64324 Federal Register / Vol. 60, No. 241 / Friday, December 15, 1995 / Rules and Regulations

provided with timely section 204(h)

notice. Accordingly, the amendment

will become effective in accordance

with its terms with respect to those

participants and alternate payees.

Q–13: Will a plan be considered to

have complied with section 204(h) of

ERISA if the plan administrator

provides section 204(h) notice to all but

a de minimis percentage of participants

and alternate payees to whom section

204(h) notice must be provided?

A–13: The plan will be considered to

have complied with section 204(h) of

ERISA and the amendment will become

effective in accordance with its terms

with respect to all parties to whom

section 204(h) notice was required to be

provided (including those who did not

receive notice prior to discovery of the

omission), if the plan administrator—

(a) Has made a good faith effort to

comply with the requirements of section

204(h);

(b) Has provided section 204(h) notice

to each employee organization that

represents any participant to whom

section 204(h) notice is required to be

provided;

(c) Has failed to provide section

204(h) notice to no more than a de

minimis percentage of participants and

alternate payees to whom section 204(h)

notice is required to be provided; and

(d) Provides section 204(h) notice to

those participants and alternate payees

promptly upon discovering the

oversight.

Q–14: How does section 204(h) of

ERISA apply to a plan that is terminated

in accordance with title IV of ERISA?

A–14: (a) On and after termination

date. Notwithstanding paragraph (b) of

this Q&A–14 or any other provisions of

this section, a plan that is terminated in

accordance with title IV of ERISA is

deemed to have satisfied section 204(h)

of ERISA not later than the termination

date (or date of termination, as

applicable) established under section

4048 of ERISA. Accordingly, section

204(h) would not require that any

additional benefits accrue after such

date.

(b) Amendment effective before

termination date. An amendment that is

effective before the termination date (or

date of termination, as applicable)

established under section 4048 of ERISA

is subject to section 204(h).

Accordingly, if such amendment

provides for a significant reduction in

the rate of future benefit accrual, the

plan administrator must provide section

204(h) notice (either separately or with

or as part of the notice of intent to

terminate) with respect to the

amendment. However, if a plan is not

amended to reduce significantly the rate

of future benefit accrual before the

termination date (for example, the plan

continues existing benefit accruals until

the termination date), section 204(h)

notice is not required.

Q–15: When does section 204(h) of

ERISA become effective?

A–15: (a) Statutory effective date.

With respect to defined benefit plans,

section 204(h) of ERISA generally

applies to plan amendments adopted on

or after January 1, 1986. With respect to

individual account plans, section 204(h)

applies to plan amendments adopted on

or after October 22, 1986.

(b) Regulatory effective date. This

section applies to amendments adopted

on or after December 15, 1995, and

amendments effective by their terms on

or after January 2, 1996.

PART 602—OMB CONTROL NUMBERS

UNDER THE PAPERWORK

REDUCTION ACT

Par. 6. The authority citation for part

602 continues to read as follows:

Authority: 26 U.S.C. 7805.

Par. 7. In § 602.101, paragraph (c) is

amended by adding to the table in

numerical order the entry ‘‘1.411(d)–6T

* * * .1545–1477’’.

Margaret Milner Richardson,

Commissioner of Internal Revenue.

Approved: December 5, 1995.

Leslie Samuels,

Assistant Secretary of the Treasury.

[FR Doc. 95–30416 Filed 12–12–95; 1:23 pm]

BILLING CODE 4830–01–U

PENSION BENEFIT GUARANTY

CORPORATION

29 CFR Parts 2621 and 2627

Limitation on Guaranteed Benefits in

Single-Employer Plans; Disclosure to

Participants

AGENCY: Pension Benefit Guaranty

Corporation.

ACTION: Final rule.

SUMMARY: This rule amends Appendix A

to the Limitation on Guaranteed

Benefits regulation of the Pension

Benefit Guaranty Corporation (‘‘PBGC’’)

by adding the maximum guaranteeable

pension benefit that may be paid by the

PBGC with respect to a plan participant

in a single-employer pension plan that

terminates in 1996. The maximum

guaranteeable benefit is computed in

accordance with the formula in section

4022(b)(3) of the Employee Retirement

Income Security Act of 1974, which

provides that the maximum

guaranteeable benefit is based on the

contribution and benefit base

determined under section 230 of the

Social Security Act. The latter number

is adjusted annually, and that

adjustment automatically changes the

dollar amount of the maximum

guaranteeable benefit paid by PBGC.

The effect of this amendment is to

advise plan participants and

beneficiaries of the increased maximum

guaranteeable benefit for 1996. This rule

also amends Appendix B to the PBGC’s

Disclosure to Participants regulation by

adding information on 1996 maximum

guaranteed benefit amounts. Plan

administrators may, subject to the

requirements of that regulation, include

this information in participant notices.

EFFECTIVE DATE: January 1, 1996.

FOR FURTHER INFORMATION CONTACT:

Harold J. Ashner, Assistant General

Counsel, Office of the General Counsel,

Pension Benefit Guaranty Corporation,

1200 K Street, NW., Washington, DC

20005–4026, 202–326–4024 (202–326–

4179 for TTY and TDD). (These are not

toll-free numbers.)

SUPPLEMENTARY INFORMATION: Section

4022(b) of the Employee Retirement

Income Security Act of 1974, as

amended, (‘‘ERISA’’) provides for

certain limitations on benefits

guaranteed by the Pension Benefit

Guaranty Corporation (‘‘PBGC’’) in

terminating single-employer pension

plans covered under Title IV of ERISA.

One of the limitations set forth in

section 4022(b)(3) is a dollar ceiling on

the amount of the monthly benefit that

may be paid to a plan participant by the

PBGC. Subparagraph (B) of section

4022(b)(3) provides that the amount of

monthly benefit payable in the form of

a life annuity beginning at age 65 shall

not exceed ‘‘$750 multiplied by a

fraction, the numerator of which is the

contribution and benefit base

(determined under section 230 of the

Social Security Act) in effect at the time

the plan terminates and the

denominator of which is such

contribution and benefit base in effect in

calendar year 1974 [$13,200]’’. This

formula is also set forth in § 2621.3(a)(2)

of the PBGC’s regulation entitled

Limitation on Guaranteed Benefits in

Single-Employer Plans (29 CFR Part

2621).

Section 230(d) of the Social Security

Act (42 U.S.C. 430(d)) provides special

rules for determining the contribution

and benefit base for purposes of section

4022(b)(3)(B). Each year the Social

Security Administration determines,

and notifies the PBGC of, the

contribution and benefit base to be used

by the PBGC under these provisions.
Federal Register / Vol. 60, No. 241 / Friday, December 15, 1995 / Rules and Regulations 64325

The PBGC has been notified by the

Social Security Administration that,

under section 230 of the Social Security

Act, $46,500 is the contribution and

benefit base that is to be used to

calculate the PBGC maximum

guaranteeable benefit for 1996.

Accordingly, the formula under section

4022(b)(3)(B) of ERISA and 29 CFR

§ 2621.3(a)(2) is: $750 multiplied by

$46,500/$13,200. Thus, the maximum

monthly benefit guaranteeable by the

PBGC in 1996 is $2,642.05 per month in

the form of a life annuity beginning at

age 65. If a benefit is payable in a

different form or begins at a different

age, the maximum guaranteeable

amount will be the actuarial equivalent

of $2,642.05 per month.

Appendix A to part 2621 lists the

maximum guaranteeable benefit payable

by the PBGC to participants in singleemployer plans that have terminated in

each year from 1974 through 1995. This

amendment updates appendix A for

plans that terminate in 1996.

Section 4011 of ERISA requires plan

administrators of certain underfunded

plans to provide notice to plan

participants and beneficiaries of the

plan’s funding status and the limits of

the PBGC’s guarantee. The PBGC’s

Disclosure to Participants regulation

(part 2627) implements the statutory

notice requirement. This rule amends

Appendix B to the PBGC’s Disclosure to

Participants regulation by adding

information on 1996 maximum

guaranteed benefit amounts. Plan

administrators may, subject to the

requirements of that regulation, include

this information in participant notices.

Because the maximum guaranteeable

benefit is determined according to the

formula in section 4022(b)(3)(B) of

ERISA, and these amendments make no

change in its method of calculation but

simply list 1996 maximum

guaranteeable benefit amounts for the

public’s knowledge, general notice of

proposed rulemaking is not required.

Moreover, because the 1996 maximum

guaranteeable benefit is effective, under

the statute, at the time that the Social

Security contribution and benefit base is

effective, i.e., January 1, 1996, and is not

dependent on the issuance of this

regulation, the PBGC finds that good

cause exists for making these

amendments effective less than 30 days

after publication (5 U.S.C. 553).

The PBGC has determined that this

action is not a ‘‘significant regulatory

action’’ under the criteria set forth in

Executive Order 12866.

Because no general notice of proposed

rulemaking is required for this

regulation, the Regulatory Flexibility

Act of 1980 does not apply (5 U.S.C.

601(2)).

List of Subjects in 29 CFR Parts 2621

and 2627

Employee benefit plans, Pension

insurance, and Pensions.

In consideration of the foregoing,

parts 2621 and 2627 of subchapter C,

chapter XXVI, title 29, Code of Federal

Regulations are hereby amended as

follows:

PART 2621—LIMITATION ON

GUARANTEED BENEFITS IN SINGLEEMPLOYER PLANS

1. The authority citation for Part 2621

continues to read as follows:

Authority: 29 U.S.C. 1302, 1322, 1322b.

2. Appendix A to part 2621 is

amended by adding a new entry to read

as follows. The introductory text is

reproduced for the convenience of the

reader and remains unchanged.

Appendix A to Part 2621—Maximum

Guaranteeable Monthly Benefit

The following table lists by year the

maximum guaranteeable monthly

benefit payable in the form of a life

annuity commencing at age 65 as

described by § 2621.3(a)(2) to a

participant in a plan that terminated in

that year:

Year

Maximum

guaranteeable

monthly

benefit

* * * * *

1996 ...................................... 2,642.05

PART 2627—DISCLOSURE TO

PARTICIPANTS

3. The authority citation for Part 2627

continues to read as follows:

Authority: 29 U.S.C. 1302(b)(3), 1311.

4. Appendix B to part 2627 is

amended by adding a new entry to read

as follows. The introductory text is

reproduced for the convenience of the

reader and remains unchanged.

Appendix B to Part 2627—Table of Maximum Guaranteed Benefits

If a plan terminates in—

The maximum guaranteed benefit for an individual starting to receive benefits at the age listed below is the

amount (monthly or annual) listed below:

Age 65 Age 62 Age 60 Age 55

Monthly Annual Monthly Annual Monthly Annual Monthly Annual

1996 .................................. $2,642.05 $31,704.60 $2,087.22 $25,046.64 $1,717.33 $20,607.96 $1,188.92 $14,267.04

Issued at Washington, DC this 11th day of

December, 1995.

Martin Slate,

Executive Director, Pension Benefit Guaranty

Corporation.

[FR Doc. 95–30497 Filed 12–14–95; 8:45 am]

BILLING CODE 7708–01–P

29 CFR Part 2619

Valuation of Plan Benefits in SingleEmployer Plans; Expected Retirement

Age

AGENCY: Pension Benefit Guaranty

Corporation.

ACTION: Final rule.

SUMMARY: This rule amends the Pension

Benefit Guaranty Corporation’s

regulation on Valuation of Plan Benefits

in Single-Employer Plans (29 CFR Part

2619) by adding a new Table I–96 to

appendix D. Table I–96 applies to any

plan being terminated either in a

distress termination or involuntarily by

the PBGC with a valuation date falling

in 1996, and is used to determine

expected retirement ages for plan

participants. This table is needed in

order to compute the value of early

retirement benefits and, thus, the total

value of benefits under the plan.

EFFECTIVE DATE: January 1, 1996.