Federal Register / Vol. 60, No. 246 / Friday, December 22, 1995 / Proposed Rules 66531

minimize the possibility of coercion or

undue influence. In past audits of

clinical investigations, FDA has had

problems on occasion verifying that

consent was obtained prior to

participation in the study because a

number of the consent documents were

not dated. By explicitly requiring that

the consent form be dated at the time it

is signed, the agency will be able to help

ensure that informed consent was

obtained prior to entry into the study

and will be able to verify that the

investigator has fulfilled his or her

obligation. Thus, FDA is proposing to

amend § 50.27(a) to explicitly require

that the consent form be dated by the

subject or the subject’s legally

authorized representative at the time

that it is signed.

II. Request for Comments

Interested persons may, on or before

March 21, 1996, submit to the Dockets

Management Branch (address above)

written comments regarding this

proposal. Two copies of any comments

are to be submitted, except that

individuals may submit one copy.

Comments are to be identified with the

docket number found in brackets in the

heading of this document. Received

comments may be seen in the office

above between 9 a.m. and 4 p.m.,

Monday through Friday.

III. Environmental Impact

The agency has determined under 21

CFR 25.24(a)(8) that this action is of a

type that does not individually or

cumulatively have a significant effect on

the human environment. Therefore,

neither an environmental assessment

nor an environmental impact statement

is required.

IV. Analysis of Impacts

FDA has examined the impacts of the

proposed rule under Executive Order

12866 and the Regulatory Flexibility Act

(Pub. L. 96–354). Executive Order 12866

directs agencies to assess all costs and

benefits of available regulatory

alternatives and, when regulation is

necessary, to select regulatory

approaches that maximize net benefits

(including potential economic,

environmental, public health and safety,

and other advantages; distributive

impacts; and equity). The agency

believes that this proposed rule is

consistent with the regulatory

philosophy and principles identified in

the Executive Order.

The Regulatory Flexibility Act

requires agencies to analyze regulatory

options that would minimize any

significant impact of a rule on small

entities. This rule simply adds a

requirement that consent forms be dated

at the time that they are signed in order

to permit the agency to verify that

informed consent is obtained prior to an

individual’s entry into a research study.

Because the majority of consent forms

are currently dated at the time that they

are signed, the agency certifies that the

proposed rule will not have a significant

economic impact on a substantial

number of small entities. Therefore,

under the Regulatory Flexibility Act, no

further analysis is required.

V. Clarifying Amendments

Along with this proposal to require

that consent forms be dated at the time

they are signed, FDA believes that a

number of related changes to the

regulations for human drugs and

biologics are warranted. FDA is

proposing to revise § 312.53(c)(1)(vi)(d)

(21 CFR 312.53(c)(1)(vi)(d)) to expressly

recognize that the informed consent

referred to be in accordance with 21

CFR part 50 and that institutional

review board review and approval

referred to be in accordance with 21

CFR part 56. Also, FDA is proposing to

revise § 312.62(b) (21 CFR 312.62(b)) to

clarify that adequate case history

records include the case report forms

and supporting data, including, for

example, signed and dated consent

forms and medical records.

List of Subjects

21 CFR Part 50

Human research subjects, Informed

consent, Prisoners, Reporting and

recordkeeping requirements, Safety.

21 CFR Part 312

Drugs, Exports, Imports,

Investigations, Labeling, Medical

research, Reporting and recordkeeping

requirements.

Therefore, under the Federal Food,

Drug, and Cosmetic Act and under

authority delegated to the Commissioner

of Food and Drugs, it is proposed that

21 CFR parts 50 and 312 be amended as

follows:

PART 50—PROTECTION OF HUMAN

SUBJECTS

1. The authority citation for 21 CFR

part 50 continues to read as follows:

Authority: Secs. 201, 406, 408, 409, 502,

503, 505, 506, 507, 510, 513–516, 518–520,

701, 721, 801 of the Federal Food, Drug, and

Cosmetic Act (21 U.S.C. 321, 346, 346a, 348,

352, 353, 355, 356, 357, 360, 360c–360f,

360h–360j, 371, 379e, 381); secs. 215, 301,

351, 354–360F of the Public Health Service

Act (42 U.S.C. 216, 241, 262, 263b–263n).

2. Section 50.27 is amended by

revising paragraph (a) to read as follows:

§ 50.27 Documentation of informed

consent.

(a) Except as provided in § 56.109(c),

informed consent shall be documented

by the use of a written consent form

approved by the IRB and signed and

dated by the subject or the subject’s

legally authorized representative at the

time of consent. A copy shall be given

to the person signing the form.

* * * * *

PART 312—INVESTIGATIONAL NEW

DRUG APPLICATION

3. The authority citation for 21 CFR

part 312 continues to read as follows:

Authority: Secs. 201, 301, 501, 502, 503,

505, 506, 507, 701 of the Federal Food, Drug,

and Cosmetic Act (21 U.S.C. 321, 331, 351,

352, 353, 355, 356, 357, 371); sec. 351 of the

Public Health Service Act (42 U.S.C. 262).

4. Section 312.53 is amended by

revising paragraph (c)(1)(vi)(d) to read

as follows:

§ 312.53 Selecting investigators and

monitors.

* * * * *

(c) * * *

(1) * * *

(vi) * * *

(d) Will inform any patients, or any

persons used as controls, that the drugs

are being used for investigational

purposes and will ensure that the

requirements relating to obtaining

informed consent (21 CFR part 50) and

institutional review board review and

approval (21 CFR part 56) are met;

* * * * *

5. Section 312.62 is amended by

revising paragraph (b) to read as follows:

§ 312.62 Investigator recordkeeping and

record retention.

* * * * *

(b) Case histories. An investigator is

required to prepare and maintain

adequate and accurate case histories

that record all observations and other

data pertinent to the investigation on

each individual treated with the

investigational drug or employed as a

control in the investigation. Case

histories include the case report forms

and supporting data including, for

example, signed and dated consent

forms and medical records.

* * * * *

Dated: December 12, 1995.

William B. Schultz,

Deputy Commissioner for Policy.

[FR Doc. 95–31154 Filed 12–21–95; 8:45 am]

BILLING CODE 4160–01–F
66532 Federal Register / Vol. 60, No. 246 / Friday, December 22, 1995 / Proposed Rules

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[EE–35–95]

RIN 1545–AT82

Allocation of Accrued Benefits

Between Employer and Employee

Contributions

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Notice of proposed rulemaking.

SUMMARY: This document contains

proposed regulations that provide

guidance on calculation of an

employee’s accrued benefit derived

from the employee’s contributions to a

qualified defined benefit pension plan.

These regulations are issued to reflect

changes to the applicable law made by

the Omnibus Budget Reconciliation Act

of 1987 (OBRA ’87) and the Omnibus

Budget Reconciliation Act of 1989

(OBRA ’89). OBRA ’87 and OBRA ’89

amended the law to change the

accumulation of employee contributions

and the conversion of those

accumulated contributions to employeederived accrued benefits.

DATES: Written comments and requests

for a public hearing must be received by

March 21, 1996.

ADDRESSES: Send submissions to:

CC:DOM:CORP:R (EE–35–95), room

5228, Internal Revenue Service, POB

7604, Ben Franklin Station, Washington,

DC 20044. In the alternative,

submissions may be hand delivered

between the hours of 8 a.m. and 5 p.m.

to: CC:DOM:CORP:R (EE–35–95),

Courier’s Desk, Internal Revenue

Service, 1111 Constitution Avenue,

NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT:

Concerning the regulations, Janet A.

Laufer, (202) 622–4606, concerning

submissions, Michael Slaughter, (202)

622–7190 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

This document contains proposed

amendments to regulations containing

rules for computing an employee’s

accrued benefit derived from the

employee’s contributions to a qualified

defined benefit pension plan. The

proposed amendments reflect changes

made to section 411(c)(2) by the

Omnibus Budget Reconciliation Act of

1987, Public Law 100–203 (OBRA ’87),

and the Omnibus Budget Reconciliation

Act of 1989, Public Law 101–239 (OBRA

’89). OBRA ’87 and OBRA ’89 changed

the interest rates used to accumulate an

employee’s contributions to normal

retirement age. OBRA ’89 also changed

the manner in which the accumulated

contributions are converted to an annual

benefit payable at normal retirement

age, and removed a limitation on the

employee-derived accrued benefit

contained in prior law.

Section 411(c)(1) provides that an

employee’s accrued benefit derived

from employer contributions as of any

applicable date is the excess, if any, of

the accrued benefit for the employee as

of that date over the accrued benefit

derived from contributions made by the

employee as of that date. Section

411(c)(2)(B) provides that in the case of

a defined benefit plan, the accrued

benefit derived from contributions made

by an employee as of any applicable

date is the amount equal to the

employee’s contributions accumulated

to normal retirement age using the

interest rate(s) specified in section

411(c)(2)(C), expressed as an actuarially

equivalent annual benefit commencing

at normal retirement age using an

interest rate which would be used by

the plan under section 417(e)(3), as of

the determination date. If the employeederived accrued benefit is determined

with respect to a benefit other than an

annual benefit in the form of a single

life annuity (without ancillary benefits)

commencing at normal retirement age,

section 411(c)(3) requires that the

employee-derived accrued benefit be the

actuarial equivalent of the benefit

determined under section 411(c)(2).

Under section 411(c)(2)(C)(iii)(I),

effective for plan years beginning after

December 31, 1987, the interest rate

used to accumulate an employee’s

contributions until the determination

date is 120 percent of the Federal midterm rate under section 1274 of the

Internal Revenue Code (Code). For the

period between the determination date

and normal retirement age, section

411(c)(2)(C)(iii)(II) provides that the

interest rate used to accumulate an

employee’s contributions is the interest

rate which would be used under the

plan under section 417(e)(3) as of the

determination date. As noted above,

section 411(c)(2)(B) provides that the

interest rate which would be used under

the plan under section 417(e)(3) as of

the determination date also applies for

purposes of converting the accumulated

contributions to an annual benefit

commencing at normal retirement age.

The Retirement Protection Act of 1994,

Public Law 103–465 (RPA ’94) amended

section 417(e) to change the applicable

interest rate under section 417(e)(3) and

to specify the applicable mortality table

under that section. Examples contained

in § 1.411(c)-1(c)(6) of these proposed

regulations reflect a plan that has been

amended to comply with the interest

rate and mortality table specifications

enacted in RPA ’94.

Explanation of Provisions

1. Conversion Calculation

Prior to OBRA ’89, section

411(c)(2)(B) specified that the

conversion factor to be used for

purposes of computing the employeederived accrued benefit was 10 percent

for a straight life annuity commencing at

normal retirement age of 65 (i.e.,

multiply the accumulated contributions

by .10), and that for other normal

retirement ages the conversion factor

was to be determined in accordance

with regulations prescribed by the

Secretary. Section 1.411(c)-1(c)(2) of the

existing regulations provides that for

normal retirement ages other than age

65, the conversion factor shall be the

factor as determined by the

Commissioner.

Rev. Rul. 76–47 (1976–1 C.B. 109) sets

forth in tabular form the conversion

factors to be used for determining the

accrued benefit derived from employee

contributions when the normal

retirement age under the plan is other

than age 65 or when the normal form of

benefit is other than a single life annuity

(without ancillary benefits). Rev. Rul

76–47 further provides that where no

standard factor is available, a

conversion factor must be determined

using an interest rate of 5 percent and

the UP–1984 mortality table (without

age setback).

OBRA ’89 deleted the ten percent

conversion factor in section 411(c)(2)(B)

and replaced it with the requirement

that the accumulated contributions at

normal retirement age be expressed as

an annual benefit commencing at

normal retirement age using an interest

rate which would be used under the

plan under section 417(e)(3) (as of the

determination date). This change was

effective retroactively to the effective

date of the OBRA ’87 provision relating

to section 411(c)(2)(C) (the first day of

the first plan year beginning after

December 31, 1987).

To reflect the OBRA ’89 amendments,

these proposed regulations define

appropriate conversion factor with

respect to an accrued benefit expressed

in the form of an annual benefit that is

nondecreasing for the life of the

participant as the present value of an

annuity in the form of that annual

benefit commencing at normal

retirement age at a rate of $1 per year.

This amount is to be computed using

the interest rate and mortality table
Federal Register / Vol. 60, No. 246 / Friday, December 22, 1995 / Proposed Rules 66533

which would be used under the plan

under section 417(e)(3) and § 1.417(e)-

1T. To reflect the post-OBRA ’89

conversion factor definition and to

conform to common actuarial practice,

these proposed regulations would

change the multiplied by language in

§ 1.411(c)-1(c)(1) to divided by.

2. Accumulated Contributions

As added by the Employee Retirement

Income Security Act of 1974 (ERISA),

section 411(c)(2)(C) provided that

employee contributions were to be

accumulated using a standard interest

rate of 5 percent for years beginning on

or after the effective date of that section.

OBRA ’87 changed the interest rate

under section 411(c)(2)(C) to 120

percent of the applicable Federal midterm rate under section 1274 for plan

years after 1987. OBRA ’89 again

amended section 411(c)(2)(C) to provide

that 120 percent of the applicable

Federal mid-term rate under section

1274 is to be used for accumulating

contributions only up to the

determination date. For the period from

the determination date to normal

retirement age, the interest rate which

would be used under the plan under

section 417(e)(3) (as of the

determination date) must be used for

accumulating contributions for the

period from the determination date to

normal retirement age. Accordingly,

these proposed regulations would

amend paragraph (3) of § 1.411(c)-1(c) to

reflect those rates. As stated above, RPA

’94 amended section 417(e)(3) to change

the applicable interest rate. See

§ 1.417(e)-1T.

3. Determination Date

Section 1.411(c)-1(c)(5)(i) defines the

term determination date for purposes of

section 411(c)(2)(C)(iii), in a case in

which a participant will receive his or

her entire accrued benefit derived from

employee contributions in any one of

the following forms (described in

paragraph (c)(5)(ii)): an annuity that is

substantially nonincreasing,

substantially nonincreasing installment

payments for a fixed number of years, or

a single sum distribution. In such a case,

the term determination date means the

date on which distribution of such

benefit commences. For this purpose, an

annuity that is nonincreasing except for

automatic increases to reflect increases

in the consumer price index is

considered to be an annuity that is

substantially nonincreasing.

Thus, for example, for purposes of

section 411(c)(2)(C)(iii), in the case of a

distribution of the employee’s entire

accrued benefit (or the employee’s

entire employee-derived accrued

benefit) in the form of a nonincreasing

single life annuity payable commencing

either at normal retirement age or at

early retirement age, the determination

date is the date the annuity commences.

Similarly, in the case of a single sum

distribution of accumulated employee

contributions (i.e., employee

contributions plus interest computed at

or above the section 411(c) required

rates) upon termination of employment

with a deferred annuity benefit derived

solely from employer contributions, the

determination date is the date of

distribution of the single sum of

accumulated employee contributions.

Alternatively, the plan may provide

that the determination date is the

annuity starting date, as defined in

§ 1.401(a)–20, Q&A–10.

Under § 1.411(c)–1(c)(5)(iii) of these

regulations, where a participant will

receive a distribution that is not

described in paragraph (c)(5)(i), the

determination date will be as provided

by the Commissioner.

4. Elimination of Limitation on

Employee-derived Accrued Benefit

Prior to OBRA ’89, section

411(c)(2)(E) of the Code limited the

accrued benefit derived from employee

contributions to the greater of (1) the

employee’s accrued benefit under the

plan, or (2) the sum of the employee’s

mandatory contributions, without

interest. Section 7881(m)(1)(C) of OBRA

’89 deleted that provision. Section

7881(m)(1)(D) of OBRA ’89 added

section 411(a)(7)(D) to the Code, which

provides that the accrued benefit of an

employee shall not be less than the

amount determined under section

411(c)(2)(B) with respect to the

employee’s accumulated contributions.

Accordingly, these proposed regulations

delete the rule included in § 1.411(c)–

1(d) of the existing regulations, which

reflects the pre-OBRA ’89 rule.

5. Delegation of Authority

Section 1.411(c)–1(d) of these

proposed regulations provides that the

Commissioner may prescribe additional

guidance on calculating the accrued

benefit derived from employer or

employee contributions under a defined

benefit plan.

Effective Date

These amendments are proposed to be

effective for plan years beginning on or

after January 1, 1997. For example,

assume that under a plan the

employee’s date of termination of

employment is treated as the

determination date, and distribution of

the employee’s entire employee-derived

accrued benefit (as determined under

the terms of the plan then in effect)

occurs or commences prior to the first

day of the plan year beginning in 1997.

In that case, with respect to interest

credits under section 411(c)(2)(C)(iii) for

plan years beginning after 1987, the

Service will not treat the plan as having

failed to satisfy the requirements of

section 411(c), nor will it require that

additional amounts be credited in the

calculation of the employee-derived

accrued benefit in order to satisfy the

requirements of section 411(c) after final

regulations become effective, merely

because the date the employee’s

employment terminated was treated as

the determination date, provided that

interest is credited in accordance with

section 411(c)(2)(C)(iii)(I) for the period

before the date the employee terminated

employment and in accordance with

section 411(c)(2)(C)(iii)(II) thereafter.

Once amendments to the regulations

under § 1.411(c)–1 are adopted in final

form, the Service will obsolete or

modify Rev. Rul. 76–47, Rev. Rul. 78–

202 (1978–2 C.B. 124) and Rev. Rul. 89–

60 (1989–1 C.B. 113) as necessary or

appropriate.

Taxpayers may rely on these proposed

regulations for guidance pending the

issuance of final regulations.

Special Analyses

It has been determined that this notice

of proposed rulemaking is not a

significant regulatory action as defined

in EO 12866. Therefore, a regulatory

assessment is not required. It also has

been determined that section 553(b) of

the Administrative Procedure Act (5

U.S.C. chapter 5) and the Regulatory

Flexibility Act (5 U.S.C. chapter 6) do

not apply to these regulations, and,

therefore, a Regulatory Flexibility

Analysis is not required. Pursuant to

section 7805(f) of the Internal Revenue

Code, this notice of proposed

rulemaking will be submitted to the

Chief Counsel for Advocacy of the Small

Business Administration for comment

on its impact on small business.

Comments and Requests for a Public

Hearing

Before these proposed regulations are

adopted as final regulations,

consideration will be given to any

written comments (a signed original and

eight (8) copies) that are submitted

timely to the IRS. All comments will be

available for public inspection and

copying. A public hearing may be

scheduled if requested in writing by a

person that timely submits written

comments. If a public hearing is

scheduled, notice of the date, time, and

place for the hearing will be published

in the Federal Register.
66534 Federal Register / Vol. 60, No. 246 / Friday, December 22, 1995 / Proposed Rules

Drafting Information

The principal author of these

regulations is Janet A. Laufer, Office of

the Associate Chief Counsel (Employee

Benefits and Exempt Organizations).

However, other personnel from the IRS

and Treasury Department participated

in their development.

List of Subjects in 26 CFR Part 1

Income taxes, Reporting and

recordkeeping requirements.

Proposed Amendments to the

Regulations

Accordingly, 26 CFR part 1 is

proposed to be amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation

for part 1 continues to read in part as

follows:

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

Par. 2. Section 1.411(c)–1 is amended

by:

1. Revising paragraphs (c)(1), (c)(2),

and (c)(3), and by adding paragraphs

(c)(5) and (c)(6).

2. Revising paragraph (d).

3. Adding paragraph (g).

The additions and revisions read as

follows:

§ 1.411(c)–1 Allocation of accrued benefits

between employer and employee

contributions.

* * * * *

(c) Accrued benefit derived from

mandatory employee contributions to a

defined benefit plan—(1) General Rule.

In the case of a defined benefit plan (as

defined in section 414(j)), the accrued

benefit derived from contributions made

by an employee under the plan as of any

applicable date in the form of an annual

benefit commencing at normal

retirement age and nondecreasing for

the life of the participant is equal to the

amount of the employee’s accumulated

contributions (determined under

paragraph (c)(3) of this section) divided

by the appropriate conversion factor

with respect to that form of benefit

(determined under paragraph (c)(2) of

this section). Paragraph (e) of this

section provides rules for actuarial

adjustments where the benefit is to be

determined in a form other than the

form described in this paragraph (c)(1).

(2) Appropriate conversion factor. For

purposes of this paragraph, with respect

to a form of annual benefit commencing

at normal retirement age described in

paragraph (c)(1), the term appropriate

conversion factor means the present

value of an annuity in the form of that

annual benefit commencing at normal

retirement age at a rate of $1 per year,

computed using an interest rate and

mortality table which would be used

under the plan under section 417(e)(3)

and § 1.417(e)–1T (as of the

determination date).

(3) Accumulated contributions. For

purposes of section 411(c) and this

section, the term accumulated

contributions means the total of—

(i) All mandatory contributions made

by the employee (determined under

paragraph (c)(4) of this section);

(ii) Interest (if any) on such

contributions, computed at the rate

provided by the plan to the end of the

last plan year to which section 411(a)(2)

does not apply (by reason of the

applicable effective dates);

(iii) Interest on the sum of the

amounts determined under paragraphs

(c)(3)(i) and (ii) of this section

compounded annually at the rate of 5

percent per annum from the beginning

of the first plan year to which section

411(a)(2) applies (by reason of the

applicable effective date) to the

beginning of the first plan year

beginning after December 31, 1987;

(iv) Interest on the sum of the

amounts determined under paragraphs

(c)(3)(i) through (iii) of this section

compounded annually at 120 percent of

the Federal mid-term rate(s) (as in effect

under section 1274(d) of the Internal

Revenue Code for the first month of a

plan year) for the period beginning with

the first plan year beginning after

December 31, 1987 and ending on the

determination date; and

(v) Interest on the sum of the amounts

determined under paragraphs (c)(3)(i)

through (iv) of this section compounded

annually, using an interest rate which

would be used under the plan under

section 417(e)(3) and § 1.417(e)–1T (as

of the determination date), from the

determination date to the date on which

the employee would attain normal

retirement age.

* * * * *

(5) Determination date—(i) For

purposes of section 411(c) and this

section, in a case in which a participant

will receive his or her entire accrued

benefit derived from employee

contributions in any one of the forms

described in paragraph (c)(5)(ii), the

term determination date means the date

on which distribution of such benefit

commences. Alternatively, in such a

case, the plan may provide that the

determination date is the annuity

starting date with respect to that benefit,

as defined in § 1.401(a)–20, Q&A–10.

(ii) Paragraph (c)(5)(i) applies to the

following forms: an annuity that is

substantially nonincreasing (e.g., an

annuity that is nonincreasing except for

automatic increases to reflect increases

in the consumer price index),

substantially nonincreasing installment

payments for a fixed number of years, or

a single sum distribution.

(iii) In a case in which a participant

will receive a distribution that is not

described in paragraph (c)(5)(i), the

determination date will be as provided

by the Commissioner.

(6) Examples.

(i) Facts. (A) In the following examples,

Employer X maintains a qualified defined

benefit plan that required mandatory

employee contributions for 1987 and prior

years, but not for years after 1987. The plan

year is the calendar year. The plan provides

for a normal retirement age of 65 and for 100

percent vesting in the employer-derived

portion of a participant’s accrued benefit

after 5 years of service.

(B) The terms of the plan provide that the

normal form of benefit is a level monthly

amount commencing at normal retirement

age and payable for the life of the participant.

A plan participant who elects not to receive

benefits in the form of the qualified joint and

survivor annuity provided by the plan may

elect to receive a single-sum distribution of

the present value of his or her accrued

benefit upon termination of employment.

(C) As of January 1, 1995, the plan was

amended to provide that, for purposes of

computing actuarially equivalent benefits,

the single sum is calculated using the unisex

version of the 1983 GAM mortality table (as

provided in Revenue Ruling 95–6 (1995–1

C.B. 80)), and interest at the rate equal to the

annual rate of interest on 30-year Treasury

securities for the first calendar month

preceding the first day of the plan year

during which the annuity starting date

occurs.

(D) Under the plan, employee

contributions are accumulated at 3 percent

interest for plan years beginning before 1976,

5 percent interest for plan years beginning

after 1975 and before 1988, and interest at

120 percent of the Federal mid-term rate (as

in effect under section 1274(d) for the first

month of the plan year) for plan years

beginning after 1987 until the determination

date. Under the plan, the determination date

is defined as the annuity starting date. For

the period from the determination date until

the date on which the employee attains

normal retirement age, interest is credited at

the interest rate which would be used under

the plan under section 417(e)(3) as of the

determination date.

(E) A, an unmarried participant, terminates

employment with X on January 1, 1997 at age

56 with 15 years of service. As of December

31, 1987, A’s total accumulated mandatory

employee contributions to the plan,

including interest compounded annually at 5

percent for plan years beginning after 1975

and before 1988, equaled $3,021. A receives

his or her accrued benefit in the form of an

annual single life annuity commencing at

normal retirement age. A’s annuity starting

date is January 1, 2006, and therefore the

determination date is January 1, 2006.
Federal Register / Vol. 60, No. 246 / Friday, December 22, 1995 / Proposed Rules 66535

(ii) Annuity at Normal Retirement Age—

Determination of Employee-Derived and

Total Plan Vested Accrued Benefit.

Example 1.

For purposes of this example, it is assumed

that A’s total accrued benefit under the plan

in the normal form of benefit commencing at

normal retirement age is $2,949 per year. A’s

benefit, as of January 1, 2006, would be

determined as follows:

(1) Determine A’s total accrued benefit in

the form of an annual single life annuity

commencing at normal retirement age under

the plan’s formula ($2,949 per year payable

at age 65).

(2) Determine A’s accumulated

contributions with interest to January 1,

1997. As of December 31, 1987, A’s

accumulated contributions with interest

under the plan provisions were $3,021. A’s

employee contributions are accumulated

from December 31, 1987 to January 1, 1997

using 120 percent of the Federal mid-term

rate under section 1274(d). This rate is 10.61

percent for 1988, 11.11 percent for 1989, 9.57

percent for 1990, 9.78 percent for 1991, 8.10

percent for 1992, 7.63 percent for 1993, 6.40

percent for 1994, and 9.54 percent for 1995.

It is assumed for purposes of this example

that 120 percent of the Federal mid-term rate

is 7.00 percent for each year between 1996

and 2006, and that the 30-year Treasury rate

for December 2005 is 8.00 percent. Thus, A’s

contributions accumulated to January 1,

1997, equal $6,480.

(3) Determine A’s accumulated

contributions with interest to normal

retirement age (January 1, 2006) using, for the

1996 plan year and for years until normal

retirement age, 120 percent of the Federal

mid-term rate under section 1274(d), which

is assumed to be 7.00 percent ($11,913).

(4) Determine the accrued annual annuity

benefit derived from A’s contributions by

dividing A’s accumulated contributions

determined in paragraph (3) of this Example

1 by the plan’s appropriate conversion factor.

The plan’s appropriate conversion factor at

age 65 is 9.196, and the accrued benefit

derived from A’s contributions would be

$11,913 ¥ 9.196 = $1,295.

(5) Determine the accrued benefit derived

from employer contributions as the excess, if

any, of the employee’s accrued benefit under

the plan over the accrued benefit derived

from employee contributions

($2,949¥$1,295=$1,654 per year).

(6) Determine the vested percentage of the

accrued benefit derived from employer

contributions under the plan’s vesting

schedule (100 percent).

(7) Determine the vested accrued benefit

derived from employer contributions by

multiplying the accrued benefit derived from

employer contributions by the vested

percentage ($1,654 × 100 percent = $1,654

per year).

(8) Determine A’s vested accrued benefit in

the form of an annual single life annuity

commencing at normal retirement age by

adding the accrued benefit derived from

employee contributions and the vested

accrued benefit derived from employer

contributions, the sum of paragraphs (4) and

(7) of this Example 1 ($1,295 + $1,654 =

$2,949 per year).

Example 2.

This example assumes the same facts as

Example 1 except that A’s total accrued

benefit under the plan in the normal form of

benefit commencing at normal retirement age

is $1,000 per year. A’s benefit, as of January

1, 2006, would be determined as follows:

(1) Determine A’s total accrued benefit in

the form of an annual single life annuity

commencing at normal retirement age under

the plan’s formula ($1,000 per year payable

at age 65).

(2) Determine A’s accumulated

contributions with interest to January 1, 1997

($6,480 from paragraph 2 of Example 1).

(3) Determine A’s accumulated

contributions with interest to normal

retirement age (January 1, 2006) ($11,913

from paragraph 3 of Example 1).

(4) Determine the accrued annual annuity

benefit derived from A’s contributions by

dividing A’s accumulated contributions

determined in paragraph (3) of this Example

2 by the plan’s appropriate conversion factor

($1,295 from paragraph 4 of Example 1).

(5) Determine the accrued benefit derived

from employer contributions as the excess, if

any, of the employee’s accrued benefit under

the plan over the accrued benefit derived

from employee contributions. Because the

accrued benefit derived from employee

contributions ($1,295) is greater than the

employee’s accrued benefit under the plan

($1,000), the accrued benefit derived from

employer contributions is zero, and A’s

vested accrued benefit in the form of an

annual single life annuity commencing at

normal retirement age is $1,295 per year.

(d) Delegation to Commissioner. The

Commissioner may prescribe additional

guidance on calculating the accrued

benefit derived from employee

contributions under a defined benefit

plan through publication in the Internal

Revenue Bulletin of revenue rulings,

notices, or other documents (see

§ 601.601(d)(2) of this chapter).

* * * * *

(g) Effective date. Paragraphs (c)(1),

(c)(2), (c)(3), (c)(5), (c)(6) and (d) of this

section are effective for plan years

beginning on or after January 1, 1997.

Margaret Milner Richardson,

Commissioner of Internal Revenue.

[FR Doc. 95–31006 Filed 12–21–95; 8:45 am]

BILLING CODE 4830–01–U

Bureau of Alcohol, Tobacco and

Firearms

27 CFR Part 9

RIN 1512–AA07

[Notice No. 817]

The Malibu-Newton Canyon Viticultural

Area (95R–014P)

AGENCY: Bureau of Alcohol, Tobacco

and Firearms, Department of the

Treasury.

ACTION: Notice of proposed rulemaking.

SUMMARY: The Bureau of Alcohol,

Tobacco and Firearms (ATF) has

received a petition proposing the

establishment of a viticultural area in

the State of California to be known as

‘‘Malibu-Newton Canyon.’’ This

proposal is the result of a petition

submitted by Mr. George Rosenthal,

President of Rancho Escondido, Inc.

ATF believes that the establishment of

viticultural area names as appellations

of origin in wine labeling and

advertising allows wineries to designate

the specific areas where the grapes used

to make the wine were grown and

enables consumers to better identify the

wines they purchase.

DATES: Written comments must be

received by February 20, 1996.

ADDRESSES: Send written comments to:

Chief, Wine, Beer and Spirits

Regulations Branch, Bureau of Alcohol,

Tobacco and Firearms, P.O. Box 50221,

Washington, DC 20091–0221 (Attn:

Notice No. 817). Copies of the petition,

the proposed regulations, the

appropriate maps, and any written

comments received will be available for

public inspection during normal

business hours at: ATF Reading Room,

Office of Public Affairs and Disclosure,

Room 6480, 650 Massachusetts Avenue,

NW, Washington, DC.

FOR FURTHER INFORMATION CONTACT:

David Brokaw, Wine, Beer and Spirits

Regulations Branch, Bureau of Alcohol,

Tobacco and Firearms, 650

Massachusetts Avenue, NW.,

Washington, DC 20226 (202–927–8230).

SUPPLEMENTARY INFORMATION:

Background

On August 23, 1978, ATF published

Treasury Decision ATF–53 (43 FR

37672, 54624) revising regulations in 27

CFR Part 4. These regulations allow the

establishment of definitive viticultural

areas. The regulations allow the name of

an approved viticultural area to be used

as an appellation of origin on wine

labels and in wine advertisements. On

October 2, 1979, ATF published

Treasury Decision ATF–60 (44 FR

56692) which added a new Part 9 to 27

CFR, for the listing of approved

American viticultural areas.

Section 4.25a(e)(1), Title 27 CFR,

defines an American viticultural area as

a delimited grape-growing region

distinguishable by geographical

features, the boundaries of which have

been delineated in Subpart C of Part 9.

Section 4.25a(e)(2) outlines the

procedure for proposing an American

viticultural area. Any interested person

may petition ATF to establish a grape-