11022 Federal Register / Vol. 74, No. 49 / Monday, March 16, 2009 / Rules and Regulations 

authority delegated to the Commissioner 

of Food and Drugs and redelegated to 

the Director, Center for Food Safety and 

Applied Nutrition, 21 CFR part 172 is 

amended as follows: 

PART 172—FOOD ADDITIVES 

PERMITTED FOR DIRECT ADDITION 

TO FOOD FOR HUMAN 

CONSUMPTION 

■ 1. The authority citation for 21 CFR 

part 172 continues to read as follows: 

Authority: 21 U.S.C. 321, 341, 342, 348, 

371, 379e. 

■ 2. Section 172.379 is added to subpart 

D to read as follows: 

§ 172.379 Vitamin D2. 

Vitamin D2 may be used safely in 

foods as a nutrient supplement defined 

under § 170.3(o)(20) of this chapter in 

accordance with the following 

prescribed conditions: 

(a) Vitamin D2, also known as 

ergocalciferol, is the chemical 9,10- 

seco(5Z,7E,22E)-5,7,10(19),22- 

ergostatetraen-3-ol. Vitamin D2 is 

produced by ultraviolet irradiation of 

ergosterol isolated from yeast and is 

purified by crystallization. 

(b) Vitamin D2 meets the 

specifications of the Food Chemicals 

Codex, 6th ed. (2008), pp. 1013 and 

1014, which is incorporated by 

reference. The Director of the Federal 

Register approves this incorporation by 

reference in accordance with 5 U.S.C 

552(a) and 1 CFR part 51. You may 

obtain a copy from the United States 

Pharmacopeial Convention, 12601 

Twinbrook Pkwy., Rockville, MD 20852 

(Internet address: http://www.usp.org). 

You may inspect a copy at the Center for 

Food Safety and Applied Nutrition’s 

Library, Food and Drug Administration, 

5100 Paint Branch Pkwy., College Park, 

MD 20740, 301–436–1071, or at the 

National Archives and Records 

Administration (NARA). For 

information on the availability of this 

material at NARA, call 202–741–6030, 

or go to: http://www.archives.gov/ 

federal_register/ 

code_of_federal_regulations/ 

ibr_locations.html. 

(c) The additive may be used as 

follows: 

Category of Food Maximum Levels in Food (as Served) 

Soy beverages 50 International Units (IU)/100 grams (g) 

Soy beverage products 89 IU/100 g 

Soy-based butter substitute spreads 330 IU/100 g 

Soy-based cheese substitutes and soy-based cheese substitute products 270 IU/100 g 

Dated: February 23, 2009. 

Leslye M. Fraser, 

Director, Office of Regulations and Policy, 

Center for Food Safety and Applied Nutrition. 

[FR Doc. E9–5549 Filed 3–13–09; 8:45 am] 

BILLING CODE 4160–01–S 

PENSION BENEFIT GUARANTY 

CORPORATION 

29 CFR Part 4001, 4010, and 4044 

RIN 1212–AB09 

Annual Financial and Actuarial 

Information Reporting; Pension 

Protection Act of 2006 

AGENCY: Pension Benefit Guaranty 

Corporation. 

ACTION: Final rule. 

SUMMARY: This is a final rule to amend 

PBGC’s regulation on Annual Financial 

and Actuarial Information Reporting. 

The amendments implement the 

provisions of the Pension Protection Act 

of 2006, Public Law 109–280 (PPA 

2006), which changed the standards for 

determining which persons are required 

to report under section 4010 (Authority 

to Require Certain Information) of the 

Employee Retirement Income Security 

Act of 1974 and made other changes to 

the reporting requirements. In addition 

to providing guidance on implementing 

the PPA 2006 changes, the final rule 

waives reporting in certain cases for 

controlled groups with aggregate plan 

underfunding of $15 million or less, 

modifies the standards for determining 

which plans are exempt from the 

actuarial information requirements, 

revises the actuarial information 

requirements to conform with other PPA 

2006 changes, and provides other 

clarifications. 

DATES: Effective April 15, 2009. (See 

Applicability in SUPPLEMENTARY

INFORMATION.) 

FOR FURTHER INFORMATION CONTACT: John 

H. Hanley, Director, Legislative and 

Regulatory Department; or Catherine B. 

Klion, Manager, or Grace H. Kraemer, 

Attorney, Regulatory and Policy 

Division, Legislative and Regulatory 

Department, Pension Benefit Guaranty 

Corporation, 1200 K Street, NW., 

Washington, DC 20005–4026; 202–326– 

4024. (TTY/TDD users may call the 

Federal relay service toll-free at 1–800– 

877–8339 and ask to be connected to 

202–326–4024.) 

SUPPLEMENTARY INFORMATION: 

Background 

Pension Benefit Guaranty Corporation 

(PBGC) administers the pension 

insurance programs under Title IV of 

the Employee Retirement Income 

Security Act of 1974 (ERISA). In order 

to give PBGC an opportunity to 

anticipate and attempt to minimize 

potential liabilities that may arise from 

the termination of significantly 

underfunded plans, ERISA section 4010 

requires the reporting of actuarial and 

financial information by controlled 

groups with pension plans that have 

significant underfunding. That 

information is exempt from disclosure 

under the Freedom of Information Act 

(5 U.S.C. 552) and may not be made 

public, except as may be relevant to any 

administrative or judicial action or 

proceeding. 

Pursuant to ERISA section 4010, 

PBGC issued its initial regulation on 

Annual Financial and Actuarial 

Information Reporting in 1995 (29 CFR 

part 4010). The regulation specifies the 

items of identifying, financial, and 

actuarial information that filers must 

submit under ERISA section 4010. 

PBGC reviews the information that is 

filed and enters it into an electronic 

database for more detailed analysis. 

Computer-assisted analysis of this 

information helps PBGC to anticipate 

possible major demands on the pension 

insurance system and to focus PBGC 

resources on situations that pose the 

greatest risks to that system. Because 

other sources of information are usually 

Federal Register / Vol. 74, No. 49 / Monday, March 16, 2009 / Rules and Regulations 11023 

1Filers with pre-PPA 2006 information years are 

reminded that PBGC regulations provide that if a 

filer for the immediately preceding information year 

is not required to file for the current information 

year, the filer must submit information, in 

accordance with the instructions on PBGC’s Web 

site, http://www.pbgc.gov, demonstrating why a 

filing is not required for the current information 

year. This requirement will apply, for example, to 

a filer that was required to file for the information 

year ending on December 31, 2007, based on the 

$50 Million Gateway Test, but that is not required 

to file for the information year ending on December 

31, 2008, based on the new 80% FTAP Gateway 

Test. 

2ERISA section 4010(a), which was unaltered by 

PPA 2006, provides that filers must provide the 

information specified by PBGC in regulations. 

not as current as the ERISA section 4010 

information, the ERISA section 4010 

filing plays a major role in PBGC’s 

ability to protect participant and 

premium-payer interests. 

In March 2005, PBGC amended part 

4010 to require electronic reporting and 

to make other less significant changes. 

Reporting is now accomplished through 

PBGC’s secure e-4010 Web-based 

application. 

PPA 2006 Changes 

On August 17, 2006, the President 

signed into law the Pension Protection 

Act of 2006, Public Law 109–280 (PPA 

2006), which made numerous changes 

in the area of pension law, including 

changes to ERISA section 4010. Before 

its amendment by PPA 2006, ERISA 

section 4010(b) required reporting, in 

general, if: (1) The aggregate unfunded 

vested benefits of all plans maintained 

by members of a controlled group 

exceeded $50 million, disregarding 

plans with no unfunded vested benefits 

(the ‘‘$50 Million Gateway Test’’); (2) 

the conditions specified in ERISA 

section 302(f) and section 412(n) of the 

Internal Revenue Code (Code) for 

imposing a lien for missed contributions 

exceeding $1 million had been met with 

respect to any plan maintained by any 

member of the controlled group; or (3) 

the Internal Revenue Service (IRS) had 

granted minimum funding waivers in 

excess of $1 million to any plan 

maintained by any member of the 

controlled group, and any portion of the 

waivers was still outstanding. 

Section 505 of PPA 2006 amended 

ERISA section 4010(b)(1), replacing the 

$50 Million Gateway Test with a test 

based on the funding target attainment 

percentage of each plan in the 

controlled group. As amended by PPA 

2006, ERISA section 4010(b)(1) requires 

reporting if: 

the funding target attainment percentage (as 

defined in subsection (d)) at the end of the 

preceding plan year of a plan maintained by 

the contributing sponsor or any member of its 

controlled group is less than 80 percent.1

This preamble refers to the new funding 

target attainment percentage test as the 

80% FTAP Gateway Test. 

Although PPA 2006 did not alter the 

substance of the other two gateway tests 

(found in paragraphs (b)(2) and (b)(3) of 

ERISA section 4010), it made other 

changes that affect these provisions. For 

instance, because PPA 2006 made 

changes to references in paragraph 

(b)(2), references in § 4010.4(a) (which 

describes who must file under part 

4010) need to be amended. Similarly, 

PPA 2006 made changes to the 

minimum funding waiver provisions, 

which are referred to in part 4010. 

Finally, PPA 2006 added ERISA 

sections 4010(d)(1) and 4010(e). ERISA 

section 4010(d)(1) lists three items that 

must be included in the information 

filers submit to PBGC.2 ERISA section 

4010(e) requires PBGC to submit to 

Congress an annual summary report of 

the information submitted to PBGC 

pursuant to ERISA section 4010. 

On February 20, 2008 (at 73 FR 9243), 

PBGC published in the Federal Register 

a proposed rule to amend part 4010 of 

PBGC’s regulations to implement the 

PPA 2006 changes and provide other 

guidance. PBGC received four public 

comments on the proposed rule, all 

from actuarial consulting firms. All of 

the commenters sought clarification of 

some of the proposal’s provisions and 

three commenters requested that 

additional waivers from the section 

4010 reporting requirements be granted 

in the final rule. The comments are 

discussed below with the topics to 

which they relate. 

Overview of Final Rule 

This final rule amends part 4010 of 

PBGC’s regulations to implement the 

change to ERISA section 4010(b)(1). In 

particular, this final rule provides 

guidance on how to determine whether 

reporting is required based on a plan’s 

funding target attainment percentage. 

The final rule also makes conforming 

changes to address the PPA 2006 

changes affecting the section 4010 

reporting triggers based on the 

imposition of certain liens or on the 

granting of certain minimum funding 

waivers. 

In conjunction with these changes, 

the final rule also: (1) Waives reporting 

in certain cases for controlled groups 

with aggregate underfunding of $15 

million or less; (2) modifies the 

standards for determining which plans 

are exempt from reporting actuarial 

information; (3) modifies the reporting 

requirements primarily to implement 

the PPA 2006 changes; (4) provides 

guidance on reporting requirements for 

sponsors of multiple employer plans; 

and (5) makes other clarifications. The 

final rule is applicable to information 

years beginning after 2007. 

The final rule is nearly the same as 

the proposed rule, but there are a few 

differences. The key changes are that the 

final rule— 

• Clarifies that for purposes of the 

gateway tests, only plans that are in 

existence on the last day of the 

information year and that are sponsored 

by persons who are members of the 

contributing sponsor’s controlled group 

on the last day of the information year 

are counted; 

• Clarifies that fair market value of 

the plan’s assets, for purposes of part 

4010 excludes contributions receivable 

(i.e., contributions received by the plan 

after the end of the plan year); 

• Modifies the proposed rule 

reporting requirements for sponsors of 

multiple employer plans and provides 

for an alternative method of compliance 

for certain contributing sponsors of 

multiple employer plans; and 

• Modifies the plan actuarial 

reporting requirements to require filers 

to report certain information regarding 

liens and outstanding minimum funding 

waivers. 

• Modifies the proposed rule 

requirements for certain plans to which 

special funding rules apply. 

A detailed discussion of the final rule 

follows. 

Information Year 

In the original proposed rule under 

ERISA section 4010 (60 FR 35308, Jul. 

6, 1995), PBGC introduced the concept 

of ‘‘information year.’’ The information 

year is the fiscal year, except that if two 

or more members of a controlled group 

have different fiscal years, the 

information year is the calendar year 

(§ 4010.5). In the preamble to that 

original proposed rule, PBGC explained 

that ‘‘information year’’ serves four 

purposes: 

First, it will help persons determine which 

plan years and fiscal years to use to identify 

Filers. Second, it will help Filers determine 

whether a pension plan qualifies for a filing 

exemption. Third, it is used to identify the 

information to be submitted by a Filer. 

Fourth, it establishes the due date for 

submission of required information by a 

Filer. The regulation does not require a Filer 

to change its fiscal year or the plan year of 

any pension plan. Further, the regulation 

does not require a Filer to report financial 

information on any accounting period other 

than an existing fiscal year or to report 

actuarial information for any period other 

than the existing plan year of a pension plan. 

Generally, the Information Year is the fiscal 

year of the Filer. If all members of a 

controlled group do not report financial 

11024 Federal Register / Vol. 74, No. 49 / Monday, March 16, 2009 / Rules and Regulations 

3ERISA section 303(g)(2) and Code section 

430(g)(3) provide that the valuation date of a plan 

for any plan year is the first day of the plan year, 

except that certain small plans may designate any 

date in the plan year to be the valuation date for 

the plan year and succeeding plan years. For this 

purpose, small plans are plans with 100 or fewer 

participants on each day of the plan year, when 

aggregated with all plans in the controlled group. 

Because PBGC will exclude controlled groups with 

under $15 million in underfunding, plans that 

would be considered small plans for purposes of 

determining valuation dates would rarely be subject 

to reporting under part 4010. Therefore, the 

valuation date for nearly all plans subject to ERISA 

section 4010 reporting would be the beginning of 

the plan year. 

information on the same fiscal year, the 

Information Year is the calendar year. 

‘‘Information year’’ has been integral to 

the process of reporting under ERISA 

section 4010 and PBGC finds no 

indication that PPA 2006 alters this. 

Therefore, under the final rule, 

reporting will continue to be based on 

the concept of ‘‘information year.’’ The 

final rule provides guidance for unusual 

situations, such as where the plan year 

and the information year differ. 

The final rule clarifies how the ERISA 

section 4010 requirements apply to 

certain unusual plan year situations, 

such as when a plan has two plan years 

that end in the information year or has 

no plan year that ends in the 

information year. Under the final rule, 

the last plan year ending on or before 

the end of the information year is 

treated as the plan year that ends within 

the information year. 

The final rule also clarifies that the 

gateway tests apply only to plans 

maintained as of the end of the 

information year and hence exclude 

plans no longer maintained by the 

controlled group as of the end of the 

information year. In addition, the final 

rule clarifies that when two or more 

members of a controlled group have 

different fiscal years, the determination 

of whether an entity is exempt from the 

ERISA section 4010 reporting 

requirements is made on the basis of a 

calendar year information year. 

One commenter requested guidance 

on applying the information year rules 

to certain spinoffs, citing as an example 

the application of the 80% FTAP 

Gateway Test both to a plan created by 

a midyear spinoff from a pre-existing 

plan within the controlled group, and to 

the pre-existing plan, where the assets 

and liabilities at the pre-existing plan’s 

valuation date include the assets and 

liabilities of the spunoff plan. Because 

section 4010 issues involving midyear 

spinoffs are infrequent and factually 

specific, PBGC believes they are better 

addressed on a case-by-case basis. Filers 

can obtain guidance on such issues by 

contacting PBGC’s Department of 

Insurance Supervision and Compliance. 

Funding Target Attainment Percentage 

As discussed above, ERISA section 

4010(b)(1), as amended by PPA 2006, 

requires reporting if the funding target 

attainment percentage at the end of the 

preceding plan year of a plan 

maintained by the contributing sponsor 

or any member of its controlled group 

is less than 80 percent. ERISA section 

303(d)(2) and Code section 430(d)(2) 

provide that the ‘‘funding target 

attainment percentage’’ of a plan for a 

plan year is the ratio (expressed as a 

percentage) which— 

(A) The value of plan assets for the plan 

year (as reduced under subsection (f)(4)(B)), 

bears to 

(B) The funding target of the plan for the 

plan year (determined without regard to 

subsection (i)(1)). 

In accordance with ERISA section 

303(g)(1) and Code section 430(g)(1), the 

value of plan assets and the funding 

target of a plan for a plan year are 

determined as of the valuation date of 

the plan for the plan year. Under ERISA 

section 303(g)(2) and Code section 

430(g)(2), the valuation date for nearly 

all plans subject to ERISA section 4010 

reporting will be the beginning of the 

plan year.3 Thus, while ERISA section 

4010(b)(1) refers to the funding target 

attainment percentage at the end of the 

preceding plan year, in nearly all cases 

both elements of the funding target 

attainment percentage must be 

calculated as of the beginning of the 

plan year. This creates an ambiguity 

with regard to the date as of which the 

funding target attainment percentage is 

to be calculated for purposes of ERISA 

section 4010(b)(1). 

The final rule resolves this ambiguity 

by providing that the funding target 

attainment percentage (for purposes of 

the 80% FTAP Gateway Test) is 

determined as of the valuation date for 

the plan year ending within the 

information year—generally, the first 

day of the plan year that ends within the 

information year. Because plans will 

need to determine the funding target 

attainment percentage as of the 

valuation date for other purposes, 

measuring the funding target attainment 

percentage as of the valuation date for 

the 80% FTAP Gateway Test will be less 

burdensome on prospective filers than 

requiring a separate determination as of 

the end of the preceding plan year. In 

addition, using this measurement date 

will give controlled groups ample time 

to determine whether reporting is 

required pursuant to the 80% FTAP 

Gateway Test and to prepare the ERISA 

section 4010 filing (if required) by the 

due date. 

ERISA section 303(d)(2) and Code 

section 430(d)(2) provide that in 

determining the funding target 

attainment percentage of a plan for a 

plan year, plan assets are reduced by the 

amount of the prefunding balance and 

the funding standard carryover balance. 

Plan sponsors are permitted under 

ERISA section 303(f) and Code section 

430(f) to make certain elections to use, 

increase, or reduce a prefunding balance 

or a funding standard carryover balance 

effective at the beginning of the plan 

year. Under PPA 2006, the Department 

of the Treasury (Treasury) is to provide 

guidance on the timing and manner of 

these elections. On August 31, 2007 (at 

72 FR 50544), Treasury published a 

proposed rule on Benefit Restrictions for 

Underfunded Pension Plans that would 

provide such guidance. Treasury’s 

proposed regulation would require that 

an election that affects the funding 

target attainment percentage for a plan 

year be made well before the due date 

for the ERISA section 4010 filing. If 

Treasury’s final regulation retains this 

rule, filers will have no difficulty 

reflecting these elections in 

determinations of whether reporting is 

required under ERISA section 4010. 

However, if the final Treasury 

regulation allows a plan sponsor to 

make such an election after the due date 

for the ERISA section 4010 filing, PBGC 

would expect controlled groups to 

anticipate any such election when 

determining the funding target 

attainment percentage, regardless of 

when the election is made. 

Certain Plans To Which Special 

Funding Rules Apply 

There are three categories of plans to 

which special funding rules apply: 

• Delayed effective date plans— 

Sections 104, 105, and 106 of PPA 2006 

delay the effective date of the funding 

amendments for certain plans described 

in those sections, which in general deal 

with plans of rural cooperatives, plans 

affected by settlement agreements with 

PBGC, and plans of government 

contractors. 

• Frozen airline plans—Section 

402(b) of PPA 2006 provides alternate 

funding rules for frozen plans sponsored 

by commercial passenger airlines and 

airline caterers. 

• Non-frozen airline plans—Section 

402(a)(2) of PPA 2006, as amended by 

the U.S. Troop Readiness, Veterans’ 

Care, Katrina Recovery, and Iraq 

Accountability Appropriations Act, 

2007, Public Law 110–28, provides 

funding relief for non frozen plans 

Federal Register / Vol. 74, No. 49 / Monday, March 16, 2009 / Rules and Regulations 11025 

4 Joint Committee on Taxation, Technical 

Explanation of H.R. 4, the ‘‘Pension Protection Act 

of 2006,’’ as passed by the House on July 26, 2006, 

and as considered by the Senate on August 3, 2006 

(JCX–38–06), August 3, 2006. 

sponsored by commercial passenger 

airlines and airline caterers. 

The proposed regulation provided 

that sections 104, 105, 106, and 402 of 

PPA 2006 were generally to be 

disregarded for purposes of 4010 

reporting. For example, under the 

proposed rule, the funding target 

attainment percentage underlying the 

80% FTAP gateway test was to be 

determined as if these plans were not 

subject to alternate funding rules. The 

final regulation retains the proposed 

regulation requirement with respect to 

frozen airline plans and delayed 

effective date plans. 

Plans subject to section 402(a)(2) of 

PPA 2006 (certain non-frozen plans of 

commercial passenger airlines and 

airline caterers) use a discount rate of 

8.25 percent to determine their funding 

target for purposes of ERISA section 303 

and IRC section 430 for ten years. Under 

the proposed regulation, this provision 

would not have affected the FTAP 

calculation for purposes of the 80% 

FTAP Gateway Test or reporting the 

FTAP if a filing is required. The final 

regulation does not address this issue. 

PBGC will provide additional guidance 

as appropriate. 

With respect to delayed effective 

plans, the final regulation, like the 

proposed regulation, does not address 

the treatment of any credit balance in 

determining the FTAP for plans subject 

to those sections, in particular whether 

the credit balance is treated as if it were 

a carryover balance and thus subtracted 

from assets when determining the 

FTAP. PBGC is examining this issue as 

well and will provide additional 

guidance as appropriate. 

The preamble to the proposed rule 

stated that where provisions of PPA 

sections 104, 105, 106 and 402 affected 

a required actuarial valuation reporting 

item, PBGC would expect that filers 

could, in consultation with PBGC, 

provide appropriately modified 

information instead of the information 

listed in § 4010.8(a)(11). PBGC is 

providing those modifications in the 

final regulation. In the case of a plan 

year for which the application of the 

new funding rules is deferred under 

PPA 2006 sections 104, 105, and 106, 

the requirements in connection with the 

actuarial valuation report are those that 

were in effect as of December 31, 2007 

(since those requirements are tied to the 

same pre-PPA funding rules that such 

plans must use to determine their 

funding requirements). With respect to 

the frozen airline plans, which are 

subject to completely different funding 

rules, the final regulation provides that 

the requirements in connection with the 

actuarial valuation report are included 

with the 4010 filing instructions on 

PBGC’s Web site, www.pbgc.gov. 

Because the funding relief for nonfrozen airline plans follows the basic 

framework of the PPA 2006 funding 

rules and there is thus no need for 

special guidance, § 4010.8(a)(11) 

applies. 

Minimum Funding Waivers 

ERISA section 4010(b) requires 

section 4010 reporting if the IRS has 

granted minimum funding waivers in 

excess of $1 million to any plan 

maintained by any member of the 

controlled group and as of the end of the 

plan year ending within the information 

year there is an outstanding balance on 

such waivers. 

The minimum funding waiver will 

continue to be included for all five years 

of the amortization period unless the 

waiver amortization bases are reduced 

to zero pursuant to ERISA section 

303(e)(5) and Code section 430(e)(5). 

The final regulation provides that 

funding waivers granted under ERISA 

section 302 and Code section 412 for a 

plan year before ERISA section 303 or 

Code section 430 became effective count 

for this purpose. This treatment of prePPA 2006 funding waivers is consistent 

with Treasury’s proposed rule on 

Determination of Minimum Required 

Pension Contributions, 73 FR 20203 

(Apr. 15, 2008) (see § 1.430(a)–1(h)(3)). 

However, regardless of what the final 

Treasury regulation provides, pre-PPA 

2006 funding waivers will count for 

purposes of determining whether an 

ERISA section 4010 filing is required. 

To simplify the regulation, the final 

rule eliminates the provision in the 

current regulation that provides that a 

minimum funding waiver is not 

outstanding under certain 

circumstances where an agreement 

requires the maintenance of a specific 

credit balance. PBGC found that this 

occurred infrequently. In those cases 

where it does occur, PBGC will consider 

waiving the ERISA section 4010 

reporting requirement on a case-by-case 

basis under § 4010.11. 

Waiver for Controlled Groups With 

Aggregate Plan Underfunding not 

Exceeding $15 Million 

The technical explanation of PPA 

2006 prepared by the staff of the Joint 

Committee on Taxation 4 states: ‘‘It is 

intended that the PBGC may waive the 

[section 4010 filing] requirement in 

appropriate circumstances, such as in 

the case of small plans.’’ Similarly, 

PBGC seeks to balance the benefit it 

derives from annual reporting of 

financial and actuarial information with 

the burden reporting imposes on filers. 

Based on its experience, PBGC has 

determined that controlled groups with 

aggregate plan underfunding of $15 

million or less present a level of risk 

and exposure to PBGC that is 

sufficiently low to warrant the waiver of 

reporting triggered solely by the 80% 

FTAP Gateway Test. Thus, under the 

proposed rule, persons that would be 

required to file solely because one or 

more plans are less than 80 percent 

funded would qualify for a waiver of 

reporting requirements if the aggregate 

‘‘4010 funding shortfall’’ is less than $15 

million (disregarding plans with no 

4010 funding shortfall). (This waiver is 

referred to in this preamble as the ‘‘$15 

million waiver.’’) The final rule defines 

a plan’s 4010 funding shortfall as the 

funding shortfall under ERISA section 

303(c)(4) and Code section 430(c)(4), but 

determined without regard to the credit 

balance reduction under ERISA section 

303(f)(4)(B) and Code section 

430(f)(4)(B). In developing this waiver, 

PBGC recognized that PPA 2006 

requires PBGC to submit to Congress an 

annual summary report of ERISA 

section 4010 information submitted to 

PBGC and that any waiver would 

therefore also affect the information 

provided to Congress. 

Three commenters expressed 

concerns about situations in which 

reporting would not be waived when 

the aggregate 4010 funding shortfall 

exceeds $15 million and the only plans 

that are less than 80 percent funded are 

small plans. For example, a small plan 

that is less than 80 percent funded 

could trigger a reporting requirement for 

an entire controlled group even though 

the other, larger plans are funded well 

above the 80 percent level. These 

commenters offered a variety of ways 

the proposed $15 million waiver could 

be modified to waive reporting for filers 

in such situations, including: (1) 

Excluding plans that are over 90 percent 

(or 95 percent) funded when 

determining the aggregate 4010 funding 

shortfall; (2) increasing the $15 million 

threshold, and (3) waiving reporting if 

the 80% FTAP Gateway Test is failed 

only by one or more plans that meet 

PBGC’s definition of an exempt plan 

under § 4010.8(c) (generally a plan with 

fewer than 500 participants) for 

purposes of reporting actuarial 

information, regardless of the aggregate 

4010 funding shortfall amount. The 

fourth commenter did not express 

concern about situations in which 

reporting would not be waived when 

11026 Federal Register / Vol. 74, No. 49 / Monday, March 16, 2009 / Rules and Regulations 

5Q&A 17 in the 2001 Blue Book and Q&A 19 in 

the 2002 Blue Book, available on PBGC’s Web site, 

http://www.pbgc.gov. Blue Books are summaries of 

the questions and answers discussed at meetings 

between PBGC staff and representatives of the 

Enrolled Actuaries Program Committee in 

preparation for the annual Enrolled Actuaries 

Meetings. The summaries reflect the views of 

individual staff members and do not represent the 

official position of PBGC. 6 ‘‘Pre-retirement decrement’’ is an actuarial term 

used to describe possible reasons an active 

participant might cease to be an active participant 

before retirement (e.g., termination, disability or 

death). 

the aggregate 4010 funding shortfall 

exceeds $15 million and the only plans 

that are less than 80 percent funded are 

small plans, but did request that PBGC 

provide examples to clarify the 

application of the $15 million waiver to 

controlled groups with both small and 

large plans. PBGC believes that this 

application of the $15 million waiver is 

clear and that further clarification is 

unnecessary. 

The final rule does not change the 

proposed $15 million waiver. PBGC is 

more concerned about the dollar 

amount of underfunding than the 

funding percentage. In the case of a 

large plan, a funding percentage of 90 or 

95 percent can represent hundreds of 

millions of dollars of underfunding. 

PBGC continues to believe that the $15 

million waiver reasonably balances the 

need for information and the burden of 

reporting, and that consistent with the 

technical explanation of PPA 2006 by 

the staff of the Joint Committee on 

Taxation, the waiver will generally 

exempt controlled groups maintaining 

only small plans from section 4010 

reporting. Moreover, PBGC believes that 

the exemption from reporting actuarial 

information in § 4010.8(c) will minimize 

the potential reporting burdens for 

sponsors of small plans without 

impairing PBGC’s ability to collect 

information on controlled groups with 

plans representing a large amount of 

underfunding and thereby representing 

significant financial exposure for PBGC. 

PBGC believes that, in most of the 

situations about which the commenters 

expressed concern, a contributing 

sponsor could make additional, 

relatively nominal, contributions to the 

small plan to increase its funding 

percentage to 80 percent or merge the 

small plan into one of the better funded 

larger plans to avoid the reporting 

requirement. One commenter expressed 

concern that if a small plan with a 

funding percentage below 80 percent 

becomes part of a controlled group 

during the information year as a result 

of a business transaction, there might 

not be enough time to fund the plan up 

or merge it with a better funded plan so 

as to avoid the reporting requirement. 

This commenter suggested that 

reporting be waived if the only plan 

under the 80 percent funding threshold 

(1) meets PBGC’s definition of an 

exempt plan for purposes of reporting 

actuarial information and (2) became a 

member of a controlled group as a result 

of a recent acquisition. PBGC is not 

adopting the commenter’s suggestion. 

PBGC believes that situations in which 

a section 4010 filing is triggered solely 

by a small plan’s becoming a member of 

a controlled group during the 

information year will occur 

infrequently, and further can sometimes 

be avoided in the normal course of 

planning corporate transactions. 

However, filers in such situations may 

contact PBGC’s Department of Insurance 

Supervision and Compliance to discuss 

a waiver or extension under PBGC’s 

discretionary authority (see § 4010.11). 

As under the proposed rule, the $15 

million waiver does not apply if 

reporting is required for any reason 

other than having a plan with a funding 

target attainment percentage below 80 

percent. 

One commenter requested guidance 

as to whether an employer may apply 

the separate lines of business rules 

under the Code for purposes of 

determining whether this employer 

must file under section 4010. The 

separate lines of business rules under 

Code section 414(r), allow an employer 

to be treated as operating separate lines 

of business for purposes of meeting the 

minimum coverage requirements under 

Code section 410(b), if certain 

requirements are met. There is no nexus 

between the filing requirements under 

ERISA section 4010 and the 

nondiscrimination requirements under 

Code section 410(b). Accordingly, the 

separate lines of business rules under 

Code section 414 (r) have no bearing on 

the filing requirements of ERISA section 

4010. 

Actuarial Information Reporting 

Requirements 

In addition to the requirements 

described in ERISA section 4010(a), 

which provides that filers must submit 

certain financial and actuarial 

information as prescribed by PBGC in 

regulations, ERISA section 4010(d), as 

amended by PPA 2006, specifies three 

items of actuarial information that are 

required to be filed with PBGC. That 

section provides that information filed 

under ERISA section 4010 must include: 

(A) The amount of benefit liabilities under 

the plan determined using the assumptions 

used by the corporation [PBGC] in 

determining liabilities; 

(B) The funding target of the plan 

determined as if the plan has been in at-risk 

status for at least 5 plan years; and 

(C) The funding target attainment 

percentage of the plan. 

The final rule provides detailed 

guidance on how to determine benefit 

liabilities for ongoing plans using the 

assumptions used by PBGC in 

determining liabilities. This 

determination is similar to that set forth 

in the current regulation under 

§ 4010.8(d)(2). As with the current 

regulation, the final rule requires filers 

to use the assumptions prescribed by 

§§ 4044.51 through 4044.57 of PBGC’s 

regulation on Allocation of Assets in 

Single-Employer Plans (29 CFR part 

4044). However, as explained below, in 

two respects the final regulation 

modifies or expands previous guidance 

(including informal guidance) given by 

PBGC or PBGC staff relating to certain 

assumptions not specified in §§ 4044.51 

through 4044.57. 

First, the final regulation provides 

that solely for purposes of determining 

the earliest retirement age (ERA) at 

valuation date and the unreduced 

retirement age (URA) to be used when 

determining expected retirement age 

(XRA), an active participant is to be 

treated as continuing in service after the 

end of the plan year. This provision 

modifies informal guidance provided by 

PBGC staff that future expected service 

should be disregarded when 

determining XRAs for ERISA section 

4010 benefit liability calculations.5 This 

modification eliminates an 

inconsistency between how filers 

compute benefit liabilities for ERISA 

section 4010 purposes and how PBGC 

calculates benefit liabilities as part of its 

plan monitoring functions. The main 

impact of this change on ERISA section 

4010 filers is that they will need to 

make a one-time modification of their 

computer programs. The final rule 

includes examples demonstrating how 

XRA is calculated and applied in 

determining benefit liabilities. 

Second, the final regulation provides 

that a filer may reflect pre-retirement 

decrements 6 other than mortality (such 

as turnover and disability) when 

determining benefit liabilities, subject to 

the following two requirements: 

• If any pre-retirement decrements 

other than mortality are used to 

calculate benefit liabilities for a plan, all 

pre-retirement decrements used for 

minimum funding purposes for that 

plan must be used. For example, if a 

plan uses both termination and 

disability decrements to determine the 

minimum required contribution, the 

benefit liability must be determined 

either including or excluding both the 

termination and the disability 

decrements. 

Federal Register / Vol. 74, No. 49 / Monday, March 16, 2009 / Rules and Regulations 11027 

7Q&A 25 in the 2000 Blue Book. 

8When valuing pre-retirement decrements, the 

XRA represents the assumed age at which benefits 

will commence. 

9Although the final rule provides detailed 

guidance about how benefit liabilities are calculated 

for section 4010 reporting purposes, there are a few 

issues that are not addressed (e.g., how to value 

temporary supplements or lump sums). PBGC will 

provide additional guidance as appropriate upon 

request. 

10Technical Updates are available on PBGC’s 

Web site, http://www.pbgc.gov. 

• Assumptions about the rate of 

incidence related to a pre-retirement 

decrement must be the same as those 

used to determine the funding target for 

minimum funding purposes. 

This provision expands informal 

guidance provided by PBGC staff 7 and 

is consistent with common actuarial 

practice. Although the rules about preretirement decrements have not changed 

from the proposed regulation, the 

language describing these rules has been 

modified to address questions raised by 

a commenter. For example, the final 

regulation states the first requirement 

described above explicitly. In addition, 

language has been added to explain that 

different XRAs may apply for different 

pre-retirement decrements 8 and how 

the pre-retirement decrement rules 

apply in situations where there is no 

clear distinction between termination 

and retirement decrements, as may be 

the case with certain hybrid plans. 

The final regulation also clarifies that 

the assumptions used to determine the 

minimum required contribution for the 

plan year ending within the filer’s 

information year, other than 

assumptions for decrements, interest, 

and expenses, must be used when 

determining benefit liabilities. The 

types of assumptions in this category 

include form of payment, cost-of-living 

increases, and marital status. 

In addition to providing detailed 

guidance on how to determine benefit 

liabilities,9 the final rule reflects new 

requirements (under PPA 2006) to 

provide the funding target of the plan 

determined as if the plan has been in atrisk status for at least 5 plan years, and 

the funding target attainment percentage 

of the plan. The final rule requires filers 

to report whether the plan, at any time 

during the plan year, was subject to any 

of the limitations described in ERISA 

section 206(g) (e.g., funding-based limits 

on benefits and benefit accruals) and, if 

so, which limitations applied, when 

such limitations applied, and when 

such limitations were lifted (if 

applicable). 

The final rule includes two new plan 

actuarial information reporting 

requirements that were not included in 

the proposed rule. Filers must report— 

• Whether a required installment or 

other required payment to the plan was 

not made and, as a result, a lien 

described in ERISA section 303(k) and 

Code section 430(k) was triggered 

during the information year, and the 

required installment or other required 

payment was not made within ten days 

after its due date; and 

• Whether IRS granted one or more 

minimum funding waivers totaling in 

excess of $1 million, if any portion 

thereof is outstanding. 

This information, which is readily 

available, will make it easier for PBGC 

to quickly determine and track the 

conditions that trigger ERISA section 

4010 filings and easily identify 

situations involving liens or large 

waivers. 

As with the current regulation, the 

final rule requires submission of the 

actuarial valuation report for the plan 

year ending within the filer’s 

information year and specifies what 

information must be included in or 

attached to the report. The required 

items of information have been 

modified to better suit the new PPA 

2006 funding structure. All of the 

required actuarial information is 

information that PBGC expects most 

actuaries would include in post-PPA 

2006 valuation reports (e.g., target 

normal cost, information on shortfall 

amortization bases, information on 

funding assumptions, an age/service 

scatter). However, because the funding 

rules have changed so dramatically as a 

result of PPA 2006, and because 

Treasury regulations implementing the 

new funding rules are not yet final, the 

regulation’s list of required items may 

exclude some relevant actuarial 

information. To allow PBGC to expand 

the list of required items as it gains 

more experience with the new funding 

requirements under PPA 2006, the final 

rule provides that the online 

instructions to PBGC’s secure e-4010 

Web-based application may require that 

additional items be included in (or 

attached to) the valuation report. PBGC 

expects that any additional items would 

be items typically required to be 

reported on the Form 5500 Schedule SB 

(defined benefit plan actuarial 

information). 

Because some of the actuarial 

reporting requirements are geared to the 

new funding rules under PPA 2006, 

which generally are applicable to plan 

years beginning after 2007, the final 

regulation includes special rules for 

plan years beginning before 2008 in 

§ 4010.8(h). 

Exempt Plans 

Section 4010.8(c) of PBGC’s current 

regulation provides that actuarial 

information need not be reported for 

plans with fewer than 500 participants, 

as of the end of the plan year ending 

within the filer’s information year. (It 

also provides an exemption for certain 

overfunded plans.) One commenter 

noted that certain actuarial information 

is more easily obtained on a plan’s 

valuation date, than as of the end of the 

plan year. In response to that comment, 

and based on further consideration by 

PBGC, the final rule allows participants 

to be counted on either date for this 

purpose. 

Through means other than reporting 

under part 4010, such as through 

PBGC’s early warning program (see 

Technical Update 00–3 10) and 

reportable events notices, PBGC has 

discovered that a number of plans with 

fewer than 500 participants have 

significant underfunding and thereby 

represent significant financial exposure 

for PBGC. In such cases, PBGC needs 

actuarial information on these plans to 

properly evaluate its risk and exposure 

for the entire controlled group. 

Therefore, PBGC is modifying the 

exemption from reporting actuarial 

information. Under the final rule, 

actuarial information is not required if 

(1) the plan has fewer than 500 

participants as of the end of the plan 

year ending within the filer’s 

information year or as of the valuation 

date for that plan year, and (2) the plan’s 

4010 funding shortfall does not exceed 

$15 million. The 4010 funding shortfall 

is described above in the discussion of 

the $15 million waiver. 

The final rule retains the exemption 

in the current regulation from providing 

actuarial information for plans that have 

no unfunded benefits. For this purpose, 

unfunded benefits are determined in the 

same manner as for purposes of ERISA 

section 4010(d)(1), which requires the 

reporting of benefit liabilities using the 

assumptions used by PBGC. The only 

difference is that the filer will be 

allowed to use the retirement age 

assumptions used by the plan for that 

plan year for purposes of section 303 of 

ERISA (without regard to the at-risk 

assumptions of section 303(i) of ERISA) 

instead of the retirement age 

assumptions in § 4044.8(d)(2). 

As under the current regulation, these 

exemptions from reporting actuarial 

information do not apply if the plan has 

a funding waiver or has been more than 

10 days late with minimum funding 

contributions. 

11028 Federal Register / Vol. 74, No. 49 / Monday, March 16, 2009 / Rules and Regulations 

11This surrogate is similar to a surrogate in 

Treasury’s proposed rule on Benefit Restrictions for 

Underfunded Pension Plans, 72 FR 50544 (Aug. 31, 

2007) and in Treasury’s proposed rule on 

Determination of Minimum Required Pension 

Contributions, 73 FR 20203 (Apr. 15, 2008). 

12Treasury’s proposed rule on Benefit 

Restrictions for Underfunded Pension Plans, 72 FR 

50544 (Aug. 31, 2007). 

Special Rules for Multiple Employer 

Plans 

Although multiple employer plans are 

uncommon and only a handful have 

been subject to ERISA section 4010 

reporting (a situation that is not 

expected to change under the new 

rules), PBGC has received a number of 

inquiries over the years on how the 

section 4010 requirements apply to 

contributing sponsors of multiple 

employer plans. In response to those 

inquiries, the proposed rule provided 

for reduced reporting for certain 

multiple employer plans and made 

several clarifications. The proposed rule 

generally provided that only 

information on employers that were 

among the 10 largest employers in terms 

of participants (for hourly plans) or 

contributions (for salaried plans) would 

need to be reported and that filers could 

provide actuarial information on 

multiple employer plans by reference if 

that information (for the same plan year) 

had been provided by another filer. 

A commenter suggested that PBGC 

waive reporting for a contributing 

sponsor of a multiple employer plan if 

the sponsor’s portion of the multiple 

employer plan liability is a de minimis 

amount and all other waiver conditions 

are met. In response to that comment, 

and based on further consideration by 

PBGC, the final rule provisions on 

multiple employer plans differ from 

those in the proposed rule. 

The final rule provides an alternative 

method of compliance for certain 

sponsors of multiple employer plans. 

An eligible contributing sponsor 

(defined as a contributing sponsor of a 

multiple employer plan that would not 

be subject to reporting if the plan were 

disregarded in applying the gateway 

tests) satisfies the section 4010 

requirements if any contributing 

sponsor of the plan provides a timely 

filing for an information year that 

coincides with or overlaps with the 

eligible contributing sponsor’s 

information year. PBGC may request 

some or all of the information that 

would otherwise be required from the 

eligible contributing sponsor; PBGC will 

make such a request no earlier than the 

date the information would otherwise 

have been due. The eligible contributing 

sponsor must provide the requested 

information within 45 days after the 

date of the request. 

For most multiple employer plans, the 

alternative method of compliance will 

have the effect of a full waiver of 

reporting for all but one of the 

contributing sponsors. The alternative 

method of compliance is simpler than 

the proposed rule provisions for 

multiple employer plans and, unlike 

those provisions, will not require 

contributing sponsors to share 

information, much of which is 

confidential, with other controlled 

groups. 

The final rule, like the proposed rule, 

clarifies that the entire 4010 funding 

shortfall of a multiple employer plan is 

counted when determining whether the 

$15 million waiver applies to any 

employer that is a contributing sponsor 

of the multiple employer plan. 

However, a sponsor of a multiple 

employer plan that does not qualify for 

the $15 million waiver may have its 

reporting requirement effectively 

waived under the alternative method of 

compliance discussed above. 

The final rule requires any filer that 

is a contributing sponsor of a multiple 

employer plan to provide a list of all 

contributing sponsors to that plan. The 

final rule clarifies that with the 

exception of that list, a filer is not 

required to provide additional 

identifying or financial information for 

another contributing sponsor of the 

multiple employer plan if that other 

contributing sponsor is not a member of 

the filer’s controlled group. 

Other Changes 

The final rule includes an automatic 

one-day extension of the ERISA section 

4010 reporting deadline for controlled 

groups whose 105-day reporting period 

includes February 29. This provision 

codifies a ‘‘leap year extension’’ of the 

ERISA section 4010 reporting deadline 

exemplified by Technical Updates 04–1 

and 08–1. 

The final rule also incorporates the 

provisions of Technical Update 96–3 

that are still relevant in light of PPA 

2006. Thus, Technical Update 96–3 is 

superseded with respect to information 

years beginning after 2007. 

The final rule makes other clarifying, 

conforming, or editorial changes. Except 

as specifically discussed in this 

preamble, no substantive change is 

intended or should be inferred. 

Transition Rules 

Under the final rule, the funding 

target attainment percentage (used for 

the 80% FTAP Gateway Test and 

reporting under § 4010.8) and the 4010 

funding shortfall (used for the $15 

million waiver and the definition of 

exempt plans) are determined as of the 

valuation date for the plan year ending 

within the information year. These 

measurements are tied to provisions of 

PPA 2006 that apply only to plan years 

beginning after 2007. Thus, for plan 

years beginning in 2007 but ending in 

information years that begin after 2007, 

these terms are not defined by statute. 

To address this situation, the proposed 

rule required that employers use 

surrogates for determining the funding 

target attainment percentage and the 

4010 funding shortfall for plan years 

beginning before 2008. The surrogates 

provided under the proposed rule are as 

follows: 

• The funding target attainment 

percentage surrogate is the ratio 

(expressed as a percentage) of the 

actuarial value of assets (reduced by any 

credit balance) to the current liability 

(determined using the highest 

permissible interest rate) for the 2007 

plan year.11 (A special rule applies in 

situations where a carryover balance is 

reduced in accordance with ERISA 

section 303(f) and Code section 430(f) as 

of the beginning of the 2008 plan year.) 

• The 4010 funding shortfall 

surrogate is the excess, if any, of the 

plan’s current liability (determined 

using the highest permissible interest 

rate) over the actuarial value of assets 

for the 2007 plan year. 

One commenter suggested that in 

determining the funding target 

attainment percentage surrogate, that 

under certain circumstances, the 

actuarial value of assets not be reduced 

by the credit balance. The commenter 

requested that for plan years beginning 

in 2007, the funding target attainment 

percentage (FTAP) transition rule 

provide that assets not be reduced by 

the credit balance if the ratio of 

unreduced assets to liability is at least 

90 percent. This would make the 4010 

FTAP transition rule consistent with the 

transition rule in Treasury’s proposed 

regulations under Code section 436.12

IRC section 436(j)(3) provides a 

permanent exemption to the rule 

requiring assets be reduced by carryover 

and prefunding balances. The proposed 

Treasury regulations under Code section 

436 incorporate this statutory 

exemption in its transition rule for plan 

years beginning in 2007. ERISA section 

4010, however, does not provide any 

exception to the rule requiring that 

assets be reduced by carryover and 

prefunding balances. Accordingly, the 

final rule does not adopt the 

commenter’s suggestion and PBGC’s 

final rule retains the surrogates 

provided under the proposed rule: 

Federal Register / Vol. 74, No. 49 / Monday, March 16, 2009 / Rules and Regulations 11029 

Although the surrogates described 

above have not changed from those in 

the proposed rule, PBGC has modified 

the regulatory language to describe the 

methodology explicitly rather than by 

reference to Treasury rules. 

Applicability 

Section 505(e) of PPA 2006 provides 

that the amendments made by section 

505 apply with respect to ‘‘years 

beginning after 2007.’’ This applicability 

provision of PPA 2006 uses the term 

‘‘year’’ rather than ‘‘plan year,’’ although 

the term ‘‘plan year’’ appears in other 

applicability provisions in PPA 2006. 

PBGC interprets this section of PPA 

2006 to mean that the amendments 

apply to any information year beginning 

after 2007. Therefore, these rules apply 

to information years beginning after 

2007. 

Technical Update 07–2 provides 

guidance regarding the application of 

these rules for information years 

beginning in 2007. In the rare case of a 

short information year beginning in 

2008 (for example, an information year 

beginning on January 1, 2008, and 

ending on March 31, 2008), the filer 

should contact PBGC to obtain a 

reporting extension. 

Compliance With Rulemaking 

Guidelines 

Executive Order 12866 

PBGC has determined, in consultation 

with the Office of Management and 

Budget, that this final rule is a 

‘‘significant regulatory action’’ under 

Executive Order 12866, as amended. 

The Office of Management and Budget 

has therefore reviewed the final rule 

under Executive Order 12866. 

Regulatory Flexibility Act 

PBGC certifies under section 605(b) of 

the Regulatory Flexibility Act that the 

amendments in this final rule will not 

have a significant economic impact on 

a substantial number of small entities. 

This final rule implements statutory 

changes made by Congress. It provides 

guidance on how to determine whether 

reporting under ERISA section 4010 is 

required and what to report. 

Furthermore, PBGC is providing an 

exemption for controlled groups that 

have total plan underfunding of $15 

million or less. Accordingly, as 

provided in section 605 of the 

Regulatory Flexibility Act (5 U.S.C. 601 

et seq.), sections 603 and 604 do not 

apply. 

Paperwork Reduction Act 

The information requirements relating 

to reporting under ERISA section 4010 

have been approved by the Office of 

Management and Budget under the 

Paperwork Reduction Act (OMB control 

number 1212–0049, expires March 31, 

2012). 

List of Subjects 

29 CFR Part 4001 

Pensions. 

29 CFR Part 4010 

Pension insurance, Pensions, 

Reporting and recordkeeping 

requirements. 

29 CFR Part 4044 

Pension insurance, Pensions. 

■ For the reasons given above, PBGC is 

amending 29 CFR parts 4001, 4010, and 

4044 as follows. 

PART 4001—TERMINOLOGY 

■ 1. The authority citation for part 4001 

continues to read as follows: 

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

■ 2. In § 4001.2, three new definitions 

are added in alphabetical order, to read 

as follows: 

§ 4001.2 Definitions. 

* * * * * 

Earliest retirement age at valuation 

date means the later of: a participant’s 

age on his or her birthday nearest to the 

valuation date, or the participant’s 

attained age as of his or her Earliest 

PBGC Retirement Date (as determined 

under § 4022.10 of this chapter). 

* * * * * 

Expected retirement age (XRA) means 

the age, determined in accordance with 

§§ 4044.55 through 4044.57 of this 

chapter, at which a participant is 

expected to begin receiving benefits 

when the participant has not elected, 

before the allocation date, an annuity 

starting date. This is the age to which a 

participant’s benefit payment is 

assumed to be deferred for valuation 

purposes. An XRA is equal to or greater 

than the participant’s earliest retirement 

age at valuation date but less than his 

or her normal retirement age. 

* * * * * 

Unreduced retirement age (URA) 

means the earlier of the normal 

retirement age specified in the plan or 

the age at which an unreduced benefit 

is first payable. 

* * * * * 

PART 4010—ANNUAL FINANCIAL AND 

ACTUARIAL INFORMATION 

REPORTING 

■ 3. The authority citation for part 4010 

continues to read as follows: 

Authority: 29 U.S.C. 1302(b)(3), 1310. 

§ 4010.1 [Amended] 

■ 4. Section 4010.1 is amended by 

removing the words ‘‘the PBGC under 

section 4010 of ERISA’’ and adding in 

their place the words ‘‘PBGC under 

ERISA section 4010’’; and by removing 

the last sentence of the section. 

■ 5. In § 4010.2: 

■ a. In the introductory text, the words 

‘‘controlled group, ERISA, fair market 

value’’ are removed and the words 

‘‘controlled group, earliest retirement 

age at valuation date, ERISA, expected 

retirement age (XRA), fair market value’’ 

are added in their place, and the words 

‘‘and plan year’’ are removed and the 

words ‘‘plan year, and unreduced 

retirement age (URA)’’ are added in 

their place. 

■ b. The definitions of ‘‘exempt entity,’’ 

‘‘exempt plan,’’ ‘‘filer,’’ and 

‘‘information year’’ are amended by 

removing the words ‘‘of this part’’ where 

they appear once in each definition. 

■ c. The definition of ‘‘exempt entity’’ is 

amended by removing the word ‘‘who’’ 

and adding in its place the word ‘‘that’’; 

by removing the word ‘‘whom’’ and 

adding in its place the word ‘‘which’’; 

and by removing the figures ‘‘4010.4(d)’’ 

and adding in their place the figures 

‘‘4010.4(c)’’. 

■ d. The definition of ‘‘information 

year’’ is amended by removing the 

words ‘‘the year’’ and adding in their 

place the words ‘‘the information year’’. 

■ e. Four new definitions are added in 

alphabetical order, to read as follows: 

§ 4010.2 Definitions. 

* * * * * 

At-risk status means, with respect to 

a plan for a plan year, at-risk status as 

defined in ERISA section 303(i)(4) and 

Code section 430(i)(4). 

* * * * * 

Funding target means, with respect to 

a plan for a plan year, the funding target 

as provided under ERISA section 

303(d)(1) and Code section 430(d)(1) 

determined as of the valuation date for 

the plan year. 

Funding target attainment percentage 

means, with respect to a plan for a plan 

year, the funding target attainment 

percentage as determined under 

§ 4010.4(b) for the plan year. 

* * * * * 

Valuation date means, with respect to 

a plan for a plan year, the valuation date 

as determined under ERISA section 

303(g)(2) and Code section 430(g)(2). 

■ 6. In § 4010.3, paragraph (a) is revised 

to read as follows: 

§ 4010.3 Filing requirement. 

(a) General. Except as provided in 

§ 4010.8(c) (relating to exempt plans) 

11030 Federal Register / Vol. 74, No. 49 / Monday, March 16, 2009 / Rules and Regulations 

and except where one or more waivers 

under § 4010.11 apply, each filer must 

submit to PBGC annually, on or before 

the due date specified in § 4010.10, all 

information specified in § 4010.6(a) 

with respect to all members of a 

controlled group and all plans 

maintained by members of the filer’s 

controlled group. Under § 4000.3(b) of 

this chapter, except as otherwise 

provided by PBGC, the information 

must be submitted electronically in 

accordance with the instructions on 

PBGC’s Web site, http://www.pbgc.gov. 

* * * * * 

■ 7. Section 4010.4 is amended to read 

as follows: 

§ 4010.4 Filers. 

(a) General. A contributing sponsor of 

a plan and each member of the 

contributing sponsor’s controlled group 

on the last day of the information year 

is a filer with respect to an information 

year (unless exempted under paragraph 

(c) of this section) if— 

(1) For any plan (including an exempt 

plan) maintained by the members of the 

contributing sponsor’s controlled group 

on the last day of the information year, 

the funding target attainment percentage 

for the plan year ending within the 

information year is less than 80 percent; 

(2) Any member of the controlled 

group fails to make a required 

installment or other required payment 

to a plan and, as a result, the conditions 

for imposition of a lien described in 

ERISA section 303(k) and Code section 

430(k) have been met during the 

information year, and the required 

installment or other required payment is 

not made within ten days after its due 

date; or 

(3) Any plan maintained by a member 

of the controlled group has been granted 

one or more minimum funding waivers 

under ERISA section 302(c) and Code 

section 412(c) totaling in excess of $1 

million, and as of the end of the plan 

year ending within the information year, 

any portion thereof is still outstanding. 

(b) Funding target attainment 

percentage—(1) General. Except as 

provided in paragraph (b)(3) of this 

section, the funding target attainment 

percentage for a plan for a plan year 

equals the funding target attainment 

percentage as provided under ERISA 

section 303(d)(2) and Code section 

430(d)(2) determined as of the valuation 

date for the plan year. 

(2) Prefunding balance and funding 

standard carryover balance elections. 

For purposes of determining the funding 

target attainment percentage for a plan 

for the plan year, prefunding balances 

and funding standard carryover 

balances must reflect any elections (or 

deemed elections) under ERISA section 

303(f) and Code section 430(f) that affect 

the value of such balances as of the 

beginning of the plan year, regardless of 

when the elections (or deemed 

elections) are made. 

(3) Transition rule for plan years 

beginning before 2008. For plan years 

beginning before 2008, the funding 

target attainment percentage for a plan 

for the plan year is determined as the 

fraction (expressed as a percentage), the 

numerator of which is the net transition 

plan assets determined under paragraph 

(b)(4) of this section, and the 

denominator of which is the plan’s 

current liability determined using the 

highest rate of interest allowable under 

Code section 412(l)(7) as of the 

valuation date for the 2007 plan year. 

(4) Net transition plan assets—(i) In 

general. Net transition plan assets for 

purposes of paragraph (b)(3) of this 

section are equal to plan assets as 

determined under paragraph (b)(4)(ii) of 

this section reduced by any credit 

balance in accordance with paragraph 

(b)(4)(iii) of this section. 

(ii) Determination of assets. Plan 

assets under this paragraph (b)(4)(ii) are 

determined under Code Section 

412(c)(2) as in effect for the plan year 

beginning in 2007, except that the value 

of plan assets before subtracting the 

plan’s funding standard account credit 

balance described in paragraph 

(b)(4)(iii) of this section can neither be 

less than 90 percent of the fair market 

value of plan assets nor greater than 110 

percent of the fair market value of plan 

assets on the valuation date for that plan 

year. 

(iii) Subtraction of credit balance. If a 

plan has a funding standard account 

credit balance as of the valuation date 

for the plan year beginning in 2007, that 

balance is subtracted from the asset 

value described in paragraph (b)(4)(ii) of 

this section as of that valuation date. 

(iv) Effect of funding standard 

carryover balance reduction for 2008 

plan year. Notwithstanding paragraph 

(b)(4)(iii) of this section, if, for the plan 

year beginning in 2008, the employer 

has made an election to reduce some or 

all of the funding standard carryover 

balance as of the first day of that year 

in accordance with ERISA section 303(f) 

and Code section 430(f), then the 

present value (determined as of the 

valuation date for the plan year 

beginning in 2007 using the valuation 

interest rate for that plan year) of the 

amount so reduced is not treated as part 

of the funding standard account credit 

balance when that balance is subtracted 

from the asset value under paragraph 

(b)(4)(iii) of this section. 

(c) Exempt entities. A person is an 

exempt entity for an information year if 

the conditions of paragraphs (c)(1) 

through (4) of this section are satisfied. 

(1) The person is not a contributing 

sponsor of a plan (other than an exempt 

plan) as of the last day of the 

information year. 

(2) The person has revenue for its 

fiscal year ending within the controlled 

group’s information year that is five 

percent or less of the revenue of the 

person’s controlled group for the fiscal 

year(s) ending within the information 

year. 

(3) The person has annual operating 

income for the fiscal year ending within 

the controlled group’s information year 

that is no more than the greater of— 

(i) Five percent of the controlled 

group’s annual operating income for the 

fiscal year(s) ending within the 

information year, or 

(ii) $5 million. 

(4) The person has net assets at the 

end of the fiscal year ending within the 

controlled group’s information year that 

is no more than the greater of— 

(i) Five percent of the controlled 

group’s net assets at the end of the fiscal 

year(s) ending within the information 

year, or 

(ii) $5 million. 

(d) Transition rule; failure to make 

required contribution; minimum 

funding waiver. For plan years 

beginning before 2008, where the 

reference is made in paragraph (a)(2) of 

this section to ‘‘ERISA section 303(k) 

and Code section 430(k)’’ a reference to 

‘‘ERISA section 302(f)(1)(A) and (B) and 

Code section 412(n)(1)(A) and (B)’’ shall 

apply in its place, and where the 

reference is made in paragraph (a)(3) of 

this section to ‘‘ERISA section 302(c) 

and Code section 412(c)’’ a reference to 

‘‘ERISA section 303 and Code section 

412(d)’’ shall apply in its place as those 

provisions are in effect for plan years 

beginning before 2008. 

(e) Minimum funding waiver—(1) 

General. For purposes of § 4010.4(a)(3), 

a portion of the minimum funding 

waiver for a plan is considered 

outstanding unless prior to the plan year 

ending within the information year the 

statutory amortization period has ended, 

or, as of the valuation date for the plan 

year ending within the information year, 

the amortization bases are deemed to be 

reduced to zero pursuant to ERISA 

section 303(e)(5) and Code section 

430(e)(5). 

(2) Example. Company A sponsors 

Plan X, which received a minimum 

funding waiver of $700,000 for the plan 

year ending December 31, 2004, and 

another waiver of $500,000 for the plan 

year ending December 31, 2008. Assume 

Federal Register / Vol. 74, No. 49 / Monday, March 16, 2009 / Rules and Regulations 11031 

that the amortization bases of the 

waivers are not reduced to zero 

pursuant to ERISA section 303(e)(5) and 

Code section 430(e)(5), and the waivers 

are therefore outstanding for the full 

five-year statutory amortization period. 

Also, assume Company A has a calendar 

information year. For the 2009 

information year, Company A must 

report under ERISA section 4010. 

However, for the 2010 information year, 

Company A, assuming no other 

obligation to report under ERISA section 

4010, is not required to report. 

(f) Certain plans to which special 

funding rules apply. The provisions of 

sections 104, 105, 106, and 402(b) of the 

Pension Protection Act of 2006, Public 

Law 109–280 (dealing with plans of 

certain rural cooperatives, certain plans 

affected by settlement agreements with 

PBGC, certain plans of government 

contractors, and certain frozen plans of 

commercial passenger airlines and 

airline caterers), are disregarded for 

purposes of this part, except that these 

provisions are taken into account in 

determining the information to be 

submitted under § 4010.8(i) of this part 

(in connection with the actuarial 

valuation report). 

■ 8. In § 4010.5: 

■ a. Paragraph (b) is amended by 

removing the words ‘‘shall be’’ and 

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

■ b. The heading of paragraph (c)(1) is 

removed and paragraph (c)(1) is 

redesignated as paragraph (c) with the 

heading ‘‘Controlled group members 

with different fiscal years.’’. 

■ c. Redesignated paragraph (c) is 

amended by removing the words ‘‘shall 

be’’ and adding in their place the word 

‘‘is’’ and by adding to the end of the 

paragraph the following new sentence: 

‘‘(If any two members of the controlled 

group report financial information on 

the basis of different fiscal years, the 

determination of whether an entity is an 

exempt entity is based on a calendar 

year information year for purposes of 

this paragraph (c) and § 4010.4(c).)’’. 

■ d. Paragraph (c)(2) is removed. 

■ e. New paragraphs (d) and (e) are 

added to read as follows: 

§ 4010.5 Information year. 

* * * * * 

(d) Examples. The following examples 

illustrate the rule in paragraph (c) of this 

section. 

(1) Example 1. Companies A and B are 

the only members of the same 

controlled group, and both are 

contributing sponsors to nonexempt 

plans. Company A has a July 1 fiscal 

year, and Company B has an October 1 

fiscal year. The information year is the 

calendar year. Company A’s financial 

information with respect to its fiscal 

year ending June 30, 2009, and 

Company B’s financial information with 

respect to its fiscal year ending 

September 30, 2009, must be submitted 

to the PBGC following the end of the 

2009 calendar year information year. 

(2) Example 2. The facts are the same 

as in Example 1 except that Company B 

is not a contributing sponsor of a plan 

and would be an exempt entity using 

the calendar year as the information 

year. Because Company B is an exempt 

entity based on a calendar year 

information year, it is excluded when 

determining the information year. Thus, 

the information year is the July 1 fiscal 

year. Note that Company B is an exempt 

entity even if it would not be exempt 

based on the July information year. 

(3) Example 3. The facts are the same 

as in Example 2 except that Company B 

would not be an exempt entity using the 

calendar year information year but 

would be exempt based on an 

information year that is the July 1 fiscal 

year. Since Company B is not exempt 

based on a calendar year information 

year, it may not be excluded when 

determining the information year. 

Therefore, the information year is the 

calendar year and Company B is not an 

exempt entity. 

(e) Special rules for certain plan 

years. If a plan maintained by the 

members of the contributing sponsor’s 

controlled group has two plan years that 

end in the information year or has no 

plan year that ends in the information 

year, the last plan year ending on or 

immediately before the end of 

information year is deemed to be the 

plan year ending within the information 

year. 

■ 9. In § 4010.6: 

■ a. Paragraph (a)(1) is amended by 

removing the words ‘‘the controlled 

group’’ and adding in their place the 

words ‘‘the filer’s controlled group’’. 

■ b. Paragraphs (a)(1) and (a)(2) are 

amended by removing the words ‘‘the 

PBGC’s website’’ (which appear once in 

each paragraph) and adding in their 

place the words ‘‘PBGC’s Web site, 

http://www.pbgc.gov’’. 

■ c. Paragraphs (b) and (c) are amended 

by removing the words ‘‘the PBGC’’ 

(which appear once in each paragraph) 

and adding in their place the word 

‘‘PBGC’’. 

■ 10. In § 4010.7: 

■ a. Paragraphs (a) introductory text and 

(b) introductory text are amended by 

removing the words ‘‘the PBGC’s 

website’’ (which appear once in each 

paragraph) and adding in their place the 

words ‘‘PBGC’s Web site, http:// 

www.pbgc.gov’’; and by removing the 

words ‘‘controlled group’’ (which 

appear once in each paragraph) and 

adding in their place the words ‘‘filer’s 

controlled group’’. 

■ b. Paragraph (a)(1)(ii) is amended by 

adding the word ‘‘and’’ after the 

semicolon at the end of the paragraph. 

■ c. Paragraph (a)(2) is amended by 

removing the words ‘‘date immediately 

preceding the date’’ and adding in their 

place the words ‘‘day before’’. 

■ d. Paragraph (b)(1)(iii) is amended by 

removing the words ‘‘since the 

beginning of the filer’s information 

year’’ and adding in their place the 

words ‘‘during the filer’s information 

year’’. 

■ e. Paragraph (b)(1)(iv) is amended by 

removing the words ‘‘had not been 

maintained’’ and adding in their place 

the words ‘‘was not maintained’’; and by 

removing the word ‘‘and’’ after the 

semicolon at the end of the paragraph. 

■ f. Paragraph (b)(1)(v) is amended by 

adding the word ‘‘and’’ after the 

semicolon at the end of the paragraph. 

■ g. Paragraph (b)(2) is amended by 

removing the words ‘‘maintaining the 

plan’’ and adding in their place the 

words ‘‘maintaining the plan (if 

applicable)’’; and by removing the 

words ‘‘paragraph (b)(1) as of the date 

immediately preceding that date’’ and 

adding in their place the words 

‘‘paragraph (b)(1) of this section as of 

the day before that date’’. 

■ h. New paragraph (b)(1)(vi) is added to 

read as follows: 

§ 4010.7 Identifying information. 

* * * * * 

(b) * * * 

(1) * * * 

(vi) In the case of a multiple employer 

plan, a list of the contributing sponsors 

as of the end of the plan year ending 

within the filer’s information year, 

including the name, employer 

identification number, contact 

information, fiscal year, and a statement 

as to whether each contributing sponsor 

is a publicly-traded company; and 

* * * * * 

■ 11. Section 4010.8 is revised to read 

as follows: 

§ 4010.8 Plan actuarial information. 

(a) Required information. Except as 

provided elsewhere in this part, for each 

plan (other than an exempt plan) 

maintained by any member of the filer’s 

controlled group, each filer is required 

to provide, in accordance with the 

instructions on PBGC’s Web site, 

http://www.pbgc.gov, the following 

actuarial information determined 

(except as specified below) as of the end 

of plan year ending within the filer’s 

information year— 

11032 Federal Register / Vol. 74, No. 49 / Monday, March 16, 2009 / Rules and Regulations 

(1) The number of— 

(i) Retired participants and 

beneficiaries receiving payments, 

(ii) Terminated vested participants, 

and 

(iii) Active participants; 

(2) The fair market value of the plan’s 

assets (excluding any contributions 

received after year-end); 

(3) The amount of benefit liabilities 

under the plan, setting forth separately 

the amount of the liabilities attributable 

to retired participants and beneficiaries 

receiving payments, terminated vested 

participants, and active participants, 

determined, for this purpose in 

accordance with paragraph (d) of this 

section; 

(4) A description of the actuarial 

assumptions used to determine the 

benefit liabilities in paragraph (a)(3) of 

this section; 

(5) The funding target (as of the 

valuation date) for the plan year ending 

within the information year determined 

in accordance with ERISA section 303(i) 

and Code section 430(i) as if the plan 

had been in at-risk status for a 

consecutive period of at least five plan 

years; 

(6) The funding target attainment 

percentage (as of the valuation date) for 

the plan year ending within the 

information year; 

(7) The adjusted funding target 

attainment percentage as defined in 

ERISA section 206(g)(9)(B) and Code 

section 436(j)(2) for the plan year ending 

within the information year; 

(8) Whether the plan, at any time 

during the plan year, was subject to any 

of the limitations described in ERISA 

section 206(g) and Code section 436, 

and, if so, which limitations applied, 

when such limitations applied, and 

when (if applicable) they were lifted; 

(9) Whether a required installment or 

other required payment to the plan was 

not made, and, as a result, a lien 

described in ERISA section 303(k) and 

Code section 430(k) was triggered 

during the information year, and the 

required installment or other required 

payment was not made within ten days 

after its due date; 

(10) Whether any portion of the total 

minimum funding waiver(s) in excess of 

$1 million granted with respect to such 

plan is outstanding; 

(11) A copy of the actuarial valuation 

report for the plan year ending within 

the filer’s information year that contains 

or is supplemented by the following 

information for that plan year— 

(i) The funding target calculated 

pursuant to ERISA section 303 without 

regard to subsection 303(i)(1) (and Code 

section 430 without regard to subsection 

430(i)(1)), setting forth separately the 

value of the liabilities attributable to 

retirees and beneficiaries receiving 

payment, terminated vested 

participants, and active participants 

(showing vested and nonvested benefits 

separately); 

(ii) A summary of the actuarial 

assumptions and methods used for 

purposes of ERISA section 303 and 

Code section 430, including the form of 

payment and benefit commencement 

date assumptions for all active and 

deferred vested participants not yet 

receiving benefits, information on how 

lump sums are valued (for plans that 

provide lump sums other than de 

minimis lump sums), and any changes 

in those assumptions and methods since 

the previous valuation and the 

justifications for such changes. 

(iii) The effective interest rate (as 

defined in ERISA section 303(h)(2)(A) 

and Code section 430(h)(2)(A)); 

(iv) The target normal cost calculated 

pursuant to ERISA section 303 without 

regard to subsection 303(i)(2) (and Code 

section 430 without regard to subsection 

430(i)(2)); 

(v) For the plan year and each of the 

four preceding plan years, a statement 

as to whether the plan was in at-risk 

status for that plan year; 

(vi) In the case of a plan that is in atrisk status, the target normal cost 

calculated pursuant to ERISA section 

303 and Code section 430 as if the plan 

has been in at-risk status for five 

consecutive years; 

(vii) The value of the plan’s assets 

(reflecting any averaging method) as of 

the valuation date and the fair market 

value of the plan’s assets as of the 

valuation date; 

(viii) The funding standard carryover 

balance and the prefunding balance 

(maintained pursuant to ERISA section 

303(f)(1) and Code section 430(f)(1)) as 

of the beginning of the plan year and a 

summary of any changes in such 

balances in the past year (e.g., amounts 

used to offset the minimum funding 

requirement, amounts reduced in 

accordance with any elections under 

ERISA section 303(f)(5) and Code 

section 430(f)(5), interest credited to 

such balances, and excess contributions 

used to increase such balances); 

(ix) A list of amortization bases 

(shortfall and waiver) under ERISA 

section 303 and Code section 430, 

including the year each base was 

established, the original amount, the 

installment amount, and the remaining 

balance at the beginning of the plan 

year; 

(x) An age/service scatter for active 

participants including average 

compensation information for payrelated plans and average account 

balance information for hybrid plans 

presented in a format similar to that 

described in the instructions to 

Schedule SB of the Form 5500; 

(xi) Expected disbursements (benefit 

payments and expenses) during the plan 

year; 

(xii) A summary of the principal 

eligibility and benefit provisions on 

which the valuation of the plan was 

based (and any changes to those 

provisions since the previous 

valuation), along with descriptions of 

any benefits not included in the 

valuation, any significant events that 

occurred during the plan year, and the 

plan’s early retirement factors; in the 

case of a plan that provides lump sums, 

other than de minimis lump sums, the 

summary must include information on 

how annuity benefits are converted to 

lump sum amounts (e.g., whether early 

retirement subsidies are reflected); and 

(xiii) Any other similar information as 

specified in instructions on PBGC’s Web 

site, http://www.pbgc.gov; and 

(12) A written certification by an 

enrolled actuary that, to the best of his 

or her knowledge and belief, the 

actuarial information submitted is true, 

correct, and complete and conforms to 

all applicable laws and regulations, 

provided that this certification may be 

qualified in writing, but only to the 

extent the qualification(s) are permitted 

under 26 CFR 301.6059–1(d). 

(b) Alternative compliance for plan 

valuation report. If any of the 

information specified in paragraph 

(a)(11) of this section is not available by 

the date specified in § 4010.10(a), a filer 

may satisfy the requirement to provide 

such information by— 

(1) Including a statement, with the 

material that is submitted to PBGC, that 

the filer will file the unavailable 

information by the alternative due date 

specified in § 4010.11(b), and 

(2) Filing such information (along 

with a certification by an enrolled 

actuary under paragraph (a)(12) of this 

section) with PBGC by that alternative 

due date. 

(c) Exempt plan. The actuarial 

information specified in this section is 

not required with respect to a plan if the 

plan satisfies the conditions in 

paragraph (c)(1) through (3). 

(1) The plan— 

(i) Has fewer than 500 participants as 

of the end of the plan year ending 

within the information year or as of the 

valuation date for that plan year and has 

a 4010 funding shortfall (as defined in 

§ 4010.11(c)) for the plan year ending 

within the information year that is not 

in excess of $15 million, or 

(ii) Has benefit liabilities as of the end 

of the plan year ending within the filer’s 

Federal Register / Vol. 74, No. 49 / Monday, March 16, 2009 / Rules and Regulations 11033 

information year, (determined in 

accordance with paragraph (d) of this 

section) equal to or less than the fair 

market value of the plan’s assets. 

(2) The plan has received, by or 

within ten days after the due dates, all 

required installments or other payments 

required to be made during the 

information year under ERISA sections 

302 and 303 and Code sections 412 and 

430. 

(3) The plan has no outstanding 

minimum funding waivers (as described 

in § 4010.4(a)(3)) as of the end of the 

plan year ending within the information 

year. 

(d) Value of benefit liabilities. The 

value of a plan’s benefit liabilities at the 

end of a plan year must be determined 

using the plan census data described in 

paragraph (d)(1) of this section and the 

actuarial assumptions and methods 

described in paragraph (d)(2) or, where 

applicable, (d)(3) of this section. 

(1) Census data—(i) Census data 

period. Plan census data must be 

determined (for all plans for any 

information year) either as of the end of 

the plan year or as of the beginning of 

the next plan year. 

(ii) Projected census data. If actual 

plan census data are not available, a 

plan may use a projection of plan 

census data from a date within the plan 

year. The projection must be consistent 

with projections used to measure 

pension obligations of the plan for 

financial statement purposes and must 

give a result appropriate for the end of 

the plan year for these obligations. For 

example, adjustments to the projection 

process are required where there has 

been a significant event (such as a plan 

amendment or a plant shutdown) that 

has not been reflected in the projection 

data. 

(2) Actuarial assumptions and 

methods. The value of benefit liabilities 

must be determined using the following 

rules in paragraphs (d)(2)(i) through (iv) 

of this section: 

(i) Assumptions included in 

§§ 4044.51 through 4044.57. Interest, 

expenses, mortality and retirement 

assumptions must be as prescribed in 

§§ 4044.51 through 4044.57 of this 

chapter. 

(ii) Assumptions not included in 

§§ 4044.51 through 4044.57. 

Assumptions for decrements other than 

mortality and retirement (such as 

turnover or disability) used to determine 

the minimum required contribution 

under ERISA section 303 and Code 

section 430 for the plan year ending 

within the filer’s information year may 

be used, but only if all such 

assumptions are used. For plans where 

there is no distinction between 

termination and retirement 

assumptions, any termination/ 

retirement rates at ages after the Earliest 

PBGC Retirement Date (as defined in 

§ 4022.10 of this chapter) must be 

treated as retirement rates and replaced 

by expected retirement ages; 

termination/retirement rates at ages 

below the Earliest PBGC Retirement 

Date must be treated as pre-retirement 

decrements. Assumptions used to 

determine the minimum required 

contribution for the plan year ending 

within the filer’s information year, other 

than assumptions for decrements, 

interest, and expenses (e.g., form of 

payment, cost-of-living increases, 

marital status), must be used. 

(iii) Benefits to be valued. Benefits to 

be valued include all benefits earned or 

accrued under the plan as of the end of 

the plan year ending within the 

information year and other benefits 

payable from the plan including, but not 

limited to, ancillary benefits and 

retirement supplements, regardless of 

whether such benefits are protected by 

the anti-cutback provisions of Code 

section 411(d)(6). 

(iv) Future service. Future service 

expected to be accrued by an active 

participant in an ongoing plan during 

future employment (based on the 

assumptions used to determine benefit 

liabilities) must be included in 

determining the earliest and unreduced 

retirement ages used to determine the 

expected retirement age and in 

determining an active participant’s 

entitlement to early retirement subsidies 

and supplements at the expected 

retirement age. See the examples in 

paragraph (e) of this section. 

(3) Special actuarial assumptions for 

exempt plan determination. Solely for 

purposes of determining whether a plan 

is an exempt plan for an information 

year, the value of benefit liabilities may 

be determined by substituting for the 

retirement age assumptions in 

paragraph (d)(2) of this section the 

retirement age assumptions used by the 

plan for the plan year ending within the 

information year for purposes of section 

303 of ERISA without regard to the atrisk assumption of subsection 303(i) of 

ERISA and Code section 430 without 

regard to the at-risk assumption of 

subsection 430(i). 

(e) Examples. The following examples 

demonstrate how XRA is determined 

and applied for purposes of determining 

benefit liabilities under paragraph (d) of 

this section: 

(1) Example 1. (i) Facts. Plan X has a 

normal retirement age of 65, but allows 

benefits to commence as early as age 55 

for participants who complete at least 

10 years of service before termination. 

Early retirement benefits are reduced for 

participants with fewer than 25 years of 

service. Employee A is an active 

participant who is age 40 and has 

completed 5 years of service. Assume 

the ‘‘medium’’ XRA look-up table 

applies, and that for purposes of 

§ 4010.8(d), the filer has decided not to 

take pre-retirement decrements other 

than mortality table into account as 

permitted under § 4010.8(d)(2)(i). 

(ii) Determination of XRA. If A 

continues working, the earliest age A 

could start receiving benefit is age 55. 

Therefore, A’s earliest retirement age at 

valuation (ERA) is 55. Because the 

earliest that A can receive an unreduced 

benefit is when A completed 25 years of 

service (at age 60), A’s URA is age 60. 

Under the medium XRA look-up table, 

A’s XRA is 58. 

(iii) Determination of Benefit 

Liabilities. The benefit liability is the 

present value of A’s benefit accrued as 

of the measurement date assuming A 

retires at age 58 and elects to have 

benefits commence immediately. Since 

A will not be eligible to receive 

unreduced benefits at that time, the 

accrued benefit is reduced in 

accordance with the plan’s early 

retirement reduction provisions, 

including any subsidies to which A will 

be entitled under the assumption that A 

works until age 58. 

(2) Example 2. Employee B is also an 

active participant in plan X and is age 

40 with 15 years of service. B will 

complete 25 years of service at age 50. 

However, because the plan does not 

allow for benefit commencement before 

age 55, B’s ERA, URA and thus, XRA are 

all age 55. The benefit liability is the 

present value of B’s benefit accrued as 

of the measurement date assuming B 

retires at age 55 and elects to commence 

benefits immediately. Since B will be 

eligible to receive an unreduced benefit 

at that time, the full unreduced benefit 

amount is valued. 

(3) Example 3—(i) Facts. Assume the 

same facts as in Example 1, except that 

for purposes of § 4010.8(d), the filer has 

decided to take pre-retirement 

decrements other than mortality into 

account as permitted under 

§ 4010.8(d)(2)(i). Assume the only preretirement decrement other than 

mortality is turnover. The plan’s 

turnover rates go from age 21 to age 54, 

and the retirement rates go from age 55 

to age 65. 

(ii) Determination of XRA. If A 

terminates employment at or before age 

45, A will not be eligible to receive 

benefits until age 65. Therefore, the 

portion of Employee A that is assumed 

to terminate before age 45 has an ERA, 

URA, and XRA of age 65. The portion 

11034 Federal Register / Vol. 74, No. 49 / Monday, March 16, 2009 / Rules and Regulations 

of A that remains in service to age 45, 

after the application of the applicable 

turnover decrements, and then 

terminates at or after age 45, but before 

age 55, will be entitled to receive a 

reduced benefit as early as 55. 

Therefore, the portion of A that is 

assumed to terminate during this period 

has an ERA of 55, a URA of 65 and an 

XRA of 60. Since the turnover rates stop 

at age 55, the portion of A that remains 

in service to age 55 is assumed to 

remain in service until the XRA for that 

portion of A. For that portion of A, the 

ERA is 55, the URA is 60 and the XRA 

is 58. (For purposes of § 4010.8(d), the 

plan’s assumed retirement rates are 

replaced by XRAs.) 

(iii) Determination of benefit 

liabilities. The benefit liability of A is 

the sum of the present value of A’s full 

accrued benefit at age 65 for the portion 

of A that terminates between age 40 and 

age 45, the present value of A’s accrued 

benefit reduced for commencement at 

age 60 for the portion of A that 

terminates between age 45 and age 54, 

and the present value of A’s accrued 

benefit reduced for commencement at 

age 58 for the portion of A that remains 

employed until age 55. 

(4) Example 4. Assume the same facts 

as in Example 3, except that Employee 

B, the sole active participant, is age 40 

with 15 years of service. The portion of 

B that is assumed to terminate before 

age 50 would be entitled to receive a 

reduced benefit as early as age 55 or an 

unreduced benefit at age 65. That 

portion of B has an ERA of 55, a URA 

of 65, and an XRA of 60. The benefit 

liability for that portion of B is the 

present value of B’s benefit accrued as 

of the measurement date assuming B 

commences a reduced benefit at age 60. 

The portion of B that survives to age 50 

would be entitled to receive an 

unreduced benefit as early as age 55. 

That portion of B has an ERA, URA and 

XRA of 55. The benefit liability for this 

portion of B is the present value of B’s 

benefit accrued as of the measurement 

date assuming B retires and commences 

unreduced payments at age 55. 

(f) Multiple employer plans. If, with 

respect to a multiple employer plan, the 

actuarial information required under 

this section 4010 for the plan year 

ending within the filer’s information 

year has been filed under part 4010 by 

another filer, the filer may include this 

actuarial information by reference. The 

filer must report the name, EIN and plan 

number of the multiple employer plan 

and the name of the other filer that 

submitted this information. 

(g) Previous filing for plan year. If the 

actuarial information for the plan year 

as required under this § 4010.8 has been 

submitted by the filer in a previous 4010 

submission, the filing may include that 

actuarial information by reference to the 

previous submission. 

(h) Special rules for plan years 

beginning before 2008. For plan years 

beginning before 2008: 

(1) The requirements of paragraphs (a) 

(5) through (8) of this section do not 

apply. 

(2) The references in paragraph (a)(9) 

of this section to ERISA section 303(k) 

and Code section 430(k) are replaced 

with references to sections of ERISA and 

the Code, as in effect before amendment 

by the Pension Protection Act of 2006, 

Public Law 109–280. 

(3) Instead of the requirement of 

paragraph (a)(11) of this section, the 

actuarial valuation report requirements 

in § 4010.8(a)(5) in effect as of December 

31, 2007, apply. 

(i) Plans subject to special funding 

rules under sections 104, 105, 106 and 

402(b) of the Pension Protection Act of 

2006. Instead of the requirements of 

paragraph (a)(11) of this section: 

(1) In the case of a plan year for which 

the application of new funding rules is 

deferred for a plan under sections 104, 

105, and 106 of the Pension Protection 

Act of 2006, Pub. L. 109–280 (dealing 

with plans of certain rural cooperatives, 

certain plans affected by settlement 

agreement with PBGC, and certain plans 

of government contractors), the 

requirements in § 4010.8(a)(5) (in 

connection with the actuarial valuation 

report) in effect as of December 31, 

2007, apply to the plan. 

(2) In the case of a plan year for which 

a plan is subject to section 402(b) of the 

Pension Protection Act of 2006, Public 

Law 109–280 (dealing with certain 

frozen plans of commercial passenger 

airlines and airline caterers), the plan 

must meet the requirements in 

connection with the actuarial valuation 

report in accordance with instructions 

on PBGC’s Web site, http:// 

www.pbgc.gov. 

§ 4010.9 [Amended] 

■ 12. In § 4010.9: 

■ a. Paragraph (a) is amended by 

removing the words ‘‘the PBGC’s Web 

site’’ and adding in their place the word 

‘‘PBGC’s Web site, http:// 

www.pbgc.gov’’; and by removing the 

words ‘‘controlled group member’’ and 

adding in their place the words 

‘‘member of the filer’s controlled 

group’’. 

■ b. Paragraph (c) is amended by 

removing the words ‘‘within 15 days 

after they are prepared’’ adding in their 

place the words ‘‘within 15 days after 

they are prepared, if they are prepared’’ 

and by removing the words ‘‘audited 

and unaudited financial statements’’ 

and adding in their place the words 

‘‘audited and unaudited financial 

statements, if prepared’’. 

■ c. Paragraph (d) is amended by 

removing the words ‘‘the PBGC’’ where 

they appear three times and adding in 

their place each time the word ‘‘PBGC’’. 

§ 4010.10 [Amended] 

■ 13. In § 4010.10: 

■ a. Paragraphs (a), (b), (c), and (d) are 

amended by removing the words ‘‘the 

PBGC’’ wherever they appear and 

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

■ b. Paragraphs (c), (d), and (e) are 

amended by removing the words ‘‘The 

PBGC’’ wherever they appear and 

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

■ c. Paragraph (a) is amended by 

removing the word ‘‘shall’’ and adding 

in place the word ‘‘must’’; and by 

adding the following new sentence at 

the end of the paragraph: ‘‘The filing 

deadline is extended to the 106th date 

after the close of the filer’s information 

year if the 105-day reporting period 

includes February 29.’’ 

■ 14. Section 4010.11 is revised to read 

as follows: 

§ 4010.11 Waivers and extensions. 

(a) Aggregate funding not in excess of 

$15 million. Unless reporting is required 

by § 4010.4(a)(2) or (a)(3), reporting is 

waived for a person (that would be a 

filer if not for the waiver) for an 

information year if, for the plan year 

ending within the information year, the 

aggregate 4010 funding shortfall for all 

plans (including any exempt plans) 

maintained by the person’s controlled 

group (disregarding those plans with no 

4010 funding shortfall) does not exceed 

$15 million. 

(b) Other waiver authority. PBGC may 

waive the requirement to submit 

information with respect to one or more 

filers or plans or may extend the 

applicable due date or dates specified in 

§ 4010.10 of this part. PBGC will 

exercise this discretion in appropriate 

cases where it finds convincing 

evidence supporting a waiver or 

extension; any waiver or extension may 

be subject to conditions. A request for 

a waiver or extension must be filed in 

writing with PBGC at the address 

provided in § 4010.10(c) no later than 15 

days before the applicable due date 

specified in § 4010.10 of this part, and 

must state the facts and circumstances 

on which the request is based. 

(c) 4010 funding shortfall for waivers 

and exemptions—(1) General. Except as 

provided in paragraph (c)(2) of this 

section, a plan’s 4010 funding shortfall 

for a plan year equals the funding 

shortfall as provided under ERISA 

Federal Register / Vol. 74, No. 49 / Monday, March 16, 2009 / Rules and Regulations 11035 

section 303(c)(4) and Code section 

430(c)(4) determined as of the valuation 

date for the plan year, except that the 

value of plan assets is determined 

without regard to the reduction under 

ERISA section 303(f)(4)(B) and Code 

section 430(f)(4)(B) (dealing with 

reduction of assets by the amount of 

prefunding and funding standard 

carryover balances). 

(2) Transition rule for plan years 

beginning before 2008. For plan years 

beginning before 2008, a plan’s 4010 

funding shortfall for a plan year equals 

the excess, if any, of the plan’s current 

liability over the value of plan assets. 

For this purpose, both current liability 

and plan assets are determined in the 

manner provided in § 4010.4(b)(3), 

except that assets are not reduced by the 

credit balance in the funding standard 

account. 

(3) Multiple employer plans. For 

purposes of § 4010.8(c) and paragraph 

(a) of this section, the entire 4010 

funding shortfall of any multiple 

employer plan of which the filer or any 

member of the filer’s controlled group is 

a contributing sponsor is included. 

■ 15. Sections 4010.12, 4010.13, and 

4010.14 are redesignated as §§ 4010.13, 

4010.14, and 4010.15. 

■ 16. New § 4010.12 is added to read as 

follows: 

§ 4010.12 Alternative method of 

compliance for certain sponsors of multiple 

employer plans. 

(a) In general. Subject to paragraph (b) 

of this section, an eligible contributing 

sponsor (as defined in paragraph (c) of 

this section) of a multiple employer 

plan satisfies the requirements of this 

part for an information year if any 

contributing sponsor of the multiple 

employer plan provides a timely filing 

under this part for an information year 

that coincides with or overlaps with the 

eligible contributing sponsor’s 

information year. 

(b) PBGC request for additional 

information. PBGC may request some or 

all of the information that would 

otherwise be required under this part 

from an eligible contributing sponsor 

that uses the alternative method of 

compliance in this section. PBGC will 

make such a request no earlier than the 

date the information would otherwise 

have been due. The eligible contributing 

sponsor must provide the requested 

information no later than 30 days after 

PBGC makes the request. The requested 

information need not be submitted 

electronically. 

(c) Eligible contributing sponsor. For 

purposes of this section, an eligible 

contributing sponsor of a multiple 

employer plan is a contributing sponsor 

that would not be subject to reporting if 

the plan were disregarded in applying 

the gateway tests in § 4010.4(a). 

§ 4010.13 [Amended] 

■ 17. Redesignated § 4010.13 is 

amended by removing the words 

‘‘section 4010(c) of ERISA’’ and adding 

in their place the words ‘‘ERISA section 

4010(c)’’; by removing the words ‘‘the 

PBGC’’ and adding in their place the 

word ‘‘PBGC’’; and by removing the 

word ‘‘shall’’ and adding in its place the 

word ‘‘will’’. 

§ 4010.14 [Amended] 

■ 18. Redesignated § 4010.14 is 

amended by removing the words 

‘‘section 4071 of ERISA’’ and adding in 

their place the words ‘‘ERISA section 

4071’’; by removing the words ‘‘the 

PBGC’’ and adding in their place the 

word ‘‘PBGC’’; and by removing the 

words ‘‘The PBGC’’ and adding in their 

place the word ‘‘PBGC’’. 

PART 4044—ALLOCATION OF 

ASSETS IN SINGLE-EMPLOYER 

PLANS 

■ 19. The authority citation for part 

4044 continues to read as follows: 

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

1341, 1344, 1362. 

§ 4044.2 [Amended] 

■ 20. In § 4044.2: 

■ a. In the introductory text, the words 

‘‘distribution date, ERISA, fair market 

value’’ are removed and the words 

‘‘distribution date, earliest retirement 

age at valuation date, ERISA, expected 

retirement age (XRA), fair market value’’ 

are added in their place and the words 

‘‘termination date, and’’ are removed 

and the words ‘‘termination date, 

unreduced retirement age (URA), and’’ 

are added in their place. 

■ b. The definitions of ‘‘earliest 

retirement age at valuation date’’, 

‘‘expected retirement age (XRA)’’, and 

‘‘unreduced retirement age (URA)’’ are 

removed. 

Issued in Washington, DC, this 12th day of 

March 2009. 

Vincent K. Snowbarger, 

Acting Director, Pension Benefit Guaranty 

Corporation. 

Issued on the date set forth above pursuant 

to a resolution of the Board of Directors 

authorizing publication of this final rule. 

Judith R. Starr, 

Secretary, Board of Directors, Pension Benefit 

Guaranty Corporation. 

[FR Doc. E9–5741 Filed 3–13–09; 8:45 am] 

BILLING CODE 7709–01–P 

PENSION BENEFIT GUARANTY 

CORPORATION 

29 CFR Parts 4022 and 4044 

Allocation of Assets in SingleEmployer Plans; Benefits Payable in 

Terminated Single-Employer Plans; 

Interest Assumptions for Valuing and 

Paying Benefits 

AGENCY: Pension Benefit Guaranty 

Corporation. 

ACTION: Final rule. 

SUMMARY: Pension Benefit Guaranty 

Corporation’s regulations on Allocation 

of Assets in Single-Employer Plans and 

Benefits Payable in Terminated SingleEmployer Plans prescribe interest 

assumptions for valuing and paying 

certain benefits under terminating 

single-employer plans. This final rule 

amends the asset allocation regulation 

to adopt interest assumptions for plans 

with valuation dates in the second 

quarter of 2009 and amends the benefit 

payments regulation to adopt interest 

assumptions for plans with valuation 

dates in April 2009. Interest 

assumptions are also published on 

PBGC’s Web site (http://www.pbgc.gov). 

DATES: Effective April 1, 2009. 

FOR FURTHER INFORMATION CONTACT: 

Catherine B. Klion, Manager, Regulatory 

and Policy Division, Legislative and 

Regulatory Department, Pension Benefit 

Guaranty Corporation, 1200 K Street, 

NW., Washington, DC 20005, 202–326– 

4024. (TTY/TDD users may call the 

Federal relay service toll-free at 1–800– 

877–8339 and ask to be connected to 

202–326–4024.) 

SUPPLEMENTARY INFORMATION: PBGC’s 

regulations prescribe actuarial 

assumptions—including interest 

assumptions—for valuing and paying 

plan benefits of terminating singleemployer plans covered by title IV of 

the Employee Retirement Income 

Security Act of 1974. The interest 

assumptions are intended to reflect 

current conditions in the financial and 

annuity markets. 

These interest assumptions are found 

in two PBGC regulations: the regulation 

on Allocation of Assets in SingleEmployer Plans (29 CFR Part 4044) and 

the regulation on Benefits Payable in 

Terminated Single-Employer Plans (29 

CFR Part 4022). Assumptions under the 

asset allocation regulation are updated 

quarterly; assumptions under the benefit 

payments regulation are updated 

monthly. This final rule updates the 

assumptions under the asset allocation 

regulation for the second quarter (April 

through June) of 2009 and updates the