4041.45(d) is

removed.

§ 4041.46 [Amended]

34. Paragraphs (a) and (b) of

redesignated § 4041.46 are amended by

removing ‘‘4041.3(c)’’ and adding in its

place ‘‘4041.41(c)’’.

35. Paragraph (b) of redesignated

§ 4041.46 is amended by removing

‘‘4041.43(b)’’ and adding in its place

‘‘4041.45(b)’’.

36. Paragraph (c)(1) of redesignated

§ 4041.46 is amended by removing

‘‘4041.3(c)’’ and adding in its place

‘‘4041.41’’; and by removing

‘‘4041.3(d)’’ and adding in its place

‘‘4041.41(b)’’.

37. Paragraph (c)(2) of redesignated

§ 4041.46 is amended by removing the

words ‘‘, or, if applicable, no later than

the due date established in an extension

notice issued under § 4041.8’’.

38. Paragraph (e) of redesignated

§ 4041.46 is amended by removing

‘‘4041.41(e)’’ and adding in its place

‘‘4041.43(e)’’; and by removing the

sentence ‘‘The notice required by this

paragraph shall be provided in the

manner described in § 4041.26(d)(2).’’

§ 4041.47 [Amended]

39. Paragraph (a) of redesignated

§ 4041.47 is amended by removing

‘‘4041.43(b)(1)’’ and adding in its place

‘‘4041.45(b)(1)’’.

40. Paragraph (b)(1) of redesignated

§ 4041.47 is amended by removing

‘‘4041.4’’ and adding in its place

‘‘4041.42’’.

41. Paragraph (c)(1) of redesignated

§ 4041.47 is amended by removing

‘‘4041.46’’ and adding in its place

‘‘4041.48’’.

42. Paragraph (c)(2) of redesignated

§ 4041.47 is amended by removing

‘‘4041.48’’ and adding in its place

‘‘4041.50’’.

43. Paragraph (c)(3) of redesignated

§ 4041.47 is amended by removing

‘‘4041.48(b)’’ and adding in its place

‘‘4041.50(b)’’.

44. Paragraph (c)(4) of redesignated

§ 4041.47 is amended by removing

‘‘4041.11’’ and adding in its place

‘‘4041.5’’.

45. Redesignated § 4041.47 is

amended by adding a new paragraph (d)

to read as follows:

§ 4041.47 PBGC determination of plan

sufficiency/insufficiency.

* * * * *

(d) Alternative treatment of majority

owner’s benefit. A majority owner may

elect to forego receipt of all or part of

his or her benefit in connection with a

distress termination. Any such

alternative treatment—

(1) Is valid only if the conditions in

§ 4041.21(b)(2)(i) through (iii) are met;

and—

(2) Is subject to the PBGC’s approval

if the election—

(i) Is made after the termination date;

and

(ii) Would result in the PBGC

determining that the plan is sufficient

for guaranteed benefits under paragraph

(c).

46. § 4041.48 is revised to read as

follows:

§ 4041.48 Sufficient plans; notice

requirements.

(a) Notices of benefit distribution.

When a distribution notice is issued by

the PBGC pursuant to § 4041.47, the

plan administrator shall issue notices of

benefit distribution in accordance with

the rules regarding notice of plan

benefits in § 4041.24, except that—

(1) The deadline for issuing the

notices of benefit distribution is the

60th day after receipt of the distribution

notice; and

(2) With respect to the information

described in § 4041.24(b), the terms

‘‘plan benefits’’ and ‘‘pension benefits’’

are replaced with ‘‘Title IV benefits’’

and the term ‘‘proposed termination

date’’ is replaced with ‘‘termination

date’’.

(b) Certification to PBGC. No later

than 15 days after the date on which the

plan administrator completes the

issuance of the notices of benefit

distribution, the plan administrator

shall file with the PBGC a certification

that the notices were so issued in

accordance with the requirements of

this section.

(c) Notice of annuity information. (1)

In general. Unless all plan benefits will

be distributed in the form of

nonconsensual lump sums, the plan

administrator shall provide a notice of

annuity information to each affected

party other than—

(i) An affected party whose plan

benefits will be distributed in the form

of a nonconsensual lump sum; and

(ii) The PBGC.

(2) Spin-off/termination transactions.

The plan administrator shall provide the

information in paragraph (c)(4) of this

section to a person entitled to notice

under § 4041.43(c), at the same time and

in the same manner as required for an

affected party described in paragraph

(c)(1) of this section.

(3) Selection of different insurer. A

plan administrator that decides to select

a different insurer after having

previously notified the affected party of

the identity of insurer(s) under this

paragraph shall provide another notice

of annuity information.

(4) Content of notice. The notice shall

include—

(i) The identity-of-insurer information

in § 4041.27(b)(1);

(ii) The information regarding change

in identity of insurer(s) in

§ 4041.27(b)(2); and

(iii) Unless the state guaranty

coverage information in § 4041.27(b)(3)

was previously provided to the affected

party, such information and the

extinguishment-of-guaranty information

in § 4041.23(b)(8) (replacing the term

‘‘pension benefits’’ with ‘‘Title IV

benefits’’).

(5) Deadline for notice. The plan

administrator shall issue the notice of

annuity information to each affected

party by the deadline in § 4041.27(d)(1).

(d) Request for IRS determination

letter. To qualify for the distribution

deadline in § 4041.28(a)(1)(ii) (as

modified and made applicable by

§ 4041.50(c)), the plan administrator

shall submit to the IRS a valid request

for a determination of the plan’s

qualification status upon termination

(‘‘determination letter’’) by the day on

which the plan administrator completes

the issuance of the notices of benefit

distribution.

§ 4041.49 [Amended]

47. Paragraphs (a) and (c) of

redesignated § 4041.49 are amended by
Federal Register / Vol. 62, No. 50 / Friday, March 14, 1997 / Proposed Rules 12519

removing ‘‘4041.48’’ and adding in its

place ‘‘4041.50’’.

48. Paragraph (b)(1)(i) of redesignated

§ 4041.49 is amended by removing

‘‘4041.45(b)’’ and adding in its place

‘‘4041.47(b)’’.

49. Paragraph (e) of redesignated

§ 4041.49 is amended by removing

‘‘4041.4(c)’’ and adding in its place

‘‘4041.42’’.

50. § 4041.50 is added to read as

follows:

§ 4041.50 Closeout of plan.

If a plan administrator receives a

distribution notice from the PBGC

pursuant to § 4041.47 and neither the

plan administrator nor the PBGC makes

the finding described in § 4041.49(b) or

(d), the plan administrator shall

distribute plan assets in accordance

with § 4041.28 and file a postdistribution certification in accordance

with § 4041.29, except that—

(a) The term ‘‘benefit liabilities’’ is

replaced with ‘‘Title IV benefits’’;

(b) For purposes of applying the

distribution deadline in

§ 4041.28(a)(1)(i), the phrase ‘‘after the

expiration of the PBGC’s 60-day (or

extended) review period under

§ 4041.26(a)’’ is replaced with ‘‘the day

on which the plan administrator

completes the issuance of the notices of

benefit distribution pursuant to

§ 4041.48(a)’’; and

(c) For purposes of applying the

distribution deadline in

§ 4041.28(a)(1)(ii), the phrase ‘‘the

requirements of § 4041.25(c)’’ is

replaced with ‘‘the requirements of

§ 4041.48(d)’’.

PART 4001—TERMINOLOGY

51. The authority citation for Part

4001 continues to read as follow:

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

§ 4001.2 [Amended]

52. In § 4001.2, paragraph (2) of the

definition of Distribution date is

amended by removing the words ‘‘Other

than for purposes of determining the

interest rate to be used in calculating the

value of a benefit to be paid as a lump

sum to a late-discovered participant,

the’’ and adding in their place ‘‘The’’;

and by removing the words ‘‘PBGC, a

benefit provided after the deemed

distribution date to a late-discovered

participant, or an irrevocable

commitment purchased from an insurer

after the deemed distribution date for a

recently-missing participant’’ and

adding in their place the word ‘‘PBGC’’.

PART 4006—PREMIUM RATES

53. The authority citation for Part

4006 continues to read as follow:

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

1307.

§ 4006.5 [Amended]

54. In § 4006.5, paragraph (f)(3) is

amended by removing the words ‘‘or, if

later (in the case of a single-employer

plan), the date 30 days prior to the date

the PBGC receives the plan’s postdistribution certification’’.

PART 4050—MISSING PARTICIPANTS

55. The authority citation for Part

4050 is added to read as follow:

Authority: 29 U.S.C. 1302(b)(3), 1350.

§ 4050.1 [Amended]

56. In § 4050.1, the reference

‘‘§ 4041.27(c)’’ is removed and the

reference ‘‘§ 4041.28(c)’’ is added in its

place.

57. In § 4050.2, the definition of Latediscovered participant is removed; the

definition of Recently-missing

participant is removed; the definition of

Post-distribution certification is

amended by removing the words

‘‘§ 4041.27(h) or § 4041.48(b)’’ and

adding in their place the words

‘‘§ 4041.29 or § 4041.50’’; and the

definition of Deemed distribution date

is revised to read as follows:

§ 4050.2 Definitions.

* * * * *

Deemed distribution date ordinarily

means the last day of the period in

which distribution may be made

(determined without regard to the

provisions of this part) under part 4041

of this chapter. The plan administrator

may select an earlier date, provided that

the selected date is no earlier than the

date when all benefit distributions have

been made under the plan except for

distributions to missing participants

whose designated benefits are paid to

the PBGC.

* * * * *

§ 4050.3 [Amended]

58. In § 4050.3, paragraph (a) is

amended by removing the words

‘‘§ 4041.27(c) or § 4041.48(a)(1)’’ and

adding in their place the words

‘‘§ 4041.28(c) or § 4041.50’’.

59. In § 4050.4, paragraph (b)(1) is

amended by removing the words ‘‘(or, in

the case of a recently-missing

participant, on or before the 90th day

after the deemed distribution date)’’;

and paragraph (a) is revised to read as

follows:

§ 4050.4 Diligent search.

(a) Search required. A diligent search

shall be made for each missing

participant before information about the

missing participant or payment is

submitted to the PBGC pursuant to

§ 4050.6.

* * * * *

60. In § 4050.6, paragraphs (a)(2) and

(a)(3) are removed; paragraph (a)(1) is

redesignated as paragraph (a), the

heading is revised as set forth below,

and the reference ‘‘§ 4041.9’’ is revised

to read ‘‘§ 4041.3(b)’; paragraph (b) is

amended by removing the words ‘‘If the

plan administrator’’ and adding in their

place the words ‘‘Except as provided in

paragraph (b)(2) of this section, if the

plan administrator’; the heading and

text of paragraph (b) (as so amended) are

redesignated as paragraph (b)(1); a new

heading is added to paragraph (b), and

new paragraph (b)(2) is added, to read

as follows:

§ 4050.6 Payment and required

documentation.

(a) Time of payment and filing.

* * * * *

(b) Late charges.

(1) Interest on late payments. * * *

(2) Assessment of interest and

penalties. The PBGC will assess interest

for late payment of a designated benefit

or a penalty for late filing of information

only to the extent paid or filed beyond

the time provided in § 4041.29(b).

* * * * *

§ 4050.7 [Amended]

61. In § 4050.7, paragraph (a) is

amended by removing the words ‘‘the

insurer and the relevant policy number’’

and adding in their place the words ‘‘the

insurer, the relevant policy number, and

(to the extent known) the amount or

value of the benefit’’.

§ 4050.12 [Amended]

62. In § 4050.12, paragraphs (a) and

(h) are removed and paragraphs (b), (c),

(d), (e), (f), (g), and (i) are redesignated

as paragraphs (a), (b), (c), (d), (e), (f), and

(g) respectively; redesignated paragraph

(a) is amended by removing the words

‘‘treat the missing participant like a latediscovered participant’’ and adding in

their place the words ‘‘make

distribution to the individual in such

manner as the PBGC shall direct’’;

redesignated paragraph (c) is amended

by removing the references ‘‘paragraph

(d)(2)’’, ‘‘paragraph (d)(2)(i)’’, and

‘‘paragraph (d)(2)(ii)’’ and adding in

their place the references ‘‘paragraph

(c)(2)’’, ‘‘paragraph (c)(2)(i)’’, and

‘‘paragraph (c)(2)(ii)’’ respectively; and

redesignated paragraph (g) is amended

by removing the reference ‘‘paragraph
12520 Federal Register / Vol. 62, No. 50 / Friday, March 14, 1997 / Proposed Rules

(i)’’ in both places where it appears and

adding in each place the reference

‘‘paragraph (g)’’.

§ 4050.13 [Removed]

63. Section 4050.13 is removed.

Issued in Washington, DC, this 11th day of

March, 1997.

John Seal,

Acting Executive Director, Pension Benefit

Guaranty Corporation.

[FR Doc. 97–6500 Filed 3–13–97; 8:45 am]

BILLING CODE 7708–01–P