[Federal Register Volume 61, Number 127 (Monday, July 1, 1996)]
[Rules and Regulations]
[Pages 34002-34137]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16398]



[[Page 34001]]


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Part II





Pension Benefit Guaranty Corporation





_______________________________________________________________________



29 CFR Chapters XXVI and XL



Reorganization, Renumbering and Reinvention of Regulations; Final Rule

Federal Register / Vol. 61, No. 127 / Monday, July 1, 1996 / Rules 
and Regulations

[[Page 34002]]



PENSION BENEFIT GUARANTY CORPORATION

29 CFR Chs. XXVI and XL

RIN 1212-AA75


Reorganization, Renumbering, and Reinvention of Regulations

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: In accordance with the President's Regulatory Reinvention 
Initiative, the Pension Benefit Guaranty Corporation is reorganizing, 
renumbering, and reinventing its regulations. The amendments will 
clarify and simplify the PBGC's regulations and make them easier to 
use.

EFFECTIVE DATE: July 1, 1996.

FOR FURTHER INFORMATION CONTACT: Harold J. Ashner, Assistant General 
Counsel, or Marc L. Jordan, Attorney, 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).

SUPPLEMENTARY INFORMATION: The PBGC is renumbering and reorganizing its 
regulations to make it easier for practitioners and the public to 
research and use the rules under Title IV of the Employee Retirement 
Income Security Act of 1974. Under the new approach, the regulations 
will be numbered to track the statutory sections they implement.
    On July 8, 1994 (at 59 FR 35067), the PBGC published a notice in 
the Federal Register inviting public comment on a proposal to 
reorganize and renumber its regulations to track Title IV. No comments 
were received.
    On March 4, 1995, the President issued his Regulatory Reinvention 
Initiative, directing Federal agencies to eliminate or revise those 
regulations that are outdated or otherwise in need of reform. The PBGC 
is reorganizing, renumbering, and reinventing its regulations. The 
reinvention is limited to nonsubstantive corrections and clarifications 
and deletion of material that is unnecessary or that has been 
substantially superseded (or is no longer applicable).
    For example, the reinvented regulations omit existing provisions 
dealing with the allocation of residual assets (part 2618, subpart C) 
because these provisions were largely superseded by changes in section 
4044(d) of ERISA made by the Pension Protection Act of 1987. Similarly, 
the provision regarding interest rate assumptions for paying lump sums 
(existing Sec. 2619.26(b)(2)) has been eliminated because of changes in 
section 417(e)(3) of the Internal Revenue Code and section 205(g)(3) of 
ERISA made by the Retirement Equity Act of 1984, the Tax Reform Act of 
1986, and the Retirement Protection Act of 1994.
    To clarify the rules on missing participants in terminating plans, 
nonsubstantive language changes have been made in the missing 
participants regulation (existing part 2629, new part 4050), related 
sections in the termination regulations (existing parts 2616 and 2617, 
new part 4041), and in the definition of ``distribution date'' in new 
Sec. 4001.2.
    The new regulation on premium rates (part 4006, which contains 
portions of existing part 2610) omits the variable-rate premium cap 
reduction rules (which have expired) and the cap rules themselves 
(repealed by the Retirement Protection Act of 1994). The rule reflects 
new provisions in the Retirement Protection Act of 1994 dealing with 
regulated public utility plans.
    In some cases, provisions that may have been partially superseded 
by statutory changes have been retained pending revision--for example, 
the regulation on allocation of assets in terminating single-employer 
plans (renumbered part 4044). A note at the beginning of part 4044 and 
reminders within the part alert readers that some regulatory material 
republished in part 4044 must be read in the light of these other 
changes in the law.
    The PBGC welcomes public comment on this rule to correct any 
editorial errors--e.g., in cross-references--that may have been 
overlooked due to the magnitude of the revision project.
    Under this final rule, the PBGC's regulations will be moved from 
chapter XXVI to chapter XL of title 29 of the CFR. Sections will be 
numbered in the 4000's. Part 4000 consists of finding aids--tables 
correlating provisions of old chapter XXVI and new chapter XL. Part 
4001 contains definitions of terms used throughout the PBGC's 
regulations. A table of contents showing the rest of the new structure, 
along with the full text of the revised regulations, is set forth 
below.

Rulemaking Requirements and E.O. 12866

    The PBGC has determined that this action is not a ``significant 
regulatory action'' under the criteria set forth in Executive Order 
12866.
    The PBGC has determined that the notice and comment requirements of 
the Administrative Procedure Act (5 U.S.C. 553(b)) do not apply to this 
final rule. The PBGC previously notified the public of the primary 
changes made by this rule and provided an opportunity for public 
comment. None of the amendments in this rule (including those that 
clarify the regulations or remove or replace provisions made obsolete 
by the passage of time or by subsequent statutory or regulatory 
changes) affects applicable substantive legal requirements. Therefore, 
the PBGC has, for good cause, found that further notice and public 
procedure thereon are unnecessary.
    For the same reasons, the PBGC finds pursuant to section 553(d)(3) 
of the Administrative Procedure Act (5 U.S.C. 553(d)(3)) that there is 
good cause to make this rule effective less than 30 days from the date 
of its publication.
    The PBGC also certifies that the amendments in this regulation will 
not have a significant economic impact on a substantial number of small 
entities. Accordingly, as provided in section 605(b) of the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.), sections 603 and 604 of the 
Regulatory Flexibility Act do not apply. None of the amendments in this 
rule affects applicable substantive legal requirements.

    Issued in Washington, DC, on the 24th day of June 1996.
Robert B. Reich,
Chairman, Board of Directors, Pension Benefit Guaranty Corporation.

    Issued on the date set forth above pursuant to a resolution of 
the Board of Directors authorizing its Chairman to issue this final 
rule.
James J. Keightley,
Secretary, Board of Directors Pension Benefit Guaranty Corporation.

List of Subjects in 29 CFR Chapters XXVI and XL

Parts 2601 and 4002

    Authority delegations (Government agencies), Organization and 
functions (Government agencies).

Part 2602

    Conflict of interests, Government employees, Penalties, Political 
activities (Government employees), Production and disclosure of 
information, Testimony.

Parts 2603 and 4901

    Freedom of Information.

Parts 2604 and 4906

    Administrative practice and procedure, Conflict of interests, 
Penalties.

Parts 2606 and 4003

    Administrative practice and procedure, Organization and functions

[[Page 34003]]

(Government agencies), Pension insurance, Pensions.

Parts 2607 and 4902

    Privacy.

Parts 2608 and 4907

    Blind, Civil rights, Deaf, Disabled, Discrimination against 
handicapped, Equal employment opportunity, Federal buildings and 
facilities, Handicapped, Nondiscrimination, Physically handicapped.

Parts 2609 and 4903

    Administrative practice and procedure, Claims, Organization and 
functions (Government agencies).

Part 2610 and 4007

    Penalties, Pension insurance, Pensions, Reporting and recordkeeping 
requirements.

Parts 2611, 2615, 2616, 2617, 2623, 2642, 2674, 4022, 4041, 4041A, 
4065, 4211, and 4245

    Pension insurance, Pensions, Reporting and recordkeeping 
requirements.

Parts 2612 and 4068

    Business and industry, Pension insurance, Pensions, Small 
businesses.

Parts 2613, 2618, 2619, 2620, 2621, 2640, 2670, 4006, 4022, 4022B, 
4044, and 4061

    Pension insurance, Pensions.

Parts 2622, 2643, 4062, 4063, 4064, and 4204

    Business and industry, Pension insurance, Pensions, Reporting and 
recordkeeping requirements, Small businesses.

Parts 2641 and 4221

    Business and industry, Pensions, Small businesses.

Parts 2644, 2645, 2647, 2649, 2676, 2677, 4203, 4206, 4207, and 4220

    Pensions.

Parts 2627, 2628, 2629, 2646, 2648, 2672, 2675, 4001, 4010, 4050, 4208, 
4219, 4231, 4261, and 4281

    Pensions, Reporting and recordkeeping requirements.

Part 2673

    Pension insurance.

Part 4000

    Administrative practice and procedure, Authority delegations 
(Government agencies), Blind, Business and industry, Civil rights, 
Claims, Conflict of interests, Deaf, Disabled, Discrimination against 
handicapped, Equal employment opportunity, Federal buildings and 
facilities, Freedom of Information, Government employees, Handicapped, 
Nondiscrimination, Organization and functions (Government agencies), 
Penalties, Pension insurance, Pensions, Physically handicapped, 
Political activities (Government employees), Privacy, Production and 
disclosure of information, Reporting and recordkeeping requirements, 
Small businesses, Testimony.

Part 4001

    Business and industry, Organization and functions (Government 
agencies), Pension insurance, Pensions, Small businesses.

Part 4903

    Conflict of interests, Government employees, Penalties, Political 
activities (Government employees).

Part 4904

    Government employees, Penalties, Production and disclosure of 
information, Testimony.

    For the reasons set forth above, the PBGC is amending subtitle B of 
title 29 of the Code of Federal Regulations as follows:

CHAPTER XXVI--[REMOVED]

    1. Chapter XXVI is removed.
    2. Chapter XL is added to read as follows:

CHAPTER XL--PENSION BENEFIT GUARANTY CORPORATION

SUBCHAPTER A--GENERAL

Part 4000--Finding Aids

Sec.
4000.1  Distribution table.
4000.2  Derivation table.

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

Part 4001--Terminology

Sec.
4001.1  Purpose and scope.
4001.2  Definitions.
4001.3  Trades or businesses under common control; controlled 
groups.

    Authority: 29 U.S.C. 1301(a), 1301(b)(1), 1302(b)(3).
Part 4002--Bylaws of the Pension Benefit Guaranty Corporation
Sec.
4002.1  Name.
4002.2  Offices.
4002.3  Board of Directors.
4002.4  Chairman.
4002.5  Quorum.
4002.6  Meetings.
4002.7  Place of meetings; use of conference call communications 
equipment.
4002.8  Alternate voting procedure.
4002.9  Amendments.

    Authority: 29 U.S.C. 1302(f).
Part 4003--Rules for Administrative Review of Agency Decisions

Subpart A--General Provisions

Sec.
4003.1  Purpose and scope.
4003.2  Definitions.
4003.3  PBGC assistance in obtaining information.
4003.4  Extension of time.
4003.5  Non-timely request for review.
4003.6  Representation.
4003.7  Exhaustion of administrative remedies.
4003.8  Request for confidential treatment.
4003.9  Filing of documents.
4003.10  Computation of time.

Subpart B--Initial Determinations

4003.21  Form and contents of initial determinations.
4003.22  Effective date of determinations.

Subpart C--Reconsideration of Initial Determinations

4003.31  Who may request reconsideration.
4003.32  When to request reconsideration.
4003.33  Where to submit request for reconsideration.
4003.34  Form and contents of request for reconsideration.
4003.35  Final decision on request for reconsideration.

Subpart D--Administrative Appeals

4003.51  Who may appeal or participate in appeals.
4003.52  When to file.
4003.53  Where to file.
4003.54  Contents of appeal.
4003.55  Opportunity to appear and to present witnesses.
4003.56  Consolidation of appeals.
4003.57  Appeals affecting third parties.
4003.58  Powers of the Appeals Board.
4003.59  Decision by the Appeals Board.
4003.60  Referral of appeal to the Executive Director.

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

SUBCHAPTER B--PREMIUMS

Part 4006--Premium Rates

Sec.
4006.1  Purpose and scope.
4006.2  Definitions.
4006.3  Premium rate.
4006.4  Determination of unfunded vested benefits.
4006.5  Exemptions and special rules.

    Authority: 29 U.S.C. 1302(b)(3), 1306, 1307.

Part 4007--Payment of Premiums

Sec.
4007.1  Purpose and scope.
4007.2  Definitions.
4007.3  Filing requirement and forms.
4007.4  Filing address.
4007.5  Date of filing.
4007.6  Computation of time.
4007.7  Late payment interest charges.
4007.8  Late payment penalty charges.
4007.9  Coverage for guaranteed basic benefits.

[[Page 34004]]

4007.10  Recordkeeping requirements; PBGC audits.
4007.11  Due dates.
4007.12  Liability for single-employer premiums.

    Authority: 29 U.S.C. 1302(b)(3), 1306, 1307.

SUBCHAPTER C--CERTAIN REPORTING AND DISCLOSURE REQUIREMENTS

Part 4010--Annual Financial and Actuarial Information Reporting
Sec.
4010.1  Purpose and scope.
4010.2  Definitions.
4010.3  Filing requirement.
4010.4  Filers.
4010.5  Information year.
4010.6  Information to be filed.
4010.7  Identifying information.
4010.8  Plan actuarial information.
4010.9  Financial information.
4010.10  Due date and filing with the PBGC.
4010.11  Waivers and extensions.
4010.12  Confidentiality of information submitted.
4010.13  Penalties.
4010.14  OMB control number.

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

Part 4011--Disclosure to Participants

Sec.
4011.1  Purpose and scope.
4011.2  Definitions.
4011.3  Notice requirement.
4011.4  Small plan rules.
4011.5  Exemption for new and newly-covered plans.
4011.6  Mergers, consolidations, and spinoffs.
4011.7  Persons entitled to receive notice.
4011.8  Time of notice.
4011.9  Manner of issuance of notice.
4011.10  Form of notice.
4011.11  OMB control number.
Appendix A to part 4011--Model participant notice.
Appendix B to part 4011--Table of maximum guaranteed benefits.

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

SUBCHAPTER D--COVERAGE AND BENEFITS

Part 4022--Benefits Payable in Terminated Single-Employer Plans

Subpart A--General Provisions; Guaranteed Benefits

Sec.
4022.1  Purpose and scope.
4022.2  Definitions.
4022.3  Guaranteed benefits.
4022.4  Entitlement to a benefit.
4022.5  Determination of nonforfeitable benefits.
4022.6  Annuity payable for total disability.
4022.7  Benefits payable in a single installment.

Subpart B--Limitations on Guaranteed Benefits

4022.21  Limitations; in general.
4022.22  Maximum guaranteeable benefit.
4022.23  Computation of maximum guaranteeable benefit.
4022.24  Benefit increases.
4022.25  Five-year phase-in of benefit guarantee for participants 
other than substantial owners.
4022.26  Phase-in of benefit guarantee for participants who are 
substantial owners.
4022.27  Effect of tax disqualification.

Subpart C--Calculation and Payment of Unfunded Nonguaranteed Benefits 
[Reserved]

Subpart D--Benefit Reductions in Terminating Plans

4022.61  Limitations on benefit payments by plan administrator.
4022.62  Estimated guaranteed benefit.
4022.63  Estimated title IV benefit.

Subpart E--PBGC Recoupment and Reimbursement of Benefit Overpayments 
and Underpayments

4022.81  General rules.
4022.82  Method of recoupment.
4022.83  PBGC reimbursement of benefit underpayments.
Appendix to Part 4022--Maximum Guaranteeable Monthly Benefit

    Authority: 29 U.S.C. 1302(b)(3), 1322, 1322b, 1341(c)(3)(D), 
1344.

Part 4022B--Aggregate Limits on Guaranteed Benefits

Sec.
4022B.1  Aggregate payments limitation.

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

SUBCHAPTER E--PLAN TERMINATIONS

Part 4041--Termination of Single-Employer Plans

Subpart A--General Provisions

Sec.
4041.1  Purpose and scope.
4041.2  Definitions.
4041.3  Requirements for a standard or a distress termination.
4041.4  Administration of plan during pendency of termination 
proceedings.
4041.5  Challenges to plan termination under collective bargaining 
agreement.
4041.6  Annuity requirements.
4041.7  Facilitating plan sufficiency in a standard termination.
4041.8  Disaster relief--distress termination.
4041.9  Filing with the PBGC.
4041.10  Computation of time.
4041.11  Maintenance of plan records.
4041.12  Information collection.

Subpart B--Standard Terminations

4041.21  Notice of intent to terminate.
4041.22  Issuance of notices of plan benefits.
4041.23  Form and contents of notices of plan benefits.
4041.24  Standard termination notice.
4041.25  PBGC action upon filing of standard termination notice.
4041.26  Notice of noncompliance.
4041.27  Closeout of plan.

Subpart C--Distress Terminations

4041.41  Notice of intent to terminate.
4041.42  PBGC review of notice of intent to terminate.
4041.43  Distress termination notice.
4041.44  PBGC determination of compliance with requirements for 
distress termination.
4041.45  PBGC determination of plan sufficiency/insufficiency.
4041.46  Notices of benefit distribution.
4041.47  Verification of plan sufficiency prior to closeout.
4041.48  Closeout of plan.
Appendix to Part 4041--Agreement for Commitment to Make Plan 
Sufficient for Benefit Liabilities

    Authority: 29 U.S.C. 1302(b)(3), 1341, 1344.

Part 4041A--Termination of Multiemployer Plans

Subpart A--General Provisions

Sec.
4041A.1  Purpose and scope.
4041A.2  Definitions.
4041A.3  Submission of documents.

Subpart B--Notice of Termination

4041A.11  Requirement of notice.
4041A.12  Contents of notice.

Subpart C--Plan Sponsor Duties

4041A.21  General rule.
4041A.22  Payment of benefits.
4041A.23  Imposition and collection of withdrawal liability.
4041A.24  Annual plan valuations and monitoring.
4041A.25  Periodic determinations of plan solvency.
4041A.26  Financial assistance.
4041A.27  PBGC approval to pay benefits not otherwise permitted.

Subpart D--Closeout of Sufficient Plans

4041A.41  General rule.
4041A.42  Method of distribution.
4041A.43  Benefit forms.
4041A.44  Cessation of withdrawal liability.

    Authority: 29 U.S.C. 1302(b)(3), 1341a, 1441.

Part 4043--Reportable Events and Certain Other Notification 
Requirements

Subpart A--Reportable Events; In General

Sec.
4043.1  Purpose and scope.
4043.2  Definitions.
4043.3  Requirement of notice.
4043.4  Reporting of reportable events on annual report.
4043.5  Obligation of contributing sponsor.
4043.6  Date of filing.
4043.7  Computation of time.
4043.11  Tax disqualification.
4043.12  Title I non-compliance.
4043.13  Amendment decreasing benefits payable.
4043.14  Active participant reduction.
4043.15  Termination or partial termination.
4043.16  Failure to meet minimum funding standards and granting of 
funding waiver.
4043.17  Inability to pay benefits when due.
4043.18  Distribution to a substantial owner.
4043.19  Plan merger, consolidation or transfer.

[[Page 34005]]

4043.20  Alternative compliance with reporting and disclosure 
requirements of Title I.
4043.21  Bankruptcy, insolvency, or similar settlements.
4043.22  Liquidation or dissolution.
4043.23  Transactions involving a change in contributing sponsor or 
controlled group.

Subpart B--Section 302(f); Notice of Failure to Make Required 
Contributions

4043.31  PBGC Form 200, notice of failure to make required 
contributions.

    Authority: 29 U.S.C. 1302(b)(3), 1343, 1365.

Part 4044--Allocation of Assets in Single-Employer Plans

Subpart A--Allocation of Assets

General Provisions

Sec.
4044.1  Purpose and scope of subpart A.
4044.2  Definitions.
4044.3  General rule.
4044.4  Violations.

Allocation of Assets to Benefit Categories

4044.10  Manner of allocation.
4044.11  Priority category 1 benefits.
4044.12  Priority category 2 benefits.
4044.13  Priority category 3 benefits.
4044.14  Priority category 4 benefits.
4044.15  Priority category 5 benefits.
4044.16  Priority category 6 benefits.
4044.17  Subclasses.

Allocation of Residual Assets

4044.30  [Reserved.]

Subpart B--Valuation of Benefits and Assets

4044.41  General valuation rules.

Trusteed Plans

4044.51  Benefits to be valued.
4044.52  Valuation of benefits.
4044.53  Mortality assumptions--in general.
4044.54  Mortality assumptions--lump sums.

Expected Retirement Age

4044.55  XRA when a participant must retire to receive a benefit.
4044.56  XRA when a participant need not retire to receive a 
benefit.
4044.57  Special rule for facility closing.

Non-Trusteed Plans

4044.71  Valuation of annuity benefits.
4044.72  Form of annuity to be valued.
4044.73  Lump sums and other alternative forms of distribution in 
lieu of annuities.
4044.74  Withdrawal of employee contributions.
4044.75  Other lump sum benefits.
Appendix A to Part 4044--Mortality Rate Tables
Appendix B to Part 4044--Interest Rates Used to Value Annuities and 
Lump Sums
Appendix C to Part 4044--Loading Assumptions
Appendix D to Part 4044--Tables Used To Determine Expected 
Retirement Age

    Authority: 29 U.S.C. 1301(a), 1302(b)(3), 1341, 1344, 1362.

Part 4047--Restoration of Terminating and Terminated Plans

Sec.
4047.1  Purpose and scope.
4047.2  Definitions.
4047.3  Funding of restored plan.
4047.4  Payment of premiums.
4047.5  Repayment of PBGC payments of guaranteed benefits.

    Authority: 29 U.S.C. 1302(b)(3), 1347.

Part 4050--Missing Participants

Sec.
4050.1  Purpose and scope.
4050.2  Definitions.
4050.3  Method of distribution for missing participants.
4050.4  Diligent search.
4050.5  Designated benefit.
4050.6  Payment and required documentation.
4050.7  Benefits of missing participants--in general.
4050.8  Automatic lump sum.
4050.9  Annuity or elective lump sum--living missing participant.
4050.10  Annuity or elective lump sum--beneficiary of deceased 
missing participant.
4050.11  Limitations.
4050.12  Special rules.
4050.13  OMB control number.

SUBCHAPTER F--LIABILITY

Part 4061--Amounts Payable by the Pension Benefit Guaranty Corporation
Sec.
4061.1  Cross-references.

    Authority: 29 U.S.C. 1302(b)(3).
Part 4062--Liability for Termination of Single-Employer Plans
Sec.
4062.1  Purpose and scope.
4062.2  Definitions.
4062.3  Amount and payment of section 4062(b) liability.
4062.4  Determinations of net worth and collective net worth.
4062.5  Net worth record date.
4062.6  Net worth notification and information.
4062.7  Calculating interest on liability and refunds of 
overpayments.
4062.8  Arrangements for satisfying liability.
4062.9  Notification of and demand for liability.
4062.10  Filing of documents.
4062.11  Computation of time.
Part 4063--Withdrawal Liability; Plans Under Multiple Controlled Groups
Sec.
4063.1  Cross-references.

    Authority: 29 U.S.C. 1302(b)(3).
Part 4064--Liability on Termination of Single-Employer Plans Under 
Multiple Controlled Groups
Sec.
    4064.1  Cross-references.

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

SUBCHAPTER G--ANNUAL REPORTING REQUIREMENTS

Part 4065--Annual Report

Sec.
4065.1  Purpose and scope.
4065.2  Definitions.
4065.3  Filing requirement.

    Authority: 29 U.S.C. 1302, 1365.

SUBCHAPTER H--ENFORCEMENT PROVISIONS

Part 4067--Recovery of Liability for Plan Terminations

Sec.
4067.1  Cross-reference.

    Authority: 29 U.S.C. 1302, 1367.

Part 4068--Lien for Liability

Sec.
4068.1  Purpose; cross-references.
4068.2  Definitions.
4068.3  Notification of and demand for liability.
4068.4  Lien.

    Authority: 29 U.S.C. 1302(b)(3), 1368.

SUBCHAPTER I--WITHDRAWAL LIABILITY FOR MULTIEMPLOYER PLANS

Part 4203--Extension of Special Withdrawal Liability Rules

Sec.
4203.1  Purpose and scope.
4203.2  Plan adoption of special withdrawal rules.
4203.3  Requests for PBGC approval of plan amendments.
4203.4  PBGC action on requests.
4203.5  OMB control number.

    Authority: 29 U.S.C. 1302(b)(3), 1383(f), 1388(e)(3).

Part 4204--Variances for Sale of Assets

Subpart A--General

Sec.
4204.1  Purpose and scope.
4204.2  Definitions.

Subpart B--Variance of the Statutory Requirements

4204.11  Variance of the bond/escrow and sale-contract requirements.
4204.12  De minimis transactions.
4204.13  Net income and net tangible assets tests.

Subpart C--Procedures for Individual and Class Variances or Exemptions

4204.21  Requests to PBGC for variances and exemptions.
4204.22  PBGC action on requests.

    Authority: 29 U.S.C. 1302(b)(3), 1384(c).
Part 4206--Adjustment of Liability for a Withdrawal Subsequent to a 
Partial Withdrawal
Sec.
4206.1  Purpose and scope.
4206.2  Definitions.
4206.3  Credit against liability for a subsequent withdrawal.
4206.4  Amount of credit in plans using the presumptive method.
4206.5  Amount of credit in plans using the modified presumptive 
method.

[[Page 34006]]

4206.6  Amount of credit in plans using the rolling-5 method.
4206.7  Amount of credit in plans using the direct attribution 
method.
4206.8  Reduction of credit for abatement or other reduction of 
prior partial withdrawal liability.
4206.9  Amount of credit in plans using alternative allocation 
methods.
4206.10  Special rule for 70-percent decline partial withdrawals.

    Authority: 29 U.S.C. 1302(b)(3), 1386(b).

Part 4207--Reduction or Waiver of Complete Withdrawal Liability

Sec.
4207.1  Purpose and scope.
4207.2  Definitions.
4207.3  Abatement.
4207.4  Withdrawal liability payments during pendency of abatement 
determination.
4207.5  Requirements for abatement.
4207.6  Partial withdrawals after reentry.
4207.7  Liability for subsequent complete withdrawals and related 
adjustments for allocating unfunded vested benefits.
4207.8  Liability for subsequent partial withdrawals.
4207.9  Special rules.
4207.10  Plan rules for abatement.

    Authority: 29 U.S.C. 1302(b)(3), 1387.

Part 4208--Reduction or Waiver of Partial Withdrawal Liability

Sec.
4208.1  Purpose and scope.
4208.2  Definitions.
4208.3  Abatement.
4208.4  Conditions for abatement.
4208.5  Withdrawal liability payments during pendency of abatement 
determination.
4208.6  Computation of reduced annual partial withdrawal liability 
payment.
4208.7  Adjustment of withdrawal liability for subsequent 
withdrawals.
4208.8  Multiple partial withdrawals in one plan year.
4208.9  Plan adoption of additional abatement conditions.

    Authority: 29 U.S.C. 1302(b)(3), 1388 (c) and (e).

Part 4211--Allocating Unfunded Vested Benefits

Subpart A--General

Sec.
4211.1  Purpose and scope.
4211.2  Definitions.
4211.3  Special rules for construction industry and IRC section 
404(c) plans.

Subpart B--Changes Not Subject to PBGC Approval

4211.11  Changes not subject to PBGC approval.
4211.12  Modifications to the presumptive, modified presumptive and 
rolling-5 methods.
4211.13  Modifications to the direct attribution method.

Subpart C--Changes Subject to PBGC Approval

4211.21  Changes subject to PBGC approval.
4211.22  Requests for PBGC approval.
4211.23  Approval of alternative method.
4211.24  Special rule for certain alternative methods previously 
approved.

Subpart D--Allocation Methods for Merged Multiemployer Plans

4211.31  Allocation of unfunded vested benefits following the merger 
of plans.
4211.32  Presumptive method for withdrawals after the initial plan 
year.
4211.33  Modified presumptive method for withdrawals after the 
initial plan year.
4211.34  Rolling-5 method for withdrawals after the initial plan 
year.
4211.35  Direct attribution method for withdrawals after the initial 
plan year.
4211.36  Modifications to the determination of initial liabilities, 
the amortization of initial liabilities, and the allocation 
fraction.
4211.37  Allocating unfunded vested benefits for withdrawals before 
the end of the initial plan year.

    Authority: 29 U.S.C. 1302(b)(3), 1391 (c)(1), (c)(2)(D), 
(c)(5)(A), (c)(5)(B), (c)(5) (D), and (f).
Part 4219--Notice, Collection, and Redetermination of Withdrawal 
Liability

Subpart A--General

Sec.
4219.1  Purpose and scope.
4219.2  Definitions.

Subpart B--Redetermination of Withdrawal Liability Upon Mass Withdrawal

4219.11  Withdrawal liability upon mass withdrawal.
4219.12  Employers liable upon mass withdrawal.
4219.13  Amount of liability for de minimis amounts.
4219.14  Amount of liability for 20-year-limitation amounts.
4219.15  Determination of reallocation liability.
4219.16  Imposition of liability.
4219.17  Filings with PBGC.
4219.18  Withdrawal in a plan year in which substantially all 
employers withdraw.
4219.19  Information collection.

Subpart C--Overdue, Defaulted, and Overpaid Withdrawal Liability

Sec.
4219.31  Overdue and defaulted withdrawal liability; overpayment.
4219.32  Interest on overdue, defaulted and overpaid withdrawal 
liability.
4219.34  Plan rules concerning overdue and defaulted withdrawal 
liability.

    Authority: 29 U.S.C. 1302(b)(3), 1389 (c) and (d), 1399 
(c)(1)(D) and (c)(6).

Part 4220--Procedures for PBGC Approval of Plan Amendments

Sec.
4220.1  Purpose and scope.
4220.2  Requests for PBGC approval.
4220.3  PBGC action on requests.

    Authority: 29 U.S.C. 1302(b)(3), 1400.

Part 4221--Arbitration of Disputes in Multiemployer Plans

Sec.
4221.1  Purpose and scope.
4221.2  Definitions.
4221.3  Initiation of arbitration.
4221.4  Appointment of the arbitrator.
4221.5  Powers and duties of the arbitrator.
4221.6  Hearing.
4221.7  Reopening of proceedings.
4221.8  Award.
4221.9  Reconsideration of award.
4221.10  Costs.
4221.11  Waiver of rules.
4221.12  Calculation of periods of time.
4221.13  Filing or service of documents.
4221.14  PBGC-approved arbitration procedures.

    Authority: 29 U.S.C. 1302(b)(3), 1401.

SUBCHAPTER J--INSOLVENCY, REORGANIZATION, TERMINATION, AND OTHER RULES 
APPLICABLE TO MULTIEMPLOYER PLANS

Part 4231--Mergers and Transfers Between Multiemployer Plans

Sec.
4231.1  Purpose and scope.
4231.2  Definitions.
4231.3  Requirements for mergers and transfers.
4231.4  Preservation of accrued benefits.
4231.5  Valuation requirement.
4231.6  Plan solvency tests.
4231.7  De minimis mergers and transfers.
4231.8  Notice of merger or transfer.
4231.9  Request for compliance determination.
4231.10  Actuarial calculations and assumptions.

    Authority: 29 U.S.C. 1302(b)(3), 1411.

Part 4245--Notice of Insolvency

Sec.
4245.1  Purpose and scope.
4245.2  Definitions.
4245.3  Notice of insolvency.
4245.4  Contents of notice of insolvency.
4245.5  Notice of insolvency benefit level.
4245.6  Contents of notice of insolvency benefit level.
4245.7  PBGC address.

    Authority: 29 U.S.C. 1302(b)(3), 1426(e).

Part 4261--Financial Assistance to Multiemployer Plans

Sec.
4261.1  Cross-reference.

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

Part 4281--Duties of Plan Sponsor Following Mass Withdrawal

Subpart A--General

Sec.
4281.1  Purpose and scope.
4281.2  Definitions.
4281.3  Submission of documents.
4281.4  Collection of information.

Subpart B--Valuation of Plan Benefits and Plan Assets

4281.11  Valuation dates.
4281.12  Benefits to be valued.
4281.13  Benefit valuation methods--in general.

[[Page 34007]]

4281.14  Mortality assumptions--in general.
4281.15  Mortality assumptions--lump sums under trusteed plans.
4281.16  Benefit valuation methods--plans closing out.
4281.17  Asset valuation methods--in general.
4281.18  Outstanding claims for withdrawal liability.

Subpart C--Benefit Reductions

4281.31  Plan amendment.
4281.32  Notices of benefit reductions.
4281.33  Restoration of benefits.

Subpart D--Benefit Suspensions

4281.41  Benefit suspensions.
4281.42  Retroactive payments.
4281.43  Notices of insolvency and annual updates.
4281.44  Contents of notices of insolvency and annual updates.
4281.45  Notices of insolvency benefit level.
4281.46  Contents of notices of insolvency benefit level.
4281.47  Application for financial assistance.
Appendix A to Part 4281--Interest Rates Used to Value Lump Sums and 
Annuities
Appendix B to Part 4281--Loading Assumptions

    Authority: 29 U.S.C. 1302(b)(3), 1341a, 1399(c)(1)(D), and 1441.

SUBCHAPTER K--INTERNAL AND ADMINISTRATIVE RULES AND PROCEDURES

Part 4901--Examination and Copying of Pension Benefit Guaranty 
Corporation Records

Subpart A--General

Sec.
4901.1  Purpose and scope.
4901.2  Definitions.
4901.3  Disclosure facilities.
4901.4  Information maintained in public reference room.
4901.5  Disclosure of other information.

Subpart B--Procedure for Formal Requests

4901.11  Submittal of requests for access to records.
4901.12  Description of information requested.
4901.13  Receipt by agency of request.
4901.14  Action on request.
4901.15  Appeals from denial of requests.
4901.16  Extensions of time.
4901.17  Exhaustion of administrative remedies.

Subpart C--Restrictions on Disclosure

4901.21  Restrictions in general.
4901.22  Partial disclosure.
4901.23  Records of concern to more than one agency.
4901.24  Special rules for trade secrets and confidential commercial 
or financial information submitted to the PBGC.

Subpart D--Fees

4901.31  Charges for services.
4901.32  Fee schedule.
4901.33  Payment of fees.
4901.34  Waiver or reduction of charges.

    Authority: 5 U.S.C. 552; 29 U.S.C. 1302(b)(3); E.O. 12600, 52 FR 
23781.

Part 4902--Disclosure and Amendment of Records Under the Privacy Act

Sec.
4902.1  Purpose and scope.
4902.2  Definitions.
4902.3  Procedures for determining existence of and requesting 
access to records.
4902.4  Disclosure of record to an individual.
4902.5  Procedures for requesting amendment of a record.
4902.6  Action on request for amendment of a record.
4902.7  Appeal of a denial of a request for amendment of a record.
4902.8  Fees.
4902.9  Specific exemptions.

    Authority: 5 U.S.C. 552a; 29 U.S.C. 1302(b)(3).

Part 4903--Debt Collection

Subpart A--General

Sec.
4903.1  Purpose and scope.
4903.2  General.
4903.3  Definitions.

Subpart B--Administrative Offset

4903.21  Application of Federal Claims Collection Standards.
4903.22  Administrative offset procedures.
4903.23  PBGC requests for offset to other agencies.
4903.24  Requests for offset from other agencies.

Subpart C--Tax Refund Offset

4903.31  Eligibility of debt for tax refund offset.
4903.32  Tax refund offset procedures.
4903.33  Referral of debt for tax refund offset.

Subpart D--Salary Offset [Reserved]

    Authority: 29 U.S.C. 1302(b); 31 U.S.C. 3701, 3711(f), 3720A; 4 
CFR part 102; 26 CFR 301.6402-6.

Part 4904--Ethical Conduct of Employees

Sec.
4904.1  Ethical conduct; standards and requirements.

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

Part 4905--Appearances in Certain Proceedings

Sec.
4905.1  Purpose and scope.
4905.2  Definitions.
4905.3  General.
4905.4  Appearances by PBGC employees.
4905.5  Requests for authenticated copies of PBGC records.
4905.6  Penalty.

    Authority: 29 U.S.C. 1302(b).

Part 4906--[Reserved]

Part 4907--Enforcement of Nondiscrimination on the Basis of Handicap in 
Programs or Activities Conducted by the Pension Benefit Guaranty 
Corporation
Sec.
4907.101  Purpose.
4907.102  Application.
4907.103  Definitions.
4907.110  Self-evaluation.
4907.111  Notice.
4907.130  General prohibitions against discrimination.
4907.140  Employment.
4907.149  Program accessibility: Discrimination prohibited.
4907.150  Program accessibility: Existing facilities.
4907.151  Program accessibility: New construction and alterations.
4907.160  Communications.
4907.170  Compliance procedures.

    Authority: 29 U.S.C. 794, 1302(b)(3).

PART 4000--FINDING AIDS

Sec.
4000.1  Distribution table.
4000.2  Derivation table.

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


Sec. 4000.1  Distribution table.

    The following table shows where in chapter XL of 29 CFR to find 
regulations previously codified in chapter XXVI.

------------------------------------------------------------------------
                                            Ch. XL Part(s)/Subpart(s)   
  Ch. XXVI Part  Subpart(s)/Section(s)        Subpart(s)/Section(s)     
------------------------------------------------------------------------
            Subchapter A--Internal and Administrative Rules             
------------------------------------------------------------------------
2601...................................  4002                           
2602:                                                                   
    Subpart A..........................  4904                           
    Subpart B..........................  4905                           
2603...................................  4901                           
2604...................................  Repealed                       
2606...................................  4003                           
2607...................................  4902                           
2608...................................  4907                           

[[Page 34008]]

                                                                        
2609...................................  4903                           
------------------------------------------------------------------------
   Subchapter B--Rules Applicable to Single-Employer and Multiemployer  
                                 Plans                                  
------------------------------------------------------------------------
2610...................................  4006 & 4007                    
    Secs.  2610.1, 2610.21, 2610.31....  Secs.  4006.1 & 4007.1         
    Secs.  2610.2......................  Secs.  4006.2 & 4007.2         
    Secs.  2610.3-2610.9 & 2610.11.....  4007                           
    Sec.  2610.10......................  4006.5(e)                      
    Secs.  2610.22-2610.24 & 2610.33...  4006                           
    Secs.  2610.25, 2610.26 & 2610.34..  4007                           
2611...................................  4065                           
2612...................................  4001, Subpart B                
2613...................................  4022, Subpart A                
------------------------------------------------------------------------
                  Subchapter C--Single-Employer Plans                   
------------------------------------------------------------------------
2615...................................  4043                           
2616...................................  4041                           
    Subpart A..........................  Subpart A                      
    Subpart B..........................  Subpart C                      
2617...................................  4041                           
    Subpart A..........................  Subpart A                      
    Subpart B..........................  Subpart B                      
2618...................................  4044, Subpart A                
2619...................................  4044, Subpart B                
2620...................................  4044, Subpart B                
2621 (except Sec.  2621.23(b)).........  4022, Subpart B                
2621.23(b).............................  4022B                          
2622 (except 2622.9)...................  4062                           
    Sec.  2622.9.......................  4068                           
2623...................................  4022, Subparts D & E           
2625...................................  4047                           
2627...................................  4011                           
2628...................................  4010                           
2629...................................  4050                           
------------------------------------------------------------------------
       Subchapter F--Withdrawal Liability in Multiemployer Plans        
------------------------------------------------------------------------
2640:                                                                   
    Sec.  2640.2.......................  Sec.  4001.2                   
    Sec.  2640.3.......................  Sec.  4221.2                   
    Sec.  2640.4.......................  Sec.  4211.2                   
    Sec.  2640.5.......................  Sec.  4204.2                   
    Sec.  2640.6.......................  Sec.  4207.2, 4208.2           
    Sec.  2640.7.......................  Sec.  4219.2                   
    Sec.  2640.8.......................  Sec.  4206.2                   
2641...................................  4221                           
2642...................................  4211                           
2643...................................  4204                           
2644...................................  4219, Subpart C                
2645...................................  4203                           
2646...................................  4208                           
2647...................................  4207                           
2648...................................  4219, Subpart B                
2649...................................  4206                           
------------------------------------------------------------------------
      Subchapter H--Other Rules Applicable to Multiemployer Plans       
------------------------------------------------------------------------
2670:                                                                   
    Sec.  2670.2.......................  Sec.  4001.2                   
    Sec.  2670.3.......................  Sec.  4231.2                   
    Sec.  2670.4.......................  Secs.  4041A.2, 4245.2, &      
                                          4281.2                        
2672...................................  4231                           
2673...................................  4041A, Subpart B, & 4041A.3(a) 
2674...................................  4245                           
2675...................................  4041A, Subparts C & D, & 4281, 
                                          Subparts C & D                
2676...................................  4281, Subpart B                
2677...................................  4220                           
------------------------------------------------------------------------




Sec. 4000.2  Derivation table.

    The following table shows where in previous chapter XXVI of 29 CFR 
to find regulations now codified in chapter XL.

[[Page 34009]]



------------------------------------------------------------------------
                                            Ch. XXVI Part(s)  Subpart/  
    Ch. XL Part  Subpart/Section(s)                 Section(s)          
------------------------------------------------------------------------
                         Subchapter A--General                          
------------------------------------------------------------------------
4000...................................  [tables]                       
4001:                                                                   
    Subpart A..........................  [various statutory and         
                                          regulatory definitions]       
    Subpart B..........................  2612                           
4002...................................  2601                           
4003...................................  2606                           
------------------------------------------------------------------------
                         Subchapter B--Premiums                         
------------------------------------------------------------------------
4006...................................  2610                           
4007...................................  2610                           
------------------------------------------------------------------------
      Subchapter C--Certain Reporting and Disclosure Requirements       
------------------------------------------------------------------------
4010...................................  2628                           
4011...................................  2627                           
------------------------------------------------------------------------
                   Subchapter D--Coverage and Benefits                  
------------------------------------------------------------------------
4022:                                                                   
    Subpart A..........................  2613                           
    Subpart B..........................  2621 (except Sec.  2621.23(b)) 
    Subparts D & E.....................  2623                           
4022B..................................  Sec.  2621.23(b)               
------------------------------------------------------------------------
                     Subchapter E--Plan Terminations                    
------------------------------------------------------------------------
4041:                                                                   
    Subpart A..........................  Secs.  2616 & 2617, Subparts A 
    Subpart B..........................  2617, Subpart B                
    Subpart C..........................  2616, Subpart B                
4041A:                                                                  
    Subpart A..........................  Secs.  2670.4, 2673.1, 2673.4, 
                                          2675.1 & 2675.2               
    Subpart B..........................  Secs.  2673.2 & .3             
    Subparts C & D.....................  2675, Subparts B & E           
4043...................................  2615                           
4044...................................  2618, 2619 & 2620              
4047...................................  2625                           
4050...................................  2629                           
------------------------------------------------------------------------
                        Subchapter F--Liability                         
------------------------------------------------------------------------
4061...................................  [cross-references]             
4062...................................  2622 (except Sec.  2622.9)     
4063...................................  [cross-references]             
4064...................................  [cross-references]             
------------------------------------------------------------------------
               Subchapter G--Annual Reporting Requirements              
------------------------------------------------------------------------
4065...................................  2611                           
------------------------------------------------------------------------
                   Subchapter H--Enforcement Provisions                 
------------------------------------------------------------------------
4067...................................  [cross-reference]              
4068...................................  2622.9                         
        Subchapter I--Withdrawal Liability in Multiemployer Plans       
------------------------------------------------------------------------
4203...................................  2645                           
4204...................................  2643 & Sec.  2640.5            
4206...................................  2649 & Sec.  2640.8            
4207...................................  2647 & 2640.6                  
4208...................................  2646 & 2640.6                  
4211...................................  2642 & 2640.4                  
4219:                                                                   
    Subpart A..........................  Sec.  2640.7                   
    Subpart B..........................  2648                           
    Subpart C..........................  2644                           
4220...................................  2677                           
4221...................................  2641 & Sec.  2640.3            
------------------------------------------------------------------------
  Subchapter J--Insolvency, Reorganization, Termination, and Other Rules
                   Applicable to Multiemployer Plans                    
------------------------------------------------------------------------
4231...................................  2672 & Sec.  2670.3            

[[Page 34010]]

                                                                        
4245...................................  2674 & 2670.4                  
4261...................................  [cross-reference]              
4281:                                                                   
    Subpart A..........................  2675, Subpart A, & 2670.4      
    Subpart B..........................  2676                           
    Subpart C..........................  2675, Subpart C                
    Subpart D..........................  2675, Subpart D                
------------------------------------------------------------------------
       Subchapter K--Internal Administrative Rules and Procedures       
------------------------------------------------------------------------
4901...................................  2603                           
4902...................................  2607                           
4903...................................  2609                           
4904...................................  2602, Subpart A                
4905...................................  2602, Subpart B                
4907...................................  2608                           
------------------------------------------------------------------------



PART 4001--TERMINOLOGY

Sec.
4001.1  Purpose and scope.
4001.2  Definitions.
4001.3  Trades or businesses under common control; controlled 
groups.

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


Sec. 4001.1  Purpose and scope.

    This part contains definitions of certain terms used in this 
chapter and the regulations under which the PBGC makes various 
controlled group determinations.


Sec. 4001.2  Definitions.

    For purposes of this chapter (unless otherwise indicated or 
required by the context):
    Affected party means, with respect to a plan--
    (1) Each participant in the plan;
    (2) Each beneficiary of a deceased participant;
    (3) Each alternate payee under an applicable qualified domestic 
relations order, as defined in section 206(d)(3) of ERISA;
    (4) Each employee organization that currently represents any group 
of participants;
    (5) For any group of participants not currently represented by an 
employee organization, the employee organization, if any, that last 
represented such group of participants within the 5-year period 
preceding issuance of the notice of intent to terminate; and
    (6) the PBGC. If an affected party has designated, in writing, a 
person to receive a notice on behalf of the affected party, any 
reference to the affected party (in connection with the notice) shall 
be construed to refer to such person.
    Annuity means a series of periodic payments to a participant or 
surviving beneficiary for a fixed or contingent period.
    Basic-type benefit means a benefit that is guaranteed under the 
provisions of part 4022, subpart A, of this chapter, or would be 
guaranteed if the guarantee limits in part 4022, subpart B, of this 
chapter did not apply.
    Benefit liabilities means the benefits of participants and their 
beneficiaries under the plan (within the meaning of section 401(a)(2) 
of the Code).
    Code means the Internal Revenue Code of 1986, as amended.
    Complete withdrawal means a complete withdrawal as described in 
section 4203 of ERISA.
    Contributing sponsor means a person who is a contributing sponsor 
as defined in section 4001(a)(13) of ERISA.
    Controlled group means, in connection with any person, a group 
consisting of such person and all other persons under common control 
with such person, determined under section 4001.3 of this part. For 
purposes of determining the persons liable for contributions under 
section 412(c)(11)(B) of the Code or section 302(c)(11)(B) of ERISA, or 
for premiums under section 4007(e)(2) of ERISA, a controlled group also 
includes any group treated as a single employer under section 414 (m) 
or (o) of the Code.
    Corporation means the Pension Benefit Guaranty Corporation, except 
where the context demonstrates that a different meaning is intended.
    Defined benefit plan means a plan described in section 3(35) of 
ERISA.
    Distress termination means the voluntary termination of a single-
employer plan in accordance with section 4041(c) of ERISA and part 
4041, subpart C, of this chapter.
    Distribution date means:
    (1) Except as provided in paragraph (2)--
    (i) For benefits provided through the purchase of irrevocable 
commitments, the date on which the obligation to provide the benefits 
passes from the plan to the insurer; and
    (ii) For benefits provided other than through the purchase of 
irrevocable commitments, the date on which the benefits are delivered 
to the participant or beneficiary (or to another plan or benefit 
arrangement or other recipient authorized by the participant or 
beneficiary in accordance with applicable law and regulations) 
personally or by deposit with a mail or courier service (as evidenced 
by a postmark or written receipt); or
    (2) Other than for purposes of determining the interest rate to be 
used in calculating the value of a benefit to be paid as a lump sum to 
a late-discovered participant, the deemed distribution date (as defined 
in Sec. 4050.2) in the case of a designated benefit paid to the PBGC, a 
benefit provided after the deemed distribution date to a late-
discovered participant, or an irrevocable commitment purchased from an 
insurer after the deemed distribution date for a recently-missing 
participant in accordance with part 4050 of this chapter (dealing with 
missing participants).
    Employer means all trades or businesses (whether or not 
incorporated) that are under common

[[Page 34011]]

control, within the meaning of Sec. 4001.3 of this chapter.
    ERISA means the Employee Retirement Income Security Act of 1974, as 
amended.
    Fair market value means the price at which property would change 
hands between a willing buyer and a willing seller, neither being under 
any compulsion to buy or sell and both having reasonable knowledge of 
relevant facts.
    FOIA means the Freedom of Information Act, as amended (5 U.S.C. 
552).
    Funding standard account means an account established and 
maintained under section 302(b) of ERISA or section 412(b) of the Code.
    Guaranteed benefit means a benefit under a single-employer plan 
that is guaranteed by the PBGC under section 4022(a) of ERISA and part 
4022 of this chapter, or a benefit under a multiemployer plan that is 
guaranteed by the PBGC under section 4022A of ERISA.
    Insurer means a company authorized to do business as an insurance 
carrier under the laws of a State or the District of Columbia.
    Irrevocable commitment means an obligation by an insurer to pay 
benefits to a named participant or surviving beneficiary, if the 
obligation cannot be cancelled under the terms of the insurance 
contract (except for fraud or mistake) without the consent of the 
participant or beneficiary and is legally enforceable by the 
participant or beneficiary.
    IRS means the Internal Revenue Service.
    Mandatory employee contributions means amounts contributed to the 
plan by a participant that are required as a condition of employment, 
as a condition of participation in such plan, or as a condition of 
obtaining benefits under the plan attributable to employer 
contributions.
    Mass withdrawal means the withdrawal of every employer from the 
plan, or the withdrawal of substantially all employers pursuant to an 
agreement or arrangement to withdraw.
    Multiemployer Act means the Multiemployer Pension Plan Amendments 
Act of 1980.
    Multiemployer plan means a plan that is described in section 
4001(a)(3) of ERISA and that is covered by title IV of ERISA.
    Multiple employer plan means a single-employer plan maintained by 
two or more contributing sponsors that are not members of the same 
controlled group, under which all plan assets are available to pay 
benefits to all plan participants and beneficiaries.
    Nonbasic-type benefit means any benefit provided by a plan other 
than a basic-type benefit.
    Nonforfeitable benefit means a benefit described in section 
4001(a)(8) of ERISA. Benefits that become nonforfeitable solely as a 
result of the termination of a plan will be considered forfeitable.
    Normal retirement age means the age specified in the plan as the 
normal retirement age. This age shall not exceed the later of age 65 or 
the age attained after 5 years of participation in the plan. If no 
normal retirement age is specified in the plan, it is age 65.
    Notice of intent to terminate means the notice of a proposed 
termination of a single-employer plan, as required by section 
4041(a)(2) of ERISA and Sec. 4041.21 (in a standard termination) or 
Sec. 4041.41 (in a distress termination) of this chapter.
    PBGC means the Pension Benefit Guaranty Corporation.
    Person means a person defined in section 3(9) of ERISA.
    Plan means a defined benefit plan within the meaning of section 
3(35) of ERISA that is covered by title IV of ERISA.
    Plan administrator means an administrator, as defined in section 
3(16)(A) of ERISA.
    Plan sponsor means, with respect to a multiemployer plan, the 
person described in section 4001(a)(10) of ERISA.
    Plan year means the calendar, policy, or fiscal year on which the 
records of the plan are kept.
    Proposed termination date means the date specified as such by the 
plan administrator of a single-employer plan in a notice of intent to 
terminate or, if later, in the standard or distress termination notice, 
in accordance with section 4041 of ERISA and part 4041 of this chapter.
    Single-employer plan means any defined benefit plan (as defined in 
section 3(35) of ERISA) that is not a multiemployer plan (as defined in 
section 4001(a)(3) of ERISA) and that is covered by title IV of ERISA.
    Standard termination means the voluntary termination, in accordance 
with section 4041(b) of ERISA and part 4041, subpart B, of this 
chapter, of a single-employer plan that is able to provide for all of 
its benefit liabilities when plan assets are distributed.
    Substantial owner means a substantial owner as defined in section 
4022(b)(5)(A) of ERISA.
    Sufficient for benefit liabilities means that there is no amount of 
unfunded benefit liabilities, as defined in section 4001(a)(18) of 
ERISA.
    Sufficient for guaranteed benefits means that there is no amount of 
unfunded guaranteed benefits, as defined in section 4001(a)(17) of 
ERISA.
    Termination date means the date established pursuant to section 
4048(a) of ERISA.
    Title IV benefit means the guaranteed benefit plus any additional 
benefits to which plan assets are allocated pursuant to section 4044 of 
ERISA and part 4044 of this chapter.
    Voluntary employee contributions means amounts contributed by an 
employee to a plan, pursuant to the provisions of the plan, that are 
not mandatory employee contributions.


Sec. 4001.3  Trades or businesses under common control; controlled 
groups.

    For purposes of title IV of ERISA:
    (a)(1) The PBGC will determine that trades and businesses (whether 
or not incorporated) are under common control if they are ``two or more 
trades or businesses under common control'', as defined in regulations 
prescribed under section 414(c) of the Code.
    (2) The PBGC will determine that all employees of trades or 
businesses (whether or not incorporated) which are under common control 
shall be treated as employed by a single employer, and all such trades 
and businesses shall be treated as a single employer.
    (3) An individual who owns the entire interest in an unincorporated 
trade or business is treated as his own employer, and a partnership is 
treated as the employer of each partner who is an employee within the 
meaning of section 401(c)(1) of the Code.
    (b) In the case of a single-employer plan:
    (1) In connection with any person, a controlled group consists of 
that person and all other persons under common control with such 
person.
    (2) Persons are under common control if they are members of a 
``controlled group of corporations'', as defined in regulations 
prescribed under section 414(b) of the Code, or if they are ``two or 
more trades or businesses under common control'', as defined in 
regulations prescribed under section 414(c) of the Code.

PART 4002--BYLAWS OF THE PENSION BENEFIT GUARANTY CORPORATION

Sec.
4002.1  Name.
4002.2  Offices.
4002.3  Board of Directors.
4002.4  Chairman.
4002.5  Quorum.

[[Page 34012]]

4002.6  Meetings.
4002.7  Place of meetings; use of conference call communications 
equipment.
4002.8  Alternate voting procedure.
4002.9  Amendments.

    Authority: 29 U.S.C. 1302(f).


Sec. 4002.1  Name.

    The name of the Corporation is the Pension Benefit Guaranty 
Corporation.


Sec. 4002.2  Offices.

    The principal office of the Corporation shall be in the 
Metropolitan area of the City of Washington, District of Columbia. The 
Corporation may have additional offices at such other places as the 
Board of Directors may deem necessary or desirable to the conduct of 
its business.


Sec. 4002.3  Board of Directors.

    (a) The Board of Directors shall establish the policies of the 
Corporation and shall perform the other functions assigned to the Board 
of Directors in title IV of the Employee Retirement Income Security Act 
of 1974. The Board of Directors of the Corporation shall be composed of 
the Secretary of Labor, the Secretary of the Treasury, and the 
Secretary of Commerce. Members of the Board shall serve without 
compensation, but shall be reimbursed by the Corporation for travel, 
subsistence, and other necessary expenses incurred in the performance 
of their duties as members of the Board. A person at the time of a 
meeting of the Board of Directors who is serving as Secretary of Labor, 
Secretary of the Treasury or Secretary of Commerce in an acting 
capacity, shall serve as a member of the Board of Directors with the 
same authority and effect as the designated Secretary.
    (b) The following powers are expressly reserved to the Board of 
Directors and shall not be delegated:
    (1) Approval of all final substantive regulations prior to 
publication in the Federal Register, except for amendments to the 
regulations on Allocation of Assets in Single-employer Plans and Duties 
of Plan Sponsor Following Mass Withdrawal (parts 4044 and 4281 of this 
chapter) establishing new interest rates and factors, which may be 
approved by the Executive Director of the PBGC.
    (2) Approval of all reports or recommendations to the Congress that 
are required by statute;
    (3) Establishment from time to time of the Corporation's budget and 
debt ceiling up to the statutory limit;
    (4) Determination from time to time of limits on advances to the 
revolving funds administered by the Corporation pursuant to section 
4005(a) of ERISA;
    (5) Final decision on any policy matter that would materially 
affect the rights of a substantial number of employers or covered 
participants and beneficiaries.
    (c) Final non-substantive regulations and all proposed regulations 
shall be approved by the Executive Director prior to publication in the 
Federal Register; provided that all proposed substantive regulations 
shall first be circulated for review to the Board of Directors or their 
designees, and may thereafter be issued by the Executive Director after 
responding to any comments made within 21 days after circulation of the 
proposed regulation, or, if no comments are received, after expiration 
of the 21-day period.


Sec. 4002.4   Chairman.

    The Secretary of Labor shall be the Chairman of the Board of 
Directors and he shall be the administrator of the Corporation with 
responsibility for its management, including overall supervision of the 
Corporation's personnel, organization, and budget practices, and shall 
exercise such incidental powers as may be necessary to carry out his 
administrative responsibilities. The Chairman may delegate his 
administrative responsibilities.


Sec. 4002.5   Quorum.

    A majority of the Directors shall constitute a quorum for the 
transaction of business. Any act of a majority of the Directors present 
at any meeting at which there is a quorum shall be the act of the 
Board, except as may otherwise be provided in these bylaws.


Sec. 4002.6   Meetings.

    Regular meetings of the Board of Directors shall be held at such 
times as the Chairman shall select. Special meetings of the Board of 
Directors shall be called by the Chairman on the request of any other 
Director. Reasonable notice of any meetings shall be given to each 
Director. The General Counsel of the Corporation shall serve as 
Secretary to the Board of Directors and keep its minutes. As soon as 
practicable after each meeting, a draft of the minutes of such meeting 
shall be distributed to each member of the Board for correction or 
approval.


Sec. 4002.7   Place of meetings; use of conference call communications 
equipment.

    Meetings of the Board of Directors shall be held at the principal 
office of the Corporation unless otherwise determined by the Board of 
Directors or the Chairman. Any Director may participate in a meeting of 
the Board of Directors through the use of conference call telephone or 
similar communications equipment, by means of which all persons 
participating in the meeting can simultaneously speak to and hear each 
other. Any Director so participating in a meeting shall be deemed 
present for all purposes. Actions taken by the Board of Directors at 
meetings conducted through the use of such equipment, including the 
votes of each member, shall be recorded in the usual manner in the 
minutes of the meetings of the Board of Directors. A resolution of the 
Board of Directors signed by each of its three members shall have the 
same force and effect as if agreed at a duly called meeting and shall 
be recorded in the minutes of the Board of Directors.


Sec. 4002.8   Alternate voting procedure.

    (a) A Director shall be deemed to have participated in a meeting of 
the Board of Directors for all purposes if,
    (1) That Director was represented at that meeting by an individual 
who was designated to act on his behalf, and
    (2) That Director ratified in writing the actions taken by his 
designee at that meeting within a reasonable period of time after such 
meeting.
    (b) For purposes of this section, a Director, including an 
individual serving as Acting Secretary, shall designate a 
representative at a level not below that of Assistant Secretary within 
his Department. Such designation shall be in writing and shall be 
effective until withdrawn or until a date specified therein.
    (c) For purposes of this section, a Director's approval of the 
minutes of a meeting of the Board of Directors shall constitute 
ratification of the actions of his designee at such meeting.


Sec. 4002.9   Amendments.

    These bylaws may be amended or new bylaws adopted by unanimous vote 
of the Board.

PART 4003--RULES FOR ADMINISTRATIVE REVIEW OF AGENCY DECISIONS

Subpart A--General Provisions

Sec.
4003.1  Purpose and scope.
4003.2  Definitions.
4003.3  PBGC assistance in obtaining information.
4003.4  Extension of time.
4003.5  Non-timely request for review.
4003.6  Representation.
4003.7  Exhaustion of administrative remedies.
4003.8  Request for confidential treatment.
4003.9  Filing of documents.
4003.10  Computation of time.

[[Page 34013]]

Subpart B--Initial Determinations

4003.21  Form and contents of initial determinations.
4003.22  Effective date of determinations.

Subpart C--Reconsideration of Initial Determinations

4003.31  Who may request reconsideration.
4003.32  When to request reconsideration.
4003.33  Where to submit request for reconsideration.
4003.34  Form and contents of request for reconsideration.
4003.35  Final decision on request for reconsideration.

Subpart D--Administrative Appeals

4003.51  Who may appeal or participate in appeals.
4003.52  When to file.
4003.53  Where to file.
4003.54  Contents of appeal.
4003.55  Opportunity to appear and to present witnesses.
4003.56  Consolidation of appeals.
4003.57  Appeals affecting third parties.
4003.58  Powers of the Appeals Board.
4003.59  Decision by the Appeals Board.
4003.60  Referral of appeal to the Executive Director.

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

Subpart A--General Provisions


Sec. 4003.1   Purpose and scope.

    (a) Purpose. This part sets forth the rules governing the issuance 
of all initial determinations by the PBGC on cases pending before it 
involving the matters set forth in paragraph (b) of this section and 
the procedures for requesting and obtaining administrative review by 
the PBGC of those determinations. Subpart A contains general 
provisions. Subpart B sets forth rules governing the issuance of all 
initial determinations of the PBGC on matters covered by this part. 
Subpart C establishes procedures governing the reconsideration by the 
PBGC of initial determinations relating to the matters set forth in 
paragraphs (b)(1) through (b)(4). Subpart D establishes procedures 
governing administrative appeals from initial determinations relating 
to the matters set forth in paragraphs (b)(5) through (b)(10).
    (b) Scope. This part applies to the following determinations made 
by the PBGC in cases pending before it and to the review of those 
determinations:
    (1) Determinations that a plan is covered under section 4021 of 
ERISA;
    (2) Determinations with respect to premiums, interest and late 
payment penalties pursuant to section 4007 of ERISA;
    (3) Determinations with respect to voluntary terminations under 
section 4041 of ERISA, including--
    (i) A determination that a notice requirement or a certification 
requirement under section 4041 of ERISA has not been met,
    (ii) A determination that the requirements for demonstrating 
distress under section 4041(c)(2)(B) of ERISA have not been met, and
    (iii) A determination with respect to the sufficiency of plan 
assets for benefit liabilities or for guaranteed benefits;
    (4) Determinations with respect to allocation of assets under 
section 4044 of ERISA, including distribution of excess assets under 
section 4044(d);
    (5) Determinations that a plan is not covered under section 4021 of 
ERISA;
    (6) Determinations under section 4022 (a) or (c) or section 
4022A(a) of ERISA with respect to benefit entitlement of participants 
and beneficiaries under covered plans and determinations that a 
domestic relations order is or is not a qualified domestic relations 
order under section 206(d)(3) of ERISA and section 414(p) of the Code;
    (7) Determinations under section 4022 (b) or (c), section 4022A (b) 
through (e), or section 4022B of ERISA of the amount of benefits 
payable to participants and beneficiaries under covered plans;
    (8) Determinations of the amount of money subject to recapture 
pursuant to section 4045 of ERISA;
    (9) Determinations of the amount of liability under section 
4062(b)(1), section 4063, or section 4064 of ERISA;
    (10) Determinations--
    (i) That the amount of a participant's or beneficiary's benefit 
under section 4050(a)(3) of ERISA has been correctly computed based on 
the designated benefit paid to the PBGC under section 4050(b)(2) of 
ERISA, or
    (ii) That the designated benefit is correct, but only to the extent 
that the benefit to be paid does not exceed the participant's or 
beneficiary's guaranteed benefit.
    (c) Matters not covered by this part. Nothing in this part limits--
    (1) The authority of the PBGC to review, either upon request or on 
its own initiative, a determination to which this part does not apply 
when, in its discretion, the PBGC determines that it would be 
appropriate to do so, or
    (2) The procedure that the PBGC may utilize in reviewing any 
determination to which this part does not apply.


Sec. 4003.2   Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
Code, contributing sponsor, controlled group, ERISA, multiemployer 
plan, PBGC, person, plan administrator, and single-employer plan.
    In addition, for purposes of this part:
    Aggrieved person means any participant, beneficiary, plan 
administrator, contributing sponsor of a single-employer plan or member 
of such a contributing sponsor's controlled group, plan sponsor of a 
multiemployer plan, or employer that is adversely affected by an 
initial determination of the PBGC with respect to a pension plan in 
which such person has an interest. The term ``beneficiary'' includes an 
alternate payee (within the meaning of section 206(d)(3)(K) of ERISA) 
under a qualified domestic relations order (within the meaning of 
section 206(d)(3)(B) of ERISA).
    Appeals Board means a board consisting of three PBGC officials. The 
Executive Director shall appoint a senior PBGC official to serve as 
Chairperson and three or more other PBGC officials to serve as regular 
Appeals Board members. The Chairperson shall designate the three 
officials who will constitute the Appeals Board with respect to a case, 
provided that a person may not serve on the Appeals Board with respect 
to a case in which he or she made a decision regarding the merits of 
the determination being appealed. The Chairperson need not serve on the 
Appeals Board with respect to all cases.
    Appellant means any person filing an appeal under subpart D of this 
part.
    Director means the Director of any department of the PBGC and 
includes the Executive Director of the PBGC, Deputy Executive 
Directors, and the General Counsel.


Sec. 4003.3   PBGC assistance in obtaining information.

    A person who lacks information or documents necessary to file a 
request for review pursuant to subpart C or D of this part, or 
necessary to a decision whether to seek review, or necessary to 
participate in an appeal pursuant to Sec. 4003.57 of this part or 
necessary to a decision whether to participate, may request the PBGC's 
assistance in obtaining information or documents in the possession of a 
party other than the PBGC. The request shall state or describe the 
missing information or documents, the reason why the person needs the 
information or documents, and the reason why the person needs the 
assistance of the PBGC in obtaining the information or documents. The 
request may also include a request for an extension of time to file 
pursuant to Sec. 4003.4 of this part.


Sec. 4003.4   Extension of time.

    (a) General rule. When a document is required under this part to be 
filed within a prescribed period of time, an extension of time to file 
will be granted only upon good cause shown and only

[[Page 34014]]

when the request for an extension is made before the expiration of the 
time prescribed. The request for an extension shall be in writing and 
state why additional time is needed and the amount of additional time 
requested. The filing of a request for an extension shall stop the 
running of the prescribed period of time. When a request for an 
extension is granted, the PBGC shall notify the person requesting the 
extension, in writing, of the amount of additional time granted. When a 
request for an extension is denied, the PBGC shall so notify the 
requestor in writing, and the prescribed period of time shall resume 
running from the date of denial.
    (b) Disaster relief. When the President of the United States 
declares that, under the Disaster Relief Act of 1974, as amended (42 
U.S.C. 5121, 5122(2), 5141(b)), a major disaster exists, the Executive 
Director of the PBGC (or his or her designee) may, by issuing one or 
more notices of disaster relief, extend the due date for filing a 
request for reconsideration under Sec. 4003.32 or an appeal under 
Sec. 4003.52 by up to 180 days.
    (1) The due date extension or extensions shall be available only to 
an aggrieved person who is residing in, or whose principal place of 
business is within, a designated disaster area, or with respect to whom 
the office of the service provider, bank, insurance company, or other 
person maintaining the information necessary to file the request for 
reconsideration or appeal is within a designated disaster area; and
    (2) The request for reconsideration or appeal shall identify the 
filing as one for which the due date extension is available.


Sec. 4003.5  Non-timely request for review.

    The PBGC will process a request for review of an initial 
determination that was not filed within the prescribed period of time 
for requesting review (see Secs. 4003.32 and 4003.52) if--
    (a) The person requesting review demonstrates in his or her request 
that he or she did not file a timely request for review because he or 
she neither knew nor, with due diligence, could have known of the 
initial determination; and
    (b) The request for review is filed within 30 days after the date 
the aggrieved person, exercising due diligence at all relevant times, 
first learned of the initial determination where the requested review 
is reconsideration, or within 45 days after the date the aggrieved 
person, exercising due diligence at all relevant times, first learned 
of the initial determination where the request for review is an appeal.


Sec. 4003.6   Representation.

    A person may file any document or make any appearance that is 
required or permitted by this part on his or her own behalf or he or 
she may designate a representative. When the representative is not an 
attorney-at-law, a notarized power of attorney, signed by the person 
making the designation, which authorizes the representation and 
specifies the scope of representation shall be filed with the PBGC in 
accordance with Sec. 4003.9(b) of this part.


Sec. 4003.7   Exhaustion of administrative remedies.

    Except as provided in Sec. 4003.22(b), a person aggrieved by an 
initial determination of the PBGC covered by this part, other than a 
determination subject to reconsideration that is issued by a Department 
Director, has not exhausted his or her administrative remedies until he 
or she has filed a request for reconsideration under subpart C of this 
part or an appeal under subpart D of this part, whichever is 
applicable, and a decision granting or denying the relief requested has 
been issued.


Sec. 4003.8   Request for confidential treatment.

    If any person filing a document with the PBGC believes that some or 
all of the information contained in the document is exempt from the 
mandatory public disclosure requirements of the Freedom of Information 
Act, 5 U.S.C. 552, he or she shall specify the information with respect 
to which confidentiality is claimed and the grounds therefor.


Sec. 4003.9   Filing of documents.

    (a) Date of filing. Any document required or permitted to be filed 
under this part is considered filed on the date of the United States 
postmark stamped on the cover in which the document is mailed, provided 
that--
    (1) The postmark was made by the United States Postal Service; and
    (2) The document was mailed postage prepaid, properly packaged and 
addressed to the PBGC.
    If the conditions stated in both paragraphs (a)(1) and (a)(2) of 
this section are not met, the document is considered filed on the date 
it is received by the PBGC. Documents received after regular business 
hours are considered filed on the next regular business day.
    (b) Where to file. Any document required or permitted to be filed 
under this part in connection with a request for reconsideration shall 
be submitted to the Director of the department within the PBGC that 
issued the initial determination. Any document required or permitted to 
be filed under this part in connection with an appeal shall be 
submitted to the Appeals Board, Pension Benefit Guaranty Corporation, 
1200 K Street NW., Washington, DC 20005-4026.


Sec. 4003.10   Computation of time.

    In computing any period of time prescribed or allowed by this part, 
the day of the act, event, or default from which the designated period 
of time begins to run is not counted. The last day of the period so 
computed shall be included, unless it is a Saturday, Sunday, or Federal 
holiday, in which event the period runs until the end of the next day 
which is not a Saturday, Sunday, or a Federal holiday.

Subpart B--Initial Determinations


Sec. 4003.21  Form and contents of initial determinations.

    All determinations to which this subpart applies shall be in 
writing, shall state the reason for the determination, and, except when 
effective on the date of issuance as provided in Sec. 4003.22(b), shall 
contain notice of the right to request review of the determination 
pursuant to subpart C or subpart D of this part, as applicable, and a 
brief description of the procedures for requesting review.


Sec. 4003.22  Effective date of determinations.

    (a) General Rule. Except as provided in paragraph (b) of this 
section, an initial determination covered by this subpart will not 
become effective until the prescribed period of time for filing a 
request for reconsideration under subpart C of this part or an appeal 
under subpart D of this part, whichever is applicable, has elapsed. The 
filing of a request for review under subpart C or D of this part shall 
automatically stay the effectiveness of a determination until a 
decision on the request for review has been issued by the PBGC.
    (b) Exception. The PBGC may, in its discretion, order that the 
initial determination in a case is effective on the date it is issued. 
When the PBGC makes such an order, the initial determination shall 
state that the determination is effective on the date of issuance and 
that there is no obligation to exhaust administrative remedies with 
respect to that determination by seeking review of it by the PBGC.

[[Page 34015]]

Subpart C--Reconsideration of Initial Determinations


Sec. 4003.31  Who may request reconsideration.

    Any person aggrieved by an initial determination of the PBGC to 
which this subpart applies may request reconsideration of the 
determination.


Sec. 4003.32  When to request reconsideration.

    Except as provided in Secs. 4003.4 and 4003.5, a request for 
reconsideration must be filed within 30 days after the date of the 
initial determination of which reconsideration is sought or, when 
administrative review includes a procedure in Sec. 4903.33 of this 
chapter, by a date 60 days (or more) thereafter that is specified in 
the PBGC's notice of the right to request review.


Sec. 4003.33  Where to submit request for reconsideration.

    A request for reconsideration shall be submitted to the Director of 
the department within the PBGC that issued the initial determination, 
except that a request for reconsideration of a determination described 
in Sec. 4003.1(b)(3)(ii) shall be submitted to the Executive Director.


Sec. 4003.34  Form and contents of request for reconsideration.

    A request for reconsideration shall--
    (a) Be in writing;
    (b) Be clearly designated as a request for reconsideration;
    (c) Contain a statement of the grounds for reconsideration and the 
relief sought; and
    (d) Reference all pertinent information already in the possession 
of the PBGC and include any additional information believed to be 
relevant.


Sec. 4003.35  Final decision on request for reconsideration.

    (a) Except as provided in paragraphs (a)(1) or (a)(2), final 
decisions on requests for reconsideration will be issued by the same 
department of the PBGC that issued the initial determination, by an 
official whose level of authority in that department is higher than 
that of the person who issued the initial determination.
    (1) When an initial determination is issued by a Department 
Director, the Department Director (or an official designated by the 
Department Director) will issue the final decision on request for 
reconsideration of a determination other than one described in 
Sec. 4003.1(b)(3)(ii).
    (2) The Executive Director (or an official designated by the 
Executive Director) will issue the final decision on a request for 
reconsideration of a determination described in Sec. 4003.1(b)(3)(ii).
    (b) The final decision on a request for reconsideration shall be in 
writing, specify the relief granted, if any, state the reason(s) for 
the decision, and state that the person has exhausted his or her 
administrative remedies.

Subpart D--Administrative Appeals


Sec. 4003.51  Who may appeal or participate in appeals.

    Any person aggrieved by an initial determination to which this 
subpart applies may file an appeal. Any person who may be aggrieved by 
a decision under this subpart granting the relief requested in whole or 
in part may participate in the appeal in the manner provided in 
Sec. 4003.57.


Sec. 4003.52  When to file.

    Except as provided in Secs. 4003.4 and 4003.5, an appeal under this 
subpart must be filed within 45 days after the date of the initial 
determination being appealed or, when administrative review includes a 
procedure in Sec. 4903.33 of this chapter, by a date 60 days (or more) 
thereafter that is specified in the PBGC's notice of the right to 
request review.


Sec. 4003.53  Where to file.

    An appeal or a request for an extension of time to appeal shall be 
submitted to the Appeals Board, Pension Benefit Guaranty Corporation, 
1200 K Street NW., Washington, DC 20005-4026.


Sec. 4003.54  Contents of appeal.

    (a) An appeal shall--
    (1) Be in writing;
    (2) Be clearly designated as an appeal;
    (3) Contain a statement of the grounds upon which it is brought and 
the relief sought;
    (4) Reference all pertinent information already in the possession 
of the PBGC and include any additional information believed to be 
relevant;
    (5) State whether the appellant desires to appear in person or 
through a representative before the Appeals Board; and
    (6) State whether the appellant desires to present witnesses to 
testify before the Appeals Board, and if so, state why the presence of 
witnesses will further the decision-making process.
    (b) In any case where the appellant believes that another person 
may be aggrieved if the PBGC grants the relief sought, the appeal shall 
also include the name(s) and address(es) (if known) of such other 
person(s).


Sec. 4003.55  Opportunity to appear and to present witnesses.

    (a) At the discretion of the Appeals Board, any appearance 
permitted under this subpart may be before a hearing officer designated 
by the Appeals Board.
    (b) An opportunity to appear before the Appeals Board (or a hearing 
officer) and an opportunity to present witnesses will be permitted at 
the discretion of the Appeals Board. In general, an opportunity to 
appear will be permitted if the Appeals Board determines that there is 
a dispute as to a material fact; an opportunity to present witnesses 
will be permitted when the Appeals Board determines that witnesses will 
contribute to the resolution of a factual dispute.
    (c) Appearances permitted under this section will take place at the 
main offices of the PBGC, 1200 K Street NW., Washington, DC 20005-4026, 
unless the Appeals Board, in its discretion, designates a different 
location, either on its own initiative or at the request of the 
appellant or a third party participating in the appeal.


Sec. 4003.56  Consolidation of appeals.

    (a) When consolidation may be required. Whenever multiple appeals 
are filed that arise out of the same or similar facts and seek the same 
or similar relief, the Appeals Board may, in its discretion, order the 
consolidation of all or some of the appeals.
    (b) Representation of parties. Whenever the Appeals Board orders 
the consolidation of appeals, the appellants may designate one (or 
more) of their number to represent all of them for all purposes 
relating to their appeals.
    (c) Decision by Appeals Board. The decision of the Appeals Board in 
a consolidated appeal shall be binding on all appellants whose appeals 
were subject to the consolidation.


Sec. 4003.57  Appeals affecting third parties.

    (a) Before the Appeals Board issues a decision granting, in whole 
or in part, the relief requested in an appeal, it shall make a 
reasonable effort to notify third persons who will be aggrieved by the 
decision of the following:
    (1) The pendency of the appeal;
    (2) The grounds upon which the appeal is based;
    (3) The grounds upon which the Appeals Board is considering 
reversing the initial determination;
    (4) The right to submit written comments on the appeal;
    (5) The right to request an opportunity to appear in person or 
through a representative before the Appeals Board and to present 
witnesses; and
    (6) That no further opportunity to present information to the PBGC 
with

[[Page 34016]]

respect to the determination under appeal will be provided.
    (b) Written comments and a request to appear before the Appeals 
Board must be filed within 45 days after the date of the notice from 
the Appeals Board.
    (c) If more than one third party is involved, their participation 
in the appeal may be consolidated pursuant to the provisions of 
Sec. 4003.56.


Sec. 4003.58  Powers of the Appeals Board.

    In addition to the powers specifically described in this part, the 
Appeals Board may request the submission of any information or the 
appearance of any person it considers necessary to resolve a matter 
before it and to enter any order it considers necessary for or 
appropriate to the disposition of any matter before it.


Sec. 4003.59  Decision by the Appeals Board.

    (a) In reaching its decision, the Appeals Board shall consider 
those portions of the file relating to the initial determination, all 
material submitted by the appellant and any third parties in connection 
with the appeal, and any additional information submitted by PBGC 
staff.
    (b) The decision of the Appeals Board constitutes the final agency 
action by the PBGC with respect to the determination which was the 
subject of the appeal and is binding on all parties who participated in 
the appeal and who were notified pursuant to Sec. 4003.57 of their 
right to participate in the appeal.
    (c) The decision of the Appeals Board shall be in writing, specify 
the relief granted, if any, state the bases for the decision, including 
a brief statement of the facts or legal conclusions supporting the 
decision, and state that the appellant has exhausted his or her 
administrative remedies.


Sec. 4003.60  Referral of appeal to the Executive Director.

    The Appeals Board may, in its discretion, refer any appeal to the 
Executive Director of the PBGC for decision. In such a case, the 
Executive Director shall have all the powers vested in the Appeals 
Board by this subpart and the decision of the Executive Director shall 
meet the requirements of and have the effect of a decision issued under 
Sec. 4003.59 of this part.

PART 4006--PREMIUM RATES

Sec.
4006.1  Purpose and scope.
4006.2  Definitions.
4006.3  Premium rate.
4006.4  Determination of unfunded vested benefits.
4006.5  Exemptions and special rules.

    Authority: 29 U.S.C. 1302(b)(3), 1306, 1307.


Sec. 4006.1  Purpose and scope.

    This part, which applies to all plans covered by title IV of ERISA, 
provides rules for computing the premiums imposed by sections 4006 and 
4007 of ERISA. (See part 4007 of this chapter for rules for the payment 
of premiums, including due dates and late payment charges.)


Sec. 4006.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
Code, contributing sponsor, ERISA, fair market value, insurer, 
irrevocable commitment, multiemployer plan, notice of intent to 
terminate, PBGC, plan administrator, plan, plan year, and single-
employer plan.
    In addition, for purposes of this part:
    New plan means a plan that became effective within the premium 
payment year and includes a plan resulting from a consolidation or 
spinoff. A plan that meets this definition is considered to be a new 
plan even if the plan constitutes a successor plan within the meaning 
of section 4021(a) of ERISA.
    Newly-covered plan means a plan that is not a new plan and that was 
not covered by title IV of ERISA immediately prior to the premium 
payment year.
    Participant means any individual who is included in one of the 
categories below:
    (a) Active. (1) Any individual who is currently in employment 
covered by the plan and who is earning or retaining credited service 
under the plan. This category includes any individual who is considered 
covered under the plan for purposes of meeting the minimum coverage 
requirements, but because of offset or other provisions (including 
integration with Social Security benefits), the individual does not 
have any accrued benefits.
    (2) Any non-vested individual who is not currently in employment 
covered by the plan but who is earning or retaining credited service 
under the plan. This category does not include a non-vested former 
employee who has incurred a break in service the greater of one year or 
the break in service period specified in the plan.
    (b) Inactive--(1) Inactive receiving benefits. Any individual who 
is retired or separated from employment covered by the plan and who is 
receiving benefits under the plan. This category does not include an 
individual to whom an insurer has made an irrevocable commitment to pay 
all the benefits to which the individual is entitled under the plan.
    (2) Inactive entitled to future benefits. Any individual who is 
retired or separated from employment covered by the plan and who is 
entitled to begin receiving benefits under the plan in the future. This 
category does not include an individual to whom an insurer has made an 
irrevocable commitment to pay all the benefits to which the individual 
is entitled under the plan.
    (c) Deceased. Any deceased individual who has one or more 
beneficiaries who are receiving or entitled to receive benefits under 
the plan. This category does not include an individual if an insurer 
has made an irrevocable commitment to pay all the benefits to which the 
beneficiaries of that individual are entitled under the plan.
    Premium payment year means the plan year for which the premium is 
being paid.
    Short plan year means a plan year that is less than twelve full 
months.


Sec. 4006.3  Premium rate.

    Subject to the provisions of Sec. 4006.5 (dealing with exemptions 
and special rules), the premium paid for basic benefits guaranteed 
under section 4022(a) of ERISA shall equal the flat-rate premium under 
paragraph (a) of this section plus, in the case of a single-employer 
plan, the variable-rate premium under paragraph (b) of this section.
    (a) Flat-rate premium. The flat-rate premium is equal to the number 
of participants in the plan on the last day of the plan year preceding 
the premium payment year, multiplied by--
    (1) $19 for a single-employer plan, or
    (2) $2.60 for a multiemployer plan.
    (b) Variable-rate premium. The variable-rate premium is $9 for each 
$1,000 of a single-employer plan's unfunded vested benefits, as 
determined under Sec. 4006.4.


Sec. 4006.4  Determination of unfunded vested benefits.

    (a) General rule. Except as permitted by paragraph (c) of this 
section or as provided in the exemptions and special rules under 
Sec. 4006.5, the amount of a plan's unfunded vested benefits (as 
defined in paragraph (b) of this section) shall be determined as of the 
last day of the plan year preceding the premium payment year, based on 
the plan provisions and the plan's population as of that date. The 
determination shall be made in accordance with paragraph (a)(1) or 
(a)(2), and shall be certified to in accordance with paragraph (a)(4).
    (1) The unfunded vested benefits shall be determined using the 
actuarial assumptions and methods described in

[[Page 34017]]

paragraph (a)(3) for the plan year preceding the premium payment year 
(or, in the case of a new or newly-covered plan, for the premium 
payment year), except to the extent that other actuarial assumptions or 
methods are specifically prescribed by this section or are necessary to 
reflect the occurrence of a significant event described in paragraph 
(d) of this section between the date of the funding valuation and the 
last day of the plan year preceding the premium payment year. (If the 
plan does a valuation as of the last day of the plan year preceding the 
premium payment year, no separate adjustment for significant events is 
needed.)
    (2) Under this rule, the determination of the unfunded vested 
benefits may be based on a plan valuation done as of the first day of 
the premium payment year, provided that--
    (i) The actuarial assumptions and methods used are those described 
in paragraph (a)(3) for the premium payment year, except to the extent 
that other actuarial assumptions or methods are specifically prescribed 
by this section or are required to make the adjustment described in 
paragraph (a)(2)(ii) of this section; and
    (ii) If an enrolled actuary determines that there is a material 
difference between the values determined under the valuation and the 
values that would have been determined as of the last day of the 
preceding plan year, the valuation results are adjusted to reflect 
appropriately the values as of the last day of the preceding plan year. 
(This adjustment need not be made if the unadjusted valuation would 
result in greater unfunded vested benefits.)
    (3) For purposes of paragraphs (a)(1) and (a)(2), the actuarial 
assumptions and methods for a plan year are those used by the plan for 
purposes of determining the additional funding requirement under 
section 302(d) of ERISA and section 412(1) of the Code (or, in the case 
of a plan that is not required to determine such additional funding 
requirement, any assumptions and methods that would be permitted for 
such purpose if the plan were so required).
    (4) In the case of any plan that determines the amount of its 
unfunded vested benefits under the general rule described in this 
paragraph, an enrolled actuary must certify, in accordance with the 
PBGC annual Premium Payment Package provided for in Sec. 4007.3 of this 
part, that the determination was made in a manner consistent with 
generally accepted actuarial principles and practices.
    (b) Unfunded vested benefits. The amount of a plan's unfunded 
vested benefits under this section shall be the excess of the plan's 
vested benefits amount (determined under paragraph (b)(1) of this 
section) over the value of the plan's assets (determined under 
paragraph (b)(2) of this section).
    (1) Vested benefits amount. A plan's vested benefits amount under 
this section shall be the plan's current liability (within the meaning 
of section 302(d)(7) of ERISA and section 412(1)(7) of the Code) 
determined by taking into account only vested benefits and by using an 
interest rate equal to the applicable percentage of the annual yield 
for 30-year Treasury constant maturities, as reported in Federal 
Reserve Statistical Release G.13 and H.15, for the calendar month 
preceding the calendar month in which the premium payment year begins. 
If the interest rate (or rates) used by the plan to determine current 
liability was (or were all) not greater than the required interest 
rate, the vested benefits need not be revalued if an enrolled actuary 
certifies that the interest rate (or interest rates) used was (or were 
all) not greater than the required interest rate. For purposes of this 
paragraph (b)(1) (subject to the provisions of Sec. 4006.5(g), dealing 
with plans of regulated public utilities), the applicable percentage 
is--
    (i) For a premium payment year that begins before July 1997, 80 
percent;
    (ii) For a premium payment year that begins after June 1997 and 
before the first premium payment year to which the first tables 
prescribed under section 302(d)(7)(C)(ii)(II) of ERISA and section 
412(1)(7)(C)(ii)(II) of the Code apply, 85 percent; and
    (iii) For the first premium payment year to which the first tables 
prescribed under section 302(d)(7)(C)(ii)(II) of ERISA and section 
412(1)(7)(C)(ii)(II) of the Code apply and any subsequent plan year, 
100 percent.
    (2) Value of assets. (i) Actuarial value. For a premium payment 
year that is described in paragraph (b)(1)(i) or (b)(1)(ii) of this 
section, the value of the plan's assets shall be their actuarial value 
determined in accordance with section 302(c)(2) of ERISA and section 
412(c)(2) of the Code.
    (ii) Fair market value. For a premium payment year that is 
described in paragraph (b)(1)(iii) of this section, the value of the 
plan's assets shall be their fair market value.
    (iii) Use of credit balance. The value of the plan's assets shall 
not be reduced by a credit balance in the funding standard account.
    (iv) Contributions. Contributions owed for any plan year preceding 
the premium payment year shall be included for plans with 500 or more 
participants and may be included for any other plan. Contributions may 
be included only to the extent such contributions have been paid into 
the plan on or before the earlier of the due date for payment of the 
variable-rate portion of the premium under Sec. 4007.11 or the date 
that portion is paid. Contributions included that are paid after the 
last day of the plan year preceding the premium payment year shall be 
discounted at the plan asset valuation rate (on a simple or compound 
basis in accordance with the plan's discounting rules) to such last day 
to reflect the date(s) of payment. Contributions for the premium 
payment year may not be included for any plan.
    (c) Alternative method for calculating unfunded vested benefits. In 
lieu of determining the amount of the plan's unfunded vested benefits 
pursuant to paragraph (a) of this section, a plan administrator may 
calculate the amount of a plan's unfunded vested benefits under this 
paragraph (c) using the plan's Form 5500, Schedule B, for the plan year 
preceding the premium payment year. Pursuant to this paragraph (c), 
unfunded vested benefits shall be determined, in accordance with the 
Premium Payment Package, from values for the plan's vested benefits and 
assets that are required to be reported on the plan's Schedule B. The 
value of the vested benefits shall be adjusted in accordance with 
paragraph (c)(1) of this section to reflect accruals during the plan 
year preceding the premium payment year and with paragraph (c)(2) of 
this section to reflect the interest rate prescribed in paragraph 
(b)(1) of this section, and the value of the assets shall be adjusted 
in accordance with paragraph (c)(4) of this section. (If the plan 
administrator certifies that the interest rate (or rates) used to 
determine the vested benefit values taken from the Schedule B was (or 
were all) not greater than the interest rate prescribed in paragraph 
(b)(1) of this section, the interest rate adjustment prescribed in 
paragraph (c)(2) of this section is not required.) The resulting 
unfunded vested benefits amount shall be adjusted in accordance with 
paragraph (c)(5) of this section to reflect the passage of time from 
the date of the Schedule B data to the last day of the plan year 
preceding the premium payment year.
    (1) Vested benefits adjustment for accruals. The total value of the 
plan's current liability as of the first day of the plan year preceding 
the premium payment year for vested benefits of active and terminated 
vested participants not in pay status, computed in accordance with 
section 302(d)(7) of ERISA and section 412(l)(7) of the Code,

[[Page 34018]]

shall be adjusted to reflect the increase in vested benefits 
attributable to accruals during the plan year preceding the premium 
payment year by multiplying that value by 1.07.
    (2) Vested benefits interest rate adjustment. The value of vested 
benefits as entered on the Schedule B shall be adjusted in accordance 
with the following formula (except as provided in paragraph (c)(3) of 
this section) to reflect the interest rate prescribed in paragraph 
(b)(1) of this section:

VB<INF>adj=VB<INF>PAY x .94<SUP>(RIR-BIR)+VB<INF>NON-PAY 
x .94<SUP>(RIR-BIR) x ((100+BIA)/(100+RIR))<SUP>(ARA-50);

where--
    (i) VB<INF>adj is the adjusted vested benefits amount (as of the 
first day of the plan year preceding the premium payment year) under 
the alternative calculation method;
    (ii) VB<INF>PAY is the plan's current liability as of the first day 
of the plan year preceding the premium payment year for vested benefits 
of participants and beneficiaries in pay status, computed in accordance 
with section 302(d)(7) of ERISA and section 412(l)(7) of the Code;
    (iii) VB<INF>NON-PAY is the total of the plan's current liability 
as of the first day of the plan year preceding the premium payment year 
for vested benefits of active and terminated vested participants not in 
pay status, computed in accordance with section 302(d)(7) of ERISA and 
section 412(l)(7) of the Code, multiplied by 1.07 in accordance with 
paragraph (c)(1) of this section;
    (iv) RIR is the required interest rate prescribed in paragraph 
(b)(1) of this section;
    (v) BIR is the post-retirement current liability interest rate used 
to determine the pay-status current liability figure referred to in 
paragraph (c)(2)(ii) of this section;
    (vi) BIA is the pre-retirement current liability interest rate used 
to determine the pre-pay-status current liability figures referred to 
in paragraph (c)(2)(iii) of this section; and
    (vii) ARA is the plan's assumed weighted average retirement age.
    (3) Optional use of substitution factors in interest rate 
adjustment formula. In lieu of the term, .94 <SUP>(RIR-BIR), in the 
formula prescribed by paragraph (c)(2) of this section, a plan 
administrator may use the optional substitution factor provided in the 
Premium Payment Package.
    (4) Adjusted value of plan assets. The value of plan assets shall 
be the actuarial value of plan assets as of the first day of the plan 
year preceding the premium payment year, determined in accordance with 
section 302(c)(2) of ERISA and section 412(c)(2) of the Code without 
reduction for any credit balance in the plan's funding standard 
account, unless that amount was determined as of a date other than the 
first day of the plan year preceding the premium payment year or the 
premium payment year is described in Sec. 4006.4(b)(1)(iii). In either 
of those events, the value of plan assets shall be the current value of 
assets (as reported on Form 5500) as of that first day or (if Form 
5500-EZ is filed) as of the last day of the plan year preceding the 
Schedule B year. The value of assets from the Schedule B shall be 
adjusted in accordance with paragraph (b)(2) of this section, except 
that the amount of all contributions that are included in the value of 
assets and that were made after the first day of the plan year 
preceding the premium payment year shall be discounted to such first 
day at the interest rate prescribed in paragraph (b)(1) of this section 
for the premium payment year, compounded annually except that simple 
interest may be used for any partial years.
    (5) Adjustment for passage of time. The amount of the plan's 
unfunded vested benefits shall be adjusted to reflect the passage of 
time between the date of the Schedule B data (the first day of the plan 
year preceding the premium payment year) and the last day of the plan 
year preceding the premium payment year in accordance with the 
following formula:

UVB<INF>adj=(VB<INF>adj-A<INF>adj) x (1+RIR/100)<SUP>Y;

where--
    (i) UVB<INF>adj is the amount of the plan's adjusted unfunded 
vested benefits;
    (ii) VB<INF>adj is the value of the adjusted vested benefits 
calculated in accordance with paragraphs (c)(1) and (c)(2) of this 
section;
    (iii) A<INF>adj is the adjusted asset amount calculated in 
accordance with paragraph (c)(3) of this section; (iv) RIR is the 
required interest rate prescribed in paragraph (b)(1) of this section; 
and
    (v) Y is deemed to be equal to 1 (unless the plan year preceding 
the premium payment year is a short plan year, in which case Y is the 
number of years between the first day and the last day of the short 
plan year, expressed as a decimal fraction of 1.0 with two digits to 
the right of the decimal point).
    (d) Restrictions on alternative calculation method for large plans.
    (1) The alternative calculation method described in paragraph (c) 
of this section may be used for a plan with 500 or more participants as 
of the last day of the plan year preceding the premium payment year 
only if--
    (i) No significant event, as described in paragraph (d)(2) of this 
section, has occurred between the first day and the last day of the 
plan year preceding the premium payment year, and an enrolled actuary 
so certifies in accordance with the Premium Payment Package; or
    (ii) An enrolled actuary makes an appropriate adjustment to the 
value of unfunded vested benefits to reflect the occurrence of 
significant events that have occurred between those dates and certifies 
to that fact in accordance with the Premium Payment Package.
    (2) The significant events described in this paragraph are--
    (i) An increase in the plan's actuarial costs (consisting of the 
plan's normal cost under section 302(b)(2)(A) of ERISA and section 
412(b)(2)(A) of the Code, amortization charges under section 
302(b)(2)(B) of ERISA and section 412(b)(2)(B) of the Code, and 
amortization credits under section 302(b)(3)(B) of ERISA and section 
412(b)(3)(B) of the Code) attributable to a plan amendment, unless the 
cost increase attributable to the amendment is less than 5 percent of 
the actuarial costs determined without regard to the amendment;
    (ii) The extension of coverage under the plan to a new group of 
employees resulting in an increase of 5 percent or more in the plan's 
liability for accrued benefits;
    (iii) A plan merger, consolidation or spinoff that is not de 
minimis pursuant to the regulations under section 414(l) of the Code;
    (iv) The shutdown of any facility, plant, store, etc., that creates 
immediate eligibility for benefits that would not otherwise be 
immediately payable for participants separating from service;
    (v) The offer by the plan for a temporary period to permit 
participants to retire at benefit levels greater than that to which 
they would otherwise be entitled;
    (vi) A cost-of-living increase for retirees resulting in an 
increase of 5 percent or more in the plan's liability for accrued 
benefits; and
    (vii) Any other event or trend that results in a material increase 
in the value of unfunded vested benefits.


Sec. 4006.5   Exemptions and special rules.

    (a) Variable-rate premium exemptions. A plan described in any of 
paragraphs (a)(1)-(a)(5) of this section is not required to determine 
its unfunded vested benefits under Sec. 4006.4 and does not owe a 
variable-rate premium under Sec. 4006.3(b).
    (1) Certain fully funded plans. A plan is described in this 
paragraph if the plan had fewer than 500 participants on the

[[Page 34019]]

last day of the plan year preceding the premium payment year, and an 
enrolled actuary certifies in accordance with the Premium Payment 
Package that, as of that date, the plan had no unfunded vested benefits 
(valued at the interest rate prescribed in Sec. 4006.4(b)(1)).
    (2) Plans without vested benefit liabilities. A plan is described 
in this paragraph if it did not have any participants with vested 
benefits as of the last day of the plan year preceding the premium 
payment year, and the plan administrator so certifies in accordance 
with the Premium Payment Package.
    (3) Section 412(i) plans. A plan is described in this paragraph if 
the plan was a plan described in section 412(i) of the Code and the 
regulations thereunder at all times during the plan year preceding the 
premium payment year and the plan administrator so certifies, in 
accordance with the Premium Payment Package. If the plan is a new plan 
or a newly-covered plan, the certification under this paragraph shall 
be made as of the due date for the premium under Sec. 4007.11(c) and 
shall certify to the plan's status at all times during the premium 
payment year through such due date.
    (4) Plans terminating in standard terminations. The exemption for a 
plan described in this paragraph is conditioned upon the plan's making 
a final distribution of assets in a standard termination. If a plan is 
ultimately unable to do so, the exemption is revoked and all variable-
rate amounts not paid pursuant to this exemption are due retroactive to 
the applicable due date(s). A plan is described in this paragraph if--
    (i) The plan administrator has issued notices of intent to 
terminate the plan in a standard termination in accordance with section 
4041(a)(2) of ERISA; and
    (ii) The proposed termination date set forth in the notice of 
intent to terminate is on or before the last day of the plan year 
preceding the premium payment year.
    (5) Plans at full funding limit. A plan is described in this 
paragraph if, on or before the earlier of the due date for payment of 
the variable-rate portion of the premium under Sec. 4007.11 or the date 
that portion is paid, the plan's contributing sponsor or contributing 
sponsors made contributions to the plan for the plan year preceding the 
premium payment year in an amount not less than the full funding 
limitation for such preceding plan year under section 302(c)(7) of 
ERISA and section 412(c)(7) of the Code (determined in accordance with 
paragraphs (a)(5)(i) and (a)(5)(ii) of this section). In order for a 
plan to qualify for this exemption, an enrolled actuary must certify 
that the plan has met the requirements of this paragraph.
    (i) Determination of full funding limitation. The determination of 
whether contributions for the preceding plan year were in an amount not 
less than the full funding limitation under section 302(c)(7) of ERISA 
and section 412(c)(7) of the Code for such preceding plan year shall be 
based on the methods of computing the full funding limitation, 
including actuarial assumptions and funding methods, used by the plan 
(provided such assumptions and methods met all requirements, including 
the requirements for reasonableness, under section 302 of ERISA and 
section 412 of the Code) with respect to such preceding plan year. Plan 
assets shall not be reduced by the amount of any credit balance in the 
plan's funding standard account.
    (ii) Rounding of de minimis amounts. Any contribution that is 
rounded down to no less than the next lower multiple of one hundred 
dollars (in the case of full funding limitations up to one hundred 
thousand dollars) or to no less than the next lower multiple of one 
thousand dollars (in the case of full funding limitations above one 
hundred thousand dollars) shall be deemed for purposes of this 
paragraph to be in an amount equal to the full funding limitation.
    (b) Special rule for determining vested benefits for certain large 
plans. With respect to a plan that had 500 or more participants on the 
last day of the plan year preceding the premium payment year, if an 
enrolled actuary determines pursuant to Sec. 4006.4(a) that the 
actuarial value of plan assets equals or exceeds the value of all 
benefits accrued under the plan (valued at the interest rate prescribed 
in Sec. 4006.4(b)(1)), the enrolled actuary need not determine the 
value of the plan's vested benefits, and may instead report in the 
Premium Payment Package the value of the accrued benefits.
    (c) Special rule for determining unfunded vested benefits for plans 
terminating in distress or involuntary terminations. A plan described 
in this paragraph may determine its unfunded vested benefits by using 
the special alternative calculation method set forth in this paragraph. 
A plan is described in this paragraph if it has issued notices of 
intent to terminate in a distress termination in accordance with 
section 4041(a)(2) of ERISA with a proposed termination date on or 
before the last day of the plan year preceding the premium payment 
year, or if the PBGC has instituted proceedings to terminate the plan 
in accordance with section 4042 of ERISA and has sought a termination 
date on or before the last day of the plan year preceding the premium 
payment year. Pursuant to this paragraph, a plan shall determine its 
unfunded vested benefits in accordance with the alternative calculation 
method in Sec. 4006.4(c), except that--
    (1) The calculation shall be based on the Form 5500, Schedule B, 
for the plan year which includes (in the case of a distress 
termination) the proposed termination date or (in the case of an 
involuntary termination) the termination date sought by the PBGC, or, 
if no Schedule B is filed for that plan year, on the Schedule B for the 
immediately preceding plan year;
    (2) All references in Sec. 4006.4(c) and Sec. 4006.4(d) to the 
first day of the plan year preceding the premium payment year shall be 
deemed to refer to the first day of the plan year for which the 
Schedule B was filed;
    (3) The value of the sum of the plan's current liability as of the 
first day of the plan year preceding the premium payment year for 
vested benefits of active and terminated vested participants not in pay 
status, computed in accordance with section 302(d)(7) of ERISA and 
section 412(l)(7) of the Code, shall be adjusted (in lieu of the 
adjustment required by Sec. 4006.4(c)(1)) by multiplying that value by 
the sum of 1 plus the product of .07 and the number of years (rounded 
to the nearest hundredth of a year) between the date of the Schedule B 
data and (in the case of a distress termination) the proposed 
termination date or (in the case of an involuntary termination) the 
termination date sought by the PBGC; and
    (4) The exponent, ``Y,'' in the time adjustment formula of 
Sec. 4006.4(c)(5) shall be deemed to equal the number of years (rounded 
to the nearest hundredth of a year) between the date of the Schedule B 
data and the last day of the plan year preceding the premium payment 
year.
    (d) Special determination date rule for new and newly-covered 
plans. In the case of a new plan or a newly-covered plan, all 
references in Secs. 4006.3, 4006.4, and paragraphs (a) and (b) of this 
section to the last day of the plan year preceding the premium payment 
year shall be deemed to refer to the first day of the premium payment 
year or, if later, the date on which the plan became effective for 
benefit accruals for future service, and for purposes of determining 
the plan's premium, the number of plan participants, and (for a single-
employer plan) the amount of the plan's unfunded vested benefits and 
the applicability of any exemption or special rule under

[[Page 34020]]

paragraph (a) or (b) of this section, shall be determined as of such 
first day or later date.
    (e) Special determination date rule for certain mergers and 
spinoffs. (1) With respect to a plan described in paragraph (e)(2) of 
this section, all references in Secs. 4006.3, 4006.4, and this section, 
as applicable, to the last day of the plan year preceding the premium 
payment year shall be deemed to refer to the first day of the premium 
payment year.
    (2) A plan is described in this paragraph (e)(2) if--
    (i) The plan engages in a merger or spinoff that is not de minimis 
pursuant to the regulations under section 414(l) of the Code (in the 
case of single-employer plans) or pursuant to part 4231 of this chapter 
(in the case of multiemployer plans), as applicable;
    (ii) The merger or spinoff is effective on the first day of the 
plan's premium payment year; and
    (iii) The plan is the transferee plan in the case of a merger or 
the transferor plan in the case of a spinoff.
    (f) Special refund rule for certain short plan years. A plan 
described in this paragraph (f) is entitled to a refund for a short 
plan year. The amount of the refund will be determined by prorating the 
premium for the short plan year by the number of months (treating a 
part of a month as a month) in the short plan year. A plan is described 
in this paragraph if--
    (1) The plan is a new or newly-covered plan that becomes effective 
for premium purposes on a date other than the first day of its first 
plan year;
    (2) The plan adopts an amendment changing its plan year, resulting 
in a short plan year;
    (3) The plan's assets are distributed pursuant to the plan's 
termination, in which case the short plan year for purposes of 
computing the amount of the refund under this paragraph shall be deemed 
to end on the asset distribution date or, if later (in the case of a 
single-employer plan), the date 30 days prior to the date the PBGC 
receives the plan's post-distribution certification; or
    (4) The plan is a single-employer plan and a trustee of the plan is 
appointed pursuant to section 4042 of ERISA, in which case the short 
plan year for purposes of computing the amount of the refund under this 
paragraph shall be deemed to end on the date of appointment.
    (g) Special rules for plans of regulated public utilities. (1) This 
paragraph (g) applies to a premium payment year beginning before 1998 
of a plan maintained by one or more contributing sponsors at least one 
of which is a regulated public utility. For this purpose, a regulated 
public utility is one that, as of the beginning of the premium payment 
year, is described in section 7701(a)(33)(A)(i) of the Code and has not 
begun to collect from utility customers rates that reflect the costs 
incurred or projected to be incurred for additional premiums under 
section 4006(a)(3)(E) of ERISA pursuant to final and nonappealable 
determinations by all public utility commissions (or other authorities 
having jurisdiction over the rates and terms of service by the 
regulated public utility) that the costs are just and reasonable and 
recoverable from customers of the regulated public utility.
    (2) Limitation on variable-rate premium and required interest rate. 
If every contributing sponsor of a plan described in paragraph (a) of 
this section is a regulated public utility, then, notwithstanding the 
provisions of Secs. 4006.3(b) and 4006.4(b)(1),--
    (i) The variable-rate premium shall not be greater than $53 
multiplied by the number of participants in the plan on the last day of 
the plan year preceding the premium payment year; and
    (ii) If the premium payment year begins after June 1997, 
Sec. 4006.4(b)(1) shall be applied as if the applicable percentage 
referred to therein were 80 percent.
    (3) Proportional application of limitation rules. If a plan is 
described in paragraph (g)(1) of this section but also has a 
contributing sponsor that is not a regulated public utility and 
participants who are not regulated public utility participants 
(determined under any reasonable method consistently applied among 
participants and from year to year), the limitations in paragraph 
(g)(2) of this section shall be applied in proportion to the number of 
regulated public utility participants in accordance with the Premium 
Payment Package.
    (4) Special variable-rate premium rule for certain small regulated 
public utility plans paying maximum variable-rate premium. A plan whose 
variable-rate premium is subject to the limitation described in 
paragraph (g)(2)(i) of this section is not required to determine its 
unfunded vested benefits under Sec. 4006.4 if--
    (i) The number of participants required to be taken into account in 
computing the plan's premium for the premium payment year is fewer than 
500; and
    (ii) The plan pays a variable-rate premium equal to $53 multiplied 
by the number of participants in the plan on the last day of the plan 
year preceding the premium payment year.
    (5) Effect of omitted or inadequate information. The variable-rate 
premium of a plan described in paragraph (g)(2) of this section may be 
deemed to be $53 multiplied by the number of participants in the plan 
on the last day of the plan year preceding the premium payment year 
if--
    (i) Any item or items necessary to establish the correct variable-
rate premium for the plan are omitted from the plan's premium filing; 
or
    (ii) In connection with an audit, the plan's records fail, in the 
PBGC's judgment, to establish that the plan's unfunded vested benefits 
were of the amount reported by the plan for the premium payment year.

PART 4007--PAYMENT OF PREMIUMS

Sec.
4007.1  Purpose and scope.
4007.2  Definitions.
4007.3  Filing requirement and forms.
4007.4  Filing address.
4007.5  Date of filing.
4007.6  Computation of time.
4007.7  Late payment interest charges.
4007.8  Late payment penalty charges.
4007.9  Coverage for guaranteed basic benefits.
4007.10  Recordkeeping requirements; PBGC audits.
4007.11  Due dates.
4007.12  Liability for single-employer premiums.

    Authority: 29 U.S.C. 1302(b)(3), 1306, 1307.


Sec. 4007.1  Purpose and scope.

    This part, which applies to all plans that are covered by title IV 
of ERISA, provides procedures for paying the premiums imposed by 
sections 4006 and 4007 of ERISA. (See part 4006 of this chapter for 
premium rates and computational rules.)


Sec. 4007.2  Definitions.

    (a) The following terms are defined in Sec. 4001.2 of this chapter: 
Code, contributing sponsor, ERISA, insurer, IRS, multiemployer plan, 
notice of intent to terminate, PBGC, plan, plan administrator, plan 
year, and single-employer plan.
    (b) For purposes of this part, the following terms are defined in 
Sec. 4006.2 of this chapter: new plan, newly covered plan, participant, 
premium payment year, and short plan year.


Sec. 4007.3  Filing requirement and forms.

    The estimation, declaration, reconciliation and payment of premiums 
shall be made using the forms prescribed by and in accordance with the 
instructions in the PBGC annual Premium Payment Package. The plan 
administrator of each covered plan shall

[[Page 34021]]

file the prescribed form or forms, and any premium payments due, no 
later than the applicable due date specified in Sec. 4007.11.


Sec. 4007.4  Filing address.

    Plan administrators shall file all forms required to be filed under 
this part and all payments for premiums, interest, and penalties 
required to be made under this part at the address specified in the 
Premium Payment Package.


Sec. 4007.5  Date of filing.

    (a) Any form required to be filed under this part and any payment 
required to be made under this part shall be deemed to have been filed 
or made on the date on which it is mailed.
    (b) A form or payment shall be presumed to have been mailed on the 
date on which it is postmarked by the United States Postal Service, or 
three days prior to the date on which it is received by the PBGC if it 
does not contain a legible United States Postal Service postmark.


Sec. 4007.6  Computation of time.

    In computing any period of time prescribed by this part, the day of 
the act, event, or default from which the designated period of time 
begins to run is not counted. The last day of the period so computed 
shall be included, unless it is a Saturday, Sunday, or federal holiday, 
in which event the period runs until the end of the next day that is 
not a Saturday, Sunday, or federal holiday. For purposes of computing 
late payment interest charges under Sec. 4007.7 and late payment 
penalty charges under Sec. 4007.8, a Saturday, Sunday or federal 
holiday referred to in the previous sentence shall be included.


Sec. 4007.7  Late payment interest charges.

    (a) If any premium payment due under this part is not paid by the 
due date prescribed for such payment by Sec. 4007.11, an interest 
charge will accrue on the unpaid amount at the rate imposed under 
section 6601(a) of the Code for the period from the date payment is due 
to the date payment is made. Late payment interest charges are 
compounded daily.
    (b) When PBGC issues a bill for premium payments necessary to 
reconcile the premiums paid with the actual premium due, interest will 
be accrued on the unpaid premium until the date of the bill if paid no 
later than 30 days after the date of such bill. If the bill is not paid 
within the 30-day period following the date of such bill, interest will 
continue to accrue throughout such 30-day period and thereafter, until 
the date paid.
    (c) PBGC bills for interest assessed under this section will be 
deemed paid when due if paid no later than 30 days after the date of 
such bills. Otherwise, interest will accrue in accordance with 
paragraph (a) of this section on the amount of the bill from the date 
of the bill until the date of payment.


Sec. 4007.8   Late payment penalty charges.

    (a) Penalty charge. If any premium payment due under this part is 
not paid by the due date prescribed for such payment by Sec. 4007.11, 
the PBGC will, unless a waiver is granted pursuant to paragraph (b) of 
this section, assess a late payment charge (not to exceed 100% of the 
unpaid premium) equal to the greater of--
    (i) 5% per month (or fraction thereof) of the unpaid premiums; or
    (ii) $25.
    (b) Waiver of penalty charge. The late payment penalty charge will 
be waived, in whole or in part--
    (1) With respect to any premium payment made within 60 days after 
the due date prescribed for such payment in Sec. 4007.11, if, before 
such due date, the PBGC grants a waiver upon a showing of substantial 
hardship arising from the timely payment of the premium and a showing 
that the premium will be paid within such 60-day period;
    (2) If the PBGC grants a waiver based on any other demonstration of 
good cause;
    (3) If the PBGC, on its own motion, waives the application of 
paragraph (a) of this section;
    (4) With respect to any premium payment (excluding any variable-
rate premium under Sec. 4006.3(b)), if a plan that is required to make 
a reconciliation filing described in Sec. 4007.11(b)(2)(iii)--
    (i) Paid at least 90 percent of the flat-rate premium due for the 
premium payment year by the due date specified in 
Sec. 4007.11(b)(2)(i); or
    (ii) Paid by the due date specified in Sec. 4007.11(b)(2)(i) an 
amount equal to the premium that would be due for the premium payment 
year, computed using the flat per capita premium rate for the premium 
payment year and the participant count upon which the prior year's 
premium was based; and
    (iii) Pays 100 percent of the flat-rate premium due for the premium 
payment year under Sec. 4006.3 on or before the due date for the 
reconciliation filing under Sec. 4007.11(b)(2)(iii); or
    (5) With respect to any PBGC bills for the premium payment 
necessary to reconcile the premium paid with the actual premium due, if 
such bills are paid no later than 30 days after the date of such bills.


Sec. 4007.9   Coverage for guaranteed basic benefits.

    (a) The failure by a plan administrator to pay the premiums due 
under this part will not result in that plan's loss of coverage for 
basic benefits guaranteed under sections 4022(a) or 4022A(a) of ERISA.
    (b) The payment of the premiums imposed by this part will not 
result in coverage for basic benefits guaranteed under sections 4022(a) 
or 4022A(a) of ERISA for plans not covered under title IV of ERISA.


Sec. 4007.10   Recordkeeping requirements; PBGC audits.

    (a) Retention of records to support premium payments. All plan 
records, including calculations and other data prepared by an enrolled 
actuary or, for a plan described in section 412(i) of the Code, by the 
insurer from which the insurance contracts are purchased, that are 
necessary to support or to validate premium payments under this part 
shall be retained by the plan administrator for a period of six years 
after the premium due date. Records that must be retained pursuant to 
this paragraph include, but are not limited to, records that establish 
the number of plan participants and that reconcile the calculation of 
the plan's unfunded vested benefits with the actuarial valuation upon 
which the calculation was based. Records retained pursuant to this 
paragraph shall be made available to the PBGC upon request for 
inspection and photocopying.
    (b) PBGC audit. Premium payments under this part are subject to 
audit by the PBGC. If, upon audit, the PBGC determines that a premium 
due under this part was underpaid, the late payment interest charges 
under Sec. 4007.7 and the late payment penalty charges under 
Sec. 4007.8 shall apply to the unpaid balance from the premium due date 
to the date of payment. In determining the premium due, if, in the 
judgment of the PBGC, the plan's records fail to establish the number 
of plan participants with respect to whom premiums were required for 
any premium payment year, the PBGC may rely on data it obtains from 
other sources (including the IRS and the Department of Labor) for 
presumptively establishing the number of plan participants for premium 
computation purposes.


Sec. 4007.11   Due dates.

    (a) In general. The premium filing due date for small plans is 
prescribed in paragraph (a)(1) of this section and the premium filing 
due dates for large plans are prescribed in paragraph (a)(2) of this 
section.

[[Page 34022]]

    (1) Plans with fewer than 500 participants. If the plan has fewer 
than 500 participants, as determined under paragraph (b) of this 
section, the due date is the fifteenth day of the eighth full calendar 
month following the month in which the plan year began.
    (2) Plans with 500 or more participants. If the plan has 500 or 
more participants, as determined under paragraph (b) of this section--
    (i) The due date for the flat-rate premium required by 
Sec. 4006.3(a) is the last day of the second full calendar month 
following the close of the plan year preceding the premium payment 
year; and
    (ii) The due date for the variable-rate premium required by 
Sec. 4006.3(b) for single-employer plans is the fifteenth day of the 
eighth full calendar month following the month in which the premium 
payment year begins.
    (iii) If the number of plan participants on the last day of the 
plan year preceding the premium payment year is not known by the date 
specified in paragraph (a)(2)(i) of this section, a reconciliation 
filing (on the form prescribed by this part) and any required premium 
payment or request for refund shall be made by the date specified in 
paragraph (a)(2)(ii) of this section.
    (3) Plans that change plan years. For any plan that changes its 
plan year, the premium form or forms and payment or payments for the 
short plan year shall be filed by the applicable due date or dates 
specified in paragraphs (a)(1), (a)(2), or (c) of this section. For the 
plan year that follows a short plan year, the due date or dates for the 
premium forms and payments shall be, with respect to each such due 
date, the later of--
    (i) The applicable due date or dates specified in paragraph (a)(1) 
or (a)(2) of this section; or
    (ii) 30 days after the date on which the amendment changing the 
plan year was adopted.
    (b) Participant count rule for purposes of determining filing due 
dates. For purposes of determining under paragraph (a) of this section 
whether a plan has fewer than 500 participants, or 500 or more 
participants, the plan administrator shall use--
    (1) For a single-employer plan, the number of participants for whom 
premiums were payable for the plan year preceding the premium payment 
year, or
    (2) For a multiemployer plan,--
    (i) If the premium payment year is the plan's second plan year, the 
first day of the first plan year; or
    (ii) If the premium payment year is the plan's third or a 
subsequent plan year, the last day of the second preceding plan year.
    (c) Due dates for new and newly covered plans. Notwithstanding 
paragraph (a) of this section, the premium form and all premium 
payments due for the first plan year of coverage of any new plan or 
newly covered plan shall be filed on or before the latest of--
    (1) The fifteenth day of the eighth full calendar month following 
the month in which the plan year began or, if later, in which the plan 
became effective for benefit accruals for future service;
    (2) 90 days after the date of the plan's adoption; or
    (3) 90 days after the date on which the plan became covered by 
title IV of ERISA.
    (d) Continuing obligation to file. The obligation to file the form 
or forms prescribed by this part and to pay any premiums due continues 
through the plan year in which all plan assets are distributed pursuant 
to a plan's termination or in which a trustee is appointed under 
section 4042 of ERISA, whichever occurs earlier. The entire premium 
computed under this part is due, irrespective of whether the plan is 
entitled to a refund for a short plan year pursuant to Sec. 4006.5(f).
    (e) Improper filings. Any form not filed in accordance with this 
part, not filed in accordance with the instructions in the Premium 
Payment Package, not accompanied by the required premium payment, or 
otherwise incomplete, may, in the discretion of the PBGC, be returned 
with any payment accompanying the form to the plan administrator, and 
such payment shall be treated as not having been made.


Sec. 4007.12   Liability for single-employer premiums.

    (a) The designation under this part of the plan administrator as 
the person required to file the applicable forms and to submit the 
premium payment for a single-employer plan is a procedural requirement 
only and does not alter the liability for premium payments imposed by 
section 4007 of ERISA. Pursuant to section 4007(e) of ERISA, both the 
plan administrator and the contributing sponsor of a single-employer 
plan are liable for premium payments, and, if the contributing sponsor 
is a member of a controlled group, each member of the controlled group 
is jointly and severally liable for the required premiums. Any entity 
that is liable for required premiums is also liable for any interest 
and penalties assessed with respect to such premiums.
    (b) For any plan year in which a plan administrator issues 
(pursuant to section 4041(a)(2) of ERISA) notices of intent to 
terminate in a distress termination under section 4041(c) of ERISA or 
the PBGC initiates a termination proceeding under section 4042 of 
ERISA, and for each plan year thereafter, the obligation to pay the 
premiums (and any interest or penalties thereon) imposed by ERISA and 
this part for a single-employer plan shall be an obligation solely of 
the contributing sponsor and the members of its controlled group, if 
any.

(Approved by the Office of Management and Budget under control 
number 1212-0009)

PART 4010--ANNUAL FINANCIAL AND ACTUARIAL INFORMATION REPORTING

Sec.
4010.1  Purpose and scope.
4010.2  Definitions.
4010.3  Filing requirement.
4010.4  Filers.
4010.5  Information year.
4010.6  Information to be filed.
4010.7  Identifying information.
4010.8  Plan actuarial information.
4010.9  Financial information.
4010.10  Due date and filing with the PBGC.
4010.11  Waivers and extensions.
4010.12  Confidentiality of information submitted.
4010.13  Penalties.
4010.14  OMB control number.

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


Sec. 4010.1  Purpose and scope.

    This part prescribes the requirements for annual filings with the 
PBGC under section 4010 of ERISA. This part applies to filers for any 
information year ending on or after December 31, 1995.


Sec. 4010.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
benefit liabilities, Code, contributing sponsor, controlled group, 
ERISA, fair market value, IRS, PBGC, person, plan, and plan year.
    In addition, for purposes of this part:
    Exempt entity means a person who does not have to file information 
and about whom information does not have to be filed, as described in 
Sec. 4010.4(d) of this part.
    Exempt plan means a plan about which actuarial information does not 
have to be filed, as described in Sec. 4010.8(c) of this part.
    Fair market value of the plan's assets means the fair market value 
of the plan's assets at the end of the plan year ending within the 
filer's information year (determined without regard to any 
contributions receivable).

[[Page 34023]]

    Filer means a person who is required to file reports, as described 
in Sec. 4010.4 of this part.
    Fiscal year means, with respect to a person, the person's annual 
accounting period or, if the person has not adopted a closing date, the 
calendar year.
    Information year means the year determined under Sec. 4010.5 of 
this part.


Sec. 4010.3  Filing requirement.

    (a) In general. Except as provided in Sec. 4010.8(c) (relating to 
exempt plans) and except where waivers have been granted under 
Sec. 4010.11 of this part, each filer shall submit to the PBGC 
annually, on or before the due date specified in Sec. 4010.10, all 
information specified in Sec. 4010.6(a) with respect to all members of 
a controlled group and all plans maintained by members of a controlled 
group.
    (b) Single controlled group submission. Any filer or other person 
may submit the information specified in Sec. 4010.6(a) on behalf of one 
or more members of a filer's controlled group. If a person other than a 
filer submits the information, the submission must also include a 
written power of attorney signed by a filer authorizing the person to 
act on behalf of one or more filers.


Sec. 4010.4  Filers.

    (a) General. A contributing sponsor of a plan and each member of 
the contributing sponsor's controlled group is a filer with respect to 
an information year (unless exempted under paragraph (d) of this 
section) if--
    (1) the aggregate unfunded vested benefits of all plans (including 
any exempt plans) maintained by the members of the contributing 
sponsor's controlled group exceed $50 million (disregarding those plans 
with no unfunded vested benefits);
    (2) any member of a 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 section 302(f)(1) (A) 
and (B) of ERISA or section 412(n)(1) (A) and (B) of the Code 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 a controlled group has been 
granted one or more minimum funding waivers under section 303 of ERISA 
or section 412(d) of the Code totaling in excess of $1 million that, as 
of the end of the plan year ending within the information year, are 
still outstanding (determined in accordance with paragraph (c) of this 
section).
    (b) Unfunded vested benefits--(1) General. Except as provided in 
paragraph (b)(2) of this section, for purposes of the $50 million test 
in paragraph (a)(1) of this section, the value of a plan's unfunded 
vested benefits is determined at the end of the plan year ending within 
the filer's information year in accordance with section 
4006(a)(3)(E)(iii) of ERISA and Sec. 4006.4 of this chapter (without 
reference to the exemptions and special rules under Sec. 4006.5).
    (2) Optional assumptions. Prior to the first information year in 
which the mortality assumptions prescribed under section 
302(d)(7)(C)(ii)(II) of ERISA apply to all of the plans maintained by a 
controlled group, the value of unfunded vested benefits for a plan may 
be determined by substituting for the respective assumptions used under 
paragraph (b)(1) of this section (but not using the alternative 
calculation method under Sec. 4006.4(c) of this chapter) all of the 
following assumptions:
    (i) an interest rate equal to 100% of the annual yield for 30-year 
Treasury constant maturities (as reported in Federal Reserve 
Statistical Release G.13 and H.15) for the last full calendar month in 
the plan year;
    (ii) the fair market value of the plan's assets; and
    (iii) the mortality tables described in section 302(d)(7)(C)(ii)(I) 
of ERISA or section 412(l)(7)(C)(ii)(I) of the Code; provided that for 
any plan year ending on or after the effective date of an amendment 
changing the mortality assumptions used to value benefits to be paid as 
annuities in trusteed plans under part 4044 of this chapter, those 
amended mortality assumptions shall be used.
    (c) Outstanding waiver. Before the end of the statutory 
amortization period, a minimum funding waiver for a plan is considered 
outstanding unless--
    (1) a credit balance exists in the funding standard account 
(described in section 302(b) of ERISA and section 412(b) of the Code) 
that is no less than the outstanding balance of all waivers for the 
plan;
    (2) a waiver condition or contractual obligation requires that a 
credit balance as described in paragraph (c)(1) continue to be 
maintained as of the end of each plan year during the remainder of the 
statutory amortization period for the waiver; and
    (3) no portion of any credit balance described in paragraph (c)(1) 
is used to make any required installment under section 302(e) of ERISA 
or section 412(m) of the Code for any plan year during the remainder of 
the statutory amortization period.
    (d) Exempt entities. A person is an exempt entity if the person--
    (1) is not a contributing sponsor of a plan (other than an exempt 
plan);
    (2) has revenue for its fiscal year ending within the controlled 
group's nformation year that is five percent or less of the controlled 
group's revenue for the fiscal year(s) ending within the information 
year;
    (3) 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; and
    (4) 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.


Sec. 4010.5  Information year.

    (a) Determinations based on information year. An information year 
is used under this part to determine which persons are filers 
(Sec. 4010.4), what information a filer must submit (Secs. 4010.6-
4010.9), whether a plan is an exempt plan (Sec. 4010.8(c)), and the due 
date for submitting the information (Sec. 4010.10(a)).
    (b) General. Except as provided in paragraph (c) of this section, a 
person's information year shall be the fiscal year of the person. A 
filer is not required to change its fiscal year or the plan year of a 
plan, to report financial information for any accounting period other 
than an existing fiscal year, or to report actuarial information for 
any plan year other than an existing plan year.
    (c) Controlled group members with different fiscal years-- (1) Use 
of calendar year. If members of a controlled group (disregarding any 
exempt entity) report financial information on the basis of different 
fiscal years, the information year shall be the calendar year.
    (2) Example. Filers A and B are members of the same controlled 
group. Filer A has a July 1 fiscal year, and filer B has an October 1 
fiscal year. The information year is the calendar year. Filer A's 
financial information with respect to its fiscal year ending June 30, 
1996, and filer B's financial information with respect to its fiscal 
year ending September 30, 1996, must be submitted to the PBGC following 
the end of the 1996 calendar year (the calendar year in

[[Page 34024]]

which those fiscal years end). If filer B were an exempt entity, the 
information year would be filer A's July 1 fiscal year.


Sec. 4010.6   Information to be filed.

    (a) General. A filer must submit the information specified in 
Sec. 4010.7 (identifying information), Sec. 4010.8 (plan actuarial 
information) and Sec. 4010.9 (financial information) of this part with 
respect to each member of the filer's controlled group and each plan 
maintained by any member of the controlled group.
    (b) Additional information. By written notification, the PBGC may 
require any filer to submit additional actuarial or financial 
information that is necessary to determine plan assets and liabilities 
for any period through the end of the filer's information year, or the 
financial status of a filer for any period through the end of the 
filer's information year. The information must be submitted within ten 
days after the date of the written notification or by a different time 
specified therein.
    (c) Previous submissions. If any required information has been 
previously submitted to the PBGC, a filer may incorporate this 
information into the required submission by referring to the previous 
submission.


Sec. 4010.7   Identifying information.

    (a) Filers. Each filer is required to provide the following 
identifying information with respect to each member of the controlled 
group (excluding exempt entities)--
    (1) the name, address, and telephone number of each member of the 
controlled group and the legal relationships of each (for example, 
parent, subsidiary); and
    (2) the nine-digit Employer Identification Number (EIN) assigned by 
the IRS to each member (or if there is no EIN for a member, an 
explanation).
    (b) Plans. Each filer is required to provide the following 
identifying information with respect to each plan (including exempt 
plans) maintained by any member of the controlled group (including 
exempt entities)--
    (1) the name of each plan;
    (2) the EIN and the three-digit Plan Number (PN) assigned by the 
contributing sponsor to each plan (or if there is no EIN or PN for a 
plan, an explanation); and
    (3) if the EIN or PN of a plan has changed since the beginning of 
the filer's information year, the previous EIN or PN and an 
explanation.


Sec. 4010.8   Plan actuarial information.

    (a) Required information. For each plan (other than an exempt plan) 
maintained by any member of the filer's controlled group, each filer is 
required to provide the following actuarial information--
    (1) the fair market value of the plan's assets;
    (2) the value of the plan's benefit liabilities (determined in 
accordance with paragraph (d) of this section) at the end of the plan 
year ending within the filer's information year;
    (3) 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--
    (i) each amortization base and related amortization charge or 
credit to the funding standard account (as defined in section 302 (b) 
of ERISA or section 412 (b) of the Code) for that plan year (excluding 
the amount considered contributed to the plan as described in section 
302(b)(3)(A) of ERISA or section 412(b)(3)(A) of the Code),
    (ii) the itemized development of the additional funding charge 
payable for that plan year pursuant to section 412(l) of the Code,
    (iii) the minimum funding contribution and the maximum deductible 
contribution for that plan year,
    (iv) the actuarial assumptions and methods used for that plan year 
for purposes of section 302(b) and (d) of ERISA or section 412(b) and 
(l) of the Code (and any change in those assumptions and methods since 
the previous valuation and justifications for any change), and
    (v) 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 that plan year, and the plan's early retirement 
factors; and
    (4) 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 Sec. 301.6059-1(d).
    (b) Alternative compliance for plan actuarial information. If any 
of the information specified in paragraph (a)(3) of this section is not 
available by the date specified in Sec. 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 
the PBGC, that the filer will file the unavailable information by the 
alternative due date specified in Sec. 4010.10(b) of this part, and
    (2) filing such information (along with a certification by an 
enrolled actuary under paragraph (a)(4) of this section) with the PBGC 
by that alternative due date.
    (c) Exempt plan. The actuarial information specified in this 
section is not required with respect to a plan that, as of the end of 
the plan year ending within the filer's information year, has fewer 
than 500 participants or has benefit liabilities (determined in 
accordance with paragraph (d) of this section) equal to or less than 
the fair market value of the plan's assets, provided that the plan--
    (1) has received, on or within ten days after their due dates, all 
required installments or other payments required to be made during the 
information year under section 302 of ERISA or section 412 of the Code; 
and
    (2) has no minimum funding waivers outstanding (as described in 
Sec. 4010.4(c) of this part) 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 shall 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 shall 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 is 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 will be 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 shall be determined using the assumptions and methods 
applicable to the valuation of benefits to be paid as annuities in 
trusteed plans terminating at the end of the plan year (as prescribed

[[Page 34025]]

in Secs. 4044.51 through 4044.57 of this chapter).
    (3) Special actuarial assumptions for exempt plan determination. 
Solely for purposes of determining whether a plan is an exempt plan, 
the value of benefit liabilities may be determined by substituting for 
the retirement age assumptions in paragraph (d)(2) the retirement age 
assumptions used by the plan for that plan year for purposes of section 
302(d) of ERISA or section 412(l) of the Code.


Sec. 4010.9   Financial information.

    (a) General. Except as provided in this section, each filer is 
required to provide the following financial information for each 
controlled group member (other than an exempt entity)--
    (1) audited financial statements for the fiscal year ending within 
the information year (including balance sheets, income statements, cash 
flow statements, and notes to the financial statements);
    (2) if audited financial statements are not available by the date 
specified in Sec. 4010.10(a), unaudited financial statements for the 
fiscal year ending within the information year; or
    (3) if neither audited nor unaudited financial statements are 
available by the date specified in Sec. 4010.10(a), copies of federal 
tax returns for the tax year ending within the information year.
    (b) Consolidated financial statements. If the financial information 
of a controlled group member is combined with the information of other 
group members in consolidated financial statements, a filer may provide 
the following financial information in lieu of the information required 
in paragraph (a) of this section--
    (1) the audited consolidated financial statements for the filer's 
information year or, if the audited consolidated financial statements 
are not available by the date specified in Sec. 4010.10(a), unaudited 
consolidated financial statements for the fiscal year ending within the 
information year; and
    (2) for each controlled group member included in the consolidated 
financial statements that is a contributing sponsor of a plan (other 
than an exempt plan), the contributing sponsor's revenues and operating 
income for the information year, and net assets at the end of the 
information year.
    (c) Subsequent submissions. If unaudited financial statements are 
submitted as provided in paragraph (a)(2) or (b)(1) of this section, 
audited financial statements must thereafter be filed within 15 days 
after they are prepared. If federal tax returns are submitted as 
provided in paragraph (a)(3) of this section, audited and unaudited 
financial statements must thereafter be filed within 15 days after they 
are prepared.
    (d) Submission of public information. If any of the financial 
information required by paragraphs (a) through (c) of this section is 
publicly available, the filer, in lieu of submitting such information 
to the PBGC, may include a statement with the other information that is 
submitted to the PBGC indicating when such financial information was 
made available to the public and where the PBGC may obtain it. For 
example, if the controlled group member has filed audited financial 
statements with the Securities and Exchange Commission, it need not 
file the financial statements with PBGC but instead can identify the 
SEC filing as part of its submission under this part.
    (e) Inclusion of information about non-filers and exempt entities. 
Consolidated financial statements provided pursuant to paragraph (b)(1) 
of this section may include financial information of persons who are 
not controlled group members (e.g., joint ventures) or are exempt 
entities.


Sec. 4010.10   Due date and filing with the PBGC.

    (a) Due date. Except as permitted under paragraph (b) of this 
section, a filer shall file the information required under this part 
with the PBGC on or before the 105th day after the close of the filer's 
information year.
    (b) Alternative due date. A filer that includes the statement 
specified in Sec. 4010.8(b)(1) with its submission to the PBGC by the 
date specified in paragraph (a) of this section must submit the 
actuarial information specified in Sec. 4010.8(b)(2) within 15 days 
after the deadline for filing the plan's annual report (Form 5500 
series) for the plan year ending within the filer's information year 
(see Sec. 2520.104a-5(a)(2) of this title).
    (c) How to file. Requests and information may be delivered by mail, 
by delivery service, by hand, or by any other method acceptable to the 
PBGC, to: Corporate Finance and Negotiations Department, Pension 
Benefit Guaranty Corporation, 1200 K Street, N.W., Washington, DC 
20005-4026.
    (d) Date when information filed. Information filed under this part 
is considered filed--
    (1) on the date of the United States postmark stamped on the cover 
in which the information is mailed, if--
    (i) the postmark was made by the United States Postal Service; and
    (ii) the document was mailed postage prepaid, properly addressed to 
the PBGC; or
    (2) if the conditions stated in paragraph (d)(1) of this section 
are not met, on the date it is received by the PBGC. Information 
received on a weekend or Federal holiday or after 5:00 p.m. on a 
weekday is considered filed on the next regular business day.
    (e) Computation of time. In computing any period of time under this 
part, the day of the act or event from which the designated period of 
time begins to run shall not be included. The last day of the period so 
computed shall be included, unless it is a weekend or Federal holiday, 
in which event the period runs until the end of the next day that is 
not a weekend or Federal holiday.


Sec. 4010.11   Waivers and extensions.

    The 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 Sec. 4010.10 of this part. The 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 the PBGC at the address provided in 
Sec. 4010.10(c) no later than 15 days before the applicable date 
specified in Sec. 4010.10 of this part, and must state the facts and 
circumstances on which the request is based.


Sec. 4010.12   Confidentiality of information submitted.

    In accordance with Sec. 4901.21(a)(3) of this chapter and section 
4010(c) of ERISA, any information or documentary material that is not 
publicly available and is submitted to the PBGC pursuant to this part 
shall not be made public, except as may be relevant to any 
administrative or judicial action or proceeding or for disclosures to 
either body of Congress or to any duly authorized committee or 
subcommittee of the Congress.


Sec. 4010.13   Penalties.

    If all of the information required under this part is not provided 
within the specified time limit, the PBGC may assess a separate penalty 
under section 4071 of ERISA against the filer and each member of the 
filer's controlled group (other than an exempt entity) of up to $1,000 
a day for each day that the failure continues. The PBGC may also pursue 
other equitable or legal remedies available to it under the law.

[[Page 34026]]

Sec. 4010.14   OMB control number.

    The collection of information requirements contained in this part 
have been approved by the Office of Management and Budget under OMB 
Control Number 1212-0049.

PART 4011--DISCLOSURE TO PARTICIPANTS

Sec.
4011.1  Purpose and scope.
4011.2  Definitions.
4011.3  Notice requirement.
4011.4  Small plan rules.
4011.5  Exemption for new and newly-covered plans.
4011.6  Mergers, consolidations, and spinoffs.
4011.7  Persons entitled to receive notice.
4011.8  Time of notice.
4011.9  Manner of issuance of notice.
4011.10  Form of notice.
4011.11  OMB control number.

Appendix A to Part 4011--Model Participant Notice. Appendix B to Part 
4011--Table of maximum Guaranteed Benefits.

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


Sec. 4011.1   Purpose and scope.

    This part prescribes rules and procedures for complying with the 
requirements of section 4011 of ERISA. This part applies for any plan 
year beginning on or after January 1, 1995, with respect to any single-
employer plan that is covered by section 4021 of ERISA.


Sec. 4011.2   Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
contributing sponsor, employer, ERISA, normal retirement age, PBGC, 
person, plan, plan administrator, plan year, and single-employer plan.
    In addition, for purposes of this part:
    Participant has the meaning in Sec. 4041.2 of this chapter.
    Participant Notice means the notice required pursuant to section 
4011 of ERISA and this part.


Sec. 4011.3   Notice requirement.

    (a) General. Except as otherwise provided in this part, the plan 
administrator of a plan must provide a Participant Notice for a plan 
year if a variable rate premium is payable for the plan under section 
4006(a)(3)(E) of ERISA and part 4006 of this chapter for that plan 
year, unless, for that plan year or for the prior plan year, the plan 
meets the Deficit Reduction Contribution (``DRC'') Exception Test in 
paragraph (b) of this section. The DRC Exception Test may be applied 
using the Small Plan DRC Exception Test rules in Sec. 4011.4(b), where 
applicable.
    (b) DRC Exception Test--(1) Basic rule. A plan meets the DRC 
Exception Test for a plan year if it is exempt from the requirements of 
section 302(d) of ERISA for that plan year by reason of section 
302(d)(9), without regard to the small plan exemption in section 
302(d)(6)(A).
    (2) 1994 plan year. A plan satisfies the DRC Exception Test for the 
1994 plan year if, for any two of the plan years beginning in 1992, 
1993, and 1994 (whether or not consecutive), the plan satisfies any 
requirement of section 302(d)(9)(D)(i) of ERISA.
    (c) Penalties for non-compliance. If a plan administrator fails to 
provide a Participant Notice within the specified time limit or omits 
material information from a Participant Notice, the PBGC may assess a 
penalty under section 4071 of ERISA of up to $1,000 a day for each day 
that the failure continues.


Sec. 4011.4   Small plan rules.

    (a) 1995 plan year exemption. A plan that is exempt from the 
requirements of section 302(d) of ERISA for the 1994 or 1995 plan year 
by reason of section 302(d)(6)(A) is exempt from the Participant Notice 
requirement for the 1995 plan year.
    (b) Small Plan DRC Exception Test. In determining whether the 
Participant Notice requirement applies for a plan year beginning after 
1995, the plan administrator of a plan that is exempt from the 
requirements of section 302(d) of ERISA by reason of section 
302(d)(6)(A) for the plan year being tested may use any one or more of 
the following rules in determining whether the plan meets the DRC 
Exception Test for that plan year:
    (1) Use of Schedule B data. For any plan year for which the plan is 
exempt from the requirements of section 302(d) of ERISA by reason of 
section 302(d)(6)(A), provided both of the following adjustments are 
made--
    (i) The market value of the plan's assets as of the beginning of 
the plan year (as required to be reported on Form 5500, Schedule B) may 
be substituted for the actuarial value of the plan's assets as of the 
valuation date; and
    (ii) The plan's current liability for all participants' total 
benefits as of the beginning of the plan year (as required to be 
reported on Form 5500, Schedule B) may be substituted for the plan's 
current liability as of the valuation date.
    (2) Pre-1995 plan year 90 percent test. A plan that is exempt from 
the requirements of section 302(d) of ERISA for a pre-1995 plan year by 
reason of section 302(d)(6)(A) satisfies the requirements of section 
302(d)(9)(D)(i) for that pre-1995 plan year if the ratio of its assets 
to its current liability for that plan year is at least 90 percent. For 
this purpose, the plan's assets are valued without subtracting any 
credit balance under section 302(b) of ERISA, and its current liability 
is determined using the highest interest rate allowable for the plan 
year under section 302(d)(7)(C).
    (3) Interest rate adjustment. If the interest rate used to 
calculate current liability for a plan year is less than the highest 
rate allowable for the plan year under section 302(d)(7)(C) of ERISA, 
the current liability may be reduced by one percent for each tenth of a 
percentage point by which the highest rate exceeds the rate so used.


Sec. 4011.5   Exemption for new and newly-covered plans.

    A plan (other than a plan resulting from a consolidation or 
spinoff) is exempt from the Participant Notice requirement for the 
first plan year for which the plan must pay premiums under parts 4006 
and 4007 of this chapter.


Sec. 4011.6   Mergers, consolidations, and spinoffs.

    In the case of a plan involved in a merger, consolidation, or 
spinoff transaction that becomes effective during a plan year, the plan 
administrator shall apply the requirements of section 4011 of ERISA and 
of this part for that plan year in a reasonable manner to ensure that 
the Participant Notice serves its statutory purpose.


Sec. 4011.7   Persons entitled to receive notice.

    The plan administrator must provide the Participant Notice to each 
person who is a participant, a beneficiary of a deceased participant, 
an alternate payee under an applicable qualified domestic relations 
order (as defined in section 206(d)(3) of ERISA), or an employee 
organization that represents any group of participants for purposes of 
collective bargaining. To determine who is a person that must receive 
the Participant Notice for a plan year, the plan administrator may 
select any date during the period beginning with the last day of the 
previous plan year and ending with the day on which the Participant 
Notice for the plan year is due, provided that a change in the date 
from one plan year to the next does not exclude a substantial number of 
participants and beneficiaries.


Sec. 4011.8   Time of notice.

    The plan administrator must issue the Participant Notice for a plan 
year no later than two months after the deadline (including extensions) 
for filing the annual report for the previous plan year (see 
Sec. 2520.104a-5(a)(2) of this title).

[[Page 34027]]

The plan administrator may change the date of issuance from one plan 
year to the next, provided that the effect of any change is not to 
avoid disclosing a minimum funding waiver under Sec. 4011.10(b)(5) or a 
missed contribution under Sec. 4011.10(b)(6). When the President of the 
United States declares that, under the Disaster Relief Act of 1974, as 
amended (42 U.S.C. 5121, 5122(2), 5141(b)), a major disaster exists, 
the PBGC may extend the due date for providing the Participant Notice 
by up to 180 days.


Sec. 4011.9   Manner of issuance of notice.

    The Participant Notice shall be issued by using measures reasonably 
calculated to ensure actual receipt by the persons entitled to receive 
it. It may be issued together with another document, such as the 
summary annual report required under section 104(b)(3) of ERISA for the 
prior plan year, but must be in a separate document.


Sec. 4011.10   Form of notice.

    (a) General. The Participant Notice (and any additional information 
under paragraph (d) of this section) shall be readable and written in a 
manner calculated to be understood by the average plan participant and 
not to mislead recipients. The Model Participant Notice in Appendix A 
to this part (when properly completed) is an example of a Participant 
Notice meeting the requirements of this section.
    (b) Content. The Participant Notice for a plan year shall include--
    (1) Identifying information (the name of the plan and the 
contributing sponsor, the employer identification number of the 
contributing sponsor, the plan number, the date (at least the month and 
year) on which the Participant Notice is issued, and the name, title, 
address and telephone number of the person(s) who can provide 
information about the plan's funding);
    (2) A statement to the effect that the Participant Notice is 
required by law;
    (3) The Notice Funding Percentage for the plan year, determined in 
accordance with paragraph (c) of this section, and the date as of which 
the Notice Funding Percentage is determined;
    (4) A statement to the effect that--
    (i) To pay pension benefits, the employer is required to contribute 
money to the plan over a period of years;
    (ii) A plan's funding percentage does not take into consideration 
the financial strength of the employer; and
    (iii) The employer, by law, must pay for all pension benefits, but 
benefits may be at risk if the employer faces a severe financial crisis 
or is in bankruptcy;
    (5) If, for any of the five plan years immediately preceding the 
plan year, the plan has been granted a minimum funding waiver under 
section 303 of ERISA that has not (as of the end of the prior plan 
year) been fully repaid, a statement identifying each such plan year 
and an explanation of a minimum funding waiver;
    (6) For any payment subject to the requirements of this paragraph, 
a statement identifying the due date for the payment and noting that 
the payment has or has not been made and (if made) the date of the 
payment. Once participants have been notified (under this part or Title 
I of ERISA) of a missed contribution that is subject to the 
requirements of this paragraph, the delinquency need not be reported in 
a Participant Notice for a subsequent plan year if the missed 
contribution has been paid in full by the time the subsequent 
Participant Notice is issued. The payments subject to the requirements 
of this paragraph are--
    (i) Any minimum funding payment necessary to satisfy the minimum 
funding standard under section 302(a) of ERISA for any plan year 
beginning on or after January 1, 1994, if not paid by the earlier of 
the due date for that payment (the latest date allowed under section 
302(c)(10)) or the date of issuance of the Participant Notice; and
    (ii) An installment or other payment required by section 302 of 
ERISA for a plan year beginning on or after January 1, 1995, that was 
not paid by the 60th day after the due date for that payment;
    (7) A statement to the effect that if a plan terminates before all 
pension benefits are fully funded, the PBGC pays most persons all 
pension benefits, but some persons may lose certain benefits that are 
not guaranteed;
    (8) A summary of plan benefits guaranteed by the PBGC, with an 
explanation of the limitations on such guarantee; and
    (9) A statement that further information about the PBGC's guarantee 
may be obtained by requesting a free copy of the booklet ``Your 
Guaranteed Pension'' from Consumer Information Center, Dept. YGP, 
Pueblo, Colorado 81009. The Participant Notice may include a statement 
that the booklet may be obtained through electronic access via the 
World Wide Web from the PBGC Homepage at http://www.pbgc.gov/ygp.htm.
    (c) Notice Funding Percentage--
    (1) General Rule. The Notice Funding Percentage that must be 
included in the Participant Notice for a plan year is the ``funded 
current liability percentage'' (as that term is defined in section 
302(d)(9)(C) of ERISA) for that plan year or the prior plan year.
    (2) Small plans. A plan that is exempt from the requirements of 
section 302(d) of ERISA for a plan year by reason of section 
302(d)(6)(A) may determine its funded current liability percentage for 
that plan year using the Small Plan DRC Exception Test rules in 
Sec. 4011.4(b).
    (d) Additional information. The plan administrator may include with 
the Participant Notice any information not described in paragraph (b) 
of this section only if it is in a separate document.
    (e) Foreign languages. In the case of a plan that (as of the date 
selected under Sec. 4011.7) covers the numbers or percentages specified 
in Sec. 2520.104b-10(e) of this title of participants literate only in 
the same non-English language, the plan administrator shall provide 
those participants either--
    (1) An English-language Participant Notice that prominently 
displays a legend, in their common non-English language, offering them 
assistance in that language, and clearly setting forth any procedures 
participants must follow to obtain such assistance, or
    (2) A Participant Notice in that language.


Sec. 4011.11   OMB control number.

    The collections of information contained in this part have been 
approved by the Office of Management and Budget under OMB control 
number 1212-0050.

Appendix A to Part 4011--Model Participant Notice

    The following is an example of a Participant Notice that 
satisfies the requirements of Sec. 4011.10 when the required 
information is filled in (subject to Secs. 4011.10(d)-(e), where 
applicable).

Notice to Participants of [Plan Name]

    The law requires that you receive information on the funding 
level of your defined benefit pension plan and the benefits 
guaranteed by the Pension Benefit Guaranty Corporation (PBGC), a 
federal insurance agency. YOUR PLAN'S FUNDING
    As of [DATE], your plan had [INSERT NOTICE FUNDING PERCENTAGE 
(DETERMINED IN ACCORDANCE WITH Sec. 4011.10(c))] percent of the 
money needed to pay benefits promised to employees and retirees.
    To pay pension benefits, your employer is required to contribute 
money to the pension plan over a period of years. A plan's funding 
percentage does not take into consideration the financial strength 
of the employer. Your employer, by law, must pay for all pension 
benefits, but your benefits may be at risk if your employer faces a 
severe financial crisis or is in bankruptcy.

[[Page 34028]]

    [INCLUDE THE FOLLOWING PARAGRAPH ONLY IF, FOR ANY OF THE 
PREVIOUS FIVE PLAN YEARS, THE PLAN HAS BEEN GRANTED AND HAS NOT 
FULLY REPAID A FUNDING WAIVER.]
    Your plan received a funding waiver for [LIST ANY OF THE FIVE 
PREVIOUS PLAN YEARS FOR WHICH A FUNDING WAIVER WAS GRANTED AND HAS 
NOT BEEN FULLY REPAID]. If a company is experiencing temporary 
financial hardship, the Internal Revenue Service may grant a funding 
waiver that permits the company to delay contributions that fund the 
pension plan.
    [INCLUDE THE FOLLOWING WITH RESPECT TO ANY UNPAID OR LATE 
PAYMENT THAT MUST BE DISCLOSED UNDER Sec. 4011.10(b)(6):]
    Your plan was required to receive a payment from the employer on 
[LIST APPLICABLE DUE DATE(S)]. That payment [has not been made] [was 
made on [LIST APPLICABLE PAYMENT DATE(S)]].

PBGC GUARANTEES

    When a pension plan ends without enough money to pay all 
benefits, the PBGC steps in to pay pension benefits. The PBGC pays 
most people all pension benefits, but some people may lose certain 
benefits that are not guaranteed.
    The PBGC pays pension benefits up to certain maximum limits.
    <bullet> The maximum guaranteed benefit is [INSERT FROM TABLE IN 
APPENDIX B] per month or [INSERT FROM TABLE IN APPENDIX B] per year 
for a 65-year-old person in a plan that terminates in [INSERT 
APPLICABLE YEAR].
    <bullet> The maximum benefit may be reduced for an individual 
who is younger than age 65. For example, it is [INSERT FROM TABLE IN 
APPENDIX B] per month or [INSERT FROM TABLE IN APPENDIX B] per year 
for an individual who starts receiving benefits at age 55. [IN LIEU 
OF AGE 55, YOU MAY ADD OR SUBSTITUTE ANY AGE(S) RELEVANT UNDER THE 
PLAN. FOR EXAMPLE, YOU MAY ADD OR SUBSTITUTE THE MAXIMUM BENEFIT FOR 
AGES 62 OR 60 FROM THE TABLE IN APPENDIX B. IF THE PLAN PROVIDES FOR 
NORMAL RETIREMENT BEFORE AGE 65, YOU MUST INCLUDE THE NORMAL 
RETIREMENT AGE.]
    [IF THE PLAN DOES NOT PROVIDE FOR COMMENCEMENT OF BENEFITS BEFORE 
AGE 65, YOU MAY OMIT THIS PARAGRAPH.]
    <bullet> The maximum benefit will also be reduced when a benefit 
is provided for a survivor.
    The PBGC does not guarantee certain types of benefits.
    [INCLUDE THE FOLLOWING GUARANTEE LIMITS THAT APPLY TO THE 
BENEFITS AVAILABLE UNDER YOUR PLAN.]
    <bullet> The PBGC does not guarantee benefits for which you do 
not have a vested right when a plan ends, usually because you have 
not worked enough years for the company.
    <bullet> The PBGC does not guarantee benefits for which you have 
not met all age, service, or other requirements at the time the plan 
ends.
    <bullet> Benefit increases and new benefits that have been in 
place for less than a year are not guaranteed. Those that have been 
in place for less than 5 years are only partly guaranteed.
    <bullet> Early retirement payments that are greater than 
payments at normal retirement age may not be guaranteed. For 
example, a supplemental benefit that stops when you become eligible 
for Social Security may not be guaranteed.
    <bullet> Benefits other than pension benefits, such as health 
insurance, life insurance, death benefits, vacation pay, or 
severance pay, are not guaranteed.
    <bullet> The PBGC does not pay lump sums exceeding $3,500.

WHERE TO GET MORE INFORMATION

    Your plan, [EIN-PN], is sponsored by [CONTRIBUTING SPONSOR(S)]. 
If you would like more information about the funding of your plan, 
contact [INSERT NAME, TITLE, BUSINESS ADDRESS AND PHONE NUMBER OF 
INDIVIDUAL OR ENTITY].
    For more information about the PBGC and the benefits it 
guarantees, you may request a free copy of ``Your Guaranteed 
Pension'' by writing to Consumer Information Center, Dept. YGP, 
Pueblo, Colorado 81009.
    [THE FOLLOWING SENTENCE MAY BE INCLUDED:] ``Your Guaranteed 
Pension'' is also available from the PBGC Homepage on the World Wide 
Web at http://www.pbgc.gov/ygp.htm.
    Issued: [INSERT AT LEAST MONTH AND YEAR]

Appendix B to Part 4011--Table of Maximum Guaranteed Benefits

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   The maximum guaranteed benefit for an individual starting to receive benefits at the age listed below
                                                                              is the amount (monthly or annual) listed below:                           
                                                 -------------------------------------------------------------------------------------------------------
            If a plan terminates in--                      Age 65                    Age 62                    Age 60                    Age 55         
                                                 -------------------------------------------------------------------------------------------------------
                                                    Monthly       Annual      Monthly       Annual      Monthly       Annual      Monthly       Annual  
--------------------------------------------------------------------------------------------------------------------------------------------------------
1995............................................    $2,573.86   $30,886.32    $2,033.35   $24,400.20    $1,673.01   $20,076.12    $1,158.24   $13,898.88
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
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The maximum guaranteed benefit for an individual starting to 
receive benefits at ages other than those listed above can be 
determined by applying the PBGC's regulation on computation of 
maximum guaranteeable benefits (29 CFR 4022.22).

PART 4022--BENEFITS PAYABLE IN TERMINATED SINGLE-EMPLOYER PLANS

Subpart A--General Provisions; Guaranteed Benefits

Sec.
4022.1  Purpose and scope.
4022.2  Definitions.
4022.3  Guaranteed benefits.
4022.4  Entitlement to a benefit.
4022.5  Determination of nonforfeitable benefits.
4022.6  Annuity payable for total disability.
4022.7  Benefits payable in a single installment.

Subpart B--Limitations on Guaranteed Benefits

4022.21  Limitations; in general.
4022.22  Maximum guaranteeable benefit.
4022.23  Computation of maximum guaranteeable benefits.
4022.24  Benefit increases.
4022.25  Five-year phase-in of benefit guarantee for participants 
other than substantial owners.
4022.26  Phase-in of benefit guarantee for participants who are 
substantial owners.
4022.27  Effect of tax disqualification.
Subpart C--Calculation and Payment of Unfunded Nonguaranteed Benefits 
[Reserved]

Subpart D--Benefit Reductions in Terminating Plans

4022.61  Limitations on benefit payments by plan administrator.
4022.62  Estimated guaranteed benefit.
4022.63  Estimated title IV benefit.

Subpart E--PBGC Recoupment and Reimbursement of Benefit Overpayments 
and Underpayments

4022.81  General rules.
4022.82  Method of recoupment.
4022.83  PBGC reimbursement of benefit underpayments.

Appendix A to Part 4022--Maximum Guaranteeable Monthly Benefit

    Authority: 29 U.S.C. 1302, 1322, 1322b, 1341(c)(3)(D), and 1344.

Subpart A--General Provisions; Guaranteed Benefits


Sec. 4022.1  Purpose and scope.

    The purpose of this part is to prescribe rules governing the 
calculation and payment of benefits payable in terminated single-
employer plans under section 4022 of ERISA. Subpart A, which applies to 
each plan

[[Page 34029]]

providing benefits guaranteed under title IV of ERISA, contains 
definitions applicable to all subparts, and describes basic-type 
benefits that are guaranteed by the PBGC subject to the limitations set 
forth in Subpart B. Subpart C is reserved for rules relating to the 
calculation and payment of unfunded nonguaranteed benefits under 
section 4022(c) of ERISA. Subpart D prescribes procedures that minimize 
the overpayment of benefits by plan administrators after initiating 
distress terminations of single-employer plans that are not expected to 
be sufficient for guaranteed benefits. Subpart E sets forth the method 
of recoupment of benefit payments in excess of the amounts permitted 
under sections 4022, 4022B, and 4044 of ERISA from participants and 
beneficiaries in PBGC-trusteed plans, and provides for reimbursement of 
benefit underpayments. (The provisions of this part have not been 
amended to take account of changes made in section 4022 of ERISA by 
sections 766 and 777 of the Retirement Protection Act of 1994.)


Sec. 4022.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
annuity, Code, employer, ERISA, guaranteed benefit, mandatory employee 
contributions, nonforfeitable benefit, normal retirement age, notice of 
intent to terminate, PBGC, person, plan, plan administrator, plan year, 
proposed termination date, substantial owner, and title IV benefit.
    In addition, for purposes of this part (unless otherwise required 
by the context):
    Accumulated mandatory employee contributions means mandatory 
employee contributions plus interest credited on those contributions 
under the plan, or, if greater, interest required by section 204(c) of 
ERISA.
    Benefit in pay status means that one or more benefit payments have 
been made or would have been made except for administrative delay.
    Benefit increase means any benefit arising from the adoption of a 
new plan or an increase in the value of benefits payable arising from 
an amendment to an existing plan. Such increases include, but are not 
limited to, a scheduled increase in benefits under a plan or plan 
amendment, such as a cost-of-living increase, and any change in plan 
provisions which advances a participant's or beneficiary's entitlement 
to a benefit, such as liberalized participation requirements or vesting 
schedules, reductions in the normal or early retirement age under a 
plan, and changes in the form of benefit payments. In the case of a 
plan under which the amount of benefits depends on the participant's 
salary and the participant receives a salary increase the resulting 
increase in benefits to which the participant becomes entitled will 
not, for the purpose of this part, be treated as a benefit increase. 
Similarly, in the case of a plan under which the amount of benefits 
depends on the participant's age or service, and the participant 
becomes entitled to increased benefits solely because of advancement in 
age or service, the increased benefits to which the participant becomes 
entitled will not, for the purpose of this part, be treated as a 
benefit increase.
    Covered employment means employment with respect to which benefits 
accrue under a plan.
    Pension benefit means a benefit payable as an annuity, or one or 
more payments related thereto, to a participant who permanently leaves 
or has permanently left covered employment, or to a surviving 
beneficiary, which payments by themselves or in combination with Social 
Security, Railroad Retirement, or workmen's compensation benefits 
provide a substantially level income to the recipient.
    Straight life annuity means a series of level periodic payments 
payable for the life of the recipient, but does not include any 
combined annuity form, including an annuity payable for a term certain 
and life.


Sec. 4022.3  Guaranteed benefits.

    Except as otherwise provided in this part, the PBGC will guarantee 
the amount, as of the termination date, of a benefit provided under a 
plan to the extent that the benefit does not exceed the limitations in 
ERISA and in subpart B, if--
    (a) The benefit is a nonforfeitable benefit;
    (b) The benefit qualifies as a pension benefit as defined in 
Sec. 4022.2; and
    (c) The participant is entitled to the benefit under Sec. 4022.4.


Sec. 4022.4  Entitlement to a benefit.

    (a) A participant or his surviving beneficiary is entitled to a 
benefit if under the provisions of a plan:
    (1) The benefit was in pay status on the date of the termination of 
the plan.
    (2) A benefit payable at normal retirement age is an optional form 
of payment to the benefit otherwise payable at such age and the 
participant elected the benefit before the termination date of the 
plan.
    (3) Except for a benefit described in paragraph (a)(2) of this 
section, before the termination date the participant had satisfied the 
conditions of the plan necessary to establish the right to receive the 
benefit prior to such date other than application for the benefit, 
satisfaction of a waiting period described in the plan, or retirement; 
or
    (4) Absent an election by the participant, the benefit would be 
payable upon retirement.
    (5) In the case of a benefit that returns all or a portion of a 
participant's accumulated mandatory employee contributions upon death, 
the participant (or beneficiary) had satisfied the conditions of the 
plan necessary to establish the right to the benefit other than death 
or designation of a beneficiary.
    (b) If none of the conditions set forth in paragraph (a) of this 
section is met, the PBGC will determine whether the participant is 
entitled to a benefit on the basis of the provisions of the plan and 
the circumstances of the case.


Sec. 4022.5  Determination of nonforfeitable benefits.

    (a) A guaranteed benefit payable to a surviving beneficiary is not 
considered to be forfeitable solely because the plan provides that the 
benefit will cease upon the remarriage of such beneficiary or his 
attaining a specified age. However, the PBGC will observe the 
provisions of the plan relating to the effect of such remarriage or 
attainment of such specified age on the surviving beneficiary's 
eligibility to continue to receive benefit payments.
    (b) Any other provision in a plan that the right to a benefit in 
pay status will cease or be suspended upon the occurrence of any 
specified condition does not automatically make that benefit 
forfeitable. In each such case the PBGC will determine whether the 
benefit is forfeitable.
    (c) A benefit guaranteed under Sec. 4022.6 shall not be considered 
forfeitable solely because the plan provides that upon recovery of the 
participant the benefit will cease.


Sec. 4022.6  Annuity payable for total disability.

    (a) Except as provided in paragraph (b) of this section, an annuity 
which is payable (or would be payable after a waiting period described 
in the plan, whether or not the participant is in receipt of other 
benefits during such waiting period), under the terms of a plan on 
account of the total and permanent disability of a participant which is 
expected to last for the life of the participant and which began before 
the termination date is considered to be a pension benefit.
    (b) In any case in which the PBGC determines that the standards for

[[Page 34030]]

determining such total and permanent disability under a plan were 
unreasonable, or were modified in anticipation of termination of the 
plan, the disability benefits payable to a participant under such 
standard shall not be guaranteed unless the participant meets the 
standards of the Social Security Act and the regulations promulgated 
thereunder for determining total disability.
    (c) For the purpose of this section, a participant may be required, 
upon the request of the PBGC, to submit to an examination or to submit 
proof of continued total and permanent disability. If the PBGC finds 
that a participant is no longer so disabled, it may suspend, modify, or 
discontinue the payment of the disability benefit.


Sec. 4022.7  Benefits payable in a single installment.

    (a) Alternative benefit. If a benefit that is guaranteed under this 
part is payable in a single installment or substantially so under the 
terms of the plan, or an option elected under the plan by the 
participant, the benefit will not be guaranteed or paid as such, but 
the PBGC will guarantee the alternative benefit, if any, in the plan 
which provides for the payment of equal periodic installments for the 
life of the recipient. If the plan provides more than one such annuity, 
the recipient may within 30 days after notification of the proposed 
termination of the plan elect to receive one of those annuities. If the 
plan does not provide such an annuity, the PBGC will guarantee an 
actuarially equivalent life annuity.
    (b)(1) Payment in single installments. Notwithstanding paragraph 
(a) of this section, in any case in which the value of a guaranteed 
benefit payable by the PBGC is $3,500 or less, the total value of the 
guaranteed benefit may be paid in a single payment. For purposes of 
determining the value of the guaranteed benefit, subtract from the 
value of the guaranteed benefit, any amounts that are returned under 
paragraph (b)(2) of this section, but only to the extent such amounts 
do not exceed the value of the portion of an individual's benefit 
derived from mandatory employee contributions that is guaranteed.
    (2) Return of employee contributions--
    (i) General. Notwithstanding any other provision of this part, the 
PBGC may pay in a single installment (or a series of installments) 
instead of as an annuity, the value of the portion of an individual's 
basic-type benefit derived from mandatory employee contributions, if:
    (A) The individual elects payment in a single installment (or a 
series of installments) before the sixty-first (61st) day after the 
date he or she receives notice that such an election is available; and
    (B) Payment in a single installment (or a series of installments) 
is consistent with the plan's provisions. For purposes of this part, 
the portion of an individual's basic-type benefit derived from 
mandatory employee contributions is determined under Sec. 4044.12 
(priority category 2 benefits) of this chapter, and the value of that 
portion is computed under the applicable rules contained in part 4044, 
subpart B, of this chapter.
    (ii) Set-off for distributions after termination. The amount to be 
returned under paragraph (b)(2)(i) of this section is reduced by the 
set-off amount. The set-off amount is the amount by which distributions 
made to the individual after the termination date exceed the amount 
that would have been distributed, exclusive of mandatory employee 
contributions, if the individual had withdrawn the mandatory employee 
contributions on the termination date.
    Example: Participant A is receiving a benefit of $600 per month 
when the plan terminates, $200 of which is derived from mandatory 
employee contributions. If the participant had withdrawn his 
contributions on the termination date, his benefit would have been 
reduced to $400 per month. The participant receives two monthly 
payments after the termination date. The set-off amount is $400. (The 
$600 actual payment minus the $400 the participant would have received 
if he had withdrawn his contributions multiplied by the two months for 
which he received the extra payment.)
    (c) Death benefits--
    (1) General. Notwithstanding paragraph (a) of this section, a 
benefit that would otherwise be guaranteed under the provisions of this 
subpart, except for the fact that it is payable solely in a single 
installment (or substantially so) upon the death of a participant, 
shall be paid by the PBGC as an annuity that has the same value as the 
single installment. The PBGC will in each case determine the amount and 
duration of the annuity based on all the facts and circumstances.
    (2) Exception. Upon the death of a participant the PBGC may pay in 
a single installment (or a series of installments) that portion of the 
participant's accumulated mandatory employee contributions that is 
payable under the plan in a single installment (or a series of 
installments) upon the participant's death.

Subpart B--Limitations on Guaranteed Benefits


Sec. 4022.21  Limitations; in general.

    (a)(1) Subject to paragraphs (b), (c) and (d) of this section, the 
PBGC will not guarantee that part of an installment payment that 
exceeds the dollar amount payable as a straight life annuity commencing 
at normal retirement age, or thereafter, to which a participant would 
have been entitled under the provisions of the plan in effect on the 
termination date, on the basis of his credited service to such date. If 
the plan does not provide a straight life annuity either as its normal 
form of retirement benefit or as an option to the normal form, the PBGC 
will for purposes of this paragraph convert the plan's normal form 
benefit to a straight life annuity of equal actuarial value as 
determined by the PBGC.
    (2) The limitation of paragraph (a)(1) of this section shall not 
apply to:
    (i) A survivor's benefit payable as an annuity on account of the 
death of a participant that occurred before the plan terminates and 
before the participant retired;
    (ii) A disability pension described in section 4022.6 of this part; 
or
    (iii) A benefit payable in non-level installments that in 
combination with Social Security, Railroad Retirement, or workman's 
compensation benefits yields a substantially level income if the 
projected income from the plan benefit over the expected life of the 
recipient does not exceed the value of the straight life annuity 
described in paragraph (a)(1) of this section.
    (b) The PBGC will not guarantee the payment of that part of any 
benefit that exceeds the limitations in section 4022(b) of ERISA and 
this subpart B.
    (c)(1) Except as provided in paragraph (c)(2) of this section, the 
PBGC does not guarantee a benefit payable in a single installment (or 
substantially so) upon the death of a participant or his surviving 
beneficiary unless that benefit is substantially derived from a 
reduction in the pension benefit payable to the participant or 
surviving beneficiary.
    (2) Paragraphs (a) and (c)(1) of this section do not apply to that 
portion of accumulated mandatory employee contributions payable under a 
plan upon the death of a participant, and such a benefit is a pension 
benefit for purposes of this part.
    (d) The PBGC will not guarantee a benefit payable to other than 
natural persons, or a trust or estate for the benefit of one or more 
natural persons.

[[Page 34031]]

Sec. 4022.22  Maximum guaranteeable benefit.

    Subject to section 4022B of ERISA and part 4022B of this chapter, 
benefits payable with respect to a participant under a plan shall be 
guaranteed only to the extent that such benefits do not exceed the 
actuarial value of a benefit in the form of a life annuity payable in 
monthly installments, commencing at age 65 equal to the lesser of the 
amounts computed in paragraphs (a) and (b) of this section.
    (a) One-twelfth of the participant's average annual gross income 
from his employer during either his highest-paid five consecutive 
calendar years in which he was an active participant under the plan, or 
if he was not an active participant throughout the entire such period, 
the lesser number of calendar years within that period in which he was 
an active participant under the plan.
    (1) As used in this paragraph, ``gross income'' means ``earned 
income'' as defined in section 911(b) of the Code, determined without 
regard to any community property laws.
    (2) For the purposes of this paragraph, if the plan is one to which 
more than one employer contributes, and during any calendar year the 
participant received gross income from more than one such contributing 
employer, then the amounts so received shall be aggregated in 
determining the participant's gross income for the calendar year.
    (b) $750 multiplied by the fraction x/$13,200 where ``x'' is the 
Social Security contribution and benefit base determined under section 
230 of the Social Security Act in effect at the termination date of the 
plan.


Sec. 4022.23  Computation of maximum guaranteeable benefits.

    (a) General. Where a benefit is payable in any manner other than as 
a monthly benefit payable for life commencing at age 65, the maximum 
guaranteeable monthly amount of such benefit shall be computed by 
applying the applicable factor or factors set forth in paragraphs (c)-
(e) of this section to the monthly amount computed under Sec. 4022.22. 
In the case of a step-down life annuity, the maximum guaranteeable 
monthly amount of such benefit shall be computed in accordance with 
paragraph (f) of this section.
    (b) Application of adjustment factors to monthly amount computed 
under Sec. 4022.22. (1) Each percentage increase or decrease computed 
under paragraphs (c), (d), and (e) of this section shall be added to or 
subtracted from a base of 1.00, and the resulting amounts shall be 
multiplied.
    (2) The monthly amount computed under Sec. 4022.22 shall be 
multiplied by the product computed pursuant to paragraph (b)(1) of this 
section in order to determine the participant's and/or beneficiary's 
maximum benefit guaranteeable.
    (c) Annuitant's age factor. If a participant or the beneficiary of 
a deceased participant is entitled to and chooses to receive his 
benefit at an age younger than 65, the monthly amount computed under 
Sec. 4022.22 shall be reduced by the following amounts for each month 
up to the number of whole months below age 65 that corresponds to the 
later of the participant's age at the termination date or his age at 
the time he begins to receive the benefit: For each of the 60 months 
immediately preceding the 65th birthday, the reduction shall be \7/12\ 
of 1%; For each of the 60 months immediately preceding the 60th 
birthday, the reduction shall be \4/12\ of 1%; For each of the 120 
months immediately preceding the 55th birthday, the reduction shall be 
\2/12\ of 1%; and For each succeeding 120 months period, the monthly 
percentage reduction shall be \1/2\ of that used for the preceding 120 
month period.
    (d) Factor for benefit payable in a form other than as a life 
annuity. When a benefit is in a form other than a life annuity payable 
in monthly installments, the monthly amount computed under Sec. 4022.22 
shall be adjusted by the appropriate factors on a case-by-case basis by 
PBGC. This paragraph sets forth the adjustment factors to be used for 
several common benefit forms payable in monthly installments.
    (1) Period certain and continuous annuity. A period certain and 
continuous annuity means an annuity which is payable in periodic 
installments for the participant's life, but for not less than a 
specified period of time whether or not the participant dies during 
that period. The monthly amount of a period certain and continuous 
annuity computed under Sec. 4022.22 shall be reduced by the following 
amounts for each month of the period certain subsequent to the 
termination date:
    For each month up to 60 months deduct \1/24\ of 1%;
    For each month beyond 60 months deduct \1/12\ of 1%.
    (i) A cash refund annuity means an annuity under which if the 
participant dies prior to the time when he has received pension 
payments equal to a fixed sum specified in the plan, then the balance 
is paid as a lump-sum death benefit. A cash refund annuity shall be 
treated as a benefit payable for a period certain and continuous. The 
period of certainty shall be computed by dividing the amount of the 
lump-sum refund by the monthly amount to which the participant is 
entitled under the terms of the plan.
    (ii) An installment refund annuity means an annuity under which if 
the participant dies prior to the time he has received pension payments 
equal to a fixed sum specified in the plan, then the balance is paid as 
a death benefit in periodic installments equal in amount to the 
participant's periodic benefit. An installment refund annuity shall be 
treated as a benefit payable for a period certain and continuous. The 
period of certainty shall be computed by dividing the amount of the 
remaining refund by the monthly amount to which the participant is 
entitled under the terms of the plan.
    (2) Joint and survivor annuity (contingent basis). A joint and 
survivor annuity (contingent basis) means an annuity which is payable 
in periodic installments to a participant for his life and upon his 
death is payable to his beneficiary for the beneficiary's life in the 
same or in a reduced amount. The monthly amount of a joint and survivor 
annuity (contingent basis) computed under Sec. 4022.22 shall be reduced 
by an amount equal to 10% plus \2/10\ of 1% for each percentage point 
in excess of 50% of the participant's benefit that will continue to be 
paid to the beneficiary. If the benefit payable to the beneficiary is 
less than 50 percent of the participant's benefit, PBGC shall provide 
the adjustment factors to be used.
    (3) Joint and survivor annuity (joint basis). A joint and survivor 
annuity (joint basis) means an annuity which is payable in periodic 
installments to a participant and upon his death or the death of his 
beneficiary is payable to the survivor for the survivor's life in the 
same or in a reduced amount. The monthly amount of a joint and survivor 
annuity (joint basis) computed under Sec. 4022.22 shall be reduced by 
an amount equal to \4/10\ of 1% for each percentage point in excess of 
50% of the participant's original benefit that will continue to be paid 
to the survivor. If the benefit payable to the survivor is less than 50 
percent of the participant's original benefit, PBGC shall provide the 
adjustment factors to be used.
    (e) When a benefit is payable in a form described in paragraph (d) 
(2) or (3) of this section, and the beneficiary's age is different from 
the participant's age, by 15 years or less, the monthly amount computed 
under Sec. 4022.22 shall be adjusted by the following amounts: If the 
beneficiary is younger than the

[[Page 34032]]

participant, deduct 1% for each year of the age difference; If the 
beneficiary is older than the participant, add \1/2\ of 1% for each 
year of the age difference. In computing the difference in ages, years 
over 65 years of age shall not be counted. If the difference in age 
between the beneficiary and the participant is greater than 15 years, 
PBGC shall provide the adjustment factors to be used.
    (f) Step-down life annuity. A step-down life annuity means an 
annuity payable in a certain amount for the life of the participant 
plus a temporary additional amount payable until the participant 
attains an age specified in the plan.
    (1) The temporary additional amount payable under a step-down life 
annuity shall be converted to a life annuity payable in monthly 
installments by multiplying the appropriate factor based on the 
participant's age and the number of remaining years of the temporary 
additional benefit by the amount of the temporary additional benefit. 
The factors to be used are set forth in the table below. The amount of 
the monthly benefit so calculated shall be added to the level amount of 
the monthly benefit payable for life to determine the level-life 
annuity that is equivalent to the step-down life annuity.

                Factors for Converting Temporary Additional Benefit Under Step-Down Life Annuity                
----------------------------------------------------------------------------------------------------------------
  Age of participant \1\ at the    Number of years temporary additional benefit is payable under the plan as of 
 later of the date the temporary                         the date of plan termination \2\                       
 additional benefit commences or -------------------------------------------------------------------------------
  the date of plan termination       1       2       3       4       5       6       7       8       9      10  
----------------------------------------------------------------------------------------------------------------
45..............................   0.060   0.117   0.170   0.220   0.268   0.315   0.355   0.395   0.435   0.475
46..............................    .061    .119    .173    .224    .273    .321    .362    .403    .444    .485
47..............................    .062    .121    .176    .228    .278    .327    .369    .411    .453    .495
48..............................    .063    .123    .179    .232    .283    .333    .376    .419    .462    .505
49..............................    .064    .125    .182    .236    .288    .339    .383    .427    .471    .515
50..............................    .065    .127    .185    .240    .293    .345    .390    .435    .480    .525
51..............................    .066    .129    .188    .244    .298    .351    .397    .443    .489    .535
52..............................    .068    .133    .194    .252    .308    .363    .411    .459    .507    .555
53..............................    .067    .131    .191    .248    .303    .357    .404    .451    .498    .545
54..............................    .069    .135    .197    .256    .313    .369    .418    .467    .516    .565
55..............................    .070    .137    .200    .260    .318    .375    .425    .475    .525    .575
56..............................    .072    .141    .206    .268    .328    .387    .439    .491    .543  ......
57..............................    .074    .145    .212    .276    .338    .399    .453    .507  ......  ......
58..............................    .076    .149    .218    .284    .348    .411    .467  ......  ......  ......
59..............................    .078     153    .224    .292    .358    .423  ......  ......  ......  ......
60..............................    .080    .157    .230    .300    .368  ......  ......  ......  ......  ......
61..............................    .082    .161    .236    .308  ......  ......  ......  ......  ......  ......
62..............................    .084    .165    .242  ......  ......  ......  ......  ......  ......  ......
63..............................    .086    .169  ......  ......  ......  ......  ......  ......  ......  ......
64..............................    .088  ......  ......  ......  ......  ......  ......  ......  ......  ......
----------------------------------------------------------------------------------------------------------------
\1\ Age of participant is his age at his last birthday.                                                         
\2\ If the benefit is payable for less than 1 yr, the appropriate factor is obtained by multiplying the factor  
  for 1 yr by a fraction, the numerator of which is the number of months the benefit is payable, and the        
  denominator of which is 12. If the benefit is payable for 1 or more whole years, plus an additional number of 
  months less than 12, the appropriate factor is obtained by linear interpolation between the factor for the    
  number of whole years the benefit is payable and the factor for the next year.                                

    (2) If a participant is entitled to and chooses to receive a step-
down life annuity at an age younger than 65, the monthly amount 
computed under Sec. 4022.22 shall be adjusted by applying the factors 
set forth in paragraph (c) of this section in the manner described in 
paragraph (b) of this section.
    (3) If the level-life monthly benefit calculated pursuant to 
paragraph (f)(1) of this section exceeds the monthly amount calculated 
pursuant to paragraph (f)(2) of this section, then the monthly maximum 
benefit guaranteeable shall be a step-down life annuity under which the 
monthly amount of the temporary additional benefit and the amount of 
the monthly benefit payable for life, respectively, shall bear the same 
ratio to the monthly amount of the temporary additional benefit and the 
monthly benefit payable for life provided under the plan, respectively, 
as the monthly benefit calculated pursuant to paragraph (f)(2) of this 
section bears to the monthly benefit calculated pursuant to paragraph 
(f)(1) of this section.


Sec. 4022.24  Benefit increases.

    (a) Scope. This section applies:
    (1) To all benefit increases, as defined in Sec. 4022.2, payable 
with respect to a participant other than a substantial owner, which 
have been in effect for less than five years preceding the termination 
date; and
    (2) To all benefit increases payable with respect to a substantial 
owner, which have been in effect for less than 30 years preceding the 
termination date.
    (b) General rule. Benefit increases described in paragraph (a) of 
this section shall be guaranteed only to the extent provided in 
Sec. 4022.25 with respect to a participant other than a substantial 
owner and in Sec. 4022.26 with respect to a participant who is a 
substantial owner.
    (c) Computation of guaranteeable benefit increases. Except as 
provided in paragraph (d) of this section pertaining to multiple 
benefit increases, the amount of a guaranteeable benefit increase shall 
be the amount, if any, by which the monthly benefit calculated pursuant 
to paragraph (c)(1) of this section (the monthly benefit provided under 
the terms of the plan as of the termination date, as limited by 
Sec. 4022.22) exceeds the monthly benefit calculated pursuant to 
paragraph (c)(4) of this section (the monthly benefit which would have 
been payable on the termination date if the benefit provided subsequent 
to the increase were equivalent, as of the date of the increase, to the 
benefit provided prior to the increase).
    (1) Determine the amount of the monthly benefit payable on the 
termination date (or, in the case of a deferred benefit, the monthly 
benefit which will become payable thereafter)

[[Page 34033]]

under the terms of the plan subsequent to the increase, using service 
credited to the participant as of the termination date, that is 
guaranteeable pursuant to Sec. 4022.22;
    (2) Determine, as of the date of the benefit increase, in 
accordance with the provisions of Sec. 4022.23, the factors which would 
be used to calculate the monthly maximum benefit guaranteeable (i) 
under the terms of the plan prior to the increase and (ii) under the 
terms of the plan subsequent to the increase. However, when the benefit 
referred to in paragraph (c)(2)(ii) of this section is a joint and 
survivor benefit deferred as of the termination date and there is no 
beneficiary on that date, the factors computed in paragraph (c)(2)(ii) 
of this section shall be determined as if the benefit were payable only 
to the participant. Each set of factors determined under this paragraph 
shall be stated in the manner set forth in Sec. 4022.23(b)(1);
    (3) Multiply the monthly benefit which would have been payable (or, 
in the case of a deferred benefit, would have become payable) under the 
terms of the plan prior to the increase based on service credited to 
the participant as of the termination date by a fraction, the numerator 
of which is the product of the factors computed pursuant to paragraph 
(c)(2)(ii) of this section and the denominator of which is the product 
of the factors computed pursuant to paragraph (c)(2)(i) of this 
section.
    (4) Calculate the amount of the monthly benefit which would be 
payable on the termination date if the monthly benefit computed in 
paragraph (c)(3) of this section had been payable commencing on the 
date of the benefit increase (or, in the case of a deferred benefit, 
would have become payable thereafter.) In the case of a benefit which 
does not become payable until subsequent to the termination date, the 
amount of the monthly benefit determined pursuant to this paragraph is 
the same as the amount of the monthly benefit calculated pursuant to 
paragraph (c)(3) of this section.
    (d) Multiple benefit increases. (1) Where there has been more than 
one benefit increase described in paragraph (a) of this section, the 
amounts of guaranteeable benefit increases shall be calculated 
beginning with the earliest increase, and each such amount (except for 
the amount resulting from the final benefit increase) shall be 
multiplied by a fraction, the numerator of which is the product of the 
factors, stated in the manner set forth in Sec. 4022.23(b)(1), used to 
calculate the monthly maximum guaranteeable benefit under Sec. 4022.22 
and the denominator of which is the product of the factors used in the 
calculation under paragraph (c)(2)(i) of this section.
    (2) Each benefit increase shall be treated separately for the 
purposes of Sec. 4022.25, except as otherwise provided in paragraph (d) 
of that section, and for the purposes of Sec. 4022.26, as appropriate.
    (e) For the purposes of this subpart, a benefit increase is deemed 
to be in effect commencing on the later of its adoption date or its 
effective date.


Sec. 4022.25   Five-year phase-in of benefit guarantee for participants 
other than substantial owners.

    (a) Scope. This section applies to the guarantee of benefit 
increases which have been in effect for less than five years with 
respect to participants other than substantial owners.
    (b) Phase-in formula. The amount of a benefit increase computed 
pursuant to Sec. 4022.24 shall be guaranteed to the extent provided in 
the following formula: the number of years the benefit increase has 
been in effect, not to exceed five, multiplied by the greater of (1) 20 
percent of the amount computed pursuant to Sec. 4022.24; or (2) $20 per 
month.
    (c) Computation of years. In computing the number of years a 
benefit increase has been in effect, each complete 12-month period 
prior to the termination date during which such benefit increase was in 
effect shall constitute one year.
    (d) Multiple benefit increases. In applying the formula contained 
in paragraph (b) of this section, multiple benefit increases within any 
12-month period prior to the termination date and calculated from that 
date shall be aggregated and treated as one benefit increase.
    (e) Notwithstanding the provisions of paragraph (b) of this 
section, a benefit increase described in paragraph (a) of this section 
shall be guaranteed only if PBGC determines that the plan was 
terminated for a reasonable business purpose and not for the purpose of 
obtaining the payment of benefits by PBGC.


Sec. 4022.26   Phase-in of benefit guarantee for participants who are 
substantial owners.

    (a) Scope. This section shall apply to the guarantee of all 
benefits described in subpart A with respect to participants who are 
substantial owners at the termination date or who were substantial 
owners at any time within the 5-year period preceding that date.
    (b) Phase-in formula when there have been no benefit increases. 
Benefits provided by a plan under which there has been no benefit 
increase, other than the adoption of the plan, shall be guaranteed to 
the extent provided in the following formula: The monthly amount 
computed under Sec. 4022.22 multiplied by a fraction not to exceed 1, 
the numerator of which is the number of full years prior to the 
termination date that the substantial owner was an active participant 
under the plan, and the denominator of which is 30. Active 
participation under a plan commences at the later of the date on which 
the plan is adopted or becomes effective.
    (c) Phase-in formula when there have been benefit increases. If 
there has been a benefit increase under the plan, other than the 
adoption of the plan, benefits provided by each such increase shall be 
guaranteed to the extent provided in the following formula: The amount 
of the guaranteeable benefit increase computed under Sec. 4022.24 
multiplied by a fraction not to exceed 1, the numerator of which is the 
number of full years prior to the termination date that the benefit 
increase was in effect and during which the substantial owner was an 
active participant under the plan, and the denominator of which is 30. 
However, in no event shall the total benefits guaranteed under all such 
benefit increases exceed the benefits which are guaranteed under 
paragraph (b) of this section with respect to a plan described therein.
    (d) For the purpose of computing the benefits guaranteed under this 
section, in the case of a substantial owner who becomes an active 
participant under a plan after a benefit increase (other than the 
adoption of the plan) has been put into effect, the plan as it exists 
at the time he commences his participation shall be deemed to be the 
original plan with respect to him.


Sec. 4022.27   Effect of tax disqualification.

    (a) General rule. Except as provided in paragraph (b) of this 
section, benefits accrued under a plan after the date on which the 
Secretary of the Treasury or his delegate issues a notice that any 
trust which is part of the plan no longer meets the requirements of 
section 401(a) of the Code or that the plan no longer meets the 
requirements of section 404(a) of the Code or after the date of 
adoption of a plan amendment that causes the issuance of such a notice 
shall not be guaranteed under this part.
    (b) Exceptions. The restriction on the guarantee of benefits set 
forth in paragraph (a) of this section shall not apply if:
    (1) The Secretary of the Treasury or his delegate issues a notice 
stating that the original notice referred to in

[[Page 34034]]

paragraph (a) of this section was erroneous;
    (2) The Secretary of the Treasury or his delegate finds that, 
subsequent to the issuance of the notice referred to in paragraph (a) 
of this section, appropriate action has been taken with respect to the 
trust or plan to cause it to meet the requirements of sections 401(a) 
or 404(a)(2) of the Code, respectively, and issues a subsequent notice 
stating that the trust or plan meets such requirements; or
    (3) The plan amendment is revoked retroactively to its original 
effective date.

Subpart C--Calculation and Payment of Unfunded Nonguaranteed 
Benefits [Reserved]

Subpart D--Benefit Reductions in Terminating Plans


Sec. 4022.61   Limitations on benefit payments by plan administrator.

    (a) General. When section 4041.4 of this chapter requires a plan 
administrator to reduce benefits, the plan administrator shall limit 
benefit payments in accordance with this section.
    (b) Accrued benefit at normal retirement. Except to the extent 
permitted by paragraph (d) of this section, a plan administrator may 
not pay that portion of a monthly benefit payable with respect to any 
participant that exceeds the participant's accrued benefit payable at 
normal retirement age under the plan. For the purpose of applying this 
limitation, post-retirement benefit increases, such as cost-of-living 
adjustments, are not considered to increase a participant's benefit 
beyond his or her accrued benefit payable at normal retirement age.
    (c) Maximum guaranteeable benefit. Except to the extent permitted 
by paragraph (d) of this section, a plan administrator may not pay that 
portion of a monthly benefit payable with respect to any participant, 
as limited by paragraph (b) of this section, that exceeds the maximum 
guaranteeable benefit under section 4022(b)(3)(B) of ERISA and 
Sec. 4022.22(b) of this part, adjusted for age and benefit form, for 
the year of the proposed termination date.
    (d) Estimated benefit payments. A plan administrator shall pay the 
monthly benefit payable with respect to each participant as determined 
under Sec. 4022.62 or Sec. 4022.63, whichever produces the higher 
benefit.
    (e) PBGC authority to modify procedures. In order to avoid abuse of 
the plan termination insurance system, inequitable treatment of 
participants and beneficiaries, or the imposition of unreasonable 
burdens on terminating plans, the PBGC may authorize or direct the use 
of alternative procedures for determining benefit reductions.
    (f) Examples. This section is illustrated by the following 
examples:

    Example 1--Facts. On October 10, 1992, a plan administrator 
files with the PBGC a notice of intent to terminate in a distress 
termination that includes December 31, 1992, as the proposed 
termination date. A participant who is in pay status on December 31, 
1992, has been receiving his accrued benefit of $2,500 per month 
under the plan. The benefit is in the form of a joint and survivor 
annuity (contingent basis) that will pay 50 percent of the 
participant's benefit amount (i.e., $1,250 per month) to his 
surviving spouse following the death of the participant. On December 
31, 1992, the participant is age 66, and his wife is age 56.
    Benefit reductions. Paragraph (b) of this section requires the 
plan administrator to cease paying benefits in excess of the accrued 
benefit payable at normal retirement age. Because the participant is 
receiving only his accrued benefit, no reduction is required under 
paragraph (b).
    Paragraph (c) of this section requires the plan administrator to 
cease paying benefits in excess of the maximum guaranteeable 
benefit, adjusted for age and benefit form in accordance with the 
provisions of subpart B. The maximum guaranteeable benefit for plans 
terminating in 1992, the year of the proposed termination date, is 
$2,352.27 per month, payable in the form of a single life annuity at 
age 65. Because the participant is older than age 65, no adjustment 
is required under Sec. 4022.23(c) based on the annuitant's age 
factor. The benefit form is a joint and survivor annuity (contingent 
basis), as defined in Sec. 4022.23(d)(2). The required benefit 
reduction for this benefit form under Sec. 4022.23(d) is 10 percent. 
The corresponding adjustment factor is 0.90 (1.00-0.10). The benefit 
reduction factor to adjust for the age difference between the 
participant and the beneficiary is computed under Sec. 4022.23(e). 
In computing the difference in ages, years over 65 years of age are 
not taken into account. Therefore, the age difference is 9 years 
(65-56). The required percentage reduction when the beneficiary is 9 
years younger than the participant is 9 percent. The corresponding 
adjustment factor is 0.91 (1.00-0.09).
    The maximum guaranteeable benefit adjusted for age and benefit 
form is $1,926.51 ($2,352.27 x 0.90 x 0.91) per month. Therefore, 
the plan administrator must reduce the participant's benefit payment 
from $2,500 to $1,926.51. If the participant dies after December 31, 
1992, the plan administrator will pay his spouse $963.26 
(0.50 x $1,926.51) per month.
    Example 2--Facts. The benefit of a participant who retired under 
a plan at age 60 is a reduced single life annuity of $400 per month 
plus a temporary supplement of $400 per month payable until age 62 
(i.e., a step-down benefit). The participant's accrued benefit under 
the plan is $450 per month, payable from the plan's normal 
retirement age. On the proposed termination date, June 30, 1992, the 
participant is 61 years old.
    The maximum guaranteeable benefit adjusted for age under 
Sec. 4022.23(c) of this chapter is $1,693.63 ($2,352.27  x  0.72) 
per month. Since the benefit is payable as a single life annuity, no 
adjustment is required under Sec. 4022.23(d) for benefit form.
    Benefit reductions. The plan benefit of $800 per month payable 
until age 62 exceeds the participant's accrued benefit at normal 
requirement age of $450 per month. Paragraph (b) of this section 
requires that, except to the extent permitted by paragraph (d), the 
plan benefit must be reduced to $450 per month. Since the levelized 
benefit of $404.10 ((0.082  x  50) + $400) per month, determined 
under Sec. 4022.23(f), is less than the adjusted maximum 
guaranteeable benefit of $1,693.63 per month, no further reduction 
in the $450 per month benefit payment is required under paragraph 
(c) of this section. The plan administrator next would determine the 
amount of the participant's estimated benefit under paragraph (d).
    Example 3--Facts. A retired participant is receiving a reduced 
early retirement benefit of $1,100 per month plus a temporary 
supplement of $700 per month payable until age 62. The benefit is in 
the form of a single life annuity. On the proposed termination date, 
November 30, 1992, the participant is 56 years old.
    The participant's accrued benefit at normal retirement age under 
the plan is $1,200 per month. The maximum guaranteeable benefit 
adjusted for age is $1,152.61 ($2,352.27  x  0.49) per month. A form 
adjustment is not required.
    Benefit reductions. The plan benefit of $1,800 per month payable 
from age 56 to age 62 exceeds the participant's accrued benefit at 
normal retirement age of $1,200 per month. Therefore, under 
paragraph (b) of this section, the plan administrator must reduce 
the temporary supplement to $100 per month.
    For the purpose of determining whether the reduced benefit, 
i.e., a level-life annuity of $1,100 per month and a temporary 
annuity supplement of $100 per month to age 62, exceeds the maximum 
guaranteeable benefit adjusted for age, the temporary annuity 
supplement of $100 per month is converted to a level-life annuity 
equivalent in accordance with Sec. 4022.23(f) of this chapter. The 
level-life annuity equivalent is $38.70 ($100  x  0.387). This, 
added to the life annuity of $1,100 per month, equals $1,138.70. 
Since the maximum guaranteeable benefit of $1,152.61 per month 
exceeds $1,138.70 per month, no further reduction is required under 
paragraph (c) of this section.
    The plan administrator next would determine the participant's 
estimated benefit under paragraph (d). Assume that the estimated 
benefit under paragraph (d) is $780 per month until age 62 and $715 
per month thereafter. The plan administrator would pay the 
participant $780 per month, reduced to $715 per month at age 62, 
subject to the final benefit determination made under title IV.
    Example 4--Facts. A retired participant is receiving a reduced 
early retirement benefit of $2,650 per month plus a temporary 
supplement of $800 per month payable until

[[Page 34035]]

age 62. The benefit is in the form of a joint and survivor annuity 
(contingent basis) that will pay 50 percent of the participant's 
benefit amount to his surviving spouse following the death of the 
participant. On the proposed termination date, December 20, 1992, 
the participant and his spouse are each 56 years old.
    The participant's accrued benefit at normal retirement age under 
the plan is $3,000 per month. The maximum guaranteeable benefit 
adjusted for age and the joint and survivor annuity (contingent 
basis) annuity form is $1,037.35 per month. An adjustment for age 
difference is not required because the participant and his spouse 
are the same age.
    Benefit reductions. The plan benefit of $3,450 per month payable 
from age 56 to age 62 exceeds the participant's accrued benefit at 
normal retirement age, which is $3,000 per month. Therefore, under 
paragraph (b) of this section, the plan administrator must reduce 
the participant's benefit so that it does not exceed $3,000 per 
month.
    The level-life equivalent of the participant's reduced benefit, 
determined using the Sec. 4022.23(f) adjustment factor, is $2,785.45 
(($350  x  0.387) + $2,650) per month. Since this benefit exceeds 
the participant's maximum guaranteeable benefit of $1,037.35 per 
month, the plan administrator must reduce the participant's benefit 
payment so that it does not exceed the maximum guaranteeable 
benefit.
    The ratio of (i) the participant's maximum guaranteeable benefit 
to (ii) the level-life equivalent of the participant's reduced 
benefit (computed under the ``accrued for normal retirement age'' 
limitation) is used in converting the level-life maximum 
guaranteeable benefit to the step-down benefit form. The level-life 
equivalent of the reduced benefit computed under the ``accrued for 
normal retirement age'' limitation is 37.24 percent ($1,037.35/
$2,785.45). Thus, the plan administrator must reduce the 
participant's level-life benefit of $2,650 per month to $986.86 
($2,650  x  0.3724) and must further reduce the reduced temporary 
benefit of $350 per month to $130.34 ($350  x  0.3724). Under 
paragraph (c) of this section, therefore, the participant's maximum 
guaranteeable benefit is $1,117.20 ($986.86 + $130.34) per month to 
age 62 and $986.86 per month thereafter, subject to any adjustment 
under paragraph (d) of this section.
    Assume that the estimated benefit under paragraph (d) is 
$1,005.48 per month to age 62 and $888.17 per month thereafter. The 
plan administrator would reduce the participant's benefit from 
$3,450 per month to $1,005.48 per month and pay this amount until 
age 62, at which time the benefit payment would be reduced to 
$888.17 per month, subject to the final benefit determination made 
under title IV.


Sec. 4022.62   Estimated guaranteed benefit.

    (a) General. The estimated guaranteed benefit payable with respect 
to each participant who is not a substantial owner is computed under 
paragraph (c) of this section. The estimated guaranteed benefit payable 
with respect to each participant who is a substantial owner is computed 
under paragraph (d) of this section.
    (b) Rules for determining benefits. For the purposes of determining 
entitlement to a benefit and the amount of the estimated benefit under 
this section, the following rules apply:
    (1) Participants in pay status on the proposed termination date. 
For benefits payable with respect to a participant who is in pay status 
on or before the proposed termination date, the plan administrator 
shall use the participant's age and benefit payable under the plan as 
of the proposed termination date.
    (2) Participants who enter pay status after the proposed 
termination date. For benefits payable with respect to a participant 
who enters pay status after the proposed termination date, the plan 
administrator shall use the participant's age as of the benefit 
commencement date and his or her service and compensation as of the 
proposed termination date.
    (3) Participants with new benefits or benefit improvements. For the 
purpose of determining the estimated guaranteed benefit under paragraph 
(c) of this section, only new benefits and benefit improvements that 
affect the benefit of the participant or beneficiary for whom the 
determination is made are taken into account.
    (4) Limitations on estimated guaranteed benefits. For the purpose 
of determining the estimated guaranteed benefit under paragraph (c) or 
(d) of this section, the benefit determined under paragraph (b)(1) or 
(b)(2) of this section is subject to the limitations set forth in 
Sec. 4022.61 (b) and (c).
    (c) Estimated guaranteed benefit payable with respect to a 
participant who is not a substantial owner. For benefits payable with 
respect to a participant who is not a substantial owner, the estimated 
guaranteed benefit is determined under paragraph (c)(1) of this 
section, if no portion of the benefit is subject to the phase-in of 
plan termination insurance guarantees set forth in section 4022(b)(1) 
of ERISA. In any other case, the estimated guaranteed benefit is 
determined under paragraph (c)(2). ``Benefit subject to phase-in'' 
means a benefit that is subject to the phase-in of plan termination 
insurance guarantees set forth in section 4022(b)(1) of ERISA, 
determined without regard to section 4022(b)(7) of ERISA.
    (1) Participants with no benefits subject to phase-in. In the case 
of a participant or beneficiary with no benefit improvement (as defined 
in paragraph (c)(2)(ii)) or new benefit (as defined in paragraph 
(c)(2)(i)) in the five years preceding the proposed termination date, 
the estimated guaranteed benefit is the benefit to which he or she is 
entitled under the rules in paragraph (b) of this section.
    (2) Participants with benefits subject to phase-in. In the case of 
a participant or beneficiary with a benefit improvement or new benefit 
in the five years preceding the proposed termination date, the 
estimated guaranteed benefit is the benefit to which he or she is 
entitled under the rules in paragraph (b) of this section, multiplied 
by the multiplier determined according to paragraphs (i), (ii), and 
(iii), but not less than the benefit to which he or she would have been 
entitled if the benefit improvement or new benefit had not been 
adopted.
    (i) From column (a) of Table I, select the line that applies 
according to the number of full years before the proposed termination 
date since the plan was last amended to provide for a new benefit (or 
the number of full years since the plan was established, if it has 
never been amended to provide for a new benefit). ``New benefit'' means 
a change in the terms of the plan that results in (a) a participant's 
or a beneficiary's eligibility for a benefit that was not previously 
available or to which he or she was not entitled (excluding a benefit 
that is actuarially equivalent to the normal retirement benefit to 
which the participant was previously entitled) or (b) an increase of 
more than twenty percent in the benefit to which a participant is 
entitled upon entering pay status before his or her normal retirement 
age under the plan. ``New benefits'' result from liberalized 
participation or vesting requirements, reductions in the age or service 
requirements for receiving unreduced benefits, additions of actuarially 
subsidized benefits, and increases in actuarial subsidies. The 
establishment of a plan creates a new benefit as of the effective date 
of the plan. A change in the amount of a benefit is not deemed to be a 
``new benefit'' if it results solely from a benefit improvement. ``New 
benefit'' and ``benefit improvement'' are mutually exclusive terms.
    (ii) If there was no benefit improvement under the plan during the 
one-year period ending on the proposed termination date, use the 
multiplier set forth in column (b) of Table I on the line selected from 
column (a). ``Benefit improvement'' means a change in the terms of the 
plan that results in (a) an increase in the benefit to which a 
participant is entitled at his or her normal retirement age under the 
plan or (b) an increase in the benefit to which a participant or 
beneficiary in pay status is entitled.

[[Page 34036]]

    (iii) If there was any benefit improvement during the one-year 
period ending on the proposed termination date, use the multiplier set 
forth in column (c) of Table I on the line selected from column (a).

                  Table I.--Applicable Multiplier If--                  
                                                                        
                                                 No benefit    Benefit  
                                                improvement  improvement
       Full years since last new benefit        during last  during last
                                                    year         year   
(a)                                                     (b)          (c)
------------------------------------------------------------------------
Five or more..................................          .90          .80
Four..........................................          .80          .70
Three.........................................          .65          .55
Two...........................................          .50          .45
Fewer than two................................          .35          .30
Note: The foregoing method of estimating guaranteed benefits is based   
  upon the PBGC's experience with a wide range of plans and may not     
  provide accurate estimates in certain circumstances. In accordance    
  with Sec.  4022.61(e), a plan administrator may use a different method
  of estimation if he or she demonstrates to the PBGC that his proposed 
  method will be more equitable to participants and beneficiaries. The  
  PBGC may require the use of a different method in certain cases.      

    (d) Estimated guaranteed benefit payable with respect to a 
substantial owner. For benefits payable with respect to each 
participant who is a substantial owner and who commenced participation 
under the plan fewer than five full years before the proposed 
termination date, the estimated guaranteed benefit is determined under 
paragraph (d)(1). With respect to any other substantial owner, the 
estimated guaranteed benefit is determined under paragraph (d)(2).
    (1) Fewer than five years of participation. The estimated 
guaranteed benefit under this paragraph is the benefit to which the 
substantial owner is entitled, as determined under paragraph (b) of 
this section, multiplied by a fraction, not to exceed one, the 
numerator of which is the number of full years prior to the proposed 
termination date that the substantial owner was an active participant 
under the plan and the denominator of which is thirty.
    (2) Five or more years of participation. The estimated guaranteed 
benefit under this paragraph is the lesser of--
    (i) the estimated guaranteed benefit calculated under paragraph 
(d)(1) of this section; or
    (ii) the benefit to which the substantial owner would have been 
entitled as of the proposed termination date (or benefit commencement 
date in the case of a substantial owner whose benefit commences after 
the proposed termination date) under the terms of the plan in effect 
when he or she first began participation, as limited by Sec. 4022.61 
(b) and (c), multiplied by a fraction, not to exceed one, the numerator 
of which is two times the number of full years of his or her active 
participation under the plan prior to the proposed termination date and 
the denominator of which is thirty.
    (e) Examples. This section is illustrated by the following 
examples:

    Example 1--Facts. A participant who is not a substantial owner 
retired on December 31, 1991, at age 60 and began receiving a 
benefit of $600 per month. On January 1, 1989, the plan had been 
amended to allow participants to retire with unreduced benefits at 
age 60. Previously, a participant who retired before age 65 was 
subject to a reduction of \1/15\ for each year by which his or her 
actual retirement age preceded age 65. On January 1, 1992, the 
plan's benefit formula was amended to increase benefits for 
participants who retired before January 1, 1992. As a result, the 
participant's benefit was increased to $750 per month. There have 
been no other pertinent amendments. The proposed termination date is 
December 15, 1992.
    Estimated guaranteed benefit. No reduction is required under 
Sec. 4022.61 (b) or (c) because the participant's benefit does not 
exceed either the participant's accrued benefit at normal retirement 
age or the maximum guaranteeable benefit. (Post-retirement benefit 
increases are not considered as increasing accrued benefits payable 
at normal retirement age.)
    The amendment as of January 1, 1989, resulted in a ``new 
benefit'' because the reduction in the age at which the participant 
could receive unreduced benefits increased the participant's benefit 
entitlement at actual retirement age by \5/15\, which is more than a 
20 percent increase. The amendment of January 1, 1992, which 
increased the participant's benefit to $750 per month, is a 
``benefit improvement'' because it is an increase in the amount of 
benefit for persons in pay status. (No percentage test applies in 
determining whether such an increase is a benefit improvement.)
    The multiplier for computing the amount of the estimated 
guaranteed benefit is taken from the third row of Table I (because 
the last new benefit had been in effect for 3 full years as of the 
proposed termination date) and column (c) (because there was a 
benefit improvement within the 1-year period preceding the proposed 
termination date). This multiplier is 0.55. Therefore, the amount of 
the participant's estimated guaranteed benefit is $412.50 
(0.55 x $750) per month.
    Example 2--Facts. A participant who is not a substantial owner 
terminated employment on December 31, 1990. On January 1, 1992, she 
reached age 65 and began receiving a benefit or $250 per month. She 
had completed 3 years of service at her termination of employment 
and was fully vested in her accrued benefit. The plan's vesting 
schedule had been amended on July 1, 1988. Under the schedule in 
effect before the amendment, a participant with 5 years of service 
was 100 percent vested. There have been no other pertinent 
amendments. The proposed termination date is December 31, 1992.
    Estimated guaranteed benefit. No reduction is required under 
Sec. 4022.61 (b) or (c) because the participant's benefit does not 
exceed either her accrued benefit at normal retirement age or the 
maximum guaranteeable benefit. The plan's change of vesting schedule 
created a new benefit for the participant. Because the amendment was 
in effect for 4 full years before the proposed termination date, the 
second row of Table I is used to determine the applicable multiplier 
for estimating the amount of the participant's guaranteed benefit. 
Because the participant did not receive any benefit improvement 
during the 12-month period ending on the proposed termination date, 
column (b) of the table is used. Therefore, the multiplier is 0.80, 
and the amount of the participant's estimated guaranteed benefit is 
$200 (0.80 x $250) per month.
    Example 3--Facts. A participant who is a substantial owner 
retired prior to the proposed termination date after 5\1/2\ years of 
active participation in the plan. The benefit under the terms of the 
plan when he first began active participation was $800 per month. On 
the proposed termination date of April 30, 1992, he was entitled to 
receive a benefit of $2000 per month. No reduction of this benefit 
is required under Sec. 4022.61 (b) or (c).
    Estimated guaranteed benefit. Paragraph (d)(2) of this section 
is used to compute the amount of the estimated guaranteed benefit of 
substantial owners with 5 or more years of active participation 
prior to the proposed termination date. Consequently, the amount of 
this participant's estimated guaranteed benefit is the lesser of--
    (i) the amount calculated as if he had been an active 
participant in the plan for fewer than 5 full years on the proposed 
termination date, or $333.33 ($2000 x \5/30\) per month, or
    (ii) the amount to which he would have been entitled as of the 
proposed termination date under the terms of the plan when he first 
began participation, as limited by Sec. 4022.61 (b) and (c), 
multiplied by 2 times the number of years of active participation 
and divided by 30, or $266.67 ($800 x 2  x \5/30\) per month. 
Therefore, the amount of the participant's estimated guaranteed 
benefit is $266.67 per month.


Sec. 4022.63  Estimated title IV benefit.

    (a) General. If the conditions specified in paragraph (b) exist, 
the plan administrator shall determine each participant's estimated 
title IV benefit. The estimated title IV benefit payable with respect 
to each participant who is not a substantial owner is computed under 
paragraph (c) of this section. The estimated title IV benefit payable 
with respect to each participant who is a substantial owner is computed 
under paragraph (d) of this section.
    (b) Conditions for use of this section. The conditions set forth in 
this

[[Page 34037]]

paragraph must be satisfied in order to make use of the procedures set 
forth in this section. If the specified conditions exist, estimated 
title IV benefits must be determined in accordance with these 
procedures (or in accordance with alternative procedures authorized by 
the PBGC under Sec. 4022.61(f)) for each participant and beneficiary 
whose benefit under the plan exceeds the limitations contained in 
Sec. 4022.61(b) or (c) or who is a substantial owner or the beneficiary 
of a substantial owner. If the specified conditions do not exist, title 
IV benefits may be estimated by the plan administrator in accordance 
with procedures authorized by the PBGC, but no such estimate is 
required. The conditions are as follows:
    (1) An actuarial valuation of the plan has been performed for a 
plan year beginning not more than eighteen months before the proposed 
termination date. If the interest rate used to value plan liabilities 
in this valuation exceeded the applicable valuation interest rates and 
factors under appendix B to part 4044 of this chapter in effect on the 
proposed termination date, the value of benefits in pay status and the 
value of vested benefits not in pay status on the valuation date must 
be converted to the PBGC's valuation rates and factors.
    (2) The plan has been in effect for at least five full years before 
the proposed termination date, and the most recent actuarial valuation 
demonstrates that the value of plan assets, reduced by employee 
contributions remaining in the plan and interest credited thereon under 
the terms of the plan, exceeds the present value, adjusted as required 
under paragraph (b)(1), of all plan benefits in pay status on the 
valuation date.
    (c) Estimated title IV benefit payable with respect to a 
participant who is not a substantial owner. For benefits payable with 
respect to a participant who is not a substantial owner, the estimated 
title IV benefit is the estimated priority category 3 benefit computed 
under this paragraph. Priority category 3 benefits are payable with 
respect to participants who were, or could have been, in pay status 
three full years prior to the proposed termination date. The estimated 
priority category 3 benefit is computed by multiplying the benefit 
payable with respect to the participant under Sec. 4022.62 (b)(1) and 
(b)(2) by a fraction, not to exceed one--
    (1) The numerator of which is the benefit that would be payable 
with respect to the participant at normal retirement age under the 
provisions of the plan in effect on the date five full years before the 
proposed termination date, based on the participant's age, service, and 
compensation as of the earlier of the participant's benefit 
commencement date or the proposed termination date, and
    (2) The denominator of which is the benefit that would be payable 
with respect to the participant at normal retirement age under the 
provisions of the plan in effect on the proposed termination date, 
based on the participant's age, service, and compensation as of the 
earlier of the participant's benefit commencement date or the proposed 
termination date.
    (d) Estimated title IV benefit payable with respect to a 
substantial owner. For benefits payable with respect to a participant 
who is a substantial owner, the estimated title IV benefit is the 
higher of the benefit computed under paragraph (c) of this section or 
the benefit computed under this paragraph.
    (1) The plan administrator shall first calculate the estimated 
guaranteed benefit payable with respect to the substantial owner as if 
he or she were not a substantial owner, using the method set forth in 
Sec. 4022.62(c).
    (2) The benefit computed under paragraph (d)(1) shall be multiplied 
by the priority category 4 funding ratio. The category 4 funding ratio 
is the ratio of x to y, not to exceed one, where--
    (i) in a plan with priority category 3 benefits, x equals plan 
assets minus employee contributions remaining in the plan on the 
valuation date, with interest credited thereon under the terms of the 
plan, and the present value of benefits in pay status, and y equals the 
present value of all vested benefits not in pay status minus such 
employee contributions and interest; or
    (ii) in a plan with no priority category 3 benefits, x equals plan 
assets minus employee contributions remaining in the plan on the 
valuation date, with interest credited thereon under the terms of the 
plan, and y equals the present value of all vested benefits minus such 
employee contributions and interest.
    (e) Examples. This section is illustrated by the following 
examples:

    Example 1--Facts. A participant who is not a substantial owner 
was eligible to retire 3\1/2\ years before the proposed termination 
date. The participant retired 2 years before the proposed 
termination date with 20 years of service. Her final 5 years' 
average salary was $45,000, and she was entitled to an unreduced 
early retirement benefit of $1,500 per month payable as a single 
life annuity. This retirement benefit does not exceed the limitation 
in Sec. 4022.61 (b) or (c).
    On the participant's benefit commencement date, the plan 
provided for a normal retirement benefit of 2 percent of the final 5 
years' salary times the number of years of service. Five years 
before the proposed termination date, the percentage was 1\1/2\ 
percent. The amendments improving benefits were put into effect 3\1/
2\ years prior to the proposed termination date. There were no other 
amendments during the 5-year period.
    The participant's estimated guaranteed benefit computed under 
Sec. 4022.62(c) is $1,500 per month times 0.90 (the factor from 
column (b) of Table I in Sec. 4022.62(c)(2)), or $1,350 per month. 
It is assumed that the plan meets the conditions set forth in 
paragraph (b) of this section, and the plan administrator is 
therefore required to estimate the title IV benefit.
    Estimated title IV benefit. For a participant who is not a 
substantial owner, the amount of the estimated title IV benefit is 
the estimated priority category 3 benefit computed under paragraph 
(c) of this section. This amount is computed by multiplying the 
participant's benefit under the plan as of the later of the proposed 
termination date or the benefit commencement date by the ratio of 
(i) the normal retirement benefit under the provisions of the plan 
in effect 5 years before the proposed termination date and (ii) the 
normal retirement benefit under the plan provisions in effect on the 
proposed termination date.
    Thus, the numerator of the ratio is the benefit that would be 
payable to the participant under the normal retirement provisions of 
the plan 5 years before the proposed termination date, based on her 
age, service, and compensation on her benefit commencement date. The 
denominator of the ratio is the benefit that would be payable to the 
participant under the normal retirement provisions of the plan in 
effect on the proposed termination date, based on her age, service, 
and compensation as of the earlier of her benefit commencement date 
or the proposed termination date. Since the only different factor in 
the numerator and denominator is the salary percentage, the amount 
of the estimated title IV benefit is $1,125 (0.015/0.020  x  $1,500) 
per month. This amount is less than the estimated guaranteed benefit 
of $1,350 per month. Therefore, in accordance with Sec. 4022.61(d), 
the benefit payable to the participant is $1,350 per month.
    Example 2--Facts. A participant who is a substantial owner 
retires at the plan's normal retirement age, having completed 5 
years of active participation in the plan, on October 31, 1992, 
which is the proposed termination date. Under provisions of the plan 
in effect 5 years prior to the proposed termination date, the 
participant is entitled to a single life annuity of $500 per month. 
Under the most recent plan amendments, which were put into effect 
1\1/2\ years prior to the proposed termination date, the participant 
is entitled to a single life annuity of $1,000 per month. The 
participant's estimated guaranteed benefit computed under 
Sec. 4022.62(d)(2) is $166.67 per month.
    It is assumed that all of the conditions in paragraph (b) of 
this section have been met. Plan assets equal $2 million. The 
present value of all benefits in pay status is $1.5 million based on 
applicable PBGC interest rates. There are no employee contributions

[[Page 34038]]

and the present value of all vested benefits that are not in pay 
status is $0.75 million based on applicable PBGC interest rates.
    Estimated title IV benefit. Paragraph (d) of this section 
provides that the amount of the estimated title IV benefit payable 
with respect to a participant who is a substantial owner is the 
higher of the estimated priority category 3 benefit computed under 
paragraph (c) of this section or the estimated priority category 4 
benefit computed under paragraph (d) of this section.
    Under paragraph (c), the participant's estimated priority 
category 3 benefit is $500 ($1,000  x  $500/$1000) per month.
    Under paragraph (d), the participant's estimated priority 
category 4 benefit is the estimated guaranteed benefit computed 
under Sec. 4022.62(c) (i.e., as if the participant were not a 
substantial owner) multiplied by the priority category 4 funding 
ratio. Since the plan has priority category 3 benefits, the ratio is 
determined under paragraph (d)(2)(i). The numerator of the ratio is 
plan assets minus the present value of benefits in pay status. The 
denominator of the ratio is the present value of all vested benefits 
that are not in pay status. The participant's estimated guaranteed 
benefit under Sec. 4022.62(c) is $1,000 per month times 0.90 (the 
factor from column (b) of Table I in Sec. 4022.62(c)(2)), or $900 
per month. Multiplying $900 by the category 4 funding ratio of \2/3\ 
(($2 million--$1.5 million)/$0.75 million) produces an estimated 
category 4 benefit of $600 per month.
    Because the estimated category 4 benefit so computed is greater 
than the estimated category 3 benefit so computed, the estimated 
category 4 benefit is the estimated title IV benefit. Because the 
estimated category 4 benefit so computed is greater than the 
estimated guaranteed benefit of $166.67 per month, in accordance 
with Sec. 4022.61(d), the benefit payable to the participant is the 
estimated category 4 benefit of $600 per month.

Subpart E--PBGC Recoupment and Reimbursement of Benefit 
Overpayments and Underpayments


Sec. 4022.81  General rules.

    (a) Recoupment of benefit overpayments. If at any time the PBGC 
determines that net benefits paid with respect to any participant in a 
PBGC-trusteed plan exceed the total amount to which the participant or 
his or her beneficiary is entitled up to that time under title IV of 
ERISA, and the participant or beneficiary is entitled to receive future 
benefit payments, the PBGC shall recoup the overpayment in accordance 
with paragraph (c) of this section and Sec. 4022.82. Notwithstanding 
the previous sentence, the PBGC may, in its discretion, recover 
overpayments by methods other than recouping in accordance with the 
rules in this subpart. The PBGC will not normally exercise this right 
unless net benefits paid after the termination date exceed those to 
which a participant or beneficiary is entitled under the terms of the 
plan before any reductions under subpart D.
    (b) Reimbursement of benefit underpayments. If at any time the PBGC 
determines that net benefits paid with respect to a participant in a 
PBGC-trusteed plan are less than the amount to which the participant or 
his or her beneficiary is entitled up to that time under title IV of 
ERISA, the PBGC shall reimburse the participant or beneficiary for the 
net underpayment in accordance with paragraphs (c) and (d) of this 
section and Sec. 4022.83.
    (c) Payments subject to recoupment or reimbursement. The PBGC shall 
recoup net overpayments and reimburse net underpayments made on or 
after the latest of the proposed termination date, the termination 
date, or, if no notice of intent to terminate was issued, the date on 
which proceedings to terminate the plan are instituted pursuant to 
section 4042 of ERISA.
    (d) Interest. The PBGC will compute interest on overpayments and 
underpayments using the interest rate established for valuing immediate 
annuities as set forth in part 4044, appendix B, of this chapter 
according to the following rules:
    (1) Overpayments before recoupment begins. Except as provided in 
paragraph (d)(2), no interest is charged on overpayments from the date 
of the payment to the date on which recoupment begins.
    (2) Receipt of both overpayments and underpayments. If both benefit 
overpayments and benefit underpayments are made with respect to a 
participant, the PBGC will determine the amount of the net overpayment 
or underpayment by charging or crediting interest on each payment from 
the first day of the month after the date of payment to the first day 
of the month in which recoupment begins. If the net overpayment thus 
computed is greater than the sum of the actual overpayments (unadjusted 
for interest to the date on which recoupment begins), computations 
under Sec. 4022.82 will be based upon the sum of the actual 
overpayments.


Sec. 4022.82  Method of recoupment.

    (a) Future benefit reductions. Unless a participant or beneficiary 
elects otherwise under paragraph (b) of this section, the PBGC shall 
recoup overpayments of benefits in accordance with this paragraph. The 
benefit reduction under this paragraph shall be an amount equal to the 
fraction determined under paragraphs (a)(1) and (a)(2) of this section, 
multiplied by each future benefit payment to which the participant or 
beneficiary is entitled.
    (1) Computation. The PBGC shall determine the fractional multiplier 
by dividing the amount of the benefit overpayment by the present value 
of the benefit payable with respect to the participant under title IV 
of ERISA. The PBGC shall determine the present value of the benefit to 
which a participant or beneficiary is entitled under title IV of ERISA 
as of the termination date, using the PBGC interest rates and factors 
in effect on that date. The PBGC may, however, utilize a different date 
of determination if warranted by the facts and circumstances of a 
particular case.
    (2) Limitation on benefit reduction. Except as provided in 
paragraph (a)(1) of this section, the PBGC shall reduce benefits with 
respect to a participant or beneficiary by no more than the greater of 
(i) ten percent per month or (ii) the amount of benefit per month in 
excess of the maximum guaranteeable benefit payable under section 
4022(b)(3)(B) of ERISA, determined without adjustment for age and 
benefit form.
    (3) PBGC notice to participant or beneficiary. Before effecting a 
benefit reduction pursuant to this paragraph, the PBGC shall notify the 
participant or beneficiary in writing of the amount of the benefit 
overpayment and of the amount of the reduced benefit computed under 
this section. The notice will advise the participant or beneficiary of 
the repayment option set forth in paragraph (b) of this section and 
inform him or her that the PBGC will proceed to recover the benefit 
overpayment in accordance with this paragraph unless an election to 
repay in a lump sum is made in accordance with paragraph (b).
    (b) Lump sum repayment. A participant or beneficiary who has 
received a net benefit overpayment may elect to repay the excess in a 
single payment on or before a date agreed to by the participant or 
beneficiary and the PBGC. If the full payment is not made by the agreed 
upon date or a date is not agreed upon, the PBGC may proceed to recover 
the overpayment in accordance with paragraph (a) of this section.


Sec. 4022.83   PBGC reimbursement of benefit underpayments.

    When the PBGC determines that there has been a net benefit 
underpayment made with respect to a participant, it shall pay the 
participant or beneficiary the amount of the net underpayment, 
determined in accordance with Sec. 4022.81(d), in a single payment.

[[Page 34039]]

Appendix to Part 4022--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 Sec. 4022.22(b) to a participant in a plan 
that terminated in that year:

------------------------------------------------------------------------
                                                              Maximum   
                                                           guaranteeable
                          Year                                monthly   
                                                              benefit   
------------------------------------------------------------------------
1974....................................................         $750.00
1975....................................................          801.14
1976....................................................          869.32
1977....................................................          937.50
1978....................................................        1,005.68
1979....................................................        1,073.86
1980....................................................        1,159.09
1981....................................................        1,261.36
1982....................................................        1,380.68
1983....................................................        1,517.05
1984....................................................        1,602.27
1985....................................................        1,687.50
1986....................................................        1,789.77
1987....................................................        1,857.95
1988....................................................        1,909.09
1989....................................................        2,028.41
1990....................................................        2,164.77
1991....................................................        2,250.00
1992....................................................        2,352.27
1993....................................................        2,437.50
1994....................................................        2,556.82
1995....................................................        2,573.86
1996....................................................        2,642.05
------------------------------------------------------------------------

PART 4022B--AGGREGATE LIMITS ON GUARANTEED BENEFITS


Sec. 4022B.1   Aggregate payments limitation.

    If a person is entitled to benefits under two or more plans or with 
respect to two or more participants, or if more than one person is 
entitled to benefits payable with respect to one participant, the 
aggregate benefits payable by PBGC from its funds shall be limited to 
the extent set forth in Sec. 4022.22 computed without regard to the 
provisions of Sec. 4022.22(a). The limitation contained in Sec. 4022.22 
shall be applied separately to each plan at the date of its 
termination, and the amounts payable by PBGC under each plan shall be 
aggregated up to the limitation contained in this section.

PART 4041--TERMINATION OF SINGLE-EMPLOYER PLANS

Subpart A--General Provisions

Sec.
4041.1  Purpose and scope.
4041.2  Definitions.
4041.3  Requirements for a standard termination or a distress 
termination.
4041.4  Administration of plan during pendency of termination 
proceedings.
4041.5  Challenges to plan termination under collective bargaining 
agreement.
4041.6  Annuity requirements.
4041.7  Facilitating plan sufficiency in a standard termination.
4041.8  Disaster relief.
4041.9  Filing with the PBGC.
4041.10  Computation of time.
4041.11  Maintenance of plan records.
4041.12  Information collection.

Subpart B--Standard Termination Process

4041.21  Notice of intent to terminate.
4041.22  Issuance of notices of plan benefits.
4041.23  Form and contents of notices of plan benefits.
4041.24  Standard termination notice.
4041.25  PBGC action upon filing of standard termination notice.
4041.26  Notice of noncompliance.
4041.27  Closeout of plan.

Subpart C--Distress Termination Process

4041.41  Notice of intent to terminate.
4041.42  PBGC review of notice of intent to terminate.
4041.43  Distress termination notice.
4041.44  PBGC determination of compliance with requirements for 
distress termination.
4041.45  PBGC determination of plan sufficiency/insufficiency.
4041.46  Notices of benefit distribution.
4041.47  Verification of plan sufficiency prior to closeout.
4041.48  Closeout of plan.

Appendix to Part 4041--Agreement for Commitment to Make Plan Sufficient 
for Benefit Liabilities

    Authority: 29 U.S.C. 1302(b)(3), 1341, 1344, 1350.

Subpart A--General Provisions


Sec. 4041.1   Purpose and scope.

    This part sets forth the rules and procedures for terminating a 
single-employer pension plan in a standard termination or in a distress 
termination under ERISA. Subpart A contains various general rules that 
apply to both standard terminations and distress terminations. Subpart 
B sets forth the specific steps that a plan administrator must follow 
in order to terminate a plan in a standard termination. Subpart C sets 
forth the specific steps that a plan administrator must follow in order 
to terminate a plan in a distress termination. This part applies to the 
termination of any single-employer plan covered under section 4021(a) 
of ERISA and not excluded by section 4021(b). This part does not 
reflect the amendments to sections 4041(b)(2)(C)(i) (relating to the 
PBGC's authority not to nullify a termination if nullification would be 
inconsistent with the interests of participants and beneficiaries) or 
4041(c)(2)(B)(i)(I) (relating to the liquidation criteria for a 
distress termination) that were contained in the Retirement Protection 
Act of 1994 (Pub. L. 103-465, section 778 (a) and (b)).


Sec. 4041.2   Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
affected party, annuity, benefit liabilities, Code, contributing 
sponsor, controlled group, distress termination, distribution date, 
employer, ERISA, guaranteed benefit, insurer, irrevocable commitment, 
IRS, mandatory employee contributions, normal retirement age, notice of 
intent to terminate, PBGC, person, plan, plan administrator, plan year, 
single-employer plan, standard termination, termination date, and title 
IV benefit.
    In addition, for purposes of this part:
    Distress termination notice means the notice filed with the PBGC 
pursuant to section 4041(c)(2)(A) of ERISA and Sec. 4041.43. PBGC Form 
601 (including Schedule EA-D) is the distress termination notice.
    Distribution notice means the notice issued to the plan 
administrator by the PBGC pursuant to Sec. 4041.45(c) of this part upon 
the PBGC's determination that the plan has sufficient assets to pay at 
least guaranteed benefits.
    Existing collective bargaining agreement means a collective 
bargaining agreement that--
    (1) By its terms, either has not expired or is extended beyond its 
stated expiration date because neither of the collective bargaining 
parties took the required action to terminate it, and
    (2) Has not been made inoperative by a judicial ruling. When a 
collective bargaining agreement no longer meets these conditions, it 
ceases to be an ``existing collective bargaining agreement,'' whether 
or not any or all of its terms may continue to apply by operation of 
law.
    Majority owner means, with respect to a contributing sponsor of a 
single-employer plan, an individual who owns, directly or indirectly, 
50 percent or more of--
    (1) An unincorporated trade or business,
    (2) The capital interest or the profits interest in a partnership, 
or
    (3) Either the voting stock of a corporation or the value of all of 
the stock of a corporation. For this purpose, the constructive 
ownership rules of section 414 (b) and (c) of the Code shall apply.
    Notice of benefit distribution means the notice to each participant 
and beneficiary required by Sec. 4041.46 of this part describing the 
benefit to be distributed to him or her.
    Notice of noncompliance means a notice issued to a plan 
administrator by the PBGC pursuant to section 4041(b)(2)(C) of ERISA 
and Sec. 4041.26 of this part advising the plan administrator that the 
requirements for a standard

[[Page 34040]]

termination have not been satisfied and that the plan is an ongoing 
plan.
    Notice of plan benefits means the notice to each participant and 
beneficiary required by section 4041(b)(2)(B) of ERISA and 
Secs. 4041.22 and 4041.23 of this part describing his or her plan 
benefits.
    Participant means--
    (1) Any individual who is currently in employment covered by the 
plan and who is earning or retaining credited service under the plan, 
including any individual who is considered covered under the plan for 
purposes of meeting the minimum participation requirements but who, 
because of offset or similar provisions, does not have any accrued 
benefits;
    (2) Any nonvested individual who is not currently in employment 
covered by the plan but who is earning or retaining credited service 
under the plan; and
    (3) Any individual who is retired or separated from employment 
covered by the plan and who is receiving benefits under the plan or is 
entitled to begin receiving benefits under the plan in the future, 
excluding any such individual to whom an insurer has made an 
irrevocable commitment to pay all the benefits to which the individual 
is entitled under the plan.
    Plan benefits means the benefits to which a participant is, or may 
become, entitled under the plan's provisions in effect as of the 
termination date, based on the participant's accrued benefit under the 
plan as of that date. Each participant's ``plan benefits'' equals that 
participant's ``benefit liabilities,'' and the sum of all ``plan 
benefits'' equals the plan's ``benefit liabilities.''
    Proposed distribution date means the date chosen by the plan 
administrator as the tentative date for the distribution of plan assets 
pursuant to a standard termination. A proposed distribution date may 
not be earlier than the 61st day, nor later than the 240th day, 
following the day on which the plan administrator files a standard 
termination notice with the PBGC.
    Proposed termination date means the date specified as such by the 
plan administrator in the notice of intent to terminate or, if later, 
in the standard termination notice or the distress termination notice. 
A proposed termination date specified in the notice of intent to 
terminate may not be earlier than the 60th day, nor later than the 90th 
day, after the issuance of the notice of intent to terminate. A 
proposed termination date becomes the 'termination date' if a plan 
terminates in a standard termination. A proposed termination date 
specified in the distress termination notice may not be earlier than 
the proposed termination date specified in the notice of intent to 
terminate, or (except with PBGC approval) later than the 90th day after 
the issuance of the notice of intent to terminate.
    Residual assets means the plan assets remaining after all benefit 
liabilities and other liabilities of the plan have been satisfied.
    Standard termination notice means the notice filed with the PBGC 
pursuant to section 4041(b)(2)(A) of ERISA and Sec. 4041.24 of this 
part advising the PBGC of a proposed standard termination. PBGC Form 
500 (including Schedule EA-S) is the standard termination notice.


Sec. 4041.3   Requirements for a standard termination or a distress 
termination.

    (a) Exclusive means of voluntary plan termination. A plan may be 
voluntarily terminated by the plan administrator only if all of the 
requirements for a standard termination set forth in paragraph (b) of 
this section are satisfied or all of the requirements for a distress 
termination set forth in paragraph (c) of this section are satisfied.
    (b) Requirements for a standard termination. A plan may be 
terminated in a standard termination only if--
    (1) The plan administrator issues a notice of intent to terminate 
to each affected party in accordance with Sec. 4041.21 at least 60 days 
and not more than 90 days before the proposed termination date;
    (2) The plan administrator files a standard termination notice with 
the PBGC in accordance with Sec. 4041.24 no later than 120 days after 
the proposed termination date or, if applicable, no later than the due 
date established in an extension notice issued under Sec. 4041.8;
    (3) The plan administrator issues notices of plan benefits to plan 
participants and beneficiaries in accordance with Secs. 4041.22 and 
4041.23 no later than the date that the standard termination notice is 
filed with the PBGC;
    (4) The PBGC does not issue a notice of noncompliance to the plan 
administrator pursuant to Sec. 4041.26; and
    (5) The plan administrator distributes plan assets in accordance 
with Sec. 4041.27(c) within the 180-day (or extended) distribution 
period under Sec. 4041.27(a), (e), and (f) (or, where applicable, 
within the time prescribed in part 4050 of this chapter), in 
satisfaction of all benefit liabilities under the plan.
    (c) Requirements for a distress termination. A plan may be 
terminated in a distress termination only if--
    (1) The plan administrator issues a notice of intent to terminate 
to each affected party in accordance with Sec. 4041.41 at least 60 days 
and not more than 90 days before the proposed termination date;
    (2) The plan administrator files a distress termination notice with 
the PBGC in accordance with Sec. 4041.43 no later than 120 days after 
the proposed termination date or, if applicable, no later than the due 
date established in an extension notice issued under Sec. 4041.8; and
    (3) The PBGC determines that each contributing sponsor and each 
member of its controlled group satisfy one of the distress criteria set 
forth in paragraph (e) of this section.
    (d) Effect of failure to satisfy requirements. (1) If the plan 
administrator does not satisfy all of the requirements of paragraph (b) 
of this section for a standard termination or, except as provided in 
paragraph (d)(2)(i) of this section, all of the requirements of 
paragraph (c) of this section for a distress termination, any action 
taken to effect the plan termination shall be null and void, and the 
plan shall be an ongoing plan. A plan administrator who still desires 
to terminate the plan shall initiate the termination process again, 
starting with the issuance of a new notice of intent to terminate.
    (2)(i) The PBGC may, upon its own motion, waive any requirement 
with respect to notices to be filed with the PBGC under paragraph 
(c)(1) or (c)(2) of this section if the PBGC believes that it will be 
less costly or administratively burdensome to the PBGC to do so. The 
PBGC will not entertain requests for waivers under this paragraph.
    (ii) Notwithstanding any other provision of this part, the PBGC 
retains the authority in any case to initiate a plan termination in 
accordance with the provisions of section 4042 of ERISA.
    (e) Distress criteria. In a distress termination, each contributing 
sponsor and each member of its controlled group shall satisfy at least 
one (but not necessarily the same one) of the following criteria in 
order for a distress termination to occur:
    (1) Liquidation. This criterion is met if, as of the proposed 
termination date--
    (i) A person has filed or had filed against it a petition seeking 
liquidation in a case under title 11, United States Code, or under a 
similar federal law or law of a State or political subdivision of a 
State, or a case described in paragraph (e)(2) of this section has been 
converted to such a case; and
    (ii) The case has not been dismissed.
    (2) Reorganization. This criterion is met if--

[[Page 34041]]

    (i) As of the proposed termination date, a person has filed or had 
filed against it a petition seeking reorganization in a case under 
title 11, United States Code, or under a similar law of a state or a 
political subdivision of a state, or a case described in paragraph 
(e)(1) of this section has been converted to such a case;
    (ii) As of the proposed termination date, the case has not been 
dismissed;
    (iii) The person notifies the PBGC of any request to the bankruptcy 
court (or other appropriate court in a case under such similar law of a 
state or a political subdivision of a state) for approval of the plan 
termination by concurrently filing with the PBGC a copy of the motion 
requesting court approval, including any documents submitted in support 
of the request; and
    (iv) The bankruptcy court or other appropriate court determines 
that, unless the plan is terminated, such person will be unable to pay 
all its debts pursuant to a plan of reorganization and will be unable 
to continue in business outside the reorganization process and approves 
the plan termination.
    (3) Inability to continue in business. This criterion is met if a 
person demonstrates to the satisfaction of the PBGC that, unless a 
distress termination occurs, the person will be unable to pay its debts 
when due and to continue in business.
    (4) Unreasonably burdensome pension costs. This criterion is met if 
a person demonstrates to the satisfaction of the PBGC that the person's 
costs of providing pension coverage have become unreasonably burdensome 
solely as a result of declining covered employment under all single-
employer plans for which that person is a contributing sponsor.
    (f) Non-duplicative efforts. (1) If a person requests approval of 
the plan termination by a court, as described in paragraph (e)(2) of 
this section, the PBGC--
    (i) Will normally enter an appearance to request that the court 
make specific findings as to whether the contributing sponsor or 
controlled group member meets the distress test in paragraph (e)(3) of 
this section, or state that it is unable to make such findings;
    (ii) Will provide the court with any information it has that may be 
germane to the court's ruling;
    (iii) Will, if the person has requested, or later requests, a 
determination by the PBGC under paragraph (e)(3) of this section, defer 
action on the request until the court makes its determination; and
    (iv) Will be bound by a final and non-appealable order of the 
court.
    (2) If a person requests a determination by the PBGC under 
paragraph (e)(3) of this section, the PBGC determines that the distress 
criterion is not met, and the person thereafter requests approval of 
the plan termination by a court, as described in paragraph (e)(2) of 
this section, the PBGC will advise the court of its determination and 
make its administrative record available to the court.
    (g) Non-recognition of certain actions. If the PBGC finds that a 
person undertook any action or failed to act for the principal purpose 
of satisfying any of the distress criteria contained in paragraph (e) 
of this section, rather than for a reasonable business purpose, the 
PBGC shall disregard such act or failure to act in determining whether 
the person has satisfied any of those criteria.


Sec. 4041.4  Administration of plan during pendency of termination 
proceedings.

    (a) General rule. Except to the extent specifically prohibited by 
this section, during the pendency of termination proceedings the plan 
administrator shall continue to carry out the normal operations of the 
plan, such as putting participants into pay status, collecting 
contributions due the plan, investing plan assets, and, during the 
pendency of a standard termination, making loans to participants, in 
accordance with plan provisions and applicable law and regulations.
    (b) Prohibitions after issuance of notice of intent to terminate in 
a standard termination. Except as provided in paragraph (d) of this 
section, during the period beginning on the first day the plan 
administrator issues a notice of intent to terminate and ending on the 
last day of the PBGC's 60-day (or extended) review period, as described 
in Sec. 4041.25(a), the plan administrator shall not--
    (1) Distribute plan assets pursuant to or in furtherance of the 
termination of the plan;
    (2) Pay benefits attributable to employer contributions, other than 
death benefits, in any form other than as an annuity; or
    (3) Purchase irrevocable commitments to provide benefits from an 
insurer.
    (c) Prohibitions after issuing notice of intent to terminate in a 
distress termination. The plan administrator shall not make loans to 
plan participants beginning on the first day he or she issues a notice 
of intent to terminate, and from that date until a distribution is 
permitted pursuant to Sec. 4041.48, the plan administrator shall not--
    (1) Distribute plan assets pursuant to, or (except as required by 
this part) take any other actions to implement, the termination of the 
plan;
    (2) Pay benefits attributable to employer contributions, other than 
death benefits, in any form other than as an annuity; or
    (3) Purchase irrevocable commitments to provide benefits from an 
insurer.
    (d) Exceptions in a standard termination. During the period set 
forth in paragraph (b) of this section, the plan administrator may pay 
benefits attributable to employer contributions either through the 
purchase of irrevocable commitments from an insurer or in a form other 
than an annuity if--
    (1) The participant has separated from active employment;
    (2) The distribution is consistent with prior plan practice; and
    (3) The distribution is not reasonably expected to jeopardize the 
plan's sufficiency for benefit liabilities.
    (e) Effect of notice of noncompliance in a standard termination. If 
the PBGC issues a notice of noncompliance pursuant to Sec. 4041.26, the 
prohibitions described in paragraphs (b)(2) and (b)(3) of this section 
shall cease to apply--
    (1) Upon expiration of the period during which reconsideration may 
be requested under Sec. 4041.26(c) or, if earlier, at the time the plan 
administrator decides not to request reconsideration; or
    (2) If reconsideration is requested, upon PBGC issuance of its 
decision on reconsideration.
    (f) Limitation on benefit payments on or after proposed termination 
date in a distress termination. Beginning on the proposed termination 
date, the plan administrator shall reduce benefits to the level 
determined under part 4022, subpart D, of this chapter.
    (g) Failure to qualify for distress termination. In any case where 
the PBGC determines, pursuant to Sec. 4041.42(c) or Sec. 4041.44(c)(1), 
that the requirements for a distress termination are not satisfied--
    (1) The prohibitions in paragraph (c) of this section, other than 
those in paragraph (c)(1), shall cease to apply--
    (i) Upon expiration of the period during which reconsideration may 
be requested under Secs. 4041.42(e) and 4041.44(d) or, if earlier, at 
the time the plan administrator decides not to request reconsideration; 
or
    (ii) If reconsideration is requested, upon PBGC issuance of its 
decision on reconsideration.
    (2) Any benefits that were not paid pursuant to paragraph (f) of 
this section shall be due and payable as of the

[[Page 34042]]

effective date of the PBGC's determination, together with interest from 
the date (or dates) on which the unpaid amounts were originally due 
until the date on which they are paid in full at the rate or rates 
prescribed under Sec. 4022.81(d) of this chapter.
    (h) Effect of subsequent insufficiency. If the plan administrator 
makes a finding of subsequent insufficiency for guaranteed benefits 
pursuant to Sec. 4041.47(b), or the PBGC notifies the plan 
administrator that it has made a finding of subsequent insufficiency 
for guaranteed benefits pursuant to Sec. 4041.47(d), the prohibitions 
in paragraph (c) of this section shall apply in accordance with 
Sec. 4041.47(e).


Sec. 4041.5  Challenges to plan termination under collective bargaining 
agreement.

    (a) Suspension upon formal challenge to termination. (1)(i) If the 
PBGC is advised, before the 60-day (or extended) period specified in 
Sec. 4041.25 ends (in a standard termination) or before issuance of a 
notice of inability to determine sufficiency or a distribution notice 
pursuant to Sec. 4041.45(b) or (c) (in a distress termination), that a 
formal challenge to the termination (as described in paragraph (b) of 
this section) has been initiated, the PBGC shall suspend the 
termination proceeding and shall so advise the plan administrator in 
writing.
    (ii) If the PBGC is advised of a challenge described in paragraph 
(a)(1)(i) of this section after the 60-day (or extended) period 
specified in Sec. 4041.25 ends (in a standard termination) or after 
issuance of a notice of inability to determine sufficiency or a 
distribution notice pursuant to Sec. 4041.45(b) or (c) (in a distress 
termination) but before the termination procedure is concluded pursuant 
to this part, the PBGC may suspend the termination proceeding and, if 
it does, shall so advise the plan administrator in writing.
    (2) The rules in paragraphs (a)(3) or (a)(4) (as appropriate) shall 
apply during a period of suspension beginning on the date of the PBGC's 
written notification to the plan administrator and ending with the 
final resolution of the challenge to the termination:
    (3) In a standard termination--
    (i) The running of all time periods specified in ERISA or this part 
relevant to the termination shall be suspended; and
    (ii) The plan administrator shall comply with the prohibitions in 
Sec. 4041.4.
    (4) In a distress termination--
    (i) The suspension shall stay the issuance by the PBGC of any 
notice of inability to determine sufficiency or distribution notice or, 
if any such notice was previously issued, shall stay its effectiveness;
    (ii) The plan administrator shall comply with the prohibitions in 
Sec. 4041.4; and
    (iii) The plan administrator shall file a distress termination 
notice with the PBGC in the manner and within the time specified in 
Sec. 4041.43.
    (b) Formal challenge to termination. For purposes of this section, 
a formal challenge to a plan termination is initiated when any of the 
following actions is taken, asserting that the termination would 
violate the terms and conditions of an existing collective bargaining 
agreement:
    (1) The commencement of any procedure specified in the collective 
bargaining agreement for resolving disputes under the agreement; or
    (2) The commencement of any action before an arbitrator, 
administrative agency or board, or court under applicable labor-
management relations law.
    (c) Resolution of challenge. Immediately upon the final resolution 
(as described in paragraph (d) of this section) of the formal challenge 
to the termination, the plan administrator shall notify the PBGC in 
writing of the outcome of the challenge, and shall provide the PBGC 
with a copy of the award or order, if any. If the validity of the 
proposed termination has been upheld, the plan administrator also shall 
advise the PBGC whether the plan administrator wishes to continue the 
proposed termination.
    (1) Challenge sustained. If the arbitrator, agency, board, or court 
has determined (or the parties have agreed) that the proposed 
termination violates an existing collective bargaining agreement, the 
PBGC shall dismiss the termination proceeding, all actions taken to 
effect the plan termination shall be null and void, and the plan shall 
be an ongoing plan. In this event, in a distress termination, 
Sec. 4041.4(g) shall apply as of the date of the dismissal by the PBGC.
    (2) Termination sustained. If the arbitrator, agency, board, or 
court has determined (or the parties have agreed) that the proposed 
termination does not violate an existing collective bargaining 
agreement and the plan administrator wishes to proceed with the 
termination, the PBGC shall reactivate the termination proceeding by 
sending a written notice thereof to the plan administrator, and the 
following rules shall apply:
    (i) The termination proceeding shall continue from the point where 
it was suspended;
    (ii) All actions taken to effect the termination before the 
suspension shall be effective;
    (iii) Any time periods that were suspended shall resume running 
from the date of the PBGC's notice of the reactivation of the 
proceeding;
    (iv) Any time periods that had fewer than 15 days remaining shall 
be extended to the 15th day after the date of the PBGC's notice, or 
such later date as the PBGC may specify, and
    (v) In a distress termination, the PBGC shall proceed to issue a 
notice of inability to determine sufficiency or a distribution notice 
(or reactivate any such notice stayed under paragraph (a)(3) of this 
section), either with or without first requesting updated information 
from the plan administrator pursuant to Sec. 4041.43(c).
    (d) Final resolution of challenge. For purposes of this section, a 
formal challenge to a proposed termination is finally resolved when--
    (1) The parties involved in the challenge enter into a settlement 
that resolves the challenge;
    (2) A final award, administrative decision, or court order is 
issued that is not subject to review or appeal; or
    (3) A final award, administrative decision, or court order is 
issued that is not appealed, or review or enforcement of which is not 
sought, within the time for filing an appeal or requesting review or 
enforcement.
    (e) Involuntary termination by the PBGC. Notwithstanding any other 
provision of this section, the PBGC retains the authority in any case 
to initiate a plan termination in accordance with the provisions of 
section 4042 of ERISA.


Sec. 4041.6  Annuity requirements.

    (a) General rule. Except as provided in paragraphs (b) and (d) of 
this section (or, where applicable, in part 4050 of this chapter), when 
a plan is closed out under Sec. 4041.27 (in a standard termination) or 
Sec. 4041.48 (in a distress termination), any benefit that is payable 
as an annuity under the provisions of the plan must be provided in 
annuity form through the purchase from an insurer of a single premium, 
nonparticipating, nonsurrenderable annuity contract that constitutes an 
irrevocable commitment by the insurer to provide the benefits 
purchased.
    (b) Exceptions to annuity requirement. A benefit that is payable as 
an annuity under the provisions of a plan need not be provided in 
annuity form if the plan provides for an alternative form of

[[Page 34043]]

distribution and either paragraph (b)(1) or (b)(2) of this section 
applies:
    (1) The participant is not in pay status as of the distribution 
date, and the present value of the participant's total benefit under 
the plan, including amounts previously distributed to the participant, 
is $3,500 or less, determined in accordance with sections 411(a)(11) 
and 417(e)(3) of the Code and the regulations thereunder. The present 
value of such benefits shall be determined using the interest rate or 
rates as of--
    (i) The date set forth in the plan for such purpose, provided that 
the plan provision is in accord with section 417(e)(3) of the Code and 
the regulations thereunder (substituting ``distribution date'' for 
``annuity starting date'' wherever used in the plan); or
    (ii) If the plan does not provide for such a date, the distribution 
date.
    (2) The participant elected the alternative form of distribution in 
writing, with the written consent of his or her spouse, in accordance 
with the requirements of sections 401(a)(11), 411(a)(11), and 417 of 
the Code and the regulations thereunder.
    (c) Optional benefit forms. Except as permitted by sections 
401(a)(11), 411(d)(6), and 417 of the Code and the regulations 
thereunder, an annuity contract purchased to satisfy the annuity 
requirement shall preserve all applicable benefit options provided 
under the plan as of the termination date.
    (d) Participating annuities. (1) General rule. Notwithstanding the 
requirement of paragraph (a) of this section that an annuity contract 
be nonparticipating, a participating annuity contract may be purchased 
to satisfy the annuity requirement if the plan can provide for all 
benefit liabilities and--
    (i) All benefit liabilities will be guaranteed under the annuity 
contract as the unconditional, irrevocable, and noncancellable 
obligation of the insurer;
    (ii) In no event, including unfavorable investment or actuarial 
experience, can the amounts payable to participants under the annuity 
contract decrease except to correct mistakes; and
    (iii) As provided in paragraph (d)(2) of this section, no amount of 
residual assets to which participants are entitled will be used to pay 
for the participation feature.
    (2) Plans with residual assets. If all or a portion of the residual 
assets of a plan will be distributed to participants--
    (i) The additional premium for the participation feature must be 
paid from the contributing sponsor's share, if any, of the residual 
assets or from assets of the contributing sponsor; and
    (ii) If the plan provided for mandatory employee contributions, the 
amount of residual assets must be determined using the price of the 
annuities for all benefit liabilities without the participation 
feature.


Sec. 4041.7  Facilitating plan sufficiency in a standard termination.

    (a) Commitment to make plan sufficient--(1) General rule. At any 
time before a standard termination notice is filed with the PBGC, in 
order to enable the plan to terminate in that standard termination, a 
contributing sponsor or a member of a controlled group of a 
contributing sponsor may make a commitment to contribute any additional 
sums necessary to make the plan sufficient for all benefit liabilities. 
Any such commitment shall be treated as a plan asset for all purposes 
under this part. A sample commitment is included in the appendix to 
this part.
    (2) Requirements for valid commitment. A commitment to make a plan 
sufficient for all benefit liabilities shall be valid for purposes of 
this part only if the commitment--
    (i) Is made to the plan;
    (ii) Is in writing, signed by the contributing sponsor and/or 
controlled group member(s); and
    (iii) If the contributing sponsor or controlled group member is the 
subject of a bankruptcy liquidation or reorganization proceeding, as 
described in Sec. 4041.3(e)(1) or (e)(2) of this part, is approved by 
the court before which the liquidation or reorganization proceeding is 
pending or is unconditionally guaranteed, by a person not in 
bankruptcy, to be met at or before the time distribution of assets is 
required in the standard termination.
    (b) Alternative treatment of majority owner's benefit--(1) General 
rule. In order to facilitate the termination of the plan and 
distribution of assets in a standard termination, a majority owner may 
agree to forego receipt of all or part of his or her benefit until the 
benefit liabilities of all other plan participants have been satisfied.
    (2) Requirements for valid agreement. Any agreement by a majority 
owner to an alternative treatment of his or her benefit is valid only 
if--
    (i) The agreement is in writing;
    (ii) In any case in which the total value of the benefit 
(determined in accordance with Sec. 4041.6(b) of this part) is greater 
than $3,500, the spouse, if any, of the majority owner consents, in 
writing, to the alternative treatment of the benefit; and
    (iii) The agreement is not inconsistent with a qualified domestic 
relations order (as defined in section 206(d)(3) of ERISA).


Sec. 4041.8   Disaster relief.

    (a) Notwithstanding any other provision in this part, when the 
President of the United States declares that, under the Disaster Relief 
Act of 1974, as amended (42 U.S.C. 5121, 5122(2), 5141(b)), a major 
disaster exists, the Executive Director of the PBGC (or his or her 
designee) may, by issuing one or more notices of disaster relief, 
extend by up to 180 days the due date for--
    (1) Filing the standard termination notice under Sec. 4041.24;
    (2) Completing the distribution of plan assets in a standard 
termination under Sec. 4041.27;
    (3) Filing the distress termination notice pursuant to 
Sec. 4041.43;
    (4) Issuing the notices of benefit distribution in a distress 
termination pursuant to Sec. 4041.46(a)(1); or
    (5) Completing the distribution of plan assets in a distress 
termination pursuant to Sec. 4041.48.
    (b) The due date extension or extensions described in paragraph (a) 
of this section shall apply only to plan terminations with respect to 
which the principal place of business of the contributing sponsor or 
the plan administrator, or the office of the service provider, bank, 
insurance company, or other person maintaining the information 
necessary to file the standard or distress termination notice, issue 
notices of plan benefits or benefit distribution, or complete the 
distribution of plan assets (as applicable), is within a designated 
disaster area.
    (c) The standard or distress termination notice or the post-
distribution certification shall identify the termination as being 
qualified for the due date extension.


Sec. 4041.9   Filing with the PBGC.

    (a) Date of filing. Any document required or permitted to be filed 
with the PBGC under this part shall be deemed filed on the date that it 
is received at the PBGC, providing it is received no later than 4:00 
p.m. on a day other than Saturday, Sunday, or a Federal holiday. 
Documents received after 4:00 p.m. or on Saturday, Sunday, or a Federal 
holiday shall be deemed filed on the next regular business day.
    (b) How to file. Except as may otherwise be provided in applicable 
forms and instructions, any document to be filed under this part may be 
delivered by mail or by hand to: Reports

[[Page 34044]]

Processing, Insurance Operations Department, Pension Benefit Guaranty 
Corporation, 1200 K Street NW., Washington, DC 20005-4026


Sec. 4041.10   Computation of time.

    In computing any period of time prescribed or allowed by this part, 
the day of the act or event from which the designated period of time 
begins to run is not counted. The last day of the period so computed 
shall be included, unless it is a Saturday, Sunday, or Federal holiday, 
in which event the period runs until the end of the next day that is 
not a Saturday, Sunday, or Federal holiday. Notwithstanding the 
preceding sentence, a proposed termination date may be any day, 
including a Saturday, Sunday, or Federal holiday.


Sec. 4041.11   Maintenance of plan records.

    Either the contributing sponsor or the plan administrator of a plan 
terminating in a standard termination or a plan terminating in a 
distress termination that closes out in accordance with Sec. 4041.48 
pursuant to a distribution notice issued under Sec. 4041.45(c) shall 
maintain and preserve all records used to compute benefits with respect 
to each individual who is a plan participant or a beneficiary of a 
deceased participant as of the termination date in accordance with the 
following rules:
    (a) The records to be maintained and preserved are those used to 
compute the benefit for purposes of distribution to each individual in 
accordance with Sec. 4041.27(c) (in a standard termination) or 
Sec. 4041.48 (in a distress termination) and include, but are not 
limited to, the plan documents and all underlying data, including 
worksheets prepared by or at the direction of the enrolled actuary, 
used in determining the amount, form, and value of benefits.
    (b) All records subject to this section shall be preserved for six 
years after the date the post-distribution certification required under 
Sec. 4041.27(h) (in a standard termination) or Sec. 4041.48(b) (in a 
distress termination) is filed with the PBGC.
    (c) The contributing sponsor or plan administrator, as appropriate, 
shall make records subject to this section available to the PBGC upon 
request for inspection and photocopying, and shall submit such records 
to the PBGC within 30 days after receipt of the PBGC's written request 
therefor (or such other period as may be specified in such written 
request).


Sec. 4041.12   Information collection.

    The information collection requirements contained in this part have 
been approved by the Office of Management and Budget under control 
number 1212-0036.

Subpart B--Standard Termination Process


Sec. 4041.21   Notice of intent to terminate.

    (a) General rule. At least 60 days and no more than 90 days before 
the proposed termination date, the plan administrator shall issue to 
each person who is (as of the proposed termination date) an affected 
party (other than the PBGC) a written notice of intent to terminate 
containing all of the information specified in paragraph (d) of this 
section. Failure to comply with the requirements of this section shall 
nullify the proposed termination.
    (b) Discovery of other affected parties. Notwithstanding the 
provisions of paragraph (a) of this section, if the plan administrator 
discovers additional affected parties after the expiration of the time 
period specified in paragraph (a) of this section, the failure to issue 
the notice of intent to terminate to such parties within the specified 
time period will not cause the notice to be untimely under paragraph 
(a) of this section if the plan administrator could not reasonably have 
been expected to know of the additional affected parties and if he or 
she promptly issues the notice to each additional affected party.
    (c) Issuance--(1) Method. The plan administrator shall issue the 
notice of intent to terminate to each affected party (other than the 
PBGC) individually either by hand delivery or by first-class mail or 
courier service directed to the affected party's last known address.
    (2) When issued. The notice of intent to terminate is deemed issued 
to each affected party on the date on which it is handed to the 
affected party or deposited with a mail or courier service (as 
evidenced by a postmark or written receipt).
    (d) Contents of notice. The plan administrator shall include in the 
notice of intent to terminate all of the following information:
    (1) The name of the plan and of the contributing sponsor;
    (2) The employer identification number (``EIN'') of the 
contributing sponsor and the plan number (``PN''); if there is no EIN 
or PN, the notice shall so state;
    (3) The name, address, and telephone number of the person who may 
be contacted by an affected party with questions concerning the plan's 
termination;
    (4) A statement that the plan administrator expects to terminate 
the plan in a standard termination on a proposed termination date that 
is either--
    (i) A specific date set forth in the notice, or
    (ii) A date to be determined that is dependent on the occurrence of 
some future event;
    (5) If the proposed termination date is dependent on the occurrence 
of a future event, the nature of the event (such as the merger of the 
contributing sponsor with another entity), generally when the event is 
expected to occur, and when the termination will occur in relation to 
the other event;
    (6) A statement that benefit and service accruals will continue 
until the termination date or, if applicable, that benefit accruals 
were or will be frozen as of a specific date in accordance with section 
204(h) of ERISA;
    (7) A statement that, in order to terminate in a standard 
termination, plan assets must be sufficient to provide all benefit 
liabilities under the plan with respect to each participant and each 
beneficiary of a deceased participant;
    (8) A statement that, after plan assets have been distributed to 
provide all benefit liabilities with respect to a participant or a 
beneficiary of a deceased participant, either by the purchase of an 
irrevocable commitment or commitments from an insurer to provide 
benefits or by an alternative form of distribution provided for under 
the plan, the PBGC's guarantee with respect to that participant's or 
beneficiary's benefit ends;
    (9) If distribution of benefits under the plan may be wholly or 
partially by the purchase of irrevocable commitments from an insurer--
    (i) The name and address of the insurer or insurers from whom, or 
(if not then known) the insurers from among whom, the plan 
administrator intends to purchase the irrevocable commitments; or
    (ii) If the plan administrator has not identified an insurer or 
insurers at the time the notice of intent to terminate is issued, a 
statement that--
    (A) Irrevocable commitments may be purchased from an insurer to 
provide some or all of the benefits under the plan,
    (B) The insurer or insurers have not yet been identified, and
    (C) Affected parties (other than the PBGC) will be notified at a 
later date (but no later than 45 days before the distribution date) of 
the name and address of the insurer or insurers from whom, or (if not 
then known) the insurers from among whom, the plan administrator 
intends to purchase the irrevocable commitments;

[[Page 34045]]

    (10) A statement that if the termination does not occur, the plan 
administrator will notify the affected parties (other than the PBGC) in 
writing of that fact;
    (11) A statement that each affected party, other than the PBGC or 
any employee organization, will receive a written notification of the 
benefits that the person will receive; and
    (12) For retirees only, a statement that their monthly (or other 
periodic) benefit amounts will not be affected by the plan's 
termination.
    (e) Supplemental notice requirements. (1) The plan administrator 
shall issue a supplemental notice (or notices) of intent to terminate 
to each affected party (other than the PBGC) in accordance with the 
rules in paragraph (e)(2) of this section if--
    (i) The plan administrator has not yet identified an insurer or 
insurers at the time the notice of intent to terminate is issued; or
    (ii) The plan administrator notifies affected parties (other than 
the PBGC) of the insurer or insurers from whom (or from among whom) he 
or she intends to purchase the irrevocable commitments, either in the 
notice of intent to terminate or in a later notice, but subsequently 
decides to select a different insurer.
    (2) The plan administrator shall issue each supplemental notice in 
the manner provided in paragraph (c) of this section no later than 45 
days before the distribution date and shall include the name and 
address of the insurer or insurers from whom, or (if not then known) 
the insurers from among whom, the plan administrator intends to 
purchase the irrevocable commitments.
    (3) Any supplemental notice or notices meeting the requirements of 
paragraph (e)(2) of this section shall be deemed a part of the notice 
of intent to terminate.
    (f) Spin-off/termination transactions. In the case of a spin-off/
termination transaction, the plan administrator shall provide all 
participants in the original plan who are covered by the ongoing plan 
(as of the proposed termination date) with a notice describing the 
transaction no later than the date on which the plan administrator 
completes the issuance of notices of intent to terminate under this 
section. A spin-off/termination is a transaction in which a single 
defined benefit plan is split into two or more plans, in conjunction 
with the termination of one or more of the plans, resulting in a 
reversion of residual assets to the employer.


Sec. 4041.22  Issuance of notices of plan benefits.

    (a) General rule. No later than the date on which the plan 
administrator files the standard termination notice with the PBGC, as 
required by Sec. 4041.24, the plan administrator shall issue to each 
person described in paragraph (b) of this section a notice of that 
individual's plan benefits. The notice shall be in the form and contain 
the information specified in Sec. 4041.23. Failure to comply with the 
requirements of this section shall nullify the proposed termination.
    (b) Persons entitled to notice. The plan administrator shall issue 
a notice of plan benefits to each person (other than the PBGC or any 
employee organization) who is an affected party as of the proposed 
termination date (and, in the case of a spin-off/termination 
transaction as described in Sec. 4043.21(f), each person who is, as of 
the proposed termination date, a participant in the original plan who 
is covered by the ongoing plan).
    (c) Discovery of other affected parties. Notwithstanding the 
provisions of paragraph (a) of this section, if the plan administrator 
discovers additional persons entitled to a notice of plan benefits 
after the expiration of the time period specified in paragraph (a) of 
this section, the failure to issue a notice of plan benefits to such 
persons within the specified time period will not cause such notices to 
be untimely under paragraph (a) of this section if the plan 
administrator could not reasonably have been expected to know of the 
additional persons and if he or she promptly issues, to each such 
additional person, a notice of plan benefits in the form and containing 
the information specified in Sec. 4041.23.
    (d) Issuance--(1) Method. The plan administrator shall issue a 
notice of plan benefits individually to each person described in 
paragraph (b) of this section, either by hand-delivery or by first-
class mail or courier service directed to the person's last known 
address.
    (2) When issued. A notice of plan benefits is deemed issued to each 
person on the date it is handed to the person or deposited with a mail 
or courier service (as evidenced by a postmark or written receipt).


Sec. 4041.23  Form and contents of notices of plan benefits.

    (a) Form of notices. The plan administrator shall provide notices 
of plan benefits written in plain, non-technical English that is likely 
to be understood by the average participant or beneficiary. If 
technical terms must be used, their meaning shall be explained in non-
technical language.
    (b) Foreign languages. The plan administrator of a plan described 
in this paragraph shall comply with paragraph (a) of this section and 
also shall include in the notices a statement, prominently displayed, 
in the foreign language (or languages) common to the non-English 
speaking plan participants advising them of how they may obtain 
assistance in understanding the notice. The assistance need not involve 
written materials, but shall be adequate to reasonably ensure that the 
participants and beneficiaries understand the information contained in 
their notices and shall be provided through media and at times and 
places that are reasonably accessible to the participants and 
beneficiaries. A plan is described in this paragraph if, as of the 
proposed termination date, the plan either--
    (1) Covers fewer than 100 participants and at least 25 percent of 
those participants speak only the same non-English language or
    (2) Covers 100 or more participants and at least the lesser of 500 
or 10 percent of those participants speak the same non-English 
language.
    (c) Contents of notice. In addition to the information described in 
paragraph (d), (e), or (f) of this section, as applicable, the plan 
administrator shall include in each notice of plan benefits the 
following information:
    (1) The name of the plan, the employer identification number 
(``EIN'') of the contributing sponsor, and the plan number (``PN''); if 
there is no EIN or PN, the notice shall so state;
    (2) The name, address, and telephone number of the person who may 
be contacted to answer questions concerning a participant's or 
beneficiary's benefit;
    (3) The proposed termination date and, if applicable, a statement 
that this date is later than the proposed termination date given in the 
notice of intent to terminate; and
    (4) If the amount of the plan benefits set forth in a notice is an 
estimate, a statement that the amount is an estimate and that benefits 
paid may be greater than or less than the estimate.
    (d) Benefits of persons in pay status. The plan administrator shall 
include in the notice of plan benefits for a participant or beneficiary 
in pay status as of the proposed termination date the following 
information:
    (1) The amount and form of the participant's plan benefits payable 
as of the proposed termination date;
    (2) The amount and form of benefit, if any, payable to a 
beneficiary upon the

[[Page 34046]]

participant's death and the name of the beneficiary;
    (3) The amount and date of any increase or decrease in the benefit 
scheduled to occur after the proposed termination date (or that has 
already occurred) and an explanation of the increase or decrease, 
including, where applicable, a reference to the pertinent plan 
provision; and
    (4) For benefits of participants or beneficiaries in pay status for 
one year or less as of the proposed termination date, the specific 
personal data used to calculate the plan benefits described in 
paragraphs (d)(1) and (d)(2) of this section, e.g., participant's age 
at retirement, spouse's age, participant's length of service, and 
including, for Social Security offset benefits, the participant's 
actual or, if unknown, estimated Social Security benefit and, for an 
estimated benefit, the assumptions used for the participant's earnings 
history.
    (e) Benefits of participants not in pay status but form and 
starting date known. The plan administrator shall include in the notice 
of plan benefits for a participant who is not in pay status as of the 
proposed termination date, but who has, as of that date, elected to 
retire and has elected a form and starting date, or with respect to 
whom the plan administrator has determined a lump sum distribution will 
be made, the following information:
    (1) The amount and form of the participant's plan benefits payable 
as of the projected benefit starting date, and what that date is;
    (2) The amount and form of benefit, if any, payable to a 
beneficiary upon the participant's death and the name of the 
beneficiary;
    (3) The amount and date of any increase or decrease in the benefit 
scheduled to occur after the proposed termination date (or that has 
already occurred) and an explanation of the increase or decrease, 
including, where applicable, a reference to the pertinent plan 
provision; and
    (4) If the age at which, or form in which, the plan benefits will 
be paid differs from the age or form in which the participant's accrued 
benefit at normal retirement age is stated in the plan, the age or form 
stated in the plan and the age or form adjustment factors, including, 
in the case of a lump sum benefit, the interest rate used to convert to 
the lump sum benefit described in paragraph (e)(1) of this section and 
a reference to the pertinent plan provision;
    (5) The specific personal data, as described in paragraph (d)(4) of 
this section, used to calculate the plan benefits (other than a lump 
sum benefit) described in paragraphs (e)(1) and (e)(2) of this section 
and, with respect to a benefit payable as a lump sum, the personal data 
used to calculate the underlying annuity; and
    (6) If the plan benefits will be paid in a lump sum, an explanation 
of how the interest rate is used to calculate the lump sum; a statement 
that the higher the interest rate used, the smaller the lump sum 
amount; and, if applicable, a statement that the lump sum amount given 
is an estimate because the applicable interest rate may change before 
the distribution date.
    (f) Benefits of all other participants not in pay status. The plan 
administrator shall include in the notice of plan benefits for any 
participant not described in paragraph (d) or (e) of this section, the 
following information:
    (1) The amount and form of the participant's plan benefits payable 
at normal retirement age in any form permitted under the plan;
    (2) The availability of any alternative benefit forms, including 
those payable to a beneficiary upon the participant's death either 
before or after retirement, and, for any benefits to which the 
participant is or may become entitled that would be payable before 
normal retirement age, the earliest benefit commencement date, the 
amount payable on and after such date, and whether the benefit would be 
subject to future reduction;
    (3) The specific personal data, as described in paragraph (d)(4) of 
this section, used to calculate the plan benefits described in 
paragraph (f)(1) of this section and, with respect to a benefit that 
may be paid in a lump sum, the personal data used to calculate the 
underlying annuity; and
    (4) If the plan benefits may be paid in a lump sum, an explanation 
of when a lump sum may be paid without a participant's consent; an 
explanation of how the interest rate is used to calculate the lump sum; 
and a statement that the higher the interest rate used, the smaller the 
lump sum amount.


Sec. 4041.24  Standard termination notice.

    (a) Form. The plan administrator shall file with the PBGC a PBGC 
Form 500, Standard Termination Notice, Single-Employer Plan 
Termination, with Schedule EA-S, Standard Termination Certification of 
Sufficiency, that has been completed in accordance with the 
instructions thereto. Except as provided in Sec. 4041.8, the plan 
administrator shall file the standard termination notice on or before 
the 120th day after the proposed termination date.
    (b) Supplemental notice requirement. If any of the benefits of the 
terminating plan may be provided in annuity form through the purchase 
of irrevocable commitments from an insurer and either of the conditions 
in paragraph (b)(1) of this section is met, the plan administrator 
shall file a supplemental notice (or notices) with the PBGC in 
accordance with the provisions in paragraph (b)(2) of this section.
    (1) The plan administrator shall file with the PBGC a supplemental 
notice (or notices) if--
    (i) The insurer or insurers from whom the plan administrator 
intends to purchase irrevocable commitments is not identified in the 
standard termination notice filed with the PBGC, or
    (ii) The plan administrator has notified the PBGC of the insurer or 
insurers from whom he or she intends to purchase irrevocable 
commitments, either in the standard termination notice or in a later 
notice pursuant to paragraph (b)(2) of this section, and subsequently 
decides to select a different insurer.
    (2) The supplemental notice (or notices) may be filed at any time 
after the filing of the standard termination notice, but no later than 
45 days before the distribution date, and shall--
    (i) Be in writing addressed to: Reports Processing, Insurance 
Operations Department, Pension Benefit Guaranty Corporation, 1200 K 
Street NW., Washington, DC 20005-4026.
    (ii) Give information identifying the contributing sponsor and the 
plan by name, address, employer identification and plan numbers (``EIN/
PN''), and PBGC case number (if applicable); and
    (iii) Give the name and address of the insurer or insurers from 
whom, or (if not then known) the insurers from among whom, the plan 
administrator intends to purchase the irrevocable commitments.


Sec. 4041.25  PBGC action upon filing of standard termination notice.

    (a) Review period upon filing of standard termination notice--(1) 
General rule. After a complete standard termination notice has been 
filed in accordance with Sec. 4041.9, the PBGC has 60 days to review 
the notice, determine whether to issue a notice of noncompliance 
pursuant to Sec. 4041.26, and issue any such notice. The 60-day review 
period begins on the day following the filing of a complete standard 
termination notice and includes the 60th day. If the PBGC does not 
issue a notice of noncompliance by the last day of this 60-day period, 
the plan administrator shall proceed to

[[Page 34047]]

close out the plan in accordance with Sec. 4041.27.
    (2) Extension of review period. The 60-day review period may be 
extended according to the following rules:
    (i) The PBGC and the plan administrator may agree in writing, 
before the expiration of the 60-day review period, to extend the period 
for up to an additional 60 days;
    (ii) More than one such extension may be made; and
    (iii) Any extension may be made upon whatever terms and conditions 
are agreed to by the PBGC and the plan administrator.
    (3) Suspension of review period. The 60-day review period shall be 
suspended in accordance with paragraph (d) of this section if the PBGC 
requests supplemental information.
    (b) Acknowledgment of complete standard termination notice. The 
PBGC shall notify the plan administrator in writing of the date on 
which a complete standard termination notice was filed, so that the 
plan administrator may determine when the 60-day review period will 
expire.
    (c) Return of incomplete standard termination notice. The PBGC 
shall return an incomplete standard termination notice and advise the 
plan administrator in writing of the missing item(s) of information and 
that the complete standard termination notice must be filed no later 
than the 120th day after the proposed termination date or the 20th day 
after the date of the PBGC notice, whichever is later.
    (d) Authority to request supplemental information. Whenever the 
PBGC has reason to believe that any of the requirements of 
Secs. 4041.21 through 4041.24 of this part were not complied with, or 
in any proposed termination that will result in a reversion of residual 
assets to the contributing sponsor, the PBGC may require the submission 
of information supplementing that furnished pursuant to Sec. 4041.24. A 
request for additional information under this paragraph shall be in 
writing and shall suspend the running of the 60-day (or extended) 
review period described in paragraph (a) of this section. That period 
shall begin running again on the day following the filing of the 
required information. If a plan administrator or contributing sponsor 
fails to submit information required under this paragraph within the 
period specified in the PBGC's request, the PBGC may issue a notice of 
noncompliance in accordance with Sec. 4041.26 or take other appropriate 
action to enforce the requirements of Title IV of ERISA.
    (e) Authority to suspend or nullify proposed termination. 
Notwithstanding any other provision of this part, the PBGC may, by 
written notice to the plan administrator, suspend or nullify a proposed 
termination after expiration of the 60-day (or extended) review period 
in any case in which it determines that such action is necessary to 
carry out the purposes of Title IV of ERISA.


Sec. 4041.26  Notice of noncompliance.

    (a) General. (1) The PBGC shall issue to the plan administrator a 
written notice of noncompliance, within the period prescribed by 
Sec. 4041.25, whenever it makes one of the following determinations:
    (i) A determination that the plan administrator failed to issue the 
notice of intent to terminate in accordance with Sec. 4041.21.
    (ii) A determination that the plan administrator failed to issue 
notices of plan benefits in accordance with Secs. 4041.22 and 4041.23.
    (iii) A determination that the standard termination notice, or any 
supplemental notice, was not filed in accordance with Sec. 4041.24.
    (iv) A determination that, as of the proposed distribution date, 
plan assets will not be sufficient to satisfy all benefit liabilities 
under the plan.
    (2) The PBGC shall base any determination described in paragraph 
(a)(1) of this section on the information contained in the standard 
termination notice, including any supplemental submission under 
Sec. 4041.25(d) and any supplemental notice under Sec. 4041.24(b), or 
on information provided by any affected party or otherwise obtained by 
the PBGC.
    (b) Effect of notice of noncompliance. A notice of noncompliance 
ends the standard termination proceeding, nullifies all actions taken 
to terminate the plan, and renders the plan an ongoing plan. The notice 
of noncompliance is effective upon the expiration of the period within 
which the plan administrator may request reconsideration pursuant to 
paragraph (c) of this section but, once a notice is issued, the plan 
administrator shall take no further action to terminate the plan 
(except by initiation of a new termination) unless and until the notice 
is revoked pursuant to a decision by the PBGC on reconsideration.
    (c) Reconsideration of notice of noncompliance. A plan 
administrator may request reconsideration of a notice of noncompliance 
in accordance with the rules prescribed in part 4003, subpart C, of 
this chapter. Any request for reconsideration automatically stays the 
effectiveness of the notice of noncompliance until the PBGC issues its 
decision on reconsideration.
    (d) Notice to affected parties--(1) General rule. Upon a decision 
by the PBGC on reconsideration affirming the issuance of a notice of 
noncompliance (or, if earlier, upon the plan administrator's decision 
not to request reconsideration), the plan administrator shall notify 
the affected parties (other than the PBGC), and any persons who were 
provided notice under Sec. 4041.21(f)), in writing that the plan is not 
going to terminate or, if applicable, that the termination was invalid 
but that a new notice of intent to terminate is being issued.
    (2) Method of issuance. The notices shall be delivered by first-
class mail or by hand to each person described in paragraph (d)(1) who 
is an employee organization or a participant or beneficiary who is then 
in pay status. The notices to other participants and beneficiaries 
shall be provided in any manner reasonably calculated to reach those 
participants and beneficiaries. Reasonable methods of notification 
include, but are not limited to, posting the notice at participants' 
worksites or publishing the notice in an employee organization 
newsletter or newspaper of general circulation in the area or areas 
where participants and beneficiaries reside.


Sec. 4041.27  Closeout of plan.

    (a) General rules--(1) Distribution. Except as provided in 
paragraphs (b), (e), and (f) of this section and Sec. 4041.8 of this 
part, if the PBGC does not issue a notice of noncompliance within the 
period specified in Sec. 4041.25 or, if a notice of noncompliance is 
issued and later revoked after reconsideration under Sec. 4041.26(c), 
the plan administrator shall complete the distribution of plan assets 
in accordance with paragraph (c) of this section within 180 days after 
the expiration of the review period specified in Sec. 4041.25 (or, if 
applicable, the date on which the PBGC revokes the notice of 
noncompliance) or, if applicable, within the time prescribed in part 
4050 of this chapter.
    (2) Post-distribution requirements. The plan administrator shall 
file with the PBGC a post-distribution certification in accordance with 
paragraph (h) of this section and, if any of the plan's benefit 
liabilities payable to a participant or beneficiary have been 
distributed through the purchase of irrevocable commitments, the plan 
administrator also shall provide such participant or beneficiary with a 
notice, contract, or certificate in accordance with paragraph (g) of 
this section.
    (b) Assets insufficient to satisfy benefit liabilities. Before 
distributing

[[Page 34048]]

plan assets to close out the plan, the plan administrator shall 
determine that plan assets are, in fact, sufficient to satisfy all 
benefit liabilities. In determining if plan assets are sufficient, the 
plan administrator shall subtract all liabilities (other than the 
future benefit liabilities that will be provided when assets are 
distributed), e.g., benefit payments due before the distribution date; 
PBGC premiums for all plan years through and including the plan year in 
which assets are distributed; expenses, fees, and other administrative 
costs. If plan assets are not sufficient to satisfy all benefit 
liabilities, the plan administrator shall not make any distribution of 
assets to effect the plan's termination. In the event of an 
insufficiency, the plan administrator shall promptly notify the PBGC.
    (c) Method of distribution. The plan administrator shall distribute 
plan assets in accordance with Sec. 4041.6 by purchasing irrevocable 
commitments from an insurer in satisfaction of all benefit liabilities 
that must be provided in annuity form, and by otherwise providing all 
benefit liabilities that need not be provided in annuity form. The plan 
administrator shall comply with part 4050 of this chapter (dealing with 
missing participants), if applicable.
    (d) Failure to distribute within 180-day period. Except as provided 
in paragraphs (e) and (f) of this section, failure to distribute assets 
in accordance with paragraph (c) of this section within the 180-day 
distribution period set forth in paragraph (a)(1) of this section, 
because of an insufficiency of plan assets as described in paragraph 
(b) of this section or for any other reason, shall nullify the 
termination. All actions taken to effect the plan's termination shall 
be null and void, and the plan shall be an ongoing plan. In this event, 
the plan administrator shall notify affected parties (other than the 
PBGC) in writing, in accordance with Sec. 4041.26(d), that the plan is 
not going to terminate or, if applicable, that the termination was 
invalid but that a new notice of intent to terminate is being issued.
    (e) Automatic extension of time for distribution. (1) Requirements 
for automatic extension. The plan administrator shall be entitled to an 
automatic extension of the 180-day period in which to complete the 
distribution of plan assets if the plan administrator--
    (i) Submits to the IRS a complete request for a determination with 
respect to the plan's tax-qualification status upon termination 
(``determination letter'') on or before the date that the plan 
administrator files the standard termination notice with the PBGC;
    (ii) Does not receive a determination letter at least 60 days 
before the expiration of the 180-day period; and
    (iii) On or before the expiration of the 180-day period, notifies 
the PBGC in writing that an extension of the distribution deadline is 
required and certifies that the conditions in this paragraph have been 
met.
    (2) Extension period. If the requirements in paragraph (e)(1) of 
this section are met, the time within which the plan administrator 
shall complete the distribution of plan assets is automatically 
extended until the 60th day after receipt of a favorable determination 
letter from the IRS.
    (f) Discretionary extension of time for distribution. If the plan 
administrator will be unable to complete the distribution of plan 
assets within the 180-day (or extended) period for any reason other 
than an insufficiency described in paragraph (b) of this section, the 
plan administrator may request, and the PBGC shall grant or deny, in 
its discretion, an extension of time within which to complete the 
distribution according to the following rules:
    (1) The plan administrator shall file a written request for a 
discretionary extension with the PBGC at least 30 days before the 
expiration of the 180-day (or extended) distribution period, explain 
the reason(s) for the request, and provide a date certain by which the 
distribution will be made if the extension is granted.
    (2) The PBGC will not grant a discretionary extension based on 
failure to meet the requirements for an automatic extension under 
paragraph (e) of this section or failure to locate all participants or 
beneficiaries.
    (3) The PBGC will grant a discretionary extension, in whole or in 
part, only if it is satisfied that the delay in making the distribution 
is not due to the action or inaction of the plan administrator or the 
contributing sponsor and that the distribution can in fact be completed 
by the date requested.
    (g) Notice of annuity contract. In the case of the distribution of 
benefit liabilities through the purchase of irrevocable commitments--
    (1) Either the plan administrator or the insurer shall, as soon as 
practicable, provide each participant and beneficiary with a copy of 
the annuity contract or certificate showing the insurer's name and 
address and clearly reflecting the insurer's obligation to provide the 
participant's or beneficiary's benefit; (2) If such a contract or 
certificate is not available on or before the date on which the post-
distribution certificate is required to be filed pursuant to paragraph 
(h) of this section, the plan administrator shall, no later than such 
date, provide each participant and beneficiary with a written notice 
stating--
    (i) That the obligation for providing the participant's or 
beneficiary's plan benefits has transferred to the insurer;
    (ii) The name and address of the insurer;
    (iii) The name, address, and telephone number of the person 
designated by the insurer to answer questions concerning the annuity; 
and
    (iv) That the participant or beneficiary will receive from the plan 
administrator or insurer a copy of the annuity contract or a 
certificate showing the insurer's name and address and clearly 
reflecting the insurer's obligation to provide the participant's or 
beneficiary's benefit; and
    (3) The plan administrator shall certify to the PBGC, as part of 
the post-distribution certification required under paragraph (h) of 
this section, that the requirements in paragraph (g)(1) or (g)(2) of 
this section have been satisfied.
    (h) Post-distribution certification. Within 30 days after the last 
distribution date, the plan administrator shall file with the PBGC a 
PBGC Form 501, Post-Distribution Certification for Standard 
Termination, that has been completed in accordance with the 
instructions thereto. This requirement shall be considered satisfied 
if, in accordance with Sec. 4050.6(a)(2) and (a)(3) of this chapter, 
the plan administrator files a preliminary post-distribution 
certification within 30 days after the last distribution date and, in 
addition, timely files an amended post-distribution certification that 
otherwise satisfies all applicable requirements.

Subpart C--Distress Termination Process


Sec. 4041.41  Notice of intent to terminate.

    (a) General rules. (1) At least 60 days and no more than 90 days 
before the proposed termination date, the plan administrator shall 
issue to each person who is (as of the proposed termination date) an 
affected party a written notice of intent to terminate.
    (2) The plan administrator shall issue the notice of intent to 
terminate to all affected parties other than the PBGC at or before the 
time he or she files the notice with the PBGC.
    (3) The notice to affected parties other than the PBGC shall 
contain all of the information specified in paragraph (d) of this 
section.

[[Page 34049]]

    (4) The notice to the PBGC shall be filed on PBGC Form 600, 
Distress Termination, Notice of Intent to Terminate, completed in 
accordance with the instructions thereto.
    (b) Discovery of other affected parties. Notwithstanding the 
provisions of paragraphs (a)(1) and (a)(2) of this section, if the plan 
administrator discovers additional affected parties after the 
expiration of the time period specified in paragraphs (a)(1) or (a)(2) 
of this section, the failure to issue the notice of intent to terminate 
to such parties within the specified time periods will not cause the 
notice to be untimely under paragraph (a) of this section if the plan 
administrator could not reasonably have been expected to know of the 
additional affected parties and if he or she promptly issues the notice 
to each additional affected party.
    (c) Issuance--(1) Method. The plan administrator shall issue the 
notice of intent to terminate individually to each affected party. The 
notice to the PBGC shall be filed in accordance with Sec. 4041.9. The 
notice to each of the other affected parties shall be either hand 
delivered or delivered by first-class mail or courier service directed 
to the affected party's last known address.
    (2) When issued. The notice of intent to terminate is deemed issued 
to the PBGC on the date on which it is filed and to any other affected 
party on the date on which it is handed to the affected party or 
deposited with a mail or courier service (as evidenced by a postmark or 
written receipt).
    (d) Contents of notice to affected parties other than the PBGC. The 
plan administrator shall include in the notice of intent to terminate 
to each affected party other than the PBGC all of the following 
information:
    (1) The name of the plan and of the contributing sponsor;
    (2) The employer identification number (``EIN'') of the 
contributing sponsor and the plan number (``PN''); if there is no EIN 
or PN, the notice shall so state;
    (3) The name, address, and telephone number of the person who may 
be contacted by an affected party with questions concerning the plan's 
termination;
    (4) A statement that the plan administrator expects to terminate 
the plan in a distress termination on a specified proposed termination 
date.
    (5) A statement that benefit and service accruals will continue 
until the termination date or, if applicable, that benefit accruals 
were or will be frozen as of a specific date in accordance with section 
204(h) of ERISA;
    (6) A statement of whether plan assets are sufficient to pay all 
guaranteed benefits or all benefit liabilities;
    (7) A brief description of what benefits are guaranteed by the PBGC 
(e.g., if only a portion of the benefits are guaranteed because of the 
phase-in rule, this should be explained), and a statement that 
participants and beneficiaries also may receive a portion of the 
benefits to which each is entitled under the terms of the plan in 
excess of guaranteed benefits; and
    (8) A statement, if applicable, that benefits may be subject to 
reduction because of the limitations on the amounts guaranteed by the 
PBGC or because plan assets are insufficient to pay for full benefits 
(pursuant to part 4022, subparts B and D, of this chapter) and that 
payments in excess of the amount guaranteed by the PBGC may be recouped 
by the PBGC (pursuant to part 4022, subpart E, of this chapter).
    (e) Spin-off/termination transactions. In the case of a spin-off/
termination transaction (as described in Sec. 4041.21(f)), the plan 
administrator shall provide all participants and beneficiaries in the 
original plan who are also participants or beneficiaries in the ongoing 
plan (as of the proposed termination date) with a notice describing the 
transaction no later than the date on which the plan administrator 
completes the issuance of notices of intent to terminate under this 
section.


Sec. 4041.42  PBGC review of notice of intent to terminate.

    (a) General. When a notice of intent to terminate is filed with it, 
the PBGC--
    (1) Shall determine whether the notice was issued in compliance 
with Sec. 4041.41; and
    (2) Shall advise the plan administrator of its determination, in 
accordance with paragraph (b) or (c) of this section, no later than the 
proposed termination date specified in the notice.
    (b) Tentative finding of compliance. If the PBGC determines that 
the issuance of the notice of intent to terminate appears to be in 
compliance with Sec. 4041.41, it shall notify the plan administrator in 
writing that--
    (1) The PBGC has made a tentative determination of compliance;
    (2) The distress termination proceeding may continue; and
    (3) After reviewing the distress termination notice filed pursuant 
to Sec. 4041.43, the PBGC will make final, or reverse, this tentative 
determination.
    (c) Finding of noncompliance. If the PBGC determines that the 
issuance of the notice of intent to terminate was not in compliance 
with Sec. 4041.41 (except for requirements that the PBGC elects to 
waive under Sec. 4041.3(d)(2)(i) with respect to the notice filed with 
the PBGC), the PBGC shall notify the plan administrator in writing--
    (1) That the PBGC has determined that the notice of intent to 
terminate was not properly issued; and
    (2) That the proposed distress termination is null and void and the 
plan is an ongoing plan.
    (d) Information on need to institute section 4042 proceedings. The 
PBGC may require the plan administrator to submit, within 20 days after 
the plan administrator's receipt of the PBGC's written request (or such 
other period as may be specified in such written request), any 
information that the PBGC determines it needs in order to decide 
whether to institute termination or trusteeship proceedings pursuant to 
section 4042 of ERISA, whenever--
    (1) A notice of intent to terminate indicates that benefits 
currently in pay status (or that should be in pay status) are not being 
paid or that this is likely to occur within the 180-day period 
following the issuance of the notice of intent to terminate;
    (2) The PBGC issues a determination under paragraph (c) of this 
section; or
    (3) The PBGC has any reason to believe that it may be necessary or 
appropriate to institute proceedings under section 4042 of ERISA.
    (e) Reconsideration of finding of noncompliance. A plan 
administrator may request reconsideration of the PBGC's determination 
of noncompliance under paragraph (c) of this section in accordance with 
the rules prescribed in part 4003, subpart C, of this chapter. Any 
request for reconsideration automatically stays the effectiveness of 
the determination until the PBGC issues its decision on 
reconsideration, but does not stay the time period within which 
information must be submitted to the PBGC in response to a request 
under paragraph (d) of this section.
    (f) Notice to affected parties. Upon a decision by the PBGC 
affirming a finding of noncompliance or upon the expiration of the 
period within which the plan administrator may request reconsideration 
of a finding of noncompliance (or, if earlier, upon the plan 
administrator's decision not to request reconsideration), the plan 
administrator shall notify the affected parties (and any persons who 
were provided notice under Sec. 4041.41(e)) in writing that the plan is 
not going to terminate or, if applicable, that the termination is 
invalid but that a new notice of intent to terminate is being issued. 
The notice required by this

[[Page 34050]]

paragraph shall be provided in the manner described in 
Sec. 4041.26(d)(2).


Sec. 4041.43  Distress termination notice.

    (a) General rule. The plan administrator shall file with the PBGC a 
PBGC Form 601, Distress Termination Notice, Single-Employer Plan 
Termination, with Schedule EA-D, Distress Termination Enrolled Actuary 
Certification, that has been completed in accordance with the 
instructions thereto, on or before the 120th day after the proposed 
termination date or, if applicable, no later than the due date 
established in an extension notice issued under Sec. 4041.8.
    (b) Participant and benefit information. (1) Plan insufficient for 
guaranteed benefits. Unless the enrolled actuary certifies, in the 
Schedule EA-D filed in accordance with paragraph (a) of this section, 
that the plan is sufficient either for guaranteed benefits or for 
benefit liabilities, the plan administrator shall file with the PBGC 
the participant and benefit information described in PBGC Form 601 and 
the instructions thereto by the later of--
    (i) 120 days after the proposed termination date, or
    (ii) 30 days after receipt of the PBGC's determination, pursuant to 
Sec. 4041.44(b), that the requirements for a distress termination have 
been satisfied.
    (2) Plan sufficient for guaranteed benefits or benefit liabilities. 
If the enrolled actuary certifies that the plan is sufficient either 
for guaranteed benefits or for benefit liabilities, the plan 
administrator need not submit the participant and benefit information 
described in PBGC Form 601 and the instructions thereto unless 
requested to do so pursuant to paragraph (c) of this section.
    (3) Effect of failure to provide information. The PBGC may void the 
distress termination if the plan administrator fails to provide 
complete participant and benefit information in accordance with this 
section.
    (c) Additional information. The PBGC may in any case require the 
submission of any additional information that it needs to make the 
determinations that it is required to make under this part or to pay 
benefits pursuant to section 4061 or 4022(c) of ERISA. The plan 
administrator shall submit any information requested under this 
paragraph within 30 days after receiving the PBGC's written request (or 
such other period as may be specified in such written request).
    (d) Due date extension. Notwithstanding the provisions of 
paragraphs (a), (b), and (c) of this section, the due date for filing 
PBGC Form 601 or other information required under this section may be 
extended by a notice issued under Sec. 4041.8.


Sec. 4041.44   PBGC determination of compliance with requirements for 
distress termination.

    (a) General. Based on the information contained in and submitted 
with the PBGC Form 600 and the PBGC Form 601, with Schedule EA-D, and 
on any information submitted by an affected party or otherwise obtained 
by the PBGC, the PBGC shall determine whether the requirements for a 
distress termination set forth in Sec. 4041.3(c) have been met and 
shall notify the plan administrator in writing of its determination, in 
accordance with paragraph (b) or (c) of this section.
    (b) Qualifying termination. If the PBGC determines that all of the 
requirements of Sec. 4041.3(c) have been satisfied, it shall so advise 
the plan administrator and shall also advise the plan administrator of 
whether participant and benefit information must be submitted in 
accordance with Sec. 4041.43(b).
    (c) Non-qualifying termination. (1) Except as provided in paragraph 
(c)(2) of this section, if the PBGC determines that any of the 
requirements of Sec. 4041.3(c) has not been met, it shall notify the 
plan administrator of its determination, the basis therefor, and the 
effect thereof (as provided in Sec. 4041.3(d)).
    (2) If the only basis for the PBGC's determination described in 
paragraph (c)(1) of this section is that the distress termination 
notice is incomplete, the PBGC shall advise the plan administrator of 
the missing item(s) of information and that the information must be 
filed with the PBGC no later than the 120th day after the proposed 
termination date or the 30th day after the date of the PBGC's notice of 
its determination, whichever is later, or, if applicable, no later than 
the due date established in an extension notice issued under 
Sec. 4041.8.
    (d) Reconsideration of determination of non-qualification. A plan 
administrator may request reconsideration of the PBGC's determination 
under paragraph (c)(1) of this section in accordance with the rules 
prescribed in part 4003, subpart C, of this chapter. The filing of a 
request for reconsideration automatically stays the effectiveness of 
the determination until the PBGC issues its decision on 
reconsideration.
    (e) Notice to affected parties. Upon a decision by the PBGC 
affirming a determination of non-qualification or upon the expiration 
of the period within which the plan administrator may request 
reconsideration of a determination of non-qualification (or, if 
earlier, upon the plan administrator's decision not to request 
reconsideration), the plan administrator shall notify the affected 
parties (and any persons who were provided notice under 
Sec. 4041.41(e)) in writing that the plan is not going to terminate or, 
if applicable, that the termination is invalid but that a new notice of 
intent to terminate is being issued. The notice required by this 
paragraph shall be provided in the manner described in 
Sec. 4041.26(d)(2).


Sec. 4041.45   PBGC determination of plan sufficiency/insufficiency.

    (a) General. Upon receipt of participant and benefit information 
filed pursuant to Sec. 4041.43 (b)(1) or (c), the PBGC shall determine 
the degree to which the plan is sufficient and notify the plan 
administrator in writing of its determination in accordance with 
paragraph (b) or (c) of this section.
    (b) Insufficiency for guaranteed benefits. If the PBGC finds that 
it is unable to determine that a plan is sufficient for guaranteed 
benefits, it shall issue a ``notice of inability to determine 
sufficiency'' notifying the plan administrator of this finding and 
advising the plan administrator that--
    (1) The plan administrator shall continue to administer the plan 
under the restrictions imposed by Sec. 4041.4; and
    (2) The termination shall be completed under section 4042 of ERISA.
    (c) Sufficiency for guaranteed benefits or benefit liabilities. If 
the PBGC determines that a plan is sufficient for guaranteed benefits 
but not for benefit liabilities or is sufficient for benefit 
liabilities, the PBGC shall issue to the plan administrator a 
distribution notice advising the plan administrator--
    (1) To issue notices of benefit distribution in accordance with 
Sec. 4041.46;
    (2) To close out the plan in accordance with Sec. 4041.48;
    (3) To file a timely post-distribution certification with the PBGC 
in accordance with Sec. 4041.48(b); and
    (4) That either the plan administrator or the contributing sponsor 
must preserve and maintain plan records in accordance with 
Sec. 4041.11.


Sec. 4041.46   Notices of benefit distribution.

    (a) General rules. When a distribution notice is issued by the PBGC 
pursuant to Sec. 4041.45(c), the plan administrator shall--
    (1) No later than 60 days after receiving the distribution notice 
or, if applicable, no later than the due date

[[Page 34051]]

established in an extension notice issued under Sec. 4041.8, issue a 
notice of benefit distribution in accordance with the rules described 
in paragraphs (c) and (d) of this section to each person (other than 
any employee organization or the PBGC) who is an affected party as of 
the termination date (and, in the case of a spin-off/termination 
transaction as described in Sec. 4041.21(f), each person who is, as of 
the termination date, a participant in the original plan and covered by 
the ongoing plan); and
    (2) No later than 15 days after the date on which the plan 
administrator completes the issuance of the notices of benefit 
distribution, file with the PBGC a certification that the notices were 
so issued in accordance with the requirements of this section.
    (b) Discovery of other affected parties. Notwithstanding the 
provisions of paragraph (a) of this section, if the plan administrator 
discovers additional persons entitled to a notice of benefit 
distribution after the expiration of the time period specified in 
paragraph (a)(1) of this section, the failure to issue the notices of 
benefit distribution to such persons within the specified time period 
will not cause such notices to be untimely under paragraph (a) of this 
section if the plan administrator could not reasonably have been 
expected to know of the additional persons and if he or she promptly 
issues, to each such additional person, a notice of benefit 
distribution in the form and containing the information specified in 
paragraph (d) of this section.
    (c) Issuance--(1) Method. The plan administrator shall issue a 
notice of benefit distribution individually to each person, either by 
hand-delivery or by first-class mail or courier service directed to the 
person's last known address.
    (2) When issued. A notice of benefit distribution is deemed issued 
to each person on the date it is handed to the person or deposited with 
a mail or courier service (as evidenced by a postmark or written 
receipt).
    (d) Form and content of notices. The plan administrator shall 
provide notices of benefit distribution in the form described in 
Sec. 4041.23 (a) and (b) of this part and shall include in each--
    (1) The information described in Sec. 4041.23(c) of this part;
    (2) The information described in Sec. 4041.23 (d), (e), or (f) of 
this part, as applicable (replacing the term ``plan benefits'' with 
``Title IV benefits'' and ``proposed termination date'' with 
``termination date''.
    (3) A statement that, after plan assets have been distributed to 
provide all of the Title IV benefits payable with respect to a 
participant or a beneficiary of a deceased participant, either by the 
purchase of an irrevocable commitment or commitments from an insurer to 
provide benefits or by an alternative form of distribution provided for 
under the plan, the PBGC's guarantee with respect to that participant's 
or beneficiary's benefit ends; and
    (4) If distribution of benefits under the plan may be wholly or 
partially by the purchase of irrevocable commitments from an insurer--
    (i) The name and address of the insurer or insurers from whom, or 
(if not then known) the insurers from among whom, the plan 
administrator intends to purchase the irrevocable commitments; or
    (ii) If the plan administrator has not identified an insurer or 
insurers at the time the notice of distribution is issued, a statement 
that the affected party to whom the notice is directed will be notified 
at a later date (but no later than 45 days before the distribution 
date) of the name and address of the insurer or insurers from whom, or 
(if not then known) the insurers from among whom, irrevocable 
commitments may be purchased.
    (e) Supplemental notice requirements. (1) The plan administrator 
shall issue a supplemental notice (or notices) of distribution to each 
person in accordance with the rules in paragraph (e)(2) of this section 
if--
    (i) The plan administrator has not yet identified an insurer or 
insurers at the time the notice of distribution is issued; or
    (ii) The plan administrator included in the notice of distribution 
the name or names of the insurer or insurers from whom (or from among 
whom) he or she intends to purchase the irrevocable commitments, but 
subsequently decides to select a different insurer.
    (2) The plan administrator shall issue each supplemental notice in 
the manner provided in paragraph (c) of this section no later than 45 
days before the distribution date and shall include the name and 
address of the insurer or insurers from whom, or (if not then known) 
the insurers from among whom, the plan administrator intends to 
purchase the irrevocable commitments.


Sec. 4041.47  Verification of plan sufficiency prior to closeout.

    (a) General rule. Before distributing plan assets pursuant to a 
closeout under Sec. 4041.48, the plan administrator shall verify 
whether the plan's assets are still sufficient to provide for benefits 
at the level determined by the PBGC, i.e., guaranteed benefits or 
benefit liabilities. If the plan administrator finds that the plan is 
no longer able to provide for benefits at the level determined by the 
PBGC, then paragraph (b) or (c) of this section, as appropriate, shall 
apply.
    (b) Subsequent insufficiency for guaranteed benefits. When a plan 
administrator finds that a plan is no longer sufficient for guaranteed 
benefits, the plan administrator shall promptly notify the PBGC in 
writing of that fact and shall take no further action to implement the 
plan termination, pending the PBGC's determination and notice pursuant 
to paragraph (b)(1) or (b)(2) of this section.
    (1) PBGC concurrence with finding. If the PBGC concurs with the 
plan administrator's finding, the distribution notice shall be void, 
and the PBGC shall--
    (i) Issue the plan administrator a notice of inability to determine 
sufficiency in accordance with Sec. 4041.45(b); and
    (ii) Require the plan administrator to submit a new valuation, 
certified to by an enrolled actuary, of the benefit liabilities and 
guaranteed benefits under the plan, valued in accordance with 
Secs. 4044.41 through 4044.57 of this chapter as of the date of the 
plan administrator's notice to the PBGC.
    (2) PBGC non-concurrence with finding. If the PBGC does not concur 
with the plan administrator's finding, it shall so notify the plan 
administrator in writing, and the distribution notice shall remain in 
effect.
    (c) Subsequent insufficiency for benefit liabilities. When a plan 
administrator finds that a plan is sufficient for guaranteed benefits 
but is no longer sufficient for benefit liabilities, the plan 
administrator shall immediately notify the PBGC in writing of this 
fact, but shall continue with the distribution of assets in accordance 
with Sec. 4041.48.
    (d) Finding by PBGC of subsequent insufficiency. In any case in 
which the PBGC finds on its own initiative that a subsequent 
insufficiency for guaranteed benefits has occurred, paragraph (b)(1) of 
this section shall apply, except that the guaranteed benefits shall be 
revalued as of the date of the PBGC's finding.
    (e) Restrictions upon finding of subsequent insufficiency. When the 
plan administrator makes the finding described in paragraph (b) of this 
section or receives notice that the PBGC has made the finding described 
in paragraph (d) of this section, the plan administrator shall (except 
to the extent the PBGC otherwise directs) be subject to the 
prohibitions in Sec. 4041.4(c).

[[Page 34052]]

Sec. 4041.48  Closeout of plan.

    (a) General rules--(1) Distribution. If a plan administrator 
receives a distribution notice from the PBGC pursuant to 
Sec. 4041.45(c) and neither the plan administrator nor the PBGC makes 
the finding described in Sec. 4041.47 (b) or (d), the plan 
administrator shall distribute plan assets in accordance with 
Secs. 4041.6 and 4041.27(c) of this part no earlier than the 61st day 
and (except as provided in Sec. 4041.8 or 4041.27 (e) or (f)) no later 
than the 180th day following the day on which the plan administrator 
completes the issuance of the notices of benefit distribution pursuant 
to Sec. 4041.46(a), or, where applicable, within the time prescribed in 
part 4050 of this chapter. For purposes of applying 
Sec. 4041.27(e)(1)(i), the phrase ``the date that the plan 
administrator files the standard termination notice with the PBGC'' 
shall be replaced by ``the date that the plan administrator completes 
issuance of the notices of benefit distribution.''
    (2) Notice of annuity contract. If any of the plan's benefit 
liabilities payable to a participant or beneficiary have been 
distributed through the purchase of irrevocable commitments, the plan 
administrator shall provide such participant or beneficiary with a 
notice, contract, or certificate in accordance with Sec. 4041.27(g).
    (b) Post-distribution certification. Within 30 days after the last 
distribution date, the plan administrator shall file with the PBGC a 
PBGC Form 602, Post-Distribution Certification for Distress 
Termination, that has been completed in accordance with the 
instructions thereto. This requirement shall be considered satisfied 
if, in accordance with Sec. 4050.6 (a)(2) and (a)(3) of this chapter, 
the plan administrator files a preliminary post-distribution 
certification within 30 days after the last distribution date and, in 
addition, timely files an amended post-distribution certification that 
otherwise satisfies all applicable requirements.

Appendix to Part 4041--Agreement for Commitment To Make Plan Sufficient 
for Benefit Liabilities

    This agreement, by and between [name of company] XXXXXXXXXX (the 
``Company'') and [name of plan] XXXXXXXXXX (the ``Plan'') shall be 
effective as of the last date executed.
    Whereas, the Plan is an employee pension benefit plan as 
described in section 3(2)(A) of the Employee Retirement Income 
Security Act of 1974 (``ERISA''), 29 U.S.C. 1001-1461; and
    Whereas the Company is [describe entity, e.g., corporation, 
partnership] XXXXXXXXXX; and
    Whereas, the Company is a contributing sponsor of the Plan, or a 
member of the contributing sponsor's controlled group, as described 
in section 4001(a) (13) and (14) of ERISA, 29 U.S.C. 1301(2) (13) 
and (14); and
    Whereas, the Plan is covered by the termination insurance 
provisions of Title IV of ERISA, 29 U.S.C. 1301-1461; and
    Whereas, the Plan administrator has issued or intends to issue 
to each affected party a notice of intent to terminate the Plan, 
pursuant to section 4041(a)(2) of ERISA, 29 U.S.C. 1341(a)(2); and
    Whereas, the Company wishes the Plan to be sufficient for 
benefit liabilities, as described in section 4001(a)(16) of ERISA, 
29 U.S.C. 1301(a)(16); and
    Whereas, the parties understand that if the Plan is not able to 
satisfy all its obligations for benefit liabilities, it will not be 
able to terminate in a standard termination under section 4041(b) of 
ERISA, 29 U.S.C. 1341(b); and
    Whereas, the Company is not a debtor in a bankruptcy or other 
insolvency proceeding.

[Alternative Paragraph]

    Whereas, the Company is a debtor in a bankruptcy or other 
insolvency proceeding and the court before which the proceeding is 
pending approves this commitment.
    Whereas, the Company is a debtor in a bankruptcy or other 
insolvency proceeding and this commitment is unconditionally 
guaranteed, by an entity or person not in bankruptcy, to be met at 
or before the time distribution is required in this standard 
termination.
    Now Therefore, the parties hereto agree as follows:
    1. The Company promises to pay to the Plan, on or before the 
date prescribed for distribution of Plan assets by the plan 
administrator, the amount necessary, if any, to ensure that, on the 
date the plan administrator distributes the assets of the Plan, the 
Plan is able to provide all benefit liabilities.
    2. For the sole purpose of determining whether the Plan is 
sufficient to provide all benefit liabilities, an amount equal to 
the amount described in paragraph 1 shall be deemed a Plan asset 
available for allocation among the participants and beneficiaries of 
the Plan, in accordance with section 4044 of ERISA, 29 U.S.C. 1344.
    3. This Agreement shall in no way relieve the Company of its 
obligations to pay contributions under the Plan.

Date:
By:
Company:
By:
Plan:

PART 4041A--TERMINATION OF MULTIEMPLOYER PLANS

Subpart A--General Provisions

Sec.
4041A.1  Purpose and scope.
4041A.2  Definitions.
4041A.3  Submission of documents.

Subpart B--Notice of Termination

4041A.11  Requirement of notice.
4041A.12  Contents of notice.

Subpart C--Plan Sponsor Duties

4041A.21  General rule.
4041A.22  Payment of benefits.
4041A.23  Imposition and collection of withdrawal liability.
4041A.24  Annual plan valuations and monitoring.
4041A.25  Periodic determinations of plan solvency.
4041A.26  Financial assistance.
4041A.27  PBGC approval to pay benefits not otherwise permitted.

Subpart D--Closeout of Sufficient Plans

4041A.41  General rule.
4041A.42  Method of distribution.
4041A.43  Benefit forms.
4041A.44  Cessation of withdrawal liability.

    Authority: 29 U.S.C. 1302(b)(3), 1341a, 1441.

Subpart A--General Provisions


Sec. 4041A.1  Purpose and scope.

    The purpose of this part is to establish rules for notifying the 
PBGC of the termination of a multiemployer plan and rules for the 
administration of multiemployer plans that have terminated by mass 
withdrawal. Subpart B prescribes the contents of and procedures for 
filing a Notice of Termination for a multiemployer plan. Subpart C 
prescribes basic duties of plan sponsors of mass-withdrawal-terminated 
plans. (Other duties are prescribed in part 4281 of this chapter.) 
Subpart D contains procedures for closing out sufficient plans. This 
part applies to terminated multiemployer plans covered by title IV of 
ERISA but, in the case of subparts C and D, only to plans terminated by 
mass withdrawal under section 4041A(a)(2) of ERISA (including plans 
created by partition pursuant to section 4233 of ERISA).


Sec. 4041A.2  Definitions.

    The following terms are defined in Sec. 4001.l of this chapter: 
annuity, ERISA, insurer, IRS, mass withdrawal, multiemployer plan, 
nonforfeitable benefit, PBGC, plan, and plan year.
    In addition, for purposes of this part:
    Available resources means, for a plan year, available resources as 
described in section 4245(b)(3) of ERISA.
    Benefits subject to reduction means those benefits accrued under 
plan amendments (or plans) adopted after March 26, 1980, or under 
collective bargaining agreements entered into after March 26, 1980, 
that are not eligible for the PBGC's guarantee under section 4022A(b) 
of ERISA.
    Financial assistance means financial assistance from the PBGC under 
section 4261 of ERISA.
    Insolvency benefit level means the greater of the resource benefit 
level or the benefit level guaranteed by the

[[Page 34053]]

PBGC for each participant and beneficiary in pay status.
    Insolvency year means insolvency year as described in section 
4245(b)(4) of ERISA.
    Insolvent means that a plan is unable to pay benefits when due 
during the plan year. A plan terminated by mass withdrawal is not 
insolvent unless it has been amended to eliminate all benefits that are 
subject to reduction under section 4281(c) of ERISA, or, in the absence 
of an amendment, no benefits under the plan are subject to reduction 
under section 4281(c) of ERISA.
    Nonguaranteed benefits means those benefits that are eligible for 
the PBGC's guarantee under section 4022A(b) of ERISA, but exceed the 
guarantee limits under section 4022A(c).
    Resource benefit level means resource benefit level as described in 
section 4245(b)(2) of ERISA.


Sec. 4041A.3  Submission of documents.

    (a) Filing date. Any notice, document, or information required to 
be filed with the PBGC under this part shall be deemed filed on the 
date of the postmark stamped on the cover in which the notice, 
document, or information is mailed, provided that the postmark was made 
by the United States Postal Service and the document was mailed postage 
prepaid, properly packaged and addressed to the PBGC. If these 
conditions are not met, the document is considered filed on the date it 
is received by the PBGC. Documents received after regular business 
hours are considered filed on the next regular business day.
    (b) Address. Any notice, document, or information required to be 
filed with the PBGC under this part shall be sent by mail or submitted 
by hand during normal working hours to Reports Processing, Insurance 
Operations Department, Pension Benefit Guaranty Corporation, 1200 K 
Street NW., Washington, DC 20005-4026.

Subpart B--Notice of Termination


Sec. 4041A.11  Requirement of notice.

    (a) General. A Notice of Termination shall be filed with the PBGC 
by a multiemployer plan when the plan has terminated as described in 
section 4041A(a) of ERISA.
    (b) Who shall file. The plan sponsor or a duly authorized 
representative acting on behalf of the plan sponsor shall sign and file 
the Notice.
    (c) When to file. (1) For a termination pursuant to a plan 
amendment, the Notice shall be filed with the PBGC within thirty days 
after the amendment is adopted or effective, whichever is later.
    (2) For a termination that results from a mass withdrawal, the 
Notice shall be filed with the PBGC within thirty days after the last 
employer withdrew from the plan or thirty days after the first day of 
the first plan year for which no employer contributions were required 
under the plan, whichever is earlier.

(Approved by the Office of Management and Budget under control 
number 1212-0020)


Sec. 4041A.12  Contents of notice.

    (a) Information to be contained in notice. Except to the extent 
provided in paragraph (d), each Notice shall contain:
    (1) The name of the plan;
    (2) The name, address and telephone number of the plan sponsor and 
of the plan sponsor's duly authorized representative, if any;
    (3) The name, address, and telephone number of the person that will 
administer the plan after the date of termination, if other than the 
plan sponsor;
    (4) A copy of the plan's most recent Form 5500 (Annual Report 
Form), including schedules; and
    (5) The date of termination of the plan.
    (b) Information to be contained in a notice involving a mass 
withdrawal. In addition to the information contained in paragraph (a) 
and except as provided in paragraph (d), the following information 
shall be contained in a Notice filed by a plan that has terminated by 
mass withdrawal:
    (1) A copy of the plan document in effect 5 years prior to the date 
of termination and copies of any amendments adopted after that date.
    (2) A copy (or copies) of the trust agreement (or agreements), if 
any, authorizing the plan sponsor to control and manage the operation 
and administration of the plan.
    (3) A copy of the most recent actuarial statement and opinion (if 
any) relating to the plan.
    (4) A statement of any material change in the assets or liabilities 
of the plan occurring after either the date of the actuarial statement 
referred to in item (5) or the date of the plan's Form 5500 submitted 
as part of the Notice.
    (5) Complete copies of any letters of determination issued by the 
IRS relating to the establishment of the plan, any letters of 
determination relating to the disqualification of the plan and any 
subsequent requalification, and any letters of determination relating 
to the termination of the plan.
    (6) A statement whether the plan assets will be sufficient to pay 
all benefits in pay status during the 12-month period following the 
date of termination.
    (7) If plan assets on hand are sufficient to satisfy all 
nonforfeitable benefits under the plan, and if the plan sponsor intends 
to distribute such assets, a brief description of the proposed method 
of distributing the plan assets.
    (8) If plan assets on hand are not sufficient to satisfy all 
nonforfeitable benefits under the plan, the name and address of any 
employer who contributed to the plan within 3 plan years prior to the 
date of termination.
    (c) Certification. As part of the Notice, the plan sponsor or duly 
authorized representatives shall certify that all information and 
documents submitted pursuant to this section are true and correct to 
the best of the plan sponsor's or representative's knowledge and 
belief.
    (d) Avoiding duplication. Information described in paragraphs (a) 
and (b) of this section need not be supplied if it duplicates 
information contained in Form 5500, or a schedule thereof, that a plan 
submits as part of the Notice.
    (e) Additional information. In addition to the information 
described in paragraphs (a) and (b) of this section, the PBGC may 
require the submission of any other information which the PBGC 
determines is necessary for review of a Notice of Termination.

Subpart C--Plan Sponsor Duties


Sec. 4041A.21  General rule.

    The plan sponsor of a multiemployer plan that terminates by mass 
withdrawal shall continue to administer the plan in accordance with 
applicable statutory provisions, regulations, and plan provisions until 
a trustee is appointed under section 4042 of ERISA or until plan assets 
are distributed in accordance with subpart D of this part. In addition, 
the plan sponsor shall be responsible for the specific duties described 
in this subpart.


Sec. 4041A.22  Payment of benefits.

    (a) Except as provided in paragraph (b), the plan sponsor shall pay 
any benefit attributable to employer contributions, other than a death 
benefit, only in the form of an annuity.
    (b) The plan sponsor may pay a benefit in a form other than an 
annuity if--
    (1) The plan distributes plan assets in accordance with subpart D 
of this part;
    (2) The PBGC approves the payment of the benefit in an alternative 
form pursuant to Sec. 4041A.27; or
    (3) The value of the entire nonforfeitable benefit does not exceed 
$1,750.
    (c) Except to the extent provided in the next sentence, the plan 
sponsor

[[Page 34054]]

shall not pay benefits in excess of the amount that is nonforfeitable 
under the plan as of the date of termination, unless authorized to do 
so by the PBGC pursuant to Sec. 4041A.27. Subject to the restriction 
stated in paragraph (d) of this section, however, the plan sponsor may 
pay a qualified preretirement survivor annuity with respect to a 
participant who died after the date of termination.
    (d) The payment of benefits subject to reduction shall be 
discontinued to the extent provided in Sec. 4281.31 if the plan sponsor 
determines, in accordance with Sec. 4041A.24, that the plan's assets 
are insufficient to provide all nonforfeitable benefits.
    (e) The plan sponsor shall, to the extent provided in Sec. 4281.41, 
suspend the payment of nonguaranteed benefits if the plan sponsor 
determines, in accordance with Sec. 4041A.25, that the plan is 
insolvent.
    (f) The plan sponsor shall, to the extent required by Sec. 4281.42, 
make retroactive payments of suspended benefits if it determines under 
that section that the level of the plan's available resources requires 
such payments.


Sec. 4041A.23  Imposition and collection of withdrawal liability.

    Until plan assets are distributed in accordance with subpart D of 
this part, or until the end of the plan year as of which the PBGC 
determines that plan assets (exclusive of claims for withdrawal 
liability) are sufficient to satisfy all nonforfeitable benefits under 
the plan, the plan sponsor shall be responsible for determining, 
imposing and collecting withdrawal liability (including the liability 
arising as a result of the mass withdrawal), in accordance with part 
4219, subpart C, of this chapter and sections 4201 through 4225 of 
ERISA.


Sec. 4041A.24  Annual plan valuations and monitoring.

    (a) Annual valuation. Not later than 150 days after the end of the 
plan year, the plan sponsor shall determine or cause to be determined 
in writing the value of nonforfeitable benefits under the plan and the 
value of the plan's assets, in accordance with part 4281, subpart B. 
This valuation shall be done as of the end of the plan year in which 
the plan terminates and each plan year thereafter (exclusive of a plan 
year for which the plan receives financial assistance from the PBGC 
under section 4261 of ERISA) up to but not including the plan year in 
which the plan is closed out in accordance with subpart D of this part.
    (b) Plan monitoring. Upon receipt of the annual valuation described 
in paragraph (a) of this section, the plan sponsor shall determine 
whether the value of nonforfeitable benefits exceeds the value of the 
plan's assets, including claims for withdrawal liability owed to the 
plan. When benefits do exceed assets, the plan sponsor shall--
    (1) If the plan provides benefits subject to reduction, amend the 
plan to reduce those benefits in accordance with the procedures in part 
4281, subpart C, of this chapter to the extent necessary to ensure that 
the plan's assets are sufficient to discharge when due all of the 
plan's obligations with respect to nonforfeitable benefits; or
    (2) If the plan provides no benefits subject to reduction, make 
periodic determinations of plan solvency in accordance with 
Sec. 4041A.25.
    (c) Notices of benefit reductions. The plan sponsor of a plan that 
has been amended to reduce benefits shall provide participants and 
beneficiaries and the PBGC notice of the benefit reduction in 
accordance with Sec. 4281.32.


Sec. 4041A.25  Periodic determinations of plan solvency.

    (a) Annual insolvency determination. The plan sponsor of a plan 
that has been amended to eliminate all benefits that are subject to 
reduction under section 4281(c) of ERISA shall determine in writing 
whether the plan is expected to be insolvent for the first plan year 
beginning after the effective date of the amendment and for each plan 
year thereafter. In the event that a plan adopts more than one 
amendment reducing benefits under section 4281(c) of ERISA, the initial 
determination shall be made for the first plan year beginning after the 
effective date of the amendment that effects the elimination of all 
such benefits, and a determination shall be made for each plan year 
thereafter. The plan sponsor of a plan under which no benefits are 
subject to reduction under section 4281(c) of ERISA as of the date the 
plan terminated shall determine in writing whether the plan is expected 
to be insolvent. The initial determination shall be made for the second 
plan year beginning after the first plan year for which it is 
determined under section 4281(b) of ERISA that the value of 
nonforfeitable benefits under the plan exceeds the value of the plan's 
assets. The plan sponsor shall also make a solvency determination for 
each plan year thereafter. A determination required under this 
paragraph shall be made no later than six months before the beginning 
of the plan year to which it applies.
    (b) Other determination of insolvency. Whether or not a prior 
determination of plan solvency has been made under paragraph (a) of 
this section (or under section 4245 of ERISA), a plan sponsor that has 
reason to believe, taking into account the plan's recent and 
anticipated financial experience, that the plan is or may be insolvent 
for the current or next plan year shall determine in writing whether 
the plan is expected to be insolvent for that plan year.
    (c) Benefit suspensions. If the plan sponsor determines that the 
plan is, or is expected to be, insolvent for a plan year, it shall 
suspend benefits in accordance with Sec. 4281.41.
    (d) Insolvency notices. If the plan sponsor determines that the 
plan is, or is expected to be, insolvent for a plan year, it shall 
issue notices of insolvency or annual updates and notices of insolvency 
benefit level of the PBGC and to plan participants and beneficiaries in 
accordance with part 4281, subpart D.


Sec. 4041A.26  Financial assistance.

    A plan sponsor that determines a resource benefit level under 
section 4245(b)(2) of ERISA that is below the level of guaranteed 
benefits or that determines that the plan will be unable to pay 
guaranteed benefits for any month during an insolvency year shall apply 
for financial assistance from the PBGC in accordance with Sec. 4281.47.


Sec. 4041A.27  PBGC approval to pay benefits not otherwise permitted.

    Upon written application by the plan sponsor, the PBGC may 
authorize the plan to pay benefits other than nonforfeitable benefits 
or to pay benefits valued at more than $1,750 in a form other than an 
annuity. The PBGC will approve such payments if it determines that the 
plan sponsor has demonstrated that the payments are not adverse to the 
interests of the plan's participants and beneficiaries generally and do 
not unreasonably increase the PBGC's risk of loss with respect to the 
plan.

Subpart D--Closeout of Sufficient Plans


Sec. 4041A.41  General rule.

    If a plan's assets, excluding any claim of the plan for unpaid 
withdrawal liability, are sufficient to satisfy all obligations for 
nonforfeitable benefits provided under the plan, the plan sponsor may 
close out the plan in accordance with this subpart by distributing plan 
assets in full satisfaction of all nonforfeitable benefits under the 
plan.

[[Page 34055]]

Sec. 4041A.42  Method of distribution.

    The plan sponsor shall distribute plan assets by purchasing from an 
insurer contracts to provide all benefits required by Sec. 4041A.43 to 
be provided in annuity form and by paying in a lump sum (or other 
alternative elected by the participant) all other benefits.


Sec. 4041A.43  Benefit forms.

    (a) General rule. Except as provided in paragraph (b) of this 
section, the sponsor of a plan that is closed out shall provide for the 
payment of any benefit attributable to employer contributions only in 
the form of an annuity.
    (b) Exceptions. The plan sponsor may pay a benefit attributable to 
employer contributions in a form other than an annuity if:
    (1) The present value of the participant's entire nonforfeitable 
benefit, determined using the interest assumption under Secs. 4044.41 
through 4044.57, does not exceed $3,500.
    (2) The payment is for death benefits provided under the plan.
    (3) The participant elects an alternative form of distribution 
under paragraph (c) of this section.
    (c) Alternative forms of distribution. The plan sponsor may allow 
participants to elect alternative forms of distribution in accordance 
with this paragraph. When a form of distribution is offered as an 
alternative to the normal form, the plan sponsor shall notify each 
participant, in writing, of the form and estimated amount of the 
participant's normal form of distribution. The notification shall also 
describe any risks attendant to the alternative form. Participants' 
elections of alternative forms shall be in writing.


Sec. 4041A.44  Cessation of withdrawal liability.

    The obligation of an employer to make payments of initial 
withdrawal liability and mass withdrawal liability shall cease on the 
date on which the plan's assets are distributed in full satisfaction of 
all nonforfeitable benefits provided by the plan.

PART 4043--REPORTABLE EVENTS AND CERTAIN OTHER NOTIFICATION 
REQUIREMENTS

Subpart A--Reportable Events; In General

Sec.
4043.1  Purpose and scope.
4043.2  Definitions.
4043.3  Requirement of notice.
4043.4  Reporting events on annual report.
4043.5  Obligation of contributing sponsor.
4043.6  Date of filing.
4043.7  Computation of time.
4043.11  Tax disqualification.
4043.12  Title I non-compliance.
4043.13  Amendment decreasing benefits payable.
4043.14  Active participant reduction.
4043.15  Termination or partial termination.
4043.16  Failure to meet minimum funding standards and granting of 
funding waiver.
4043.17  Inability to pay benefits when due.
4043.18  Distribution to a substantial owner.
4043.19  Plan merger, consolidation or transfer.
4043.20  Alternative compliance with reporting and disclosure 
requirements of Title I.
4043.21  Bankruptcy, insolvency, or similar settlements.
4043.22  Liquidation or dissolution.
4043.23  Transaction involving a change in contributing sponsor or 
controlled group.

Subpart B--Section 302(f); Notice of Failure to Make Required 
Contributions

4043.31  PBGC Form 200, notice of failure to make required 
contributions; supplementary information.

    Authority: 29 U.S.C. 1082(f), 1302(b)(3), 1343, 1365.

Subpart A--Reportable Events; In General


Sec. 4043.1  Purpose and scope.

    (a) Subpart A of this part contains definitions applicable to this 
part and prescribes specific requirements for notification of the 
reportable events in section 4043 of ERISA, including the reportable 
events specified in section 4043 (c)(1) through (c)(8) and other events 
that the PBGC has determined, under section 4043(c)(13) (formerly 
section 4043(b)(9)), may be indicative of a need to terminate the plan. 
It also implements the PBGC's authority to waive the requirement that 
plan administrators notify the PBGC with respect to certain reportable 
events and with respect to certain plans. (The PBGC has waived the 
requirements of section 4043 with respect to multiemployer plans.) 
However, it does not include rules based on the amendments made to 
section 4043 by the Retirement Protection Act of 1994 (Pub. L. 103-465, 
section 771). Subpart B contains rules for notifying the PBGC of a 
failure to make certain required contributions under section 302(f)(4) 
of ERISA or section 412(n)(4) of the Code.
    (b) This subpart applies with respect to any single-employer plan 
which is covered by section 4021 of ERISA and for which either no 
notice of intent to terminate has been issued or, if such a notice has 
been issued, until the proposed termination date specified under 
section 4041 (b) or (c) of ERISA and part 4041 of this chapter; 
provided, that, if a termination proceeding is suspended pursuant to 
Sec. 4041.5 of this chapter, this subpart continues to apply unless and 
until the PBGC reactivates the termination proceeding. The collection 
of information requirements contained in this subpart have been 
approved by the Office of Management and Budget under control number 
1212-0013.


Sec. 4043.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
Code, contributing sponsor, controlled group, ERISA, fair market value, 
insurer, irrevocable commitment, IRS, multiemployer plan, 
nonforfeitable benefit, notice of intent to terminate, PBGC, person, 
plan, plan administrator, plan year, proposed termination date, and 
single-employer plan.
    In addition, for purposes of this part, the following definitions 
apply:
    Distribution means a direct or indirect benefit payment made in any 
form by a plan to a participant, including but not limited to, a 
monthly annuity payment, a lump-sum payment or a direct transfer of a 
plan asset other than cash. A cash payment made by an insurer pursuant 
to an irrevocable commitment shall not be considered a distribution.
    Nonforfeitable benefits which are not funded means nonforfeitable 
benefits, as provided in Sec. 4022.5 of this chapter, in excess of plan 
assets.
    Parent means the parent of a parent-subsidiary controlled group of 
corporations or group of trades or businesses under common control 
(within the meaning of subsection (b) or (c) of section 414 of the Code 
and the regulations thereunder). Where there is more than one parent in 
a parent-subsidiary group, the term parent (for purposes of subpart B) 
refers to the parent at the highest level in the chain of corporations 
and/or other organizations comprising the group.
    Participant has the same meaning as in Sec. 4007.2 of this chapter.
    Retirement benefit means a benefit payable upon late, normal, 
early, or disability retirement, other than a welfare benefit described 
in section 3(1) of ERISA, to a participant who leaves or has left 
covered employment.


Sec. 4043.3  Requirement of notice.

    (a) Obligation to file. Except where the requirement is expressly 
waived by this subpart, the plan administrator, or a duly authorized 
representative, shall file with the PBGC a notice of all reportable 
events described in this subpart no later than 30 days after the plan 
administrator knows or has reason to know a reportable event has 
occurred. When a notice is submitted by a plan administrator's duly 
authorized representative, other than an attorney at

[[Page 34056]]

law, it shall be accompanied by a notarized power of attorney, signed 
by the plan administrator, which authorizes the representative to sign 
and submit a notice and, if desired, also authorizes the representative 
to act on behalf of the plan administrator in connection with the 
notice.
    (b) Contents of notice. The plan administrator shall include the 
information listed in this paragraph, and when applicable, the 
information specified in paragraph (c) of this section, in a notice 
required to be submitted under this section. The plan administrator 
shall submit the most recent information available. The plan 
administrator shall identify the response to each numbered item in this 
paragraph by item number. If any requested information is included in 
an IRS form or submission attached to the notice, instead, the 
information may be incorporated by reference to the number, date, and 
page(s) of the IRS form or submission where it appears. Any required 
documentation previously filed with the PBGC need not be refiled, but 
may be incorporated by reference to the previous submission. The plan 
administrator shall include the following information in a notice:
    (1) The name of the plan;
    (2) The name, address, and telephone number of the contributing 
sponsor(s);
    (3) The name, address, and telephone number of the plan 
administrator. If the plan administrator is a corporate body, the name 
of an individual that should be contacted;
    (4) The nine-digit Employer Identification Number (EIN) assigned by 
the IRS to the contributing sponsor and the three-digit Plan Number 
(PN) assigned by the contributing sponsor to the plan, and, if 
different, also state the EIN-PN last filed with the PBGC. If an EIN-PN 
has not been assigned, so indicate;
    (5) A brief statement of the pertinent facts relating to the 
reportable event;
    (6) A copy of the plan document currently in effect, i.e., a copy 
of the last restatement of the plan and all subsequent amendments;
    (7) A copy of the most recent actuarial statement and opinion (if 
any) relating to the plan;
    (8) A statement of any material change in the assets or liabilities 
of the plan occurring after the date of the most recent actuarial 
statement and opinion relating to the plan; and
    (9) A copy of the most recent determination letter issued by the 
IRS (if any) relating to the plan.
    (c) Additional information. With respect to the following 
reportable events, the information specified below must be submitted in 
addition to that listed in paragraph (b) of this section:
    (1) For an event described in Sec. 4043.14(a) (relating to an 
active participant reduction): The number of participants and the 
number of active participants as of the beginning of the immediately 
preceding and the current plan year and as of the date of the event; 
the number of active participants with fully vested rights, the number 
of such participants with partially vested rights, and the number of 
such participants without vested rights, as of the date of the event 
or, if this information is not available as of this date, as of the 
beginning of the current plan year; the number of retired participants 
receiving benefits as of the date of the event or, if this information 
is not available as of this date, as of the beginning of the current 
plan year; the number of former employees with vested rights and the 
number of deceased participants whose beneficiaries are receiving or 
entitled to receive benefits as of the date of the event or, if this 
information is not available as of this date, the beginning of the 
current plan year. (For those plans determining the number of active 
participants as of the end of a plan year, instead of at the beginning 
of a plan year, in accordance with Sec. 4043.14(c), the information 
required by this paragraph as of the beginning of a plan year shall be 
provided as of the end of the previous plan year.)
    (2) For an event described in Sec. 4043.16(a) (relating to a 
minimum funding violation):
    A statement of the current funding standard account, or its 
alternative, showing the balance at the beginning of the plan year and 
the charges and credits to the account for the plan year that are 
required under section 302 of ERISA and section 412 of the Code; in the 
case of a plan maintained by one contributing sponsor or by two or more 
contributing sponsors that are members of the same controlled group, a 
copy of the most recent audited (or if not available, unaudited) 
financial statements, and the most recent interim financial statements, 
of the contributing sponsor (individually or where financial statements 
are only available on a consolidated basis with other members of the 
same controlled group, on a consolidated basis), including balance 
sheets, income statements, statements of changes in financial position 
and annual reports.
    (3) For an event described in Sec. 4043.17(a) (relating to an 
inability to pay benefits when due):
    The reason(s) why the plan is unable to pay benefits, including a 
statement of how long this inability is likely to continue; the amount 
of the benefits due during the current payment period and the amount of 
assets available to pay those benefits; the normal date of benefit 
payment; the amount and date of the last benefit payment.
    (4) For an event described in Sec. 4043.18(a) (relating to a 
distribution to a substantial owner):
    The amount and form of the distribution; a statement of whether an 
indemnity agreement has been entered into between the participant 
receiving the distribution and the plan trustee concerning lump-sum 
distributions to the 25 highest paid employees of the benefits subject 
to the early termination restrictions of Treas. Reg. Sec. 1.401-4(c).
    (5) For an event described in Sec. 4043.21(a) (relating to a 
bankruptcy, insolvency, or similar settlement):
    A copy of all papers filed in the relevant proceedings, including 
but not limited to, petitions and supporting schedules; the last date 
for filing claims, if known; the name, address and telephone number of 
any trustee or receiver of the contributing sponsor.
    (6) For an event described in Sec. 4043.23(a) (relating to a 
transaction involving a change in the same controlled group as a 
contributing sponsor):
    The name, address, and telephone number of the new contributing 
sponsor or of the person no longer under common control with the 
contributing sponsor, as applicable; a copy of the most recent audited 
(or if not available, unaudited) financial statements, and the most 
recent interim financial statements, of the contributing sponsor before 
and after the transaction and of the person no longer under common 
control with the contributing sponsor (individually or where financial 
statements are only available on a consolidated basis with other 
members of the same controlled group, on a consolidated basis), 
including balance sheets, income statements, statements of changes in 
financial position and annual reports.
    (d) Requests for additional information. The PBGC may, in any case, 
require the submission of additional information.
    (e) How and where to file. A notice and information required to be 
filed with the PBGC by this subpart may be sent by mail or submitted by 
hand during normal working hours to: Reports Processing, Insurance 
Operations Department, Pension Benefit Guaranty Corporation, 1200 K 
Street NW., Washington, DC 20005-4026.
    (f) Optional consolidated filing. A plan administrator may file a 
single notice with respect to the occurrence of

[[Page 34057]]

more than one reportable event, or two or more plan administrators may 
file a single notice with respect to one or more reportable events 
when--
    (1) More than one event for which a notice is required by this 
section has occurred and the plan administrator is able to give the 
PBGC simultaneous timely notification of the events; or
    (2) An event described in Secs. 4043.21(a), 4043.22(a), or 
4043.23(a) has occurred, and all plan administrators who are required 
to file a notice pursuant to this section sign the same notice.
    (g) Effect of failure to file. Failure to file a notice required by 
this section or failure to include all information required in the 
notice constitutes a violation of title IV of ERISA.


Sec. 4043.4   Reporting of reportable events on annual report.

    The requirement that the plan administrator report the occurrence 
of a reportable event described in this subpart in the annual report 
filed pursuant to part 4065 of this chapter is waived pursuant to the 
provisions of section 4065 of ERISA.


Sec. 4043.5   Obligation of contributing sponsor.

    Whenever a contributing sponsor under a plan covered by section 
4021 of ERISA, knows or has reason to know that a reportable event has 
occurred, it shall notify the plan administrator immediately.


Sec. 4043.6   Date of filing.

    (a) Any notice or document required to be filed under this subpart 
is considered filed on the date of the United States postmark stamped 
on the cover in which the document is mailed, if--
    (1) The postmark was made by the United States Postal Service; and
    (2) The document was mailed postage prepaid, properly packaged and 
addressed to the PBGC. If the conditions stated in both paragraphs 
(a)(1) and (a)(2) are not met, the notice or document is considered 
filed on the date it is received by the PBGC. Notices or documents 
received after regular business hours are considered filed on the next 
regular business day.


Sec. 4043.7   Computation of time.

    In computing any period of time prescribed or allowed by the rules 
of this subpart, the day of the act or event from which the designated 
period of time begins to run shall not be included. The last day of the 
period so computed shall be included, unless it is a Saturday, Sunday, 
or Federal holiday, in which event the period runs until the end of the 
next day that is not a Saturday, Sunday, or Federal holiday.


Sec. 4043.11   Tax disqualification.

    (a) Reportable event. A reportable event occurs when the Secretary 
of the Treasury issues a notice that a plan has ceased to be a plan 
described in section 4021(a)(2) of ERISA.
    (b) Waiver. The 30-day notice requirement contained in 
Sec. 4043.3(a) is waived for the event described in this section.


Sec. 4043.12   Title I non-compliance.

    (a) Reportable event. A reportable event occurs when the Secretary 
of Labor determines that a plan is not in compliance with title I of 
ERISA.
    (b) Waiver. The 30-day notice requirement contained in 
Sec. 4043.3(a) is waived for the event described in this section.


Sec. 4043.13   Amendment decreasing benefits payable.

    (a) Reportable event. A reportable event occurs when an amendment 
to a plan is adopted under which the retirement benefit payable from 
employer contributions with respect to any participant may be 
decreased.
    (b) Waiver. The 30-day notice requirement contained in 
Sec. 4043.3(a) is waived for the event described in this section.


Sec. 4043.14   Active participant reduction.

    (a) Reportable event. A reportable event occurs when the number of 
active participants under a plan is less than 80 percent of the number 
of active participants at the beginning of the plan year, or is less 
than 75 percent of the number of active plan participants at the 
beginning of the previous plan year.
    (b) Waiver. The 30-day notice requirement contained in 
Sec. 4043.3(a) is waived for the event described in this section, if 
the conditions in paragraph (b)(1), (b)(2), or (b)(3) of this section 
exist.
    (1) The plan has less than 100 participants as of the beginning of 
either the current or the previous plan year.
    (2) With respect to a plan maintained by one contributing sponsor 
or by two or more contributing sponsors that are members of the same 
controlled group, as of the date of the event, the total number of 
active participants covered by all the plans covered by this part that 
are maintained by a contributing sponsor and all members of the same 
controlled group, if any, either is not less than 80 percent of the 
total number of active participants in all such plans determined as of 
the beginning of each such plan's current plan year, or is not less 
than 75 percent of the total number of active participants in all such 
plans determined as of the beginning of each such plan's previous plan 
year.
    (3) The present value of unfunded vested benefits under the plan 
(as reported on the most recently filed IRS/DOL/PBGC Form 5500 or Form 
5500-C/R) is less than $250,000.
    (c) Determination of the number of active participants. (1) The 
number of active participants as of the beginning of a plan year may be 
determined as of the end of the previous plan year.
    (2) For purposes of this section and information submitted pursuant 
to Sec. 4043.3(c)(1), with respect to a plan maintained by one 
contributing sponsor or by two or more contributing sponsors that are 
members of the same controlled group, include as ``active'' only a 
participant who--
    (i) Is receiving compensation for work performed;
    (ii) Is on paid or unpaid leave granted for a reason other than a 
layoff;
    (iii) Is laid off from work for a period of time that has lasted 
less than 30 days; or
    (iv) Is absent from work due to a recurring reduction in employment 
that occurs at least annually.


Sec. 4043.15   Termination or partial termination.

    (a) Reportable event. A reportable event occurs when the Secretary 
of the Treasury determines that there has been a termination or partial 
termination of a plan within the meaning of section 411(d)(3) of the 
Code.
    (b) Waiver. The 30-day notice requirement contained in 
Sec. 4043.3(a) is waived for the events described in this section.


Sec. 4043.16   Failure to meet minimum funding standards and granting 
of funding waiver.

    (a) Reportable event. A reportable event occurs when a plan fails 
to meet the minimum funding standards or is granted a minimum funding 
waiver under section 412 of the Code or section 302 of ERISA.
    (b) Waiver. The 30-day notice requirement contained in 
Sec. 4043.3(a) is waived for the event described in this section, 
unless a plan fails to meet minimum funding standards or is granted a 
minimum funding waiver and the present value of unfunded vested 
benefits under the plan (as reported on the most recently filed IRS/
DOL/PBGC Form 5500 or Form 5500-C/R) equals or exceeds $250,000. In 
addition, the 30-day notice requirement contained in Sec. 4043.3(a) is 
waived for the event described in this section if, with respect to the 
same failure, Form 200 has been

[[Page 34058]]

completed and submitted (including all required documentation and other 
information) in accordance with subpart B of this part.


Sec. 4043.17   Inability to pay benefits when due.

    (a) Reportable event. A reportable event occurs when a plan is 
unable to pay benefits when due. Except as provided in paragraph (c) of 
this section, a plan is unable to pay benefits when due if the plan 
does not pay any participant, who is then entitled to benefit payments, 
the full promised benefits to which he or she is entitled in the form 
prescribed under the terms of the plan.
    (b) Waiver. The 30-day notice requirement in Sec. 4043.3(a) is not 
waived for the event described in this section.
    (c) Administrative delays. A plan shall not be treated as being 
unable to pay benefits when due if its failure to pay benefits is 
caused solely by: (1) The need to verify any participant's eligibility 
for benefits; (2) the inability to locate any participant; or (3) any 
other administrative delay if such delay lasts less than the shorter of 
two months or two full benefit payment periods.


Sec. 4043.18   Distribution to a substantial owner.

    (a) Reportable event. A reportable event occurs when there is a 
distribution or distributions under the plan to a participant who is a 
substantial owner if--
    (1) The total of all distributions to the substantial owner within 
a 24-month period has a value of $10,000 or more;
    (2) The distribution or distributions were not made by reason of 
the death of the participant; and
    (3) Immediately after the distribution or the last distribution in 
a series, the plan has nonforfeitable benefits which are not funded.
    (b) Waiver. The 30-day notice requirement contained in Sec. 4043.3 
is waived for the event described in this section, unless--
    (1) A plan makes a distribution or distributions within a 12-month 
period to a substantial owner having a total value of $10,000 or more; 
and
    (2) The amount of the distribution or distributions exceeds the 
amount of the maximum guaranteeable benefit for the substantial owner, 
determined under Sec. 4022.27 of this chapter, for the year in which 
the distribution or the last distribution in a series was made.
    (c) Valuation of distribution. The value of a distribution 
described in paragraph (a) or (b) of this section is determined in 
accordance with the provisions of this paragraph.
    (1) The value of a distribution, other than an irrevocable 
commitment, equals the sum of the cash amounts actually received by the 
participant and the fair market value of any assets distributed in a 
form other than cash, determined as of the distribution date.
    (2) The value of an irrevocable commitment is the purchase price of 
the irrevocable commitment, or the value, determined in accordance with 
reasonable actuarial assumptions, of the benefits payable pursuant to 
that irrevocable commitment. For this purpose, reasonable actuarial 
assumptions are the actuarial assumptions used by the PBGC under 
subpart B of part 4044 of this chapter, or the actuarial assumptions 
used by the plan for purposes of section 302 of ERISA and section 412 
of the Code.
    (d) Date of substantial owner distribution. The date of 
distribution to a substantial owner of an irrevocable commitment is the 
date on which the obligation to provide benefits passes from the plan 
to the insurer. The date of distribution to a substantial owner of a 
cash distribution shall be the date it is received by the participant. 
The date of all other distributions to a substantial owner shall be the 
date when the plan relinquishes control over the assets transferred 
directly or indirectly to the participant.
    (e) Determination date. The determination of whether a participant 
is a substantial owner, or has been in the preceding 60 months, is made 
on the date when there has been a distribution or distributions with a 
total value of $10,000 or more.
    (f) Valuation of assets and benefits. For purposes of paragraph 
(a)(3) of this section, in determining whether a plan has 
nonforfeitable benefits which are not funded--
    (1) Assets are valued at fair market value; and
    (2) Benefits are valued in accordance with reasonable actuarial 
assumptions. For this purpose, reasonable actuarial assumptions are the 
actuarial assumptions used by the PBGC under subpart B of part 4044 of 
this chapter, or the actuarial assumptions used by the plan for 
purposes of section 302 of ERISA and section 412 of the Code.


Sec. 4043.19   Plan merger, consolidation or transfer.

    (a) Reportable event. A reportable event occurs when a plan merges, 
consolidates, or transfers its assets or liabilities under section 208 
of ERISA or section 414(1) of the Code.
    (b) Waiver. The 30-day notice requirement contained in 
Sec. 4043.3(a) is waived for the events described in this section.


Sec. 4043.20   Alternative compliance with reporting and disclosure 
requirements of Title I.

    (a) Reportable event. A reportable event occurs when an alternative 
method of compliance (not of general applicability) is prescribed for a 
plan by the Secretary of Labor under section 110 of ERISA.
    (b) Waiver. The 30-day notice requirement contained in 
Sec. 4043.3(a) is waived for the event described in this section.


Sec. 4043.21   Bankruptcy, insolvency, or similar settlements.

    (a) Reportable event. A reportable event occurs with respect to a 
plan maintained by one contributing sponsor or by two or more 
contributing sponsors that are members of the same controlled group 
when a contributing sponsor--
    (1) Commences a bankruptcy case (under Title 11, U.S.C.), or has a 
bankruptcy case commenced against it;
    (2) Commences or has commenced against it, any other type of 
insolvency proceeding (including, but not limited to the appointment of 
a receiver);
    (3) Commences, or has commenced against it, a proceeding to effect 
a composition, extension or settlement with creditors;
    (4) Executes a general assignment for the benefit of creditors; or
    (5) Undertakes to effect any other non-judicial composition, 
extension or settlement with substantially all its creditors.
    (b) Waiver. The 30-day notice requirement contained in 
Sec. 4043.3(a) is not waived for the event described in this section.


Sec. 4043.22   Liquidation or dissolution.

    (a) Reportable event. Except as provided in paragraph (c) of this 
section, a reportable event occurs with respect to a plan maintained by 
one contributing sponsor or by two or more contributing sponsors that 
are members of the same controlled group when a contributing sponsor--
    (1) Is involved in any transaction to implement its complete 
liquidation; or
    (2) Institutes or has instituted against it a proceeding to be 
dissolved, or is dissolved, whichever occurs first.
    (b) Waiver. The 30-day notice requirement contained in 
Sec. 4043.3(a) is not waived for the event described in this section.
    (c) Reorganizations described in section 4069(b). This section does 
not cover any of the reoganizations described in section 4069(b) of 
ERISA.

[[Page 34059]]

Sec. 4043.23   Transaction involving a change in contributing sponsor 
or controlled group.

    (a) Reportable event. Except as provided in paragraph (c) of this 
section, a reportable event occurs with respect to a plan maintained by 
one contributing sponsor or by two or more contributing sponsors that 
are members of the same controlled group with nonforfeitable benefits 
which are not funded of $1 million or more when--
    (1) As a result of a transaction involving a transfer of assets of 
or an ownership interest in a contributing sponsor--
    (i) There is or will be a new contributing sponsor that is not a 
member of the controlled group of the previous contributing sponsor;
    (ii) The contributing sponsor leaves or will leave the controlled 
group; or
    (iii) The contributing sponsor becomes or will become a member of a 
different controlled group, except where the new controlled group is or 
will be the same, but for the addition of another person, as the 
contributing sponsor's controlled group before the transaction; or
    (2) As a result of a transaction involving a transfer by a 
contributing sponsor of assets of or an ownership interest in another 
person, the contributing sponsor and that person are or will be no 
longer part of the same controlled group.
    (b) Waiver. The 30-day notice requirement contained in 
Sec. 4043.3(a) is not waived for the event described in this section.
    (c) Certain reorganizations. This section does not apply to--
    (1) A reorganization involving a mere change in identity, form or 
place of organization, however effected;
    (2) A reorganization involving a liquidation into a parent 
corporation; and
    (3) A reorganization involving a merger, consolidation, or division 
solely between (or among) members of the same controlled group as the 
contributing sponsor.
    (d) Definition of transaction. For purposes of this section, the 
term transaction includes, but is not limited to, a legally binding 
agreement, whether or not written, to transfer, and a change in 
ownership that occurs as a matter of law or through the exercise or 
lapse of pre-existing rights.
    (e) Valuation of assets and benefits. For purposes of paragraph (a) 
of this section, in determining whether a plan has nonforfeitable 
benefits which are not funded of $1 million or more--
    (1) Assets are valued at fair market value; and
    (2) Benefits are valued in accordance with reasonable actuarial 
assumptions. For this purpose, reasonable actuarial assumptions are the 
actuarial assumptions used by the PBGC under subpart B of part 4044 of 
this chapter, or the actuarial assumptions used by the plan for 
purposes of section 302 of ERISA and section 412 of the Code.

Subpart B--Section 302(f); Notice of Failure To Make Required 
Contributions


Sec. 4043.31   PBGC Form 200, notice of failure to make required 
contributions; supplementary information.

    (a) General rules. To comply with the notification requirement in 
section 302(f)(4) of ERISA and section 412(n)(4) of the Code, a 
contributing sponsor of a single-employer plan that is covered under 
section 4021 of ERISA and, if that contributing sponsor is a member of 
a parent-subsidiary controlled group, the parent must complete and 
submit a properly certified Form 200 that includes all required 
documentation and other information, as described in the related filing 
instructions, in accordance with this section. Notice of failure to 
make required contributions is required whenever the unpaid balance of 
a required installment or any other payment required under section 302 
of ERISA and section 412 of the Code (including interest), when added 
to the aggregate unpaid balance of all preceding such installments or 
other payments for which payment was not made when due (including 
interest), exceeds $1 million.
    (1) Form 200 must be filed with the PBGC no later than 10 days 
after the due date for any required payment for which payment was not 
made when due.
    (i) The 10-day period for filing Form 200 is computed in accordance 
with Sec. 4043.7 of this chapter.
    (ii) The filing date for Form 200 is the date on which it is 
received by the PBGC office specified in the instructions if it is 
received no later than 4 p.m. on a weekday other than a Federal 
holiday. If it is received after 4 p.m. or on a weekend or Federal 
holiday, the Form 200 is deemed to be filed on the next regular 
business day.
     (2) If a contributing sponsor or the parent completes and submits 
Form 200 in accordance with this section, the PBGC will deem the other 
person to have so filed and it will consider the notification 
requirement in section 302(f)(4) of ERISA and section 412(n)(4) of the 
Code to be satisfied by all members of a controlled group of which the 
person who has filed Form 200 is a member.
    (b) Supplementary information. If, upon review of a Form 200, the 
PBGC concludes that it needs additional information in order to make 
decisions regarding enforcement of a lien imposed by section 302(f) of 
ERISA and section 412(n) of the Code, the PBGC, by written 
notification, may require any contributing sponsor or member of a 
controlled group of which a contributing sponsor is a member to 
supplement the Form 200. Such additional information must be filed with 
the PBGC office specified within 7 days after the date of the written 
notification, as determined in accordance with Secs. 4043.6 and 4043.7 
of this chapter, or by a different time specified therein.

PART 4044--ALLOCATION OF ASSETS IN SINGLE-EMPLOYER PLANS

Subpart A--Allocation of Assets

General Provisions

Sec.
4044.1  Purpose and scope.
4044.2  Definitions.
4044.3  General rule.
4044.4  Violations.

Allocation of Assets to Benefit Categories

4044.10  Manner of allocation.
4044.11  Priority category 1 benefits.
4044.12  Priority category 2 benefits.
4044.13  Priority category 3 benefits.
4044.14  Priority category 4 benefits.
4044.15  Priority category 5 benefits.
4044.16  Priority category 6 benefits.
4044.17  Subclasses.

Allocation of Residual Assets

4044.30  [Reserved.]

Subpart B--Valuation of Benefits and Assets

General Provisions

4044.41  General valuation rules.

Trusteed Plans

4044.51  Benefits to be valued.
4044.52  Valuation of benefits.
4044.53  Mortality assumptions--in general.
4044.54  Mortality assumptions--lump sums.

Expected Retirement Age

4044.55  XRA when a participant must retire to receive a benefit.
4044.56  XRA when a participant need not retire to receive a 
benefit.
4044.57  Special rule for facility closing.

Non-Trusteed Plans

4044.71  Valuation of annuity benefits.
4044.72  Form of annuity to be valued.
4044.73  Lump sums and other alternative forms of distribution in 
lieu of annuities.
4044.74  Withdrawal of employee contributions.
4044.75  Other lump sum benefits.

[[Page 34060]]

Appendix A to Part 4044--Mortality Rate Tables

Appendix B to Part 4044--Interest Rates Used to Value

Annuities and Lump Sums

Appendix C to Part 4044--Loading Assumptions

Appendix D to Part 4044--Tables Used To Determine Expected Retirement 
Age

    Authority: 29 U.S.C. 1301(a), 1302(b)(3), 1341, 1344, 1362.

    Note: Certain provisions of part 4044 have been superseded by 
legislative changes. For example, there are references to provisions 
formerly codified in 29 CFR part 2617, subpart C (and to the Notice 
of Sufficiency provided for thereunder) that no longer exist because 
of changes in the PBGC's plan termination regulations in response to 
the Single-Employer Pension Plan Amendments Act of 1986 and the 
Pension Protection Act of 1987. The PBGC intends to amend part 4044 
at a later date to conform it to current statutory provisions.

Subpart A--Allocation of Assets

General Provisions


Sec. 4044.1   Purpose and scope.

    This part implements section 4044 of ERISA, which contains rules 
for allocating a plan's assets when the plan terminates. These rules 
have been in effect since September 2, 1974, the date of enactment of 
ERISA. This part applies to any single-employer plan covered by title 
IV of ERISA that submits a notice of intent to terminate, or for which 
PBGC commences an action to terminate the plan under section 4042 of 
ERISA.
    (a) Subpart A. Sections 4044.1 through 4044.4 set forth general 
rules for applying Secs. 4044.10 through 4044.17. Sections 4044.10 
through 4044.17 interpret the rules and describe procedures for 
allocating plan assets to priority categories 1 through 6.
    (b) Subpart B. The purpose of subpart B is to establish the method 
of determining the value of benefits and assets under terminating 
single-employer pension plans covered by title IV of ERISA. This 
valuation is needed for both plans trusteed under title IV and plans 
which are not trusteed. For the former, the valuation is needed to 
allocate plan assets in accordance with subpart A of this part and to 
determine the amount of any plan asset insufficiency. For the latter, 
the valuation is needed to allocate assets in accordance with subpart A 
and to distribute the assets in accordance with subpart B of part 4041 
of this chapter.
     (1) Section 4044.41 sets forth the general provisions of subpart B 
and applies to all terminating single-employer plans. Sections 4044.51 
through 4044.57 prescribe the benefit valuation rules for plans that 
receive or that expect to receive a Notice of Inability to Determine 
Sufficiency from PBGC and are placed into trusteeship by PBGC, 
including (in Secs. 4044.55 through 4044.57) the rules and procedures a 
plan administrator shall follow to determine the expected retirement 
age (XRA) for a plan participant entitled to early retirement benefits 
for whom the annuity starting date is not known as of the valuation 
date. This applies to all trusteed plans which have such early 
retirement benefits. The plan administrator shall determine an XRA 
under Sec. 4044.55, Sec. 4044.56 or Sec. 4044.57, as appropriate, for 
each active participant or participant with a deferred vested benefit 
who is entitled to an early retirement benefit and who as of the 
valuation date has not selected an annuity starting date. [See Note at 
beginning of part 4044.]
    (2) Sections 4044.71 through 4044.75 prescribe the benefit 
valuation rules for calculating the value of a benefit to be paid a 
participant or beneficiary under a terminating pension plan that is 
distributing assets where the plan has received a Notice of Sufficiency 
issued by PBGC pursuant to part 2617 of this chapter and has not been 
placed into trusteeship by PBGC. [See Note at beginning of part 4044.]


Sec. 4044.2  Definitions.

    (a) The following terms are defined in Sec. 4001.2 of this chapter: 
annuity, basic-type benefit, Code, distribution date, ERISA, fair 
market value, guaranteed benefit, insurer, IRS, irrevocable commitment, 
mandatory employee contributions, nonbasic-type benefit, nonforfeitable 
benefit, normal retirement age, notice of intent to terminate, PBGC, 
person, plan, plan administrator, single-employer plan, substantial 
owner, termination date, and voluntary employee contributions.
    (b) For purposes of this part:
    Deferred annuity means an annuity under which the specified date or 
age at which payments are to begin occurs after the valuation date.
    Earliest retirement age at valuation date means the later of (a) a 
participant's age on his or her birthday nearest to the valuation date, 
or (b) the earliest age at which the participant can retire under the 
terms of the plan.
    Early retirement benefit means an annuity benefit payable under the 
terms of the plan, under which the participant is entitled to begin 
receiving payments before his or her normal retirement age and which is 
not payable on account of the disability of the participant. It may be 
reduced according to the terms of the plan.
    Expected retirement age (XRA) means the age, determined in 
accordance with Secs. 4044.55 through 4044.57, 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.
    Non-trusteed plan means a single-employer plan which receives a 
Notice of Sufficiency from PBGC and is able to close out by purchasing 
annuities in the private sector in accordance with part 2617 of this 
chapter. [See Note at beginning of part 4044.]
     Notice of Sufficiency means a notice issued by the PBGC that it 
has determined that plan assets are sufficient to discharge when due 
all obligations of the plan with respect to benefits in priority 
categories 1 through 4 after plan assets have been allocated to 
benefits in accordance with section 4044 of ERISA and this subpart. 
[See Note at beginning of part 4044.]
    Priority category means one of the categories contained in sections 
4044 (a)(1) through (a)(6) of ERISA that establish the order in which 
plan assets are to be allocated.
    Trusteed plan means a single-employer plan which has been placed 
into trusteeship by PBGC.
    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.
    Valuation date means (1) for non-trusteed plans, the date of 
distribution and (2) for trusteed plans, the date of termination.
    (c) For purposes of subpart B of this part (unless otherwise 
required by the context):
    Age means the participant's age at his or her nearest birthday and 
is determined by rounding the individual's exact age to the nearest 
whole year. Half years are rounded to the next highest year. This is 
also known as the ``insurance age.''
    (d) For purposes of Secs. 4044.55 through 4044.57:
    Monthly benefit means the guaranteed benefit payable by PBGC.
    (e) For purposes of Secs. 4044.71 through 4044.75:
    Lump sum payable in lieu of an annuity means a benefit that is 
payable in a single installment and is derived from an annuity payable 
under the plan.

[[Page 34061]]

    Other lump sum benefit means a benefit in priority category 5 or 6, 
determined under subpart A of this part, that is payable in a single 
installment (or substantially so) under the terms of the plan, and that 
is not derived from an annuity payable under the plan. The benefit may 
be a severance pay benefit, a death benefit or other single installment 
benefit.
    Qualifying bid means a bid obtained from an insurer in accordance 
with Sec. 2617.14(b) of this chapter. [See Note at beginning of part 
4044.]


Sec. 4044.3  General rule.

    (a) Asset allocation. Upon the termination of a single-employer 
plan, the plan administrator shall allocate the plan assets available 
to pay for benefits under the plan in the manner prescribed by this 
subpart. Plan assets available to pay for benefits include all plan 
assets (valued according to Sec. 4044.41(b)) remaining after the 
subtraction of all liabilities, other than liabilities for future 
benefit payments, paid or payable from plan assets under the provisions 
of the plan. Liabilities include expenses, fees and other 
administrative costs, and benefit payments due before the allocation 
date. Except as provided in Sec. 4044.4(b), an irrevocable commitment 
by an insurer to pay a benefit, which commitment is in effect on the 
date of the asset allocation, is not considered a plan asset, and a 
benefit payable under such a commitment is excluded from the allocation 
process.
    (b) Allocation date. For plans that close out pursuant to a Notice 
of Sufficiency under the provisions of subpart C of part 2617 of this 
chapter, assets shall be allocated as of the date plan assets are to be 
distributed. For other plans, assets shall be allocated as of the 
termination date. [See Note at beginning of part 4044.]


Sec. 4044.4  Violations.

    (a) General. A plan administrator violates ERISA if plan assets are 
allocated or distributed upon plan termination in a manner other than 
that prescribed in section 4044 of ERISA and this subpart, except as 
may be required to prevent disqualification of the plan under the Code 
and regulations thereunder.
    (b) Distributions in anticipation of termination. A distribution, 
transfer, or allocation of assets to a participant or to an insurance 
company for the benefit of a participant, made in anticipation of plan 
termination, is considered to be an allocation of plan assets upon 
termination, and is covered by paragraph (a) of this section. In 
determining whether a distribution, transfer, or allocation of assets 
has been made in anticipation of plan termination PBGC will consider 
all of the facts and circumstances including--
    (1) Any change in funding or operation procedures;
    (2) Past practice with regard to employee requests for forms of 
distribution;
    (3) Whether the distribution is consistent with plan provisions; 
and
    (4) Whether an annuity contract that provides for a cutback based 
on the guarantee limits in subpart B of part 4022 of this chapter could 
have been purchased from an insurance company.

Allocation of Assets to Benefit Categories


Sec. 4044.10  Manner of allocation.

    (a) General. The plan administrator shall allocate plan assets 
available to pay for benefits under the plan using the rules and 
procedures set forth in paragraphs (b) through (f) of this section, or 
any other procedure that results in each participant (or beneficiary) 
receiving the same benefits he or she would receive if the procedures 
in paragraphs (b) through (f) were followed.
    (b) Assigning benefits. The basic-type and nonbasic-type benefits 
payable with respect to each participant in a terminated plan shall be 
assigned to one or more priority categories in accordance with 
Secs. 4044.11 through 4044.16. Benefits derived from voluntary employee 
contributions, which are assigned only to priority category 1, are 
treated, under section 204(c)(4) of ERISA and section 411(d)(5) of the 
Code, as benefits under a separate plan. The amount of a benefit 
payable with respect to each participant shall be determined as of the 
termination date.
    (c) Valuing benefits. The value of a participant's benefit or 
benefits assigned to each priority category shall be determined, as of 
the allocation date, in accordance with the provisions of subpart B of 
this part. The value of each participant's basic-type benefit or 
benefits in a priority category shall be reduced by the value of the 
participant's benefit of the same type that is assigned to a higher 
priority category. Except as provided in the next two sentences, the 
same procedure shall be followed for nonbasic-type benefits. The value 
of a participant's nonbasic-type benefits in priority categories 3, 5, 
and 6 shall not be reduced by the value of the participant's nonbasic-
type benefit assigned to priority category 2. Benefits in priority 
category 1 shall neither be included in nor subtracted from lower 
priority categories. In no event shall a benefit assigned to a priority 
category be valued at less than zero.
    (d) Allocating assets to priority categories. Plan assets available 
to pay for benefits under the plan shall be allocated to each priority 
category in succession, beginning with priority category 1. If the plan 
has sufficient assets to pay for all benefits in a priority category, 
the remaining assets shall then be allocated to the next lower priority 
category. This process shall be repeated until all benefits in priority 
categories 1 through 6 have been provided or until all available plan 
assets have been allocated.
    (e) Allocating assets within priority categories. Except for 
priority category 5, if the plan assets available for allocation to any 
priority category are insufficient to pay for all benefits in that 
priority category, those assets shall be distributed among the 
participants according to the ratio that the value of each 
participant's benefit or benefits in that priority category bears to 
the total value of all benefits in that priority category. If the plan 
assets available for allocation to priority category 5 are insufficient 
to pay for all benefits in that category, the assets shall be 
allocated, first, to the value of each participant's nonforfeitable 
benefits that would be assigned to priority category 5 under 
Sec. 4044.15 after reduction for the value of benefits assigned to 
higher priority categories, based only on the provisions of the plan in 
effect at the beginning of the 5-year period immediately preceding the 
termination date. If assets available for allocation to priority 
category 5 are sufficient to fully satisfy the value of those benefits, 
assets shall then be allocated to the value of the benefit increase 
under the oldest amendment during the 5-year period immediately 
preceding the termination date, reduced by the value of benefits 
assigned to higher priority categories (including higher subcategories 
in priority category 5). This allocation procedure shall be repeated 
for each succeeding plan amendment within the 5-year period until all 
plan assets available for allocation have been exhausted. If an 
amendment decreased benefits, amounts previously allocated with respect 
to each participant in excess of the value of the reduced benefit shall 
be reduced accordingly. In the subcategory in which assets are 
exhausted, the assets shall be distributed among the participants 
according to the ratio that the value of each participant's benefit or 
benefits in that subcategory bears to the total value of all benefits 
in that subcategory.
    (f) Applying assets to basic-type or nonbasic-type benefits within 
priority

[[Page 34062]]

categories. The assets allocated to a participant's benefit or benefits 
within each priority category shall first be applied to pay for the 
participant's basic-type benefit or benefits assigned to that priority 
category. Any assets allocated on behalf of that participant remaining 
after satisfying the participant's basic-type benefit or benefits in 
that priority category shall then be applied to pay for the 
participant's nonbasic-type benefit or benefits assigned to that 
priority category. If the assets allocable to a participant's basic-
type benefit or benefits in all priority categories are insufficient to 
pay for all of the participant's guaranteed benefits, the assets 
allocated to that participant's benefit in priority category 4 shall be 
applied, first, to the guaranteed portion of the participant's benefit 
in priority category 4. The remaining assets allocated to that 
participant's benefit in priority category 4, if any, shall be applied 
to the nonguaranteed portion of the participant's benefit.
    (g) Allocation to established subclasses. Notwithstanding 
paragraphs (e) and (f) of this section, the assets of a plan that has 
established subclasses within any priority category may be allocated to 
the plan's subclasses in accordance with the rules set forth in 
Sec. 4044.17.


Sec. 4044.11  Priority category 1 benefits.

    (a) Definition. The benefits in priority category 1 are 
participants' accrued benefits derived from voluntary employee 
contributions.
    (b) Assigning benefits. Absent an election described in the next 
sentence, the benefit assigned to priority category 1 with respect to 
each participant is the balance of the separate account maintained for 
the participant's voluntary contributions. If a participant has elected 
to receive an annuity in lieu of his or her account balance, the 
benefit assigned to priority category 1 with respect to that 
participant is the present value of that annuity.


Sec. 4044.12  Priority category 2 benefits.

    (a) Definition. The benefits in priority category 2 are 
participants' accrued benefits derived from mandatory employee 
contributions, whether to be paid as an annuity benefit with a pre-
retirement death benefit that returns mandatory employee contributions 
or, if a participant so elects under the terms of the plan and subpart 
A of part 4022 of this chapter, as a lump sum benefit. Benefits are 
primarily basic-type benefits although nonbasic-type benefits may also 
be included as follows:
    (1) Basic-type benefits. The basic-type benefit in priority 
category 2 with respect to each participant is the sum of the values of 
the annuity benefit and the pre-retirement death benefit determined 
under the provisions of paragraph (c)(1) of this section.
    (2) Nonbasic-type benefits. If a participant elects to receive a 
lump sum benefit and if the value of the lump sum benefit exceeds the 
value of the basic-type benefit in priority category 2 determined with 
respect to the participant, the excess is a nonbasic-type benefit. 
There is no nonbasic-type benefit in priority category 2 for a 
participant who does not elect to receive a lump sum benefit.
    (b) Conversion of mandatory employee contributions to an annuity 
benefit. Subject to the limitation set forth in paragraph (b)(3) of 
this section, a participant's accumulated mandatory employee 
contributions shall be converted to an annuity form of benefit payable 
at the normal retirement age or, if the plan provides for early 
retirement, at the expected retirement age. The conversion shall be 
made using the interest rates and factors specified in paragraph (b)(2) 
of this section. The form of the annuity benefit (e.g., straight life 
annuity, joint and survivor annuity, cash refund annuity, etc.) is the 
form that the participant or beneficiary is entitled to on the 
termination date. If the participant does not have a nonforfeitable 
right to a benefit, other than the return of his or her mandatory 
contributions in a lump sum, the annuity form of benefit is the form 
the participant would be entitled to if the participant had a 
nonforfeitable right to an annuity benefit under the plan on the 
termination date.
    (1) Accumulated mandatory employee contributions. Subject to any 
addition for the cost of ancillary benefits plus interest, as provided 
in the following sentence, the amount of the accumulated mandatory 
employee contributions for each participant is the participant's total 
nonforfeitable mandatory employee contributions remaining in the plan 
on the termination date plus interest, if any, under the plan 
provisions. Mandatory employee contributions, if any, used after the 
effective date of the minimum vesting standards in section 203 of ERISA 
and section 411 of the Code for costs or to provide ancillary benefits 
such as life insurance or health insurance, plus interest under the 
plan provisions, shall be added to the contributions that remain in the 
plan to determine the accumulated mandatory employee contributions.
    (2) Interest rates and conversion factors. The interest rates and 
conversion factors used in the administration of the plan shall be used 
to convert a participant's accumulated mandatory contributions to the 
annuity form of benefit. In the absence of plan rules and factors, the 
interest rates and conversion factors established by the IRS for 
allocation of accrued benefits between employer and employee 
contributions under the provisions of section 204(c) of ERISA and 
section 411(c) of the Code shall be used.
    (3) Minimum accrued benefit. The annuity benefit derived from 
mandatory employee contributions may not be less than the minimum 
accrued benefit under the provisions of section 204(c) of ERISA and 
section 411(c) of the Code.
    (c) Assigning benefits. If a participant or beneficiary elects to 
receive a lump sum benefit, his or her benefit shall be determined 
under paragraph (c)(2) of this section. Otherwise, the benefits with 
respect to a participant shall be determined under paragraph (c)(1) of 
this section.
    (1) Annuity benefit and pre-retirement death benefit. The annuity 
benefit and the pre-retirement death benefit assigned to priority 
category 2 with respect to a participant are determined as follows:
    (i) The annuity benefit is the benefit computed under paragraph (b) 
of this section.
    (ii) Except for adjustments necessary to meet the minimum lump sum 
requirements as hereafter provided, the pre-retirement death benefit is 
the benefit under the plan that returns all or a portion of the 
participant's mandatory employee contributions upon the death of the 
participant before retirement. A benefit that became payable in a 
single installment (or substantially so) because the participant died 
before the termination date is a liability of the plan within the 
meaning of Sec. 4044.3(a) and should not be assigned to priority 
category 2. A benefit payable upon a participant's death that is 
included in the annuity form of the benefit derived from mandatory 
employee contributions (e.g., the survivor's portion of a joint and 
survivor annuity or the cash refund portion of a cash refund annuity) 
is assigned to priority category 2 as part of the annuity benefit under 
paragraph (c)(1)(i) of this section and is not assigned as a death 
benefit. The pre-retirement death benefit may not be less than the 
minimum lump sum required upon withdrawal of mandatory employee 
contributions by the IRS under section 204(c) of ERISA and section 
411(c) of the Code.

[[Page 34063]]

    (2) Lump sum benefit. Except for adjustments necessary to meet the 
minimum lump sum requirements as hereafter provided, if a participant 
elects to receive a lump sum benefit under the provisions of the plan, 
the amount of the benefit that is assigned to priority category 2 with 
respect to the participant is--
    (i) The combined value of the annuity benefit and the pre-
retirement death benefit determined according to paragraph (c)(1) 
(which constitutes the basic-type benefit) plus
    (ii) The amount, if any, of the participant's accumulated mandatory 
employee contributions that exceeds the combined value of the annuity 
benefit and the pre-retirement death benefit (which constitutes the 
nonbasic-type benefit), but not more than
    (iii) The amount of the participant's accumulated mandatory 
contributions.
    (3) For purposes of paragraph (c)(2) of this section, accumulated 
mandatory contributions means the contributions with interest, if any, 
payable under plan provisions to the participant or beneficiary on 
termination of the plan or, in the absence of such provisions, the 
amount that is payable if the participant withdrew his or her 
contributions on the termination date. The lump sum benefit may not be 
less than the minimum lump required by the IRS under section 204(c) of 
ERISA and section 411(c) of the Code upon withdrawal of mandatory 
employee contributions.


Sec. 4044.13  Priority category 3 benefits.

    (a) Definition. The benefits in priority category 3 are those 
annuity benefits that were in pay status before the beginning of the 3-
year period ending on the termination date, and those annuity benefits 
that could have been in pay status for participants who were eligible 
to receive annuity benefits before the beginning of the 3-year period 
ending on the termination date. Benefit increases that became effective 
before the beginning of the 5-year period ending on the termination 
date, including automatic benefit increases after that date to the 
extent provided in paragraph (b)(5) of this section, shall be included 
in determining the priority category 3 benefit. Benefits are primarily 
basic-type benefits, although nonbasic-type benefits will be included 
if any portion of a participant's priority category 3 benefit is not 
guaranteeable under the provisions of subpart A of part 4022 of this 
chapter.
    (b) Assigning benefits. The annuity benefit that is assigned to 
priority category 3 with respect to each participant is the lowest 
annuity that was paid or payable under the rules in paragraphs (b)(2) 
through (b)(6) of this section.
    (1) Eligibility of participants and beneficiaries. A participant or 
beneficiary is eligible for a priority category 3 benefit if either of 
the following applies:
    (i) The participant's (or beneficiary's) benefit was in pay status 
before the beginning of the 3-year period ending on the termination 
date.
    (ii) The participant was eligible for an annuity and his or her 
benefit could have been in pay status before the beginning of the 3-
year period ending on the termination date. Whether a participant was 
eligible to receive an annuity before the beginning of the 3-year 
period shall be determined using the plan provisions in effect on the 
day before the beginning of the 3-year period.
    (iii) If a participant described in either of the preceding two 
paragraphs died during the 3-year period ending on the date of the plan 
termination and his or her beneficiary is entitled to an annuity, the 
beneficiary is eligible for a priority category 3 benefit.
    (2) Plan provisions governing determination of benefit. In 
determining the amount of the priority category 3 annuity with respect 
to a participant, the plan administrator shall use the participant's 
age, service, actual or expected retirement age, and other relevant 
facts as of the following dates:
    (i) Except as provided in the next sentence, for a participant or 
beneficiary whose benefit was in pay status before the beginning of the 
3-year period ending on the termination date, the priority category 3 
benefit shall be determined according to plan provisions in effect on 
the date the benefit commenced. Benefit increases that became effective 
before the beginning of the 5-year period ending on the date of plan 
termination, including automatic benefit increases after that date to 
the extent provided in paragraph (b)(5) of this section, shall be 
included in determining the priority category 3 benefit. The form of 
annuity elected by a retiree is considered the normal form of annuity 
for that participant.
    (ii) For a participant who was eligible to receive an annuity 
before the beginning of the 3-year period ending on the termination 
date but whose benefit was not in pay status, the priority category 3 
benefit and the normal form of annuity shall be determined according to 
plan provisions in effect on the day before the beginning of the 3-year 
period ending on the termination date as if the benefit had commenced 
at that time.
    (3) General benefit limitations. The general benefit limitation is 
determined as follows:
    (i) If a participant's benefit was in pay status before the 
beginning of the 3-year period, the benefit assigned to priority 
category 3 with respect to that participant is limited to the lesser of 
the lowest annuity benefit in pay status during the 3-year period 
ending on the termination date and the lowest annuity benefit payable 
under the plan provisions at any time during the 5-year period ending 
on the termination date.
    (ii) Unless a benefit was in pay status before the beginning of the 
3-year period ending on the termination date, the benefit assigned to 
priority category 3 with respect to a participant is limited to the 
lowest annuity benefit payable under the plan provisions, including any 
reduction for early retirement, at any time during the 5-year period 
ending on the termination date. If the annuity form of benefit under a 
formula that appears to produce the lowest benefit differs from the 
normal annuity form for the participant under paragraph (b)(2)(ii) of 
this section, the benefits shall be compared after the differing form 
is converted to the normal annuity form, using plan factors. In the 
absence of plan factors, the factors in subpart B of part 4022 of this 
chapter shall be used.
    (iii) For purposes of this paragraph, if a terminating plan has 
been in effect less than five years on the termination date, computed 
in accordance with paragraph (b)(6) of this section, the lowest annuity 
benefit under the plan during the 5-year period ending on the 
termination date is zero. If the plan is a successor to a previously 
established defined benefit plan within the meaning of section 4021(a) 
of ERISA, the time it has been in effect will include the time the 
predecessor plan was in effect.
    (4) Determination of beneficiary's benefit. If a beneficiary is 
eligible for a priority category 3 benefit because of the death of a 
participant during the 3-year period ending on the termination date, 
the benefit assigned to priority category 3 for the beneficiary shall 
be determined as if the participant had died the day before the 3-year 
period began.
    (5) Automatic benefit increases. If plan provisions adopted and 
effective before the beginning of the 5-year period ending on the 
termination date provided for automatic increases in the benefit 
formula for both active participants and those in pay status or for 
participants in pay status only, the lowest annuity benefit payable 
during the 5-year period ending on the termination date determined 
under paragraph (b)(3) of this section includes the automatic

[[Page 34064]]

increases scheduled during the fourth and fifth years preceding 
termination, subject to the restriction that benefit increases for 
active participants in excess of the increases for retirees shall not 
be taken into account.
    (6) Computation of time periods. For purposes of this section, a 
plan or amendment is ``in effect'' on the later of the date on which it 
is adopted or the date it becomes effective.


Sec. 4044.14  Priority category 4 benefits.

    The benefits assigned to priority category 4 with respect to each 
participant are the participant's basic-type benefits that do not 
exceed the guarantee limits set forth in subpart B of part 4022 of this 
chapter, except as provided in the next sentence. The benefit assigned 
to priority category 4 with respect to a participant is not limited by 
the aggregate benefits limitations set forth in Sec. 4022B.1 of this 
chapter for individuals who are participants in more than one plan or 
by the phase-in limitation applicable to substantial owners set forth 
in Sec. 4022.26.


Sec. 4044.15  Priority category 5 benefits.

    The benefits assigned to priority category 5 with respect to each 
participant are all of the participant's nonforfeitable benefits under 
the plan.


Sec. 4044.16  Priority category 6 benefits.

    The benefits assigned to priority category 6 with respect to each 
participant are all of the participant's benefits under the plan, 
whether forfeitable or nonforfeitable.


Sec. 4044.17  Subclasses.

    (a) General rule. A plan may establish one or more subclasses 
within any priority category, other than priority categories 1 and 2, 
which subclasses will govern the allocation of assets within that 
priority category. The subclasses may be based only on a participant's 
longer service, older age, or disability, or any combination thereof.
    (b) Limitation. Except as provided in paragraph (c) of this 
section, whenever the allocation within a priority category on the 
basis of the subclasses established by the plan increases or decreases 
the cumulative amount of assets that otherwise would be allocated to 
guaranteed benefits, the assets so shifted shall be reallocated to 
other participants' benefits within the priority category in accordance 
with the subclasses.
    (c) Exception for subclasses in effect on September 2, 1974. A plan 
administrator may allocate assets to subclasses within any priority 
category, other than priority categories 1 and 2, without regard to the 
limitation in paragraph (b) of this section if, on September 2, 1974, 
the plan provided for allocation of plan assets upon termination of the 
plan based on a participant's longer service, older age, or disability, 
or any combination thereof, and--
    (1) Such provisions are still in effect; or
    (2) The plan, if subsequently amended to modify or remove those 
subclasses, is re-amended to re-establish the same subclasses on or 
before July 28, 1981.
    (d) Discrimination under Code. Notwithstanding the provisions of 
paragraphs (a) through (c) of this section, allocation of assets to 
subclasses established under this section is permitted only to the 
extent that the allocation does not result in discrimination prohibited 
under the Code and regulations thereunder.

Allocation of Residual Assets


Sec. 4044.30  [Reserved.]

Subpart B--Valuation of Benefits and Assets

General Provisions


Sec. 4044.41  General valuation rules.

    (a) Valuation of benefits--(1) Trusteed plans. The plan 
administrator of a plan that has been or will be placed into 
trusteeship by the PBGC shall value plan benefits in accordance with 
Secs. 4044.51 through 4044.57.
    (2) Non-trusteed plans. The plan administrator of a non-trusteed 
plan shall value plan benefits in accordance with Sec. 4044.71 through 
4044.75. If a plan with respect to which PBGC has issued a Notice of 
Sufficiency is unable to satisfy all benefits assigned to priority 
categories 1 through 4 on the distribution date, the PBGC will place it 
into trusteeship and the plan administrator shall re-value the benefits 
in accordance with Secs. 4044.51 through 4044.57. [See Note at 
beginning of part 4044.]
    (b) Valuation of assets. Plan assets shall be valued at their fair 
market value, based on the method of valuation that most accurately 
reflects such fair market value.

Trusteed Plans


Sec. 4044.51  Benefits to be valued.

    (a) Form of benefit. The plan administrator shall determine the 
form of each benefit to be valued in accordance with the following 
rules:
    (1) If a benefit is in pay status as of the valuation date, the 
plan administrator shall value the form of the benefit being paid.
    (2) If a benefit is not in pay status as of the valuation date but 
a valid election with respect to the form of benefit has been made on 
or before the valuation date, the plan administrator shall value the 
form of benefit so elected.
    (3) If a benefit is not in pay status as of the valuation date and 
no valid election with respect to the form of benefit has been made on 
or before the valuation date, the plan administrator shall value the 
form of benefit that, under the terms of the plan, is payable in the 
absence of a valid election.
    (b) Timing of benefit. The plan administrator shall value benefits 
whose starting date is subject to election using the assumption 
specified in paragraph (b)(1) or (b)(2) of this section.
    (1) Where election made. If a valid election of the starting date 
of a benefit has been made on or before the valuation date, the plan 
administrator shall assume that the starting date of the benefit is the 
starting date so elected.
    (2) Where no election made. If no valid election of the starting 
date of a benefit has been made on or before the valuation date, the 
plan administrator shall assume that the starting date of the benefit 
is the later of--
    (i) The expected retirement age, as determined under Secs. 4044.55 
through 4044.57, of the participant with respect to whom the benefit is 
payable, or
    (ii) The valuation date.


Sec. 4044.52  Valuation of benefits.

    (a) General rule. Except as otherwise provided in paragraph (b) of 
this section (regarding the valuation of benefits payable as lump 
sums), the plan administrator shall value annuity benefits as of the 
valuation date by--
    (1) Using the mortality assumptions prescribed by Sec. 4044.53 and 
the interest assumptions prescribed by Table I of appendix B to this 
part;
    (2) Using interpolation methods, where necessary, at least as 
accurate as linear interpolation;
    (3) Using valuation formulas that accord with generally accepted 
actuarial principles and practices;
    (4) Taking mortality into account during the deferral period of a 
deferred joint and survivor benefit only with respect to the 
participant (or other principal annuitant), if upon the death of the 
beneficiary the participant may elect an actuarially increased single 
life annuity or if a new beneficiary may succeed to the survivor 
portion of the benefit; and
    (5) Adjusting the values to reflect the loading for expenses in 
accordance with appendix C to this part.

[[Page 34065]]

    (b) Benefits payable as lump sums. For valuing benefits payable as 
lump sums (including the return of accumulated employee contributions 
upon death), and for determining whether the lump sum value of a 
benefit exceeds $3,500, the plan administrator shall value benefits in 
the same manner as benefits to be paid as annuities except that--
    (1) The mortality assumptions prescribed in Sec. 4044.54 and the 
interest assumptions set forth in Table II of appendix B to this part 
shall apply,
    (2) There shall be no adjustment to reflect the loading for 
expenses, and
    (3) Beneficiary mortality during the deferral period shall be 
disregarded as provided in paragraph (a)(4) of this section without 
regard to whether the participant may elect an actuarially increased 
single life annuity upon the death of the beneficiary or whether a new 
beneficiary may succeed to the survivor portion of the benefit.


Sec. 4044.53  Mortality assumptions--in general.

    (a) General rule. Subject to paragraph (b) of this section 
(regarding certain death benefits), the plan administrator shall use 
the mortality factors prescribed in paragraphs (c), (d), and (e) of 
this section to value benefits under Sec. 4044.52(a).
    (b) Certain death benefits. If an annuity for one person is in pay 
status on the valuation date, and if the payment of a death benefit 
after the valuation date to another person, who need not be 
identifiable on the valuation date, depends in whole or in part on the 
death of the pay status annuitant, then the plan administrator shall 
value the death benefit using--
    (1) the mortality rates that are applicable to the annuity in pay 
status under this section to represent the mortality of the pay status 
annuitant; and
    (2) the mortality rates applicable to annuities not in pay status 
and to deferred benefits other than annuities, under paragraph (c) of 
this section, to represent the mortality of the death beneficiary.
    (c) Mortality rates for healthy lives. The mortality rates 
applicable to annuities in pay status on the valuation date that are 
not being received as disability benefits, to annuities not in pay 
status on the valuation date, and to deferred benefits other than 
annuities, are--
    (1) For male participants, the rates in Table 1 of appendix A to 
this part, and
    (2) For female participants, the rates in Table 1 of appendix A to 
this part, set back 6 years.
    (d) Mortality rates for disabled lives (other than Social Security 
disability). The mortality rates applicable to annuities in pay status 
on the valuation date that are being received as disability benefits 
and for which neither eligibility for, nor receipt of, Social Security 
disability benefits is a prerequisite, are--
    (1) For male participants, the rates in Table 1 of appendix A to 
this part, set forward 3 years, and
    (2) For female participants, the rates in Table 1 of appendix A to 
this part, set back 3 years.
    (e) Mortality rates for disabled lives (Social Security 
disability). The mortality rates applicable to annuities in pay status 
on the valuation date that are being received as disability benefits 
and for which either eligibility for, or receipt of, Social Security 
disability benefits is a prerequisite, are the rates in Tables 2-M and 
2-F of appendix A to this part.


Sec. 4044.54  Mortality assumptions--lump sums.

    For determining whether the value of a benefit is $3,500 or less 
under Sec. 4022.7(b)(1) of this chapter and for calculating the amount 
of a lump sum benefit, the PBGC will use the mortality rates in Table 3 
of appendix A to this part.

Expected Retirement Age


Sec. 4044.55  XRA when a participant must retire to receive a benefit.

    (a) Applicability. Except as provided in Sec. 4044.57, the plan 
administrator shall determine the XRA under this section when plan 
provisions or established plan practice require a participant to retire 
from his or her job to begin receiving an early retirement benefit.
    (b) Data needed. The plan administrator shall determine for each 
participant who is entitled to an early retirement benefit--
    (1) The amount of the participant's monthly benefit payable at 
unreduced retirement age in the normal form payable under the terms of 
the plan or in the form validly elected by the participant before the 
termination date;
    (2) The calendar year in which the participant reaches unreduced 
retirement age (``URA'');
    (3) The participant's URA; and
    (4) The participant's earliest retirement age at the valuation 
date.
    (c) Procedure. (1) The plan administrator shall determine whether a 
participant is in the high, medium or low retirement rate category 
using the applicable Selection of Retirement Rate Category Table in 
appendix D, based on the participant's benefit determined under 
paragraph (b)(1) of this section and the year in which the participant 
reaches URA.
    (2) Based on the retirement rate category determined under 
paragraph (c)(1), the plan administrator shall determine the XRA from 
Table II-A, II-B or II-C, as appropriate, by using the participant's 
URA and earliest retirement age at valuation date.


Sec. 4044.56  XRA when a participant need not retire to receive a 
benefit.

    (a) Applicability. Except as provided in Sec. 4044.57, the plan 
administrator shall determine the XRA under this section when plan 
provisions or established plan practice do not require a participant to 
retire from his or her job to begin receiving his or her early 
retirement benefit.
    (b) Data needed. The plan administrator shall determine for each 
participant--
    (1) The participant's URA; and
    (2) The participant's earliest retirement age at valuation date.
    (c) Procedure. Participants in this case are always assigned to the 
high retirement rate category and therefore the plan administrator 
shall use Table II-C of appendix D to determine the XRA. The plan 
administrator shall determine the XRA from Table II-C by using the 
participant's URA and earliest retirement age at termination date.


Sec. 4044.57  Special rule for facility closing.

    (a) Applicability. The plan administrator shall determine the XRA 
under this section, rather than Sec. 4044.55 or Sec. 4044.56, when both 
the conditions set forth in paragraphs (a)(1) and (a)(2) of this 
section exist.
    (1) The facility at which the participant is or was employed 
permanently closed within one year before the valuation date, or is in 
the process of being permanently closed on the valuation date.
    (2) The participant left employment at the facility less than one 
year before the valuation date or was still employed at the facility on 
the valuation date.
    (b) XRA. The XRA is equal to the earliest retirement age at 
valuation date.

Non-Trusteed Plans


Sec. 4044.71  Valuation of annuity benefits.

    The value of a benefit which is to be paid as an annuity is the 
cost of purchasing the annuity on the date of distribution from an 
insurer under the qualifying bid.


Sec. 4044.72  Form of annuity to be valued.

    (a) When both the participant and beneficiary are alive on the date 
of distribution, the form of annuity to be valued is--

[[Page 34066]]

    (1) For a participant or beneficiary already receiving a monthly 
benefit, that form which is being received, or
    (2) For a participant or beneficiary not receiving a monthly 
benefit, the normal annuity form payable under the plan or the optional 
form for which the participant has made a valid election pursuant to 
Sec. 2617.4(c) of this chapter. [See Note at beginning of part 4044.]
    (b) When the participant dies after the date of plan termination 
but before the date of distribution, the form of annuity to be valued 
is determined under paragraph (b)(1) or (b)(2) of this section:
    (1) For a participant who was entitled to a deferred annuity--
    (i) If the form was a single or joint life annuity, no benefit 
shall be valued; or
    (ii) If the participant had made a valid election of a lump sum 
benefit before he or she died, the form to be valued is the lump sum.
    (2) For a participant who was eligible for immediate retirement, 
and for a participant who was in pay status at the date of 
termination--
    (i) If the form was a single life annuity, no benefit shall be 
valued;
    (ii) If the form was an annuity for a period certain and life 
thereafter, the form to be valued is an annuity for the certain period;
    (iii) If the form was a joint and survivor annuity, the form to be 
valued is a single life annuity payable to the beneficiary, unless the 
beneficiary has also died, in which case no benefit shall be valued;
    (iv) If the form was an annuity for a period certain and joint and 
survivor thereafter, the form to be valued is an annuity for the 
certain period and the life of the beneficiary thereafter, unless the 
beneficiary has also died, in which case the form to be valued is an 
annuity for the certain period;
    (v) If the form was a cash refund annuity, the form to be valued is 
the remaining lump sum death benefit; or
    (vi) If the participant had elected a lump sum benefit before he or 
she died, the form to be valued is the lump sum.
    (c) When the participant is still living and the named beneficiary 
or spouse dies after the date of termination but before the date of 
distribution, the form of annuity to be valued is determined under 
paragraph (c)(1) or (c)(2) of this section:
    (1) For a participant entitled to a deferred annuity--
    (i) If the form was a joint and survivor annuity, the form to be 
valued is a single life annuity payable to the participant; or
    (ii) If the form was an annuity for a period certain and joint and 
survivor thereafter, the form to be valued is an annuity for the 
certain period and the life of the participant thereafter.
    (2) For a participant eligible for immediate retirement and for a 
participant in pay status at the date of termination--
    (i) If the form was a joint and survivor annuity, the form to be 
valued is a single life annuity payable to the participant; or
    (ii) If the form was an annuity for a period certain and joint 
survivor thereafter annuity, the form to be valued is an annuity for 
the certain period and for the life of the participant thereafter.


Sec. 4044.73  Lump sums and other alternative forms of distribution in 
lieu of annuities.

    (a) Valuation. (1) The value of the lump sum or other alternative 
form of distribution is the present value of the normal form of benefit 
provided by the plan payable at normal retirement age, determined as of 
the date of distribution using reasonable actuarial assumptions as to 
interest and mortality.
    (2) If the participant dies before the date of distribution, but 
had elected a lump sum benefit, the present value shall be determined 
as if the participant were alive on the date of distribution.
    (b) Actuarial assumptions. The plan administrator shall specify the 
actuarial assumptions used to determine the value calculated under 
paragraph (a) of this section when the plan administrator submits the 
benefit valuation data to the PBGC pursuant to Sec. 2617.12 of part 
2617 of this chapter. The same actuarial assumptions shall be used for 
all such calculations. The PBGC reserves the right to review the 
actuarial assumptions used and to re-value the benefits determined by 
the plan administrator if the actuarial assumptions are found to be 
unreasonable.
    [See Note at beginning of part 4044.]


Sec. 4044.74  Withdrawal of employee contributions.

    (a) If a participant has not started to receive monthly benefit 
payments on the date of distribution, the value of the lump sum which 
returns mandatory employee contributions is equal to the total amount 
of contributions made by the participant, plus interest that is payable 
to the participant under the terms of the plan, plus interest on that 
total amount from the date of termination to the date of distribution. 
The rate of interest credited on employee contributions up to the date 
of termination shall be the greater of the interest rate provided under 
the terms of the plan or the interest rate required under section 
204(c) of ERISA or section 411(c) of the IRC.
    (b) If a participant has started to receive monthly benefit 
payments on the date of distribution, part of which are attributable to 
his or her contributions, the value of the lump sum which returns 
employee contributions is equal to the excess of the amount described 
in paragraph (b)(1) of this section over the amount computed in 
paragraph (b)(2) of this section.
    (1) The amount of accumulated mandatory employee contributions 
remaining in the plan as of the date of termination plus interest from 
the date of termination to the date of distribution.
    (2) The excess of benefit payments made from the plan between date 
of plan termination and the date of distribution, over the amount of 
payments that would have been made if the employee contributions had 
been paid as a lump sum on the date of plan termination, with interest 
accumulated on the excess from the date of payment to the date of 
distribution.
    (c) Interest assumptions. The interest rate used under this section 
to credit interest between the date of termination to the date of 
distribution shall be a reasonable rate and shall be the same for both 
paragraphs (a) and (b).


Sec. 4044.75  Other lump sum benefits.

     The value of a lump sum benefit which is not covered under 
Sec. 4044.73 or Sec. 4044.74 is equal to--
    (a) The value under the qualifying bid, if an insurer provides the 
benefit; or
    (b) The present value of the benefit as of the date of 
distribution, determined using reasonable actuarial assumptions, if the 
benefit is to be distributed other than by the purchase of the benefit 
from an insurer. The PBGC reserves the right to review the actuarial 
assumptions as to reasonableness and re-value the benefit if the 
actuarial assumptions are unreasonable.
    [See Note at beginning of part 4044.]

Appendix A to Part 4044--Mortality Rate Tables

     The tables in this appendix set forth for each age x the 
probability q<INF>X that an individual aged x will not survive to 
attain age x+1.

         Table 1.--Mortality Table for Healthy Male Participants        
------------------------------------------------------------------------
                            Age x                                  q<INF>x   
------------------------------------------------------------------------
5............................................................   0.000342
6............................................................   0.000318
7............................................................   0.000302
8............................................................   0.000294
9............................................................   0.000292

[[Page 34067]]

                                                                        
10...........................................................   0.000293
11...........................................................   0.000298
12...........................................................   0.000304
13...........................................................   0.000310
14...........................................................   0.000317
15...........................................................   0.000325
16...........................................................   0.000333
17...........................................................   0.000343
18...........................................................   0.000353
19...........................................................   0.000365
20...........................................................   0.000377
21...........................................................   0.000392
22...........................................................   0.000408
23...........................................................   0.000424
24...........................................................   0.000444
25...........................................................   0.000464
26...........................................................   0.000488
27...........................................................   0.000513
28...........................................................   0.000542
29...........................................................   0.000572
30...........................................................   0.000607
31...........................................................   0.000645
32...........................................................   0.000687
33...........................................................   0.000734
34...........................................................   0.000785
35...........................................................   0.000860
36...........................................................   0.000907
37...........................................................   0.000966
38...........................................................   0.001039
39...........................................................   0.001128
40...........................................................   0.001238
41...........................................................   0.001370
42...........................................................   0.001527
43...........................................................   0.001715
44...........................................................   0.001932
45...........................................................   0.002183
46...........................................................   0.002471
47...........................................................   0.002790
48...........................................................   0.003138
49...........................................................   0.003513
50...........................................................   0.003909
51...........................................................   0.004324
52...........................................................   0.004755
53...........................................................   0.005200
54...........................................................   0.005660
55...........................................................   0.006131
56...........................................................   0.006618
57...........................................................   0.007139
58...........................................................   0.007719
59...........................................................   0.008384
60...........................................................   0.009158
61...........................................................   0.010064
62...........................................................   0.011133
63...........................................................   0.012391
64...........................................................   0.013868
65...........................................................   0.015592
66...........................................................   0.017579
67...........................................................   0.019804
68...........................................................   0.022229
69...........................................................   0.024817
70...........................................................   0.027530
71...........................................................   0.030354
72...........................................................   0.033370
73...........................................................   0.036680
74...........................................................   0.040388
75...........................................................   0.044597
76...........................................................   0.049388
77...........................................................   0.054758
78...........................................................   0.060678
79...........................................................   0.067125
80...........................................................   0.074070
81...........................................................   0.081484
82...........................................................   0.089320
83...........................................................   0.097525
84...........................................................   0.106047
85...........................................................   0.114836
86...........................................................   0.124170
87...........................................................   0.133870
88...........................................................   0.144073
89...........................................................   0.154859
90...........................................................   0.166307
91...........................................................   0.178214
92...........................................................   0.190460
93...........................................................   0.203007
94...........................................................   0.217904
95...........................................................   0.234086
96...........................................................   0.248436
97...........................................................   0.263954
98...........................................................   0.280803
99...........................................................   0.299154
100..........................................................   0.319185
101..........................................................   0.341086
102..........................................................   0.365052
103..........................................................   0.393102
104..........................................................   0.427255
105..........................................................   0.469531
106..........................................................   0.521945
107..........................................................   0.586518
108..........................................................   0.665268
109..........................................................   0.760215
110..........................................................   1.000000
------------------------------------------------------------------------



  Table 2-M.--Mortality Table for Disabled Male Participants Receiving  
               Social Security Disability Benefit Payments              
------------------------------------------------------------------------
                          Age x                                 <SUP>T2x     
------------------------------------------------------------------------
5.......................................................        0.000000
6.......................................................        0.000000
7.......................................................        0.000000
8.......................................................        0.000000
9.......................................................        0.000000
10......................................................        0.000000
11......................................................        0.000000
12......................................................        0.000000
13......................................................        0.000000
14......................................................        0.000000
15......................................................        0.000000
16......................................................        0.000000
17......................................................        0.000000
18......................................................        0.000000
19......................................................        0.000000
20......................................................        0.048300
21......................................................        0.048300
22......................................................        0.048300
23......................................................        0.048300
24......................................................        0.048300
25......................................................        0.048300
26......................................................        0.046100
27......................................................        0.043600
28......................................................        0.041100
29......................................................        0.038600
30......................................................        0.036200
31......................................................        0.033900
32......................................................        0.032000
33......................................................        0.032000
34......................................................        0.028800
35......................................................        0.027800
36......................................................        0.027200
37......................................................        0.027100
38......................................................        0.027300
39......................................................        0.027600
40......................................................        0.028200
41......................................................        0.028800
42......................................................        0.029700
43......................................................        0.030500
44......................................................        0.031400
45......................................................        0.032200
46......................................................        0.033000
47......................................................        0.034000
48......................................................        0.035300
49......................................................        0.036700
50......................................................        0.038300
51......................................................        0.040100
52......................................................        0.042000
53......................................................        0.043900
54......................................................        0.046000
55......................................................        0.048200
56......................................................        0.050600
57......................................................        0.053100
58......................................................        0.055500
59......................................................        0.058100
60......................................................        0.060300
61......................................................        0.062400
62......................................................        0.064300
63......................................................        0.065700
64......................................................        0.066800
65......................................................        0.069225
66......................................................        0.071813
67......................................................        0.074526
68......................................................        0.077350
69......................................................        0.080366
70......................................................        0.083676
71......................................................        0.087384
72......................................................        0.091593
73......................................................        0.096384
74......................................................        0.101754
75......................................................        0.107674
76......................................................        0.114121
77......................................................        0.121066
78......................................................        0.128480
79......................................................        0.136316
80......................................................        0.144521
81......................................................        0.153043
82......................................................        0.161832
83......................................................        0.171166
84......................................................        0.180866
85......................................................        0.191069
86......................................................        0.201855
87......................................................        0.213303
88......................................................        0.225210
89......................................................        0.237456
90......................................................        0.250003
91......................................................        0.264900
92......................................................        0.281082
93......................................................        0.295432
94......................................................        0.310950
95......................................................        0.327799
96......................................................        0.346150
97......................................................        0.366181
98......................................................        0.388082
99......................................................        0.412048
100.....................................................        0.440098
101.....................................................        0.474251

[[Page 34068]]

                                                                        
102.....................................................        0.516527
103.....................................................        0.568941
104.....................................................        0.633514
105.....................................................        0.712264
106.....................................................        0.807211
107.....................................................        1.000000
------------------------------------------------------------------------



 Table 2-F.--Mortality Table for Disabled Female Participants Receiving 
               Social Security Disability Benefit Payments              
------------------------------------------------------------------------
                            Age x                                  q<INF>x   
------------------------------------------------------------------------
5............................................................   0.000000
6............................................................   0.000000
7............................................................   0.000000
8............................................................   0.000000
9............................................................   0.000000
10...........................................................   0.000000
11...........................................................   0.000000
12...........................................................   0.000000
13...........................................................   0.000000
14...........................................................   0.000000
15...........................................................   0.000000
16...........................................................   0.000000
17...........................................................   0.000000
18...........................................................   0.000000
19...........................................................   0.000000
20...........................................................   0.026300
21...........................................................   0.026300
22...........................................................   0.026300
23...........................................................   0.026300
24...........................................................   0.026300
25...........................................................   0.026300
26...........................................................   0.025700
27...........................................................   0.025300
28...........................................................   0.024700
29...........................................................   0.024200
30...........................................................   0.023700
31...........................................................   0.023200
32...........................................................   0.022700
33...........................................................   0.022200
34...........................................................   0.021800
35...........................................................   0.021400
36...........................................................   0.021200
37...........................................................   0.021000
38...........................................................   0.020800
39...........................................................   0.020800
40...........................................................   0.020900
41...........................................................   0.021000
42...........................................................   0.021300
43...........................................................   0.021600
44...........................................................   0.021900
45...........................................................   0.022400
46...........................................................   0.022900
47...........................................................   0.023500
48...........................................................   0.024200
49...........................................................   0.024900
50...........................................................   0.025700
51...........................................................   0.026400
52...........................................................   0.027200
53...........................................................   0.028100
54...........................................................   0.028800
55...........................................................   0.029500
56...........................................................   0.030100
57...........................................................   0.030700
58...........................................................   0.031500
59...........................................................   0.032300
60...........................................................   0.033100
61...........................................................   0.033900
62...........................................................   0.034700
63...........................................................   0.035500
64...........................................................   0.036200
65...........................................................   0.037269
66...........................................................   0.038527
67...........................................................   0.040004
68...........................................................   0.041728
69...........................................................   0.043715
70...........................................................   0.045940
71...........................................................   0.048365
72...........................................................   0.050953
73...........................................................   0.053666
74...........................................................   0.056490
75...........................................................   0.059506
76...........................................................   0.062816
77...........................................................   0.066524
78...........................................................   0.070733
79...........................................................   0.057524
80...........................................................   0.080894
81...........................................................   0.086814
82...........................................................   0.093261
83...........................................................   0.100206
84...........................................................   0.107620
85...........................................................   0.115456
86...........................................................   0.123661
87...........................................................   0.132183
88...........................................................   0.140972
89...........................................................   0.150306
90...........................................................   0.160006
91...........................................................   0.170209
92...........................................................   0.180995
93...........................................................   0.192443
94...........................................................   0.204350
95...........................................................   0.216596
96...........................................................   0.229143
97...........................................................   0.244040
98...........................................................   0.260222
99...........................................................   0.274572
100..........................................................   0.290090
101..........................................................   0.306939
102..........................................................   0.325290
103..........................................................   0.345321
104..........................................................   0.367222
105..........................................................   0.391188
106..........................................................   0.419238
107..........................................................   0.453391
108..........................................................   0.495667
109..........................................................   0.548081
110..........................................................   0.612654
111..........................................................   0.691404
112..........................................................   0.786351
113..........................................................   1.000000
------------------------------------------------------------------------


                   Table 3.--Lump Sum Mortality Table                   
------------------------------------------------------------------------
                             Age                                   q<INF>x   
------------------------------------------------------------------------
12...........................................................   0.000000
13...........................................................   0.000000
14...........................................................   0.000000
15...........................................................   0.000000
16...........................................................   0.001437
17...........................................................   0.001414
18...........................................................   0.001385
19...........................................................   0.001351
20...........................................................   0.001311
21...........................................................   0.001267
22...........................................................   0.001219
23...........................................................   0.001167
24...........................................................   0.001149
25...........................................................   0.001129
26...........................................................   0.001107
27...........................................................   0.001083
28...........................................................   0.001058
29...........................................................   0.001083
30...........................................................   0.001111
31...........................................................   0.001141
32...........................................................   0.001173
33...........................................................   0.001208
34...........................................................   0.001297
35...........................................................   0.001398
36...........................................................   0.001513
37...........................................................   0.001643
38...........................................................   0.001792
39...........................................................   0.001948
40...........................................................   0.002125
41...........................................................   0.002327
42...........................................................   0.002556
43...........................................................   0.002818
44...........................................................   0.003095
45...........................................................   0.003410
46...........................................................   0.003769
47...........................................................   0.004180
48...........................................................   0.004635
49...........................................................   0.005103
50...........................................................   0.005616
51...........................................................   0.006196
52...........................................................   0.006853
53...........................................................   0.007543
54...........................................................   0.008278
55...........................................................   0.009033
56...........................................................   0.009875
57...........................................................   0.010814
58...........................................................   0.011863
59...........................................................   0.012952
60...........................................................   0.014162
61...........................................................   0.015509
62...........................................................   0.017010
63...........................................................   0.018685
64...........................................................   0.020517
65...........................................................   0.022562
66...........................................................   0.024847
67...........................................................   0.027232
68...........................................................   0.029634
69...........................................................   0.032073
70...........................................................   0.034743
71...........................................................   0.037667
72...........................................................   0.040871
73...........................................................   0.044504
74...........................................................   0.048504
75...........................................................   0.052913
76...........................................................   0.057775
77...........................................................   0.063142
78...........................................................   0.068628
79...........................................................   0.074648
80...........................................................   0.081256
81...........................................................   0.088518
82...........................................................   0.096218
83...........................................................   0.104310
84...........................................................   0.112816
85...........................................................   0.122079
86...........................................................   0.132174

[[Page 34069]]

                                                                        
87...........................................................   0.143179
88...........................................................   0.155147
89...........................................................   0.168208
90...........................................................   0.182461
91...........................................................   0.198030
92...........................................................   0.215035
93...........................................................   0.232983
94...........................................................   0.252545
95...........................................................   0.273878
96...........................................................   0.297152
97...........................................................   0.322553
98...........................................................   0.349505
99...........................................................   0.378865
100..........................................................   0.410875
101..........................................................   0.445768
102..........................................................   0.483830
103..........................................................   0.524301
104..........................................................   0.568365
105..........................................................   0.616382
106..........................................................   0.668696
107..........................................................   0.725745
108..........................................................   0.786495
109..........................................................   0.852659
110..........................................................   0.924666
111..........................................................   1.000000
------------------------------------------------------------------------



Appendix B to Part 4044--Interest Rates Used To Value Annuities and 
Lump Sums

                                         Table I.--[Annuity Valuations]                                         
  [This table sets forth, for each indicated calendar month, the interest rates (denoted by i<INF>1, i<INF>2, . . ., and  
  referred to generally as i<INF>t) assumed to be in effect between specified anniversaries of a valuation date that 
 occurs within that calendar month; those anniversaries are specified in the columns adjacent to the rates. The 
              last listed rate is assumed to be in effect after the last listed anniversary date.]              
----------------------------------------------------------------------------------------------------------------
                                                                               The values of i<INF>1 are:            
          For valuation dates occurring in the month--           -----------------------------------------------
                                                                    i<INF>1    for t=    i<INF>1    for t=    i<INF>1    for t=
----------------------------------------------------------------------------------------------------------------
November 1993...................................................   .0560    1-25   .0525     >25     N/A     N/A
December 1993...................................................   .0560    1-25   .0525     >25     N/A     N/A
January 1994....................................................   .0590    1-25   .0525     >25     N/A     N/A
February 1994...................................................   .0590    1-25   .0525     >25     N/A     N/A
March 1994......................................................   .0580    1-25   .0525     >25     N/A     N/A
April 1994......................................................   .0620    1-25   .0525     >25     N/A     N/A
May 1994........................................................   .0650    1-25   .0525     >25     N/A     N/A
June 1994.......................................................   .0670    1-25   .0525     >25     N/A     N/A
July 1994.......................................................   .0690    1-25   0.525     >25     N/A     N/A
August 1994.....................................................   .0700    1-25   .0525     >25     N/A     N/A
September 1994..................................................   .0690    1-25   .0525     >25     N/A     N/A
October 1994....................................................   .0700    1-25   .0525     >25     N/A     N/A
November 1994...................................................   .0730    1-25   .0525     >25     N/A     N/A
December 1994...................................................   .0750    1-25   .0525     >25     N/A     N/A
January 1995....................................................   .0750    1-20   .0575     >20     N/A     N/A
February 1995...................................................   .0730    1-20   .0575     >20     N/A     N/A
March 1995......................................................   .0730    1-20   .0575     >20     N/A     N/A
April 1995......................................................   .0710    1-20   .0575     >20     N/A     N/A
May 1995........................................................   .0690    1-20   .0575     >20     N/A     N/A
June 1995.......................................................   .0680    1-20   .0575     >20     N/A     N/A
July 1995.......................................................   .0630    1-20   .0575     >20     N/A     N/A
August 1995.....................................................   .0620    1-20   .0575     >20     N/A     N/A
September 1995..................................................   .0640    1-20   .0575     >20     N/A     N/A
October 1995....................................................   .0630    1-20   .0575     >20     N/A     N/A
November 1995...................................................   .0620    1-20   .0575     >20     N/A     N/A
December 1995...................................................   .0600    1-20   .0575     >20     N/A     N/A
January 1996....................................................   .0560    1-20   .0475     >20     N/A     N/A
February 1996...................................................   .0540    1-20   .0475     >20     N/A     N/A
March 1996......................................................   .0550    1-20   .0475     >20     N/A     N/A
April 1996......................................................   .0580    1-20   .0475     >20     N/A     N/A
May 1996........................................................   .0600    1-20   .0475     >20     N/A     N/A
June 1996.......................................................   .0620    1-20   .0475     >20     N/A     N/A
July 1996.......................................................   .0620    1-20   .0475     >20     N/A     N/A
----------------------------------------------------------------------------------------------------------------


[[Page 34070]]



                                        Table II.--[Lump Sum Valuations]                                        
 [In using this table: (1) For benefits for which the participant or beneficiary is entitled to be in pay status
on the valuation date, the immediate annuity rate shall apply; (2) For benefits for which the deferral period is
   y years (where y is an interger and o < y  n<INF>1), interest rate i<INF>1 shall apply from the valuation date for a   
  period of y years; thereafter the immediate annuity rate shall apply; (3) For benefits for which the deferral 
 period is y years (where y is an integer and n<INF>1 < y  n<INF>1 + n<INF>2); interest rate i<INF>2 shall apply from the valuation 
    date for a period of y-n<INF>1 years, interest rate i<INF>1 shall apply for the following n<INF>1 years; thereafter the    
  immediate annuity rate shall apply; (4) For benefits for which the deferral period is y years (where y is an  
  integer and y > n<INF>1 + n<INF>2), interest rate i<INF>3 shall apply from the valuation date for a period of y-n<INF>1-n<INF>2 years; 
   interest rate i<INF>2 shall apply for the following n<INF>2 years; interest rate i<INF>1 shall apply for the following n<INF>1   
                           years; thereafter the immediate annuity rate shall apply.]                           
----------------------------------------------------------------------------------------------------------------
                                         For plans with a                      Deferred annuities (percent)     
                                          valuation date      Immediate  ---------------------------------------
               Rate set               ----------------------   annuity                                          
                                         On or                   rate       i<INF>1      i<INF>2      i<INF>3      n<INF>1      n<INF>2  
                                         after      Before    (percent)                                         
----------------------------------------------------------------------------------------------------------------
1....................................    11-1-93    12-1-93         4.25    4.00    4.00    4.00       7       8
2....................................    12-1-93     1-1-94         4.25    4.00    4.00    4.00       7       8
3....................................     1-1-94     2-1-94         4.50    4.00    4.00    4.00       7       8
4....................................     2-1-94     3-1-94         4.50    4.00    4.00    4.00       7       8
5....................................     3-1-94     4-1-94         4.50    4.00    4.00    4.00       7       8
6....................................     4-1-94     5-1-94         4.75    4.00    4.00    4.00       7       8
7....................................     5-1-94     6-1-94         5.25    4.50    4.00    4.00       7       8
8....................................     6-1-94     7-1-94         5.25    4.50    4.00    4.00       7       8
9....................................     7-1-94     8-1-94         5.50    4.75    4.00    4.00       7       8
10...................................     8-1-94     9-1-94         5.75    5.00    4.00    4.00       7       8
11...................................     9-1-94    10-1-94         5.50    4.75    4.00    4.00       7       8
12...................................    10-1-94    11-1-94         5.50    4.75    4.00    4.00       7       8
13...................................    11-1-94    12-1-94         6.00    5.25    4.00    4.00       7       8
14...................................    12-1-94     1-1-95         6.25    5.50    4.25    4.00       7       8
15...................................     1-1-95     2-1-95         6.00    5.25    4.00    4.00       7       8
16...................................     2-1-95     3-1-95         6.00    5.25    4.00    4.00       7       8
17...................................     3-1-95     4-1-95         6.00    5.25    4.00    4.00       7       8
18...................................     4-1-95     5-1-95         5.75    5.00    4.00    4.00       7       8
19...................................     5-1-95     6-1-95         5.50    4.75    4.00    4.00       7       8
20...................................     6-1-95     7-1-95         5.50    4.75    4.00    4.00       7       8
21...................................     7-1-95     8-1-95         4.75    4.00    4.00    4.00       7       8
22...................................     8-1-95     9-1-95         4.75    4.00    4.00    4.00       7       8
23...................................     9-1-95    10-1-95         5.00    4.25    4.00    4.00       7       8
24...................................    10-1-95    11-1-95         4.75    4.00    4.00    4.00       7       8
25...................................    11-1-95    12-1-95         4.75    4.00    4.00    4.00       7       8
26...................................    12-1-95     1-1-96         4.50    4.00    4.00    4.00       7       8
27...................................     1-1-96     2-1-96         4.50    4.00    4.00    4.00       7       8
28...................................     2-1-96     3-1-96         4.25    4.00    4.00    4.00       7       8
29...................................     3-1-96     4-1-96         4.25    4.00    4.00    4.00       7       8
30...................................     4-1-96     5-1-96         4.75    4.00    4.00    4.00       7       8
31...................................     5-1-96     6-1-96         5.00    4.25    4.00    4.00       7       8
32...................................     6-1-96     7-1-96         5.00    4.25    4.00    4.00       7       8
33...................................     7-1-96     8-1-96         5.00    4.25    4.00    4.00       7       8
----------------------------------------------------------------------------------------------------------------

Appendix C to Part 4044--Loading Assumptions

----------------------------------------------------------------------------------------------------------------
If the total value of the plan's benefit liabilities (as defined in 29 U.S.C.                                   
          Sec.  1301(a)(16)), exclusive of the loading charge, is--                                             
------------------------------------------------------------------------------    The loading charge equals--   
                  greater than                     but less than or equal to                                    
----------------------------------------------------------------------------------------------------------------
$0.............................................                      $200,000  5% of the total value of the     
                                                                                plan's benefits, plus $200 for  
                                                                                each plan participant.          
$200,000.......................................  ............................  $10,000, plus a percentage of the
                                                                                excess of the total value over  
                                                                                $200,000, plus $200 for each    
                                                                                plan participant; the percentage
                                                                                is equal to 1%+[(P%-7.50%)/10], 
                                                                                where P% is the initial rate,   
                                                                                expressed as a percentage, set  
                                                                                forth in Table I of appendix B  
                                                                                for the valuation of annuities. 
----------------------------------------------------------------------------------------------------------------


[[Page 34071]]



Appendix D to Part 4044--Tables Used To Determine Expected 
Retirement Age

                               Table I-96.--Selection of Retirement Rate Category                               
               [For Plans with valuation dates after December 31, 1995, and before January 1, 1997]             
----------------------------------------------------------------------------------------------------------------
                                                                  Participant's retirement rate category is--   
                                                             ---------------------------------------------------
                                                                             Medium \2\ if monthly   High \3\ if
                                                               Low \1\ if      benefit at NRA is       monthly  
              Participant reaches NRA in year--                 monthly   --------------------------  benefit at
                                                               benefit at                               NRA is  
                                                              NRA is less      From          To        greater  
                                                                 than--                                 than--  
----------------------------------------------------------------------------------------------------------------
1997........................................................          400          400        1,684        1,684
1998........................................................          413          413        1,738        1,738
1999........................................................          426          426        1,794        1,794
2000........................................................          440          440        1,850        1,850
2001........................................................          453          453        1,907        1,907
2002........................................................          467          467        1,966        1,966
2003........................................................          482          482        2,027        2,027
2004........................................................          497          497        2,090        2,090
2005........................................................          512          512        2,155        2,155
2006 or later...............................................          528          528        2,221        2,221
----------------------------------------------------------------------------------------------------------------
\1\ Table II-A.                                                                                                 
\2\ Table II-B.                                                                                                 
\3\ Table II-C.                                                                                                 


                    Table II-A.--Expected Retirement Ages for Individuals in the Low Category                   
----------------------------------------------------------------------------------------------------------------
                                                                Normal retirement age                           
 Participant's earliest retirement  ----------------------------------------------------------------------------
       age at valuation date.          60     61     62     63     64     65     66     67     68     69     70 
----------------------------------------------------------------------------------------------------------------
42.................................     53     53     53     54     54     54     54     54     54     54     54
43.................................     53     54     54     54     55     55     55     55     55     55     55
44.................................     54     54     55     55     55     55     55     56     56     56     56
45.................................     54     55     55     56     56     56     56     56     56     56     56
46.................................     55     55     56     56     56     57     57     57     57     57     57
47.................................     56     56     56     57     57     57     57     57     57     57     57
48.................................     56     57     57     57     58     58     58     58     58     58     58
49.................................     56     57     58     58     58     58     59     59     59     59     59
50.................................     57     57     58     58     59     59     59     59     59     59     59
51.................................     57     58     58     59     59     60     60     60     60     60     60
52.................................     58     58     59     59     60     60     60     60     60     60     60
53.................................     58     59     59     60     60     61     61     61     61     61     61
54.................................     58     59     60     60     61     61     61     61     61     61     61
55.................................     59     59     60     61     61     61     62     62     62     62     62
56.................................     59     60     60     61     61     62     62     62     62     62     62
57.................................     59     60     61     61     62     62     62     62     62     62     62
58.................................     59     60     61     61     62     62     63     63     63     63     63
59.................................     59     60     61     62     62     63     63     63     63     63     63
60.................................     60     60     61     62     62     63     63     63     63     63     63
61.................................  .....     61     61     62     63     63     63     63     64     64     64
62.................................  .....  .....     62     62     63     63     63     64     64     64     64
63.................................  .....  .....  .....     63     63     64     64     64     65     65     65
64.................................  .....  .....  .....  .....     64     64     65     65     65     65     65
65.................................  .....  .....  .....  .....  .....     65     65     65     65     65     65
66.................................  .....  .....  .....  .....  .....  .....     66     66     66     66     66
67.................................  .....  .....  .....  .....  .....  .....  .....     67     67     67     67
68.................................  .....  .....  .....  .....  .....  .....  .....  .....     68     68     68
69.................................  .....  .....  .....  .....  .....  .....  .....  .....  .....     69     69
70.................................  .....  .....  .....  .....  .....  .....  .....  .....  .....  .....     70
----------------------------------------------------------------------------------------------------------------


                  Table II-B.--Expected Retirement Ages for Individuals in the Medium Category                  
----------------------------------------------------------------------------------------------------------------
                                                                Normal retirement age                           
 Participant's earliest retirement  ----------------------------------------------------------------------------
       age at valuation date           60     61     62     63     64     65     66     67     68     69     70 
----------------------------------------------------------------------------------------------------------------
42.................................     49     49     49     49     49     49     49     49     49     49     49
43.................................     50     50     50     50     50     50     50     50     50     50     50
44.................................     50     51     51     51     51     51     51     51     51     51     51
45.................................     51     51     52     52     52     52     52     52     52     52     52
46.................................     52     52     52     53     53     53     53     53     53     53     53

[[Page 34072]]

                                                                                                                
47.................................     53     53     53     53     53     54     54     54     54     54     54
48.................................     54     54     54     54     54     54     54     54     54     54     54
49.................................     54     55     55     55     55     55     55     55     55     55     55
50.................................     55     55     56     56     56     56     56     56     56     56     56
51.................................     56     56     56     57     57     57     57     57     57     57     57
52.................................     56     57     57     57     57     58     58     58     58     58     58
53.................................     57     57     58     58     58     58     58     58     58     58     58
54.................................     57     58     58     59     59     59     59     59     59     59     59
55.................................     58     58     59     59     59     60     60     60     60     60     60
56.................................     58     59     59     60     60     60     60     60     60     60     60
57.................................     59     59     60     60     61     61     61     61     61     61     61
58.................................     59     60     60     61     61     61     61     61     61     61     61
59.................................     59     60     61     61     62     62     62     62     62     62     62
60.................................     60     60     61     62     62     62     62     62     62     62     62
61.................................  .....     61     61     62     62     63     63     63     63     63     63
62.................................  .....  .....     62     62     62     63     63     63     63     63     63
63.................................  .....  .....  .....     63     63     64     64     64     64     64     64
64.................................  .....  .....  .....  .....     64     64     64     64     64     64     64
65.................................  .....  .....  .....  .....  .....     65     65     65     65     65     65
66.................................  .....  .....  .....  .....  .....  .....     66     66     66     66     66
67.................................  .....  .....  .....  .....  .....  .....  .....     67     67     67     67
68.................................  .....  .....  .....  .....  .....  .....  .....  .....     68     68     68
69.................................  .....  .....  .....  .....  .....  .....  .....  .....  .....     69     69
70.................................  .....  .....  .....  .....  .....  .....  .....  .....  .....  .....     70
----------------------------------------------------------------------------------------------------------------



                   Table II-C.--Expected Retirement Ages for Individuals in the High Category                   
----------------------------------------------------------------------------------------------------------------
                                                                Normal retirement age                           
 Participant's earliest retirement  ----------------------------------------------------------------------------
       age at valuation date.          60     61     62     63     64     65     66     67     68     69     70 
----------------------------------------------------------------------------------------------------------------
42.................................     46     46     46     46     46     47     47     47     47     47     47
43.................................     47     47     47     47     47     47     47     47     47     47     47
44.................................     48     48     48     48     48     48     48     48     48     48     48
45.................................     49     49     49     49     49     49     49     49     49     49     49
46.................................     50     50     50     50     50     50     50     50     50     50     50
47.................................     51     51     51     51     51     51     51     51     51     51     51
48.................................     52     52     52     52     52     52     52     52     52     52     52
49.................................     53     53     53     53     53     53     53     53     53     53     53
50.................................     54     54     54     54     54     54     54     54     54     54     54
51.................................     54     55     55     55     55     55     55     55     55     55     55
52.................................     55     55     56     56     56     56     56     56     56     56     56
53.................................     56     56     56     57     57     57     57     57     57     57     57
54.................................     57     57     57     57     57     58     58     58     58     58     58
55.................................     57     58     58     58     58     58     58     58     58     58     58
56.................................     58     58     59     59     59     59     59     59     59     59     59
57.................................     58     59     59     60     60     60     60     60     60     60     60
58.................................     59     59     60     60     60     60     61     61     61     61     61
59.................................     59     60     60     61     61     61     61     61     61     61     61
60.................................     60     60     61     61     61     62     62     62     62     62     62
61.................................  .....     61     61     62     62     62     62     62     62     62     62
62.................................  .....  .....     62     62     62     62     62     62     62     62     62
63.................................  .....  .....  .....     63     63     63     64     64     64     64     64
64.................................  .....  .....  .....  .....     64     64     64     64     64     64     64
65.................................  .....  .....  .....  .....  .....     65     65     65     65     65     65
66.................................  .....  .....  .....  .....  .....  .....     66     66     66     66     66
67.................................  .....  .....  .....  .....  .....  .....  .....     67     67     67     67
68.................................  .....  .....  .....  .....  .....  .....  .....  .....     68     68     68
69.................................  .....  .....  .....  .....  .....  .....  .....  .....  .....     69     69
70.................................  .....  .....  .....  .....  .....  .....  .....  .....  .....  .....     70
----------------------------------------------------------------------------------------------------------------


[[Page 34073]]



PART 4047--RESTORATION OF TERMINATING AND TERMINATED PLANS

Sec.
4047.1  Purpose and scope.
4047.2  Definitions.
4047.3  Funding of restored plan.
4047.4  Payment of premiums.
4047.5  Repayment of PBGC payments of guaranteed benefits.

    Authority: 29 U.S.C. 1302(b)(3), 1347.


Sec. 4047.1  Purpose and scope.

    Section 4047 of ERISA gives the PBGC broad authority to take any 
necessary actions in furtherance of a plan restoration order issued 
pursuant to section 4047. This part (along with Treasury regulation 26 
CFR 1.412(c)(1)-3) describes certain legal obligations that arise 
incidental to a plan restoration under section 4047. This part also 
establishes procedures with respect to these obligations that are 
intended to facilitate the orderly transition of a restored plan from 
terminated (or terminating) status to ongoing status, and to help 
ensure that the restored plan will continue to be ongoing consistent 
with the best interests of the plan's participants and beneficiaries 
and the single-employer insurance program. This part applies to 
terminated and terminating single-employer plans (except for plans 
terminated and terminating under ERISA section 4041(b)) with respect to 
which the PBGC has issued or is issuing a plan restoration order 
pursuant to ERISA section 4047.


Sec. 4047.2  Definitions.

     The following terms are defined in Sec. 4001.2 of this chapter: 
controlled group, ERISA, IRS, PBGC, plan, plan administrator, plan 
year, and single-employer plan.


Sec. 4047.3  Funding of restored plan.

    (a) General. Whenever the PBGC issues or has issued a plan 
restoration order under ERISA section 4047, it shall issue to the plan 
sponsor a restoration payment schedule order in accordance with the 
rules of this section. PBGC, through its Executive Director, shall also 
issue a certification to its Board of Directors and the IRS, as 
described in paragraph (c) of this section. If more than one plan is or 
has been restored, the PBGC shall issue a separate restoration payment 
schedule order and separate certification with respect to each restored 
plan.
    (b) Restoration payment schedule order. A restoration payment 
schedule order shall set forth a schedule of payments sufficient to 
amortize the initial restoration amortization base described in 
paragraph (b) of 26 CFR 1.412(c)(1)-3 over a period extending no more 
than 30 years after the initial post-restoration valuation date, as 
defined in paragraph (a)(1) of 26 CFR 1.412(c)(1)-3. The restoration 
payment schedule shall be consistent with the requirements of 26 CFR 
1.412(c)(1)-3 and may require payments at intervals of less than one 
year, as determined by the PBGC. The PBGC may, in its discretion, amend 
the restoration payment schedule at any time, consistent with the 
requirements of 26 CFR 1.412(c)(1)-3.
    (c) Certification. The Executive Director's certification to the 
Board of Directors and the IRS pursuant to paragraph (a) of this 
section shall state that the PBGC has reviewed the funding of the plan, 
the financial condition of the plan sponsor and its controlled group 
members, the payments required under the restoration payment schedule 
(taking into account the availability of deferrals as permitted under 
paragraph (c)(4) of 26 CFR 1.412(c)(1)-3) and any other factor that the 
PBGC deems relevant, and, based on that review, determines that it is 
in the best interests of the plan's participants and beneficiaries and 
the single-employer insurance program that the restored plan not be 
reterminated.
    (d) Periodic PBGC review. As long as a restoration payment schedule 
order issued under this section is in effect, the PBGC shall review 
annually the funding status of the plan with respect to which the order 
applies. As part of this review, the PBGC, through its Executive 
Director, shall issue a certification in the form described in 
paragraph (c) of this section. As a result of its funding review, PBGC 
may amend the restoration payment schedule, consistent with the 
requirements of paragraph (c)(2) of 26 CFR 1.412(c)(1)-3.


Sec. 4047.4  Payment of premiums.

    (a) General. Upon restoration of a plan pursuant to ERISA section 
4047, the obligation to pay PBGC premiums pursuant to ERISA section 
4007 is reinstated as of the date on which the plan was trusteed under 
section 4042 of ERISA. Except as otherwise specifically provided in 
paragraphs (b) and (c) of this section, the amount of the outstanding 
premiums owed shall be computed and paid by the plan administrator in 
accordance with part 4006 of this chapter (Premium Rates) and the forms 
and instructions issued pursuant thereto, as in effect for the plan 
years for which premiums are owed.
    (b) Notification of premiums owed. Whenever the PBGC issues or has 
issued a plan restoration order, it shall send a written notice to the 
plan administrator of the restored plan advising the plan administrator 
of the plan year(s) for which premiums are owed. PBGC will include with 
the notice the necessary premium payment forms and instructions. The 
notice shall prescribe the payment due dates for the outstanding 
premiums.
    (c) Methods for determining variable rate portion of the premium. 
In general, the variable rate portion of the outstanding premiums shall 
be determined in accordance with the premium regulation and forms, as 
provided in paragraph (a) of this section, except that for any plan 
year following a plan year for which Form 5500, Schedule B was not 
filed because the plan was terminated, the alternative calculation 
method in Sec. 4006.4(c) of this chapter may not be used.


Sec. 4047.5  Repayment of PBGC payments of guaranteed benefits.

    (a) General. Upon restoration of a plan pursuant to ERISA section 
4047, amounts paid by the PBGC from its single-employer insurance fund 
(the fund established pursuant to ERISA section 4005(a)) to pay 
guaranteed benefits and related expenses under the plan while it was 
terminated are a debt of the restored plan. The terms and conditions 
for payment of this debt shall be determined by the PBGC.
    (b) Repayment terms. The PBGC shall prescribe reasonable terms and 
conditions for payment of the debt described in paragraph (a) of this 
section, including the number, amount and commencement date of the 
payments. In establishing the terms, PBGC will consider the cash needs 
of the plan, the timing and amount of contributions owed to the plan, 
the liquidity of plan assets, the interests of the single-employer 
insurance program, and any other factors PBGC deems relevant. PBGC may, 
in its discretion, revise any of the payment terms and conditions, upon 
written notice to the plan administrator in accordance with paragraph 
(c) of this section.
    (c) Notification to plan administrator. Whenever the PBGC issues or 
has issued a plan restoration order, it shall send a written notice to 
the plan administrator of the restored plan advising the plan 
administrator of the amount owed the PBGC pursuant to paragraph (a) of 
this section. The notice shall also include the terms and conditions 
for payment of this debt, as established under paragraph (b) of this 
section.

[[Page 34074]]

PART 4050--MISSING PARTICIPANTS

Sec.
4050.1 Purpose and scope.
4050.2 Definitions.
4050.3 Method of distribution for missing participants.
4050.4 Diligent search.
4050.5 Designated benefit.
4050.6 Payment and required documentation.
4050.7 Benefits of missing participants--in general.
4050.8 Automatic lump sum.
4050.9 Annuity or elective lump sum--living missing participant.
4050.10 Annuity or elective lump sum--beneficiary of deceased 
missing participant.
4050.11 Limitations.
4050.12 Special rules.
4050.13 OMB control number.

Appendix A to Part 4050--Examples of Designated Benefit Determinations 
for Missing Participants Under Sec. 4050.5

Appendix B to Part 4050--Examples of Benefit Payments for Missing 
participants Under Secs. 4050.8 Through 4050.10


Sec. 4050.1  Purpose and scope.

    This part prescribes rules for distributing benefits under a 
terminating single-employer plan for any individual whom the plan 
administrator has not located when distributing benefits under 
Sec. 4041.27(c) of this chapter. This part applies to a plan if the 
plan's deemed distribution date (or the date of a payment made in 
accordance with Sec. 4050.12) is in a plan year beginning on or after 
January 1, 1996.


Sec. 4050.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
annuity, benefit liabilities, Code, ERISA, insurer, irrevocable 
commitment, mandatory employee contributions, normal retirement age, 
PBGC, person, plan, plan administrator, plan year and title IV benefit.
    In addition, for purposes of this part:
    Deemed distribution date means the last day of the period in which 
distribution may be made (determined without regard to the provisions 
of this part) under Sec. 4041.27(a) or Sec. 4041.48(a) of this chapter 
(whichever applies) or such earlier date as may be selected by the plan 
administrator of a terminating plan that is on or after the date when 
all benefit distributions have been made under the plan except for 
distributions to--
    (1) Late-discovered participants,
    (2) Missing participants (including recently-missing participants) 
whose designated benefits are paid to the PBGC, and
    (3) Recently-missing participants whose benefits are distributed by 
purchasing an irrevocable commitment from an insurer.
    Designated benefit means the amount payable to the PBGC for a 
missing participant pursuant to Sec. 4050.5.
    Designated benefit interest rate means the rate of interest 
applicable to underpayments of guaranteed benefits by the PBGC under 
Sec. 4022.81(d) of this chapter.
    Guaranteed benefit form means, with respect to a benefit, the form 
in which the PBGC would pay a guaranteed benefit to a participant or 
beneficiary in the PBGC's program for trusteed plans under subparts A 
and B of part 4022 of this chapter (treating the deemed distribution 
date as the termination date for this purpose).
    Late-discovered participant means a participant or beneficiary 
entitled to a distribution under a terminating plan whom the plan 
administrator locates before the plan administrator pays the 
individual's designated benefit to the PBGC (or distributes the 
individual's benefit by purchasing an irrevocable commitment from an 
insurer) and not more than 90 days before the deemed distribution date.
    Missing participant means a participant or beneficiary entitled to 
a distribution under a terminating plan whom the plan administrator has 
not located as of the date when the plan administrator pays the 
individual's designated benefit to the PBGC (or distributes the 
individual's benefit by purchasing an irrevocable commitment from an 
insurer). In the absence of proof of death, individuals not located are 
presumed living.
    Missing participant annuity assumptions means the interest rate 
assumptions and actuarial methods (using the interest rates for annuity 
valuations in Table I of appendix B to part 4044 of this chapter) for 
valuing a benefit to be paid by the PBGC as an annuity under subpart B 
of part 4044, applied--
    (1) As if the deemed distribution date were the termination date;
    (2) Using unisex mortality rates that are a fixed blend of 50 
percent of the male mortality rates and 50 percent of the female 
mortality rates from the 1983 Group Annuity Mortality Table as 
prescribed in Rev. Rul. 95-6, 1995-1 C.B. 80 (Cumulative Bulletins are 
available from the Superintendent of Documents, Government Printing 
Office, Washington, DC 20402);
    (3) Without using the expected retirement age assumptions in 
Secs. 4044.55 through 4044.57 of this chapter;
    (4) Without making the adjustment for expenses provided for in 
Sec. 4044.52(a)(5) of this chapter; and
    (5) By adding $300, as an adjustment (loading) for expenses, for 
each missing participant whose designated benefit without such 
adjustment would be greater than $3,500.
    Missing participant forms and instructions means PBGC Forms 501 and 
602, Schedule MP thereto, and related forms, and their instructions.
    Missing participant lump sum assumptions means the interest rate 
assumptions and actuarial methods (using the interest rates for lump 
sum valuations in Table II of appendix B to part 4044 of this chapter) 
for valuing a benefit to be paid by the PBGC as a lump sum under 
subpart B of part 4044 of this chapter, applied--
    (1) As if the deemed distribution date were the termination date;
    (2) Using mortality assumptions from Table 3 of appendix A to part 
4044 of this chapter; and
    (3) Without using the expected retirement age assumptions in 
Secs. 4044.55 through 4044.57 of this chapter.
    Pay status means, with respect to a benefit under a plan, that the 
plan administrator has made or (except for administrative delay or a 
waiting period) would have made one or more benefit payments.
    Post-distribution certification means the post-distribution 
certification required by Sec. 4041.27(h) or Sec. 4041.48(b) of this 
chapter.
    Recently-missing participant means a participant or beneficiary 
whom the plan administrator discovers to be a missing participant on or 
after the 90th day before the deemed distribution date.
    Unloaded designated benefit means the designated benefit reduced by 
$300; except that the reduction shall not apply in the case of a 
designated benefit determined using the missing participant annuity 
assumptions without adding the $300 load described in paragraph (5) of 
the definition of ``missing participant annuity assumptions.''


Sec. 4050.3  Method of distribution for missing participants.

    The plan administrator of a terminating plan shall distribute 
benefits for each missing participant by--
    (a) purchasing from an insurer an irrevocable commitment that 
satisfies the requirements of Sec. 4041.27(c) or Sec. 4041.48(a)(1) of 
this chapter (whichever is applicable); or
    (b) paying the PBGC a designated benefit in accordance with 
Secs. 4050.4

[[Page 34075]]

through 4050.6 (subject to the special rules in Sec. 4050.12).


Sec. 4050.4  Diligent search.

    (a) Search required. A diligent search shall be made for each 
missing participant whose designated benefit (or voluntary employee 
contributions under Sec. 4050.12(d)(2)) is paid to the PBGC. The search 
shall be made before the payment is made.
    (b) Diligence. A search is a diligent search only if the search--
    (1) Begins not more than 6 months before notices of intent to 
terminate are issued and is carried on in such a manner that if the 
individual is found, distribution to the individual can reasonably be 
expected to be made on or before the deemed distribution date (or, in 
the case of a recently-missing participant, on or before the 90th day 
after the deemed distribution date);
    (2) Includes inquiry of any plan beneficiaries (including alternate 
payees) of the missing participant whose names and addresses are known 
to the plan administrator; and
    (3) Includes use of a commercial locator service to search for the 
missing participant (without charge to the missing participant or 
reduction of the missing participant's plan benefit).


Sec. 4050.5  Designated benefit.

    (a) Amount of designated benefit. The amount of the designated 
benefit shall be the amount determined under paragraph (a)(1), (a)(2), 
(a)(3), or (a)(4) of this section (whichever is applicable) or, if 
less, the maximum amount that could be provided under the plan to the 
missing participant in the form of a single sum in accordance with 
section 415 of the Code.
    (1) Mandatory lump sum. The designated benefit of a missing 
participant required under a plan to receive a mandatory lump sum as of 
the deemed distribution date shall be the lump sum payment that the 
plan administrator would have distributed to the missing participant as 
of the deemed distribution date.
    (2) De minimis lump sum. The designated benefit of a missing 
participant not described in paragraph (a)(1) of this section whose 
benefit is not in pay status as of the deemed distribution date and 
whose benefit has a de minimis actuarial present value ($3,500 or less) 
as of the deemed distribution date under the missing participant lump 
sum assumptions shall be such value.
    (3) No lump sum. The designated benefit of a missing participant 
not described in paragraph (a)(1) or (a)(2) of this section who, as of 
the deemed distribution date, cannot elect an immediate lump sum under 
the plan shall be the actuarial present value of the missing 
participant's benefit as of the deemed distribution date under the 
missing participant annuity assumptions.
    (4) Elective lump sum. The designated benefit of a missing 
participant not described in paragraph (a)(1), (a)(2), or (a)(3) of 
this section shall be the greater of the amounts determined under the 
methodologies of paragraph (a)(1) or (a)(3) of this section.
    (b) Assumptions. When the plan administrator uses the missing 
participant annuity assumptions or the missing participant lump sum 
assumptions for purposes of determining the designated benefit under 
paragraph (a) of this section, the plan administrator shall value the 
most valuable benefit, as determined under paragraph (b)(1) of this 
section, using the assumptions described in paragraph (b)(2) or (b)(3) 
of this section (whichever is applicable).
    (1) Most valuable benefit. For a missing participant whose benefit 
is in pay status as of the deemed distribution date, the most valuable 
benefit is the pay status benefit. For a missing participant whose 
benefit is not in pay status as of the deemed distribution date, the 
most valuable benefit is the benefit payable at the age on or after the 
deemed distribution date (beginning with the participant's earliest 
early retirement age and ending with the participant's normal 
retirement age) for which the present value as of the deemed 
distribution date is the greatest. The present value as of the deemed 
distribution date with respect to any age is determined by multiplying:
    (i) the monthly (or other periodic) benefit payable under the plan; 
by
    (ii) the present value (determined as of the deemed distribution 
date using the missing participant annuity assumptions) of a $1 monthly 
(or other periodic) annuity beginning at the applicable age.
    (2) Participant. A missing participant who is a participant, and 
whose benefit is not in pay status as of the deemed distribution date, 
is assumed to be married to a spouse the same age, and the form of 
benefit that must be valued is the qualified joint and survivor annuity 
benefit that would be payable under the plan. If the participant's 
benefit is in pay status as of the deemed distribution date, the form 
and beneficiary of the participant's benefit are the form of benefit 
and beneficiary of the pay status benefit.
    (3) Beneficiary. A missing participant who is a beneficiary, and 
whose benefit is not in pay status as of the deemed distribution date, 
is assumed not to be married, and the form of benefit that must be 
valued is the survivor benefit that would be payable under the plan. If 
the beneficiary's benefit is in pay status as of the deemed 
distribution date, the form and beneficiary of the beneficiary's 
benefit are the form of benefit and beneficiary of the pay status 
benefit.
    (4) Examples. See Appendix A to this part for examples illustrating 
the provisions of this section.
    (c) Missed payments. In determining the designated benefit, the 
plan administrator shall include the value of any payments that were 
due before the deemed distribution date but that were not made.
    (d) Payment of designated benefits. Payment of designated benefits 
shall be made in accordance with Sec. 4050.6 and shall be deemed made 
on the deemed distribution date.


Sec. 4050.6  Payment and required documentation.

    (a) Time of payment and filing--(1) General rule. The plan 
administrator shall pay designated benefits, and file the information 
and certifications (of the plan administrator and the plan's enrolled 
actuary) specified in the missing participant forms and instructions, 
by the time the post-distribution certification is due (determined in 
accordance with Sec. 4041.9 of this chapter). Except as otherwise 
provided in the missing participant forms and instructions, the plan 
administrator shall submit the designated benefits, information, and 
certifications with the post-distribution certification.
    (2) Recently-missing participants. For a recently-missing 
participant, the plan administrator shall either purchase an 
irrevocable commitment from an insurer not later than 90 days after the 
deemed distribution date or pay a designated benefit to the PBGC by the 
time the amended post-distribution certification is due under paragraph 
(a)(2)(ii) of this section. Except as otherwise provided in the missing 
participant forms and instructions--
    (i) Payment. The plan administrator shall submit the designated 
benefit with the amended post-distribution certification described in 
paragraph (a)(2)(ii) of this section; and
    (ii) Filing. If (in the case of a recently-missing participant for 
whom a designated benefit is to be paid to the PBGC) a diligent search 
has not been completed or (in the case of any other recently-missing 
participant) an irrevocable commitment has not been

[[Page 34076]]

purchased when the plan administrator submits the filing described in 
paragraph (a)(1) of this section, the plan administrator shall so 
indicate in that filing and submit an amended filing (including an 
amended post-distribution certification) within 120 days after the 
deemed distribution date (subject to extension under Sec. 4050.12(h)) 
in accordance with the missing participant forms and instructions.
    (3) Late-discovered participants. When it is impracticable for the 
plan administrator to include complete and accurate final information 
on a late-discovered participant in a timely post-distribution 
certification, the plan administrator shall submit an amended post-
distribution certification within 120 days after the deemed 
distribution date (subject to extension under Sec. 4050.12(h)) in 
accordance with the missing participant forms and instructions.
    (b) Interest on late payments. If the plan administrator does not 
pay a designated benefit by the time specified in paragraph (a) of this 
section, the plan administrator shall pay interest as assessed by the 
PBGC for the period beginning on the deemed distribution date and 
ending on the date when the payment is received by the PBGC. Interest 
will be assessed at the rate provided for late premium payments in 
Sec. 4007.7 of this chapter. Interest assessed under this paragraph 
shall be deemed paid in full if payment of the amount assessed is 
received by the PBGC within 30 days after the date of a PBGC bill for 
such amount.
    (c) Supplemental information. Within 30 days after the date of a 
written request from the PBGC, a plan administrator required to provide 
the information and certifications described in paragraph (a) of this 
section shall file supplemental information, as requested, for the 
purpose of verifying designated benefits, determining benefits to be 
paid by the PBGC under this part, and substantiating diligent searches.
    (1) Information mailed. Supplemental information filed under this 
paragraph (c) is considered filed on the date of the United States 
postmark stamped on the cover in which the information is mailed, if--
    (i) The postmark was made by the United States Postal Service; and
    (ii) The information was mailed postage prepaid, properly addressed 
to the PBGC.
    (2) Information delivered. When the plan administrator sends or 
transmits the information to the PBGC by means other than the United 
States Postal Service, the information is considered filed on the date 
it is received by the PBGC. Information received on a weekend or 
Federal holiday or after 5:00 p.m. on a weekday is considered filed on 
the next regular business day.


Sec. 4050.7  Benefits of missing participants--in general.

    (a) If annuity purchased. If a plan administrator distributes a 
missing participant's benefit by purchasing an irrevocable commitment 
from an insurer, and the missing participant (or his or her beneficiary 
or estate) later contacts the PBGC, the PBGC will inform the person of 
the identity of the insurer and the relevant policy number.
    (b) If designated benefit paid. If the PBGC locates or is contacted 
by a missing participant (or his or her beneficiary or estate) for whom 
a plan administrator paid a designated benefit to the PBGC, the PBGC 
will pay benefits in accordance with Secs. 4050.8 through 4050.10 
(subject to the limitations and special rules in Secs. 4050.11 and 
4050.12).
    (c) Examples. See Appendix B to this part for examples illustrating 
the provisions of Secs. 4050.8 through 4050.10.


Sec. 4050.8  Automatic lump sum.

    This section applies to a missing participant whose designated 
benefit was determined under Sec. 4050.5(a)(1) (mandatory lump sum) or 
Sec. 4050.5(a)(2) (de minimis lump sum).
    (a) General rule--(1) Benefit paid. The PBGC will pay a single sum 
benefit equal to the designated benefit plus interest at the designated 
benefit interest rate from the deemed distribution date to the date on 
which the PBGC pays the benefit.
    (2) Payee. Payment shall be made--
    (i) To the missing participant, if located;
    (ii) If the missing participant died before the deemed distribution 
date, and if the plan so provides, to the missing participant's 
beneficiary or estate; or
    (iii) If the missing participant dies on or after the deemed 
distribution date, to the missing participant's estate.
    (b) De minimis annuity alternative. If the guaranteed benefit form 
for a missing participant whose designated benefit was determined under 
Sec. 4050.5(a)(2) (de minimis lump sum) (or the guaranteed benefit form 
for a beneficiary of such a missing participant) would provide for the 
election of an annuity, the missing participant (or the beneficiary) 
may elect to receive an annuity. If such an election is made--
    (1) The PBGC will pay the benefit in the elected guaranteed benefit 
form, beginning on the annuity starting date elected by the missing 
participant (or the beneficiary), which shall not be before the later 
of the date of the election or the earliest date on which the missing 
participant (or the beneficiary) could have begun receiving benefits 
under the plan; and
    (2) The benefit paid will be actuarially equivalent to the 
designated benefit, i.e., each monthly (or other periodic) benefit 
payment will equal the designated benefit divided by the present value 
(determined as of the deemed distribution date under the missing 
participant lump sum assumptions) of a $1 monthly (or other periodic) 
annuity beginning on the annuity starting date.


Sec. 4050.9  Annuity or elective lump sum--living missing participant.

    This section applies to a missing participant whose designated 
benefit was determined under Sec. 4050.5(a)(3) (no lump sum) or 
Sec. 4050.5(a)(4) (elective lump sum) and who is living on the date as 
of which the PBGC begins paying benefits.
    (a) Missing participant whose benefit was not in pay status as of 
the deemed distribution date. The PBGC will pay the benefit of a 
missing participant whose benefit was not in pay status as of the 
deemed distribution date as follows.
    (1) Time and form of benefit. The PBGC will pay the missing 
participant's benefit in the guaranteed benefit form, beginning on the 
annuity starting date elected by the missing participant (which shall 
not be before the later of the date of the election or the earliest 
date on which the missing participant could have begun receiving 
benefits under the plan).
    (2) Amount of benefit. The PBGC will pay a benefit that is 
actuarially equivalent to the unloaded designated benefit, i.e., each 
monthly (or other periodic) benefit payment will equal the unloaded 
designated benefit divided by the present value (determined as of the 
deemed distribution date under the missing participant annuity 
assumptions) of a $1 monthly (or other periodic) annuity beginning on 
the annuity starting date.
    (b) Missing participant whose benefit was in pay status as of the 
deemed distribution date. The PBGC will pay the benefit of a missing 
participant whose benefit was in pay status as of the deemed 
distribution date as follows.
    (1) Time and form of benefit. The PBGC will pay the benefit in the 
form that was in pay status, beginning when the missing participant is 
located.
    (2) Amount of benefit. The PBGC will pay the monthly (or other 
periodic) amount of the pay status benefit, plus a lump sum equal to 
the payments the missing participant would have

[[Page 34077]]

received under the plan, plus interest on the missed payments (at the 
plan rate up to the deemed distribution date and thereafter at the 
designated benefit interest rate) to the date as of which the PBGC pays 
the lump sum.
    (c) Payment of lump sum. If a missing participant whose designated 
benefit was determined under Sec. 4050.5(a)(4) (elective lump sum) so 
elects, the PBGC will pay his or her benefit in the form of a single 
sum. This election is not effective unless the missing participant's 
spouse consents (if such consent would be required under section 205 of 
ERISA). The single sum equals the designated benefit plus interest (at 
the designated benefit interest rate) from the deemed distribution date 
to the date as of which the PBGC pays the benefit.


Sec. 4050.10  Annuity or elective lump sum--beneficiary of deceased 
missing participant.

    This section applies to a beneficiary of a deceased missing 
participant whose designated benefit was determined under 
Sec. 4050.5(a)(3) (no lump sum) or Sec. 4050.5(a)(4) (elective lump 
sum) and whose benefit is not payable under Sec. 4050.9.
    (a) If deceased missing participant's benefit was not in pay status 
as of the deemed distribution date. The PBGC will pay a benefit with 
respect to a deceased missing participant whose benefit was not in pay 
status as of the deemed distribution date as follows.
    (1) General rule.--(i) Beneficiary. The PBGC will pay a benefit to 
the surviving spouse of a missing participant who was a participant 
(unless the surviving spouse has properly waived a benefit in 
accordance with section 205 of ERISA).
    (ii) Form and amount of benefit. The PBGC will pay the survivor 
benefit in the form of a single life annuity. Each monthly (or other 
periodic) benefit payment will equal 50% of the quotient that results 
when the unloaded designated benefit is divided by the present value 
(determined as of the deemed distribution date under the missing 
participant annuity assumptions, and assuming that the missing 
participant survived to the deemed distribution date) of a $1 monthly 
(or other periodic) joint and 50 percent survivor annuity beginning on 
the annuity starting date, under which reduced payments (at the 50 
percent level) are made only after the death of the missing participant 
during the life of the spouse (and not after the death of the spouse 
during the missing participant's life).
    (iii) Time of benefit. The PBGC will pay the survivor benefit 
beginning at the time elected by the surviving spouse (which shall not 
be before the later of the date of the election or the earliest date on 
which the surviving spouse could have begun receiving benefits under 
the plan).
    (2) If missing participant died before deemed distribution date. 
Notwithstanding the provisions of paragraph (a)(1) of this section, if 
a beneficiary of a missing participant who died before the deemed 
distribution date establishes to the PBGC's satisfaction that he or she 
is the proper beneficiary or would have received benefits under the 
plan in a form, at a time, or in an amount different from the benefit 
paid under paragraph (a)(1)(ii) or (a)(1)(iii) of this section, the 
PBGC will make payments in accordance with the facts so established, 
but only in the guaranteed benefit form.
    (3) Elective lump sum. Notwithstanding the provisions of paragraphs 
(a)(1) and (a)(2) of this section, if the beneficiary of a missing 
participant whose designated benefit was determined under 
Sec. 4050.5(a)(4) (elective lump sum) so elects, the PBGC will pay his 
or her benefit in the form of a single sum. The single sum will be 
equal to the actuarial present value (determined as of the deemed 
distribution date under the missing participant annuity assumptions) of 
the death benefit payable on the annuity starting date, plus interest 
(at the designated benefit interest rate) from the deemed distribution 
date to the date as of which the PBGC pays the benefit.
    (b) If deceased missing participant's benefit was in pay status as 
of the deemed distribution date. The PBGC will pay a benefit with 
respect to a deceased missing participant whose benefit was in pay 
status as of the deemed distribution date as follows.
    (1) Beneficiary. The PBGC will pay a benefit to the beneficiary (if 
any) of the benefit that was in pay status as of the deemed 
distribution date.
    (2) Form and amount of benefit. The PBGC will pay a monthly (or 
other periodic) amount equal to the monthly (or other periodic) amount, 
if any, that the beneficiary would have received under the form of 
payment in effect, plus a lump sum payment equal to the payments the 
beneficiary would have received under the plan subsequent to the 
missing participant's death and prior to the date as of which the 
benefit is paid under paragraph (b)(4) of this section, plus interest 
on the missed payments (at the plan rate up to the deemed distribution 
date and thereafter at the designated benefit interest rate) to the 
date as of which the benefit is paid under paragraph (b)(4) of this 
section.
    (3) Lump sum payment to estate. The PBGC will make a lump sum 
payment to the missing participant's estate equal to the payments that 
the missing participant would have received under the plan for the 
period prior to the missing participant's death, plus interest on the 
missed payments (at the plan rate up to the deemed distribution date 
and thereafter at the designated benefit interest rate) to the date 
when the lump sum is paid. Notwithstanding the preceding sentence, if a 
beneficiary of a missing participant other than the estate establishes 
to the PBGC's satisfaction that the beneficiary is entitled to the lump 
sum payment, the PBGC will pay the lump sum to such beneficiary.
    (4) Time of benefit. The PBGC will pay the survivor benefit 
beginning when the beneficiary is located.
    (5) Spouse deceased. If the PBGC locates the estate of the deceased 
missing participant's spouse under circumstances where a benefit would 
have been paid under this paragraph (b) if the spouse had been located 
while alive, the PBGC shall pay to the spouse's estate a lump sum 
payment computed in the same manner as provided for in paragraph (b)(2) 
of this section based on the period from the missing participant's 
death to the death of the spouse.


Sec. 4050.11  Limitations.

    (a) Exclusive benefit. The benefits provided for under this part 
shall be the only benefits payable by the PBGC to missing participants 
or to beneficiaries based on the benefits of deceased missing 
participants.
    (b) Limitation on benefit value. The total actuarial present value 
of all benefits paid with respect to a missing participant under 
Secs. 4050.8 through 4050.10, determined as of the deemed distribution 
date, shall not exceed the missing participant's designated benefit.
    (c) Guaranteed benefit. If a missing participant or his or her 
beneficiary establishes to the PBGC's satisfaction that the benefit 
under Secs. 4050.8 through 4050.10 (based on the designated benefit 
actually paid to the PBGC) is less than the minimum benefit in this 
paragraph (c), the PBGC shall instead pay the minimum benefit. The 
minimum benefit shall be the lesser of:
    (1) The benefit as determined under the PBGC's rules for paying 
guaranteed benefits in trusteed plans under subparts A and B of part 
4022 of this chapter (treating the deemed distribution date as the 
termination date for this purpose); or

[[Page 34078]]

    (2) The benefit based on the designated benefit that should have 
been paid under Sec. 4050.5.
    (d) Limitation on annuity starting date. A missing participant (or 
his or her survivor) may not elect an annuity starting date after the 
later of--
    (1) the required beginning date under section 401(a)(9) of the 
Code; or
    (2) the date when the missing participant (or the survivor) is 
notified of his or her right to a benefit.


Sec. 4050.12  Special rules.

    (a) Late-discovered participants. The plan administrator of a plan 
that terminates with one or more late-discovered participants shall 
(after issuing notices to each such participant in accordance with 
Secs. 4041.21 and 4041.41 or 4041.46 of this chapter (whichever 
apply)), distribute each such late-discovered participant's benefit 
within the period (determined without regard to the provisions of this 
part) described in Sec. 4041.27(a) or Sec. 4041.48(a) of this chapter 
(whichever applies) if practicable or (if not) as soon thereafter as 
practicable, but not more than 90 days after the deemed distribution 
date (subject to extension under Sec. 4050.12(h)).
    (b) Missing participants located quickly. Notwithstanding the 
provisions of Secs. 4050.8 through 4050.10, if the PBGC or the plan 
administrator locates a missing participant within 30 days after the 
PBGC receives the missing participant's designated benefit, the PBGC 
may in its discretion return the missing participant's designated 
benefit to the plan administrator, and the plan administrator shall 
treat the missing participant like a late-discovered participant.
    (c) Qualified domestic relations orders. Plan administrators and 
the PBGC shall take the provisions of qualified domestic relations 
orders (QDROs) under section 206(d)(3) of ERISA or section 414(p) of 
the Code into account in determining designated benefits and benefit 
payments by the PBGC, including treating an alternate payee under an 
applicable QDRO as a missing participant or as a beneficiary of a 
missing participant, as appropriate, in accordance with the terms of 
the QDRO. For purposes of calculating the amount of the designated 
benefit of an alternate payee, the plan administrator shall use the 
assumptions for a missing participant who is a beneficiary under 
Sec. 4050.5(b).
    (d) Employee contributions--(1) Mandatory employee contributions. 
Notwithstanding the provisions of Sec. 4050.5, if a missing participant 
made mandatory contributions (within the meaning of section 4044(a)(2) 
of ERISA), the missing participant's designated benefit shall not be 
less than the sum of the missing participant's mandatory contributions 
and interest to the deemed distribution date at the plan's rate or the 
rate under section 204(c) of ERISA (whichever produces the greater 
amount).
    (2) Voluntary employee contributions.
    (i) Applicability. This paragraph (d)(2) applies to any employee 
contributions that were not mandatory (within the meaning of section 
4044(a)(2) of ERISA) to which a missing participant is entitled in 
connection with the termination of a defined benefit plan.
    (ii) Payment to PBGC. A plan administrator, in accordance with the 
missing participant forms and instructions, shall pay the employee 
contributions described in paragraph (d)(2)(i) of this section 
(together with any earnings thereon) to the PBGC, and shall file 
Schedule MP with the PBGC, by the time the designated benefit is due 
under Sec. 4050.6. Any such amount shall be in addition to the 
designated benefit and shall be separately identified.
    (iii) Payment by PBGC. In addition to any other amounts paid by the 
PBGC under Secs. 4050.8 through 4050.10, the PBGC shall pay any amount 
paid to it under paragraph (d)(2)(ii) of this section, with interest at 
the designated benefit interest rate from the date of receipt by the 
PBGC to the date of payment by the PBGC, in the same manner as 
described in Sec. 4050.8 (automatic lump sums), except that if the 
missing participant died before the deemed distribution date and there 
is no beneficiary, payment shall be made to the missing participant's 
estate.
    (e) Residual assets. The PBGC shall determine, in a manner 
consistent with the purposes of this part and section 4050 of ERISA, 
how the provisions of this part shall apply to any distribution, to 
participants and beneficiaries who cannot be located, of residual 
assets remaining after the satisfaction of benefit liabilities in 
connection with the termination of a defined benefit plan. Unless the 
PBGC otherwise determines, the deadline for payment of residual assets 
for a missing participant and for submission to the PBGC of a Schedule 
MP (or an amended Schedule MP) is the 30th day after the date on which 
all residual assets have been distributed to all participants and 
beneficiaries other than missing participants for whom payment of 
residual assets is made to the PBGC.
    (f) Sufficient distress terminations. In the case of a plan 
undergoing a distress termination (under section 4041(c) of ERISA) that 
is sufficient for at least all guaranteed benefits and that distributes 
its assets in the manner described in section 4041(b)(3) of ERISA, the 
benefit assumed to be payable by the plan for purposes of determining 
the amount of the designated benefit under Sec. 4050.5 shall be limited 
to the Title IV benefit plus any benefit to which funds under section 
4022(c) of ERISA have been allocated.
    (g) Similar rules for later payments. If the PBGC determines that 
one or more persons should receive benefits (which may be in addition 
to benefits already provided) in order for a plan termination to be 
valid (e.g., upon audit of the termination), and one or more of such 
individuals cannot be located, the PBGC shall determine, in a manner 
consistent with the purposes of this part and section 4050 of ERISA, 
how the provisions of this part shall apply to such benefits.
    (h) Discretionary extensions. The PBGC may in its sole discretion 
extend the 120-day amended filing periods in Sec. 4050.6(a)(2)(ii) and 
(3) and the 90-day distribution periods in Sec. 4050.6(a)(2) and in 
paragraph (a) of this section--
    (1) Where a recently-missing participant becomes a late-discovered 
participant,
    (2) Where the PBGC returns the designated benefit of a missing 
participant who is located quickly to the plan administrator under 
Sec. 4050.12(b), or
    (3) In other unusual circumstances.
    (i) Payments beginning after age 70\1/2\. If the PBGC begins paying 
an annuity under Sec. 4050.9(a) or 4050.10(a) to a participant or a 
participant's spouse after the January 1 following the date when the 
participant attained or would have attained age 70\1/2\, the PBGC shall 
pay to the participant or the spouse (or their respective estates) or 
both, as appropriate, the lump sum equivalent of the past annuity 
payments the participant and spouse would have received if the PBGC had 
begun making payments on such January 1. The PBGC shall also pay lump 
sum equivalents under this paragraph (i) if the PBGC locates the estate 
of the participant or spouse after both are deceased. (Nothing in this 
paragraph (i) shall increase the total value of the benefits payable 
with respect to a missing participant.)


Sec. 4050.13  OMB control number.

    The collection of information requirements contained in this part 
have been approved by the Office of Management under OMB Control Number 
1212-0036.

[[Page 34079]]

Appendix A to part 4050--Examples of Designated Benefit Determinations 
for Missing Participants under Sec. 4050.5

    The calculation of the designated benefit under Sec. 4050.5 is 
illustrated by the following examples.
    Example 1. Plan A provides that any participant whose benefit 
has a value at distribution of $1,750 or less will be paid a lump 
sum, and that no other lump sums will be paid. P, Q, and R are 
missing participants.
    (1) As of the deemed distribution date, the value of P's benefit 
is $1,700 under plan A's assumptions. Under Sec. 4050.5(a)(1), the 
plan administrator pays the PBGC $1,700 as P's designated benefit.
    (2) As of the deemed distribution date, the value of Q's benefit 
is $3,700 under plan A's assumptions and $3,200 under the missing 
participant lump sum assumptions. Under Sec. 4050.5(a)(2), the plan 
administrator pays the PBGC $3,200 as Q's designated benefit.
    (3) As of the deemed distribution date, the value of R's benefit 
is $3,400 under plan A's assumptions, $3,600 under the missing 
participant lump sum assumptions, and $3,450 under the missing 
participant annuity assumptions. Under Sec. 4050.5(a)(3), the plan 
administrator pays the PBGC $3,450 as R's designated benefit.
    Example 2. Plan B provides for a normal retirement age of 65 and 
permits early commencement of benefits at any age between 60 and 65, 
with benefits reduced by 5 percent for each year before age 65 that 
the benefit begins. The qualified joint and 50 percent survivor 
annuity payable under the terms of the plan requires in all cases a 
16 percent reduction in the benefit otherwise payable. The plan does 
not provide for elective lump sums.
    (1) M is a missing participant who separated from service under 
plan B with a deferred vested benefit. M is age 50 at the deemed 
distribution date, and has a normal retirement benefit of $1,000 per 
month payable at age 65 in the form of a single life annuity. M's 
benefit as of the deemed distribution date has a value greater than 
$3,500 using either plan assumptions or the missing participant lump 
sum assumptions. Accordingly, M's designated benefit is to be 
determined under Sec. 4050.5(a)(3).
    (2) For purposes of determining M's designated benefit, M is 
assumed to be married to a spouse who is also age 50 on the deemed 
distribution date. M's monthly benefit in the form of the qualified 
joint and survivor annuity under the plan varies from $840 at age 65 
(the normal retirement age) ($1,000  x  (1 - .16)) to $630 at age 60 
(the earliest retirement age) ($1,000  x  (1 - 5  x  (.05))  x  (1 - 
.16)).
    (3) Under Sec. 4050.5(a)(3), M's benefit is to be valued using 
the missing participant annuity assumptions. The select and ultimate 
interest rates on Plan B's deemed distribution date are 7.50 percent 
for the first 20 years and 5.75 percent thereafter. Using these 
rates and the blended mortality table described in paragraph (2) of 
the definition of ``missing participant annuity assumptions'' in 
Sec. 4050.2, the plan administrator determines that the benefit 
commencing at age 60 is the most valuable benefit (i.e., the benefit 
at age 60 is more valuable than the benefit at ages 61, 62, 63, 64 
or 65). The present value as of the deemed distribution date of each 
dollar of annual benefit (payable monthly as a joint and 50 percent 
survivor annuity) is $5.4307 if the benefit begins at age 60. 
(Because a new spouse may succeed to the survivor benefit, the 
mortality of the spouse during the deferral period is ignored.) 
Thus, without adjustment (loading) for expenses, the value of the 
benefit beginning at age 60 is $41,056 (12  x  $630  x  5.4307). The 
designated benefit is equal to this value plus an expense adjustment 
of $300, or a total of $41,356.

Appendix B to Part 4050--Examples of Benefit Payments for Missing 
Participants Under Secs. 4050.8 Through 4050.10

    The provisions of Secs. 4050.8 through 4050.10 are illustrated 
by the following examples.
    Example 1. Participant M from Plan B (see Example 2 in Appendix 
A of this part) is located. M's spouse is ten years younger than M. 
M elects to receive benefits in the form of a joint and 50 percent 
survivor annuity commencing at age 62.
    (1) M's designated benefit was $41,356. The unloaded designated 
benefit was $41,056. As of Plan B's deemed distribution date (and 
using the missing participant annuity assumptions), the present 
value per dollar of monthly benefit (payable monthly as a joint and 
50 percent survivor annuity commencing at age 62 and reflecting the 
actual age of M's spouse) is $4.7405. Thus, the monthly benefit to M 
at age 62 is $722 ($41,056 / (4.7405  x  12)). M's spouse will 
receive $361 (50 percent of $722) per month for life after the death 
of M.
    (2) If M had instead been found to have died on or after the 
deemed distribution date, and M's spouse wanted benefits to commence 
when M would have attained age 62, the same calculation would be 
performed to arrive at a monthly benefit of $361 to M's spouse.
    Example 2. Participant P is a missing participant from Plan C, a 
plan that allows elective lump sums upon plan termination. Plan C's 
administrator pays a designated benefit of $10,000 to the PBGC on 
behalf of P, who was age 30 on the deemed distribution date.
    (1) P's spouse, S, is located and has a death certificate 
showing that P died on or after the deemed distribution date with S 
as spouse. S is the same age as P, and would like survivor benefits 
to commence immediately, at age 55 (as permitted by the plan). S's 
benefit is the survivor's share of the joint and 50 percent survivor 
annuity which is actuarially equivalent, as of the deemed 
distribution date, to $9,700 (the unloaded designated benefit).
    (2) The select and ultimate interest rates on Plan C's deemed 
distribution date were 7.50 percent for the first 20 years and 5.75 
percent thereafter. Using these rates and the blended mortality 
table described in paragraph (2) of the definition of ``missing 
participant annuity assumptions'' in Sec. 4050.2, the present value 
as of the deemed distribution date of each dollar of annual benefit 
(payable monthly as a joint and 50 percent survivor annuity) is 
$2.4048 if the benefit begins when S and P would have been age 55. 
Thus, the monthly benefit to S commencing at age 55 is $168 (50 
percent of $9,700 / (2.4048  x  12)). Since P could have elected a 
lump sum upon plan termination, S may elect a lump sum. S's lump sum 
is the present value as of the deemed distribution date (using the 
missing participant annuity assumptions) of the monthly benefit of 
$168, accumulated with interest at the designated benefit interest 
rate to the date paid.

PART 4061--AMOUNTS PAYABLE BY THE PENSION BENEFIT GUARANTY 
CORPORATION


Sec. 4061.1  Cross-references.

    See part 4022 of this chapter regarding benefits payable under 
terminated single-employer plans and Sec. 4281.47 of this chapter 
regarding financial assistance to pay benefits under insolvent 
multiemployer plans.

PART 4062--LIABILITY FOR TERMINATION OF SINGLE-EMPLOYER PLANS

Sec.
4062.1  Purpose and scope.
4062.2  Definitions.
4062.3  Amount and payment of section 4062(b) liability.
4062.4  Determinations of net worth and collective net worth.
4062.5  Net worth record date.
4062.6  Net worth notification and information.
4062.7  Calculating interest on liability and refunds of 
overpayments.
4062.8  Arrangements for satisfying liability.
4062.9  Filing of documents.
4062.10  Computation of time.

    Authority: 29 U.S.C. 1302(b)(3), 1362-1364, 1367, 1368.


Sec. 4062.1  Purpose and scope.

    The purpose of this part is to set forth rules for determination 
and payment of the liability incurred, under section 4062(b) of ERISA, 
upon termination of any single-employer plan and, to the extent 
appropriate, determination of the liability incurred with respect to 
multiple employer plans under sections 4063 and 4064 of ERISA. The 
provisions of this part regarding the amount of liability to the PBGC 
that is incurred upon termination of a single-employer plan apply with 
respect to a plan for which a notice of intent to terminate under 
section 4041(c) of ERISA is issued or proceedings to terminate under 
section 4042 of ERISA are instituted after December 17, 1987. Those 
provisions also apply, to the extent described in paragraph (a) of this 
section, to the amount of liability for withdrawal from a multiple 
employer plan after that date.

[[Page 34080]]

Sec. 4062.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
benefit liabilities, Code, contributing sponsor, controlled group, 
ERISA, fair market value, guaranteed benefit, multiple employer plan, 
notice of intent to terminate, PBGC, person, plan, plan administrator, 
proposed termination date, single-employer plan, and termination date.
    In addition, for purposes of this part, the term collective net 
worth of persons subject to liability in connection with a plan 
termination means the sum of the individual net worths of all persons 
that have individual net worths which are greater than zero and that 
(as of the termination date) are contributing sponsors of the 
terminated plan or members of their controlled groups, as determined in 
accordance with section 4062(d)(1) of ERISA and Sec. 4062.4 of this 
part.


Sec. 4062.3  Amount and payment of section 4062(b) liability.

    (a) Amount of liability.--(1) General rule. Except as provided in 
paragraph (a)(2) of this section, the amount of section 4062(b) 
liability is the total amount (as of the termination date) of the 
unfunded benefit liabilities (within the meaning of section 4001(a)(18) 
of ERISA) to all participants and beneficiaries under the plan, 
together with interest calculated from the termination date in 
accordance with Sec. 4062.7.
    (2) Special rule in case of subsequent finding of inability to pay 
guaranteed benefits. In any distress termination proceeding under 
section 4041(c) of ERISA and part 4041 of this chapter in which (as 
described in section 4041(c)(3)(C)(ii) of ERISA), after a determination 
that the plan is sufficient for benefit liabilities or for guaranteed 
benefits, the plan administrator finds that the plan is or will be 
insufficient for guaranteed benefits and the PBGC concurs with that 
finding, or the PBGC makes such a finding on its own initiative, 
actuarial present values shall be determined as of the date of the 
notice to, or the finding by, the PBGC of insufficiency for guaranteed 
benefits.
    (b) Payment of liability. Section 4062(b) liability is due and 
payable as of the termination date, in cash or securities acceptable to 
the PBGC, except that, as provided in Sec. 4062.8(c), the PBGC shall 
prescribe commercially reasonable terms for payment of so much of such 
liability as exceeds 30 percent of the collective net worth of persons 
subject to liability in connection with a plan termination. The PBGC 
may make alternative arrangements, as provided in Sec. 4062.8(b).


Sec. 4062.4  Determinations of net worth and collective net worth.

    (a) General rules. When a contributing sponsor, or member(s) of a 
contributing sponsor's controlled group, notifies and submits 
information to the PBGC in accordance with Sec. 4062.6, the PBGC shall 
determine the net worth, as of the net worth record date, of that 
contributing sponsor and any members of its controlled group based on 
the factors set forth in paragraph (c) of this section and shall 
include the value of any assets that it determines, pursuant to 
paragraph (d) of this section, have been improperly transferred. In 
making such determinations, the PBGC will consider information 
submitted pursuant to Sec. 4062.6. The PBGC shall then determine the 
collective net worth of persons subject to liability in connection with 
a plan termination.
    (b) Partnerships and sole proprietorships. In the case of a person 
that is a partnership or a sole proprietorship, net worth does not 
include the personal assets and liabilities of the partners or sole 
proprietor, except for the assets included pursuant to paragraph (d) of 
this section. As used in this paragraph, ``personal assets'' are those 
assets which do not produce income for the business being valued or are 
not used in the business.
    (c) Factors for determining net worth. A person's net worth is 
equal to its fair market value and fair market value shall be 
determined on the basis of the factors set forth below, to the extent 
relevant; different factors may be considered with respect to different 
portions of the person's operations.
    (1) A bona fide sale of, agreement to sell, or offer to purchase or 
sell the business of the person made on or about the net worth record 
date.
    (2) A bona fide sale of, agreement to sell, or offer to purchase or 
sell stock or a partnership interest in the person, made on or about 
the net worth record date.
    (3) If stock in the person is publicly traded, the price of such 
stock on or about the net worth record date.
    (4) The price/earnings ratios and prices of stocks of similar 
trades or businesses on or about the net worth record date.
    (5) The person's economic outlook, as reflected by its earnings and 
dividend projections, current financial condition, and business 
history.
    (6) The economic outlook for the person's industry and the market 
it serves.
    (7) The appraised value, including the liquidating value, of the 
person's tangible and intangible assets.
    (8) The value of the equity assumed in a plan of reorganization of 
a person in a case under title 11, United States Code, or any similar 
law of a state or political subdivision thereof.
    (9) Any other factor relevant in determining the person's net 
worth.
    (d) Improper transfers. A person's net worth shall include the 
value of any assets transferred by the person which the PBGC determines 
were improperly transferred for the purpose, as inferred from all the 
facts and circumstances, and with the effect of avoiding liability 
under this part. Assets ``improperly transferred'' include but are not 
limited to assets sold, leased or otherwise transferred for less than 
adequate consideration and assets distributed as gifts, capital 
distributions and stock redemptions inconsistent with past practices of 
the employer. The word ``transfer'' includes but is not limited to 
sales, assignments, pledges, leases, gifts and dividends.


Sec. 4062.5  Net worth record date.

    (a) General. Unless the PBGC establishes an earlier net worth 
record date pursuant to paragraph (b) of this section, the net worth 
record date, for all purposes under this part, is the plan's 
termination date.
    (b) Establishment of an earlier net worth record date. At any time 
during a termination proceeding, the PBGC, in order to prevent undue 
loss to or abuse of the plan termination insurance system, may 
establish as the net worth record date an earlier date during the 120-
day period ending with the termination date.
    (c) Notification. Whenever the PBGC establishes an earlier net 
worth record date, it shall immediately give liable person(s) written 
notification of that fact. The written notice may also include a 
request for additional information, as provided in Sec. 4062.6(a)(3).


Sec. 4062.6  Net worth notification and information.

    (a) General. (1) A contributing sponsor or member of the 
contributing sponsor's controlled group that believes section 4062(b) 
liability exceeds 30 percent of the collective net worth of persons 
subject to liability in connection with a plan termination shall--
    (i) So notify the PBGC by the 90th day after the notice of intent 
to terminate is filed with the PBGC or, if no notice of intent to 
terminate is filed with the PBGC and the PBGC institutes

[[Page 34081]]

proceedings under section 4042 of ERISA, within 30 days after the 
establishment of the plan's termination date in such proceedings; and
    (ii) Submit to the PBGC the information specified in paragraph (b) 
of this section with respect to the contributing sponsor and each 
member of the contributing sponsor's controlled group (if any)--
    (A) By the 120th day after the proposed termination date, or
    (B) If no notice of intent to terminate is filed with the PBGC and 
the PBGC institutes proceedings under section 4042 of ERISA, within 120 
days after the establishment of the plan's termination date in such 
proceedings.
    (2) If a contributing sponsor or a member of its controlled group 
complies with the requirements of paragraph (a)(1) of this section, the 
PBGC will consider the requirements to be satisfied by all members of 
that controlled group.
    (3) The PBGC may require any person subject to liability--
    (i) To submit the information specified in paragraph (b) of this 
section within a shorter period whenever the PBGC believes that its 
ability to obtain information or payment of liability is in jeopardy, 
and
    (ii) To submit additional information within 30 days, or a 
different specified time, after the PBGC's written notification that it 
needs such information to make net worth determinations.
    (4) If a provision of paragraph (b) of this section or a PBGC 
notice specifies information previously submitted to the PBGC, a person 
may respond by identifying the previous submission in which the 
response was provided.
    (b) Net worth information. The following information specifications 
apply, individually, with respect to each person subject to liability:
    (1) An estimate, made in accordance with Sec. 4062.4, of the 
person's net worth on the net worth record date and a statement, with 
supporting evidence, of the basis for the estimate.
    (2) A copy of the person's audited (or if not available, unaudited) 
financial statements for the 5 full fiscal years plus any partial 
fiscal year preceding the net worth record date. The statements must 
include balance sheets, income statements, and statements of changes in 
financial position and must be accompanied by the annual reports, if 
available.
    (3) A statement of all sales and copies of all offers or agreements 
to buy or sell at least 25 percent of the person's assets or at least 5 
percent of the person's stock or partnership interest, made on or about 
the net worth record date.
    (4) A statement of the person's current financial condition and 
business history.
    (5) A statement of the person's business plans, including projected 
earnings and, if available, dividend projections.
    (6) Any appraisal of the person's fixed and intangible assets made 
on or about the net worth record date.
    (7) A copy of any plan of reorganization, whether or not confirmed, 
with respect to a case under title 11, United States Code, or any 
similar law of a state or political subdivision thereof, involving the 
person and occurring within 5 calendar years prior to or any time after 
the net worth record date.
    (c) Incomplete submission. If a contributing sponsor and/or members 
of the contributing sponsor's controlled group do not submit all of the 
information required pursuant to paragraph (a) of this section (other 
than the estimate described in paragraph (b)(1) of this section) with 
respect to each person subject to liability, the PBGC may base 
determinations of net worth and the collective net worth of persons 
subject to liability in connection with a plan termination on any such 
information that such person(s) did submit, as well as any other 
pertinent information that the PBGC may have. In general, the PBGC will 
view information as of a date further removed from the net worth record 
date as having less probative value than information as of a date 
nearer to the net worth record date.


Sec. 4062.7  Calculating interest on liability and refunds of 
overpayments.

    (a) Interest. Whether or not the PBGC has granted deferred payment 
terms pursuant to Sec. 4062.8, the amount of liability under this part 
includes interest, from the termination date, on any unpaid portion of 
the liability. Such interest accrues at the rate set forth in paragraph 
(c) of this section until the liability is paid in full and is 
compounded daily. When liability under this part is paid in more than 
one payment, the PBGC will apply each payment to the satisfaction of 
accrued interest and then to the reduction of principal.
    (b) Refunds. If a contributing sponsor or member(s) of a 
contributing sponsor's controlled group pays the PBGC an amount that 
exceeds the full amount of liability under this part, the PBGC shall 
refund the excess amount, with interest at the rate set forth in 
paragraph (c) of this section. Interest on an overpayment accrues from 
the later of the date of the overpayment or 10 days prior to the 
termination date until the date of the refund and is compounded daily.
    (c) Interest rate. The interest rate on liability under this part 
and refunds thereof is the annual rate prescribed in section 6601(a) of 
the Code, and will change whenever the interest rate under section 
6601(a) of the Code changes.


Sec. 4062.8  Arrangements for satisfying liability.

    (a) General. The PBGC will defer payment, or agree to other 
arrangements for the satisfaction, of any portion of liability to the 
PBGC only when--
    (1) As provided in paragraph (b) of this section, the PBGC 
determines that such action is necessary to avoid the imposition of a 
severe hardship and that there is a reasonable possibility that the 
terms so prescribed will be met and the entire liability paid; or
    (2) As provided in paragraph (c) of this section, the PBGC 
determines that section 4062(b) liability exceeds 30 percent of the 
collective net worth of persons subject to liability in connection with 
a plan termination.
    (b) Upon request. If the PBGC determines that such action is 
necessary to avoid the imposition of a severe hardship on persons that 
are or may become liable under section 4062, 4063, or 4064 of ERISA and 
that there is a reasonable possibility that persons so liable will be 
able to meet the terms prescribed and pay the entire liability, the 
PBGC, in its discretion and when so requested in accordance with 
paragraph (b)(2) of this section, may grant deferred payment or other 
terms for the satisfaction of such liability.
    (1) In determining what, if any, terms to grant, the PBGC shall 
examine the following factors:
    (i) The ratio of the liability to the net worth of the person 
making the request and (if different) to the collective net worth of 
persons subject to liability in connection with a plan termination.
    (ii) The overall financial condition of persons that are or may 
become liable, including, with respect to each such person--
    (A) The amounts and terms of existing debts;
    (B) The amount and availability of liquid assets;
    (C) Current and past cash flow; and
    (D) Projected cash flow, including a projection of the impact on 
operations that would be caused by the immediate full payment of the 
liability.
    (iii) The availability of credit from private sector sources to the 
person making the request and to other liable persons.
    (2) A contributing sponsor or member of a contributing sponsor's 
controlled

[[Page 34082]]

group may request deferred payment or other terms for the satisfaction 
of any portion of the liability under section 4062, 4063, or 4064 of 
ERISA at any time by filing a written request. The request must include 
the information specified in Sec. 4062.6(b), except that--
    (i) If the request is filed one year or more after the net worth 
record date, references to ``the net worth record date'' in 
Sec. 4062.6(b) shall be replaced by ``the most recent annual 
anniversary of the net worth record date''; and
    (ii) Information that already has been submitted to the PBGC need 
not be submitted again.
    (c) Liability exceeding 30 percent of collective net worth. If the 
PBGC determines that section 4062(b) liability exceeds 30 percent of 
the collective net worth of persons subject to the liability, the PBGC 
will, after making a reasonable effort to reach agreement with such 
persons, prescribe commercially reasonable terms for payment of so much 
of the liability as exceeds 30 percent of the collective net worth of 
such persons. The terms prescribed by the PBGC for payment of that 
portion of the liability (including interest) will provide for deferral 
of 50 percent of any amount otherwise payable for any year if a person 
subject to such liability demonstrates to the satisfaction of the PBGC 
that no person subject to such liability has any individual pre-tax 
profits (within the meaning of section 4062(d)(2) of ERISA) for such 
person's last full fiscal year ending during that year.
    (d) Interest. Interest on unpaid liability is calculated in 
accordance with Sec. 4062.7(a).
    (e) Security during period of deferred payment. As a condition to 
the granting of deferred payment terms, PBGC may, in its discretion, 
require that the liable person(s) provide PBGC with such security for 
its obligations as the PBGC deems adequate.


Sec. 4062.9  Filing of documents.

    (a) Date of filing. Any document (including information) required 
or permitted to be filed under this part is considered filed on the 
date of the United States postmark stamped on the cover in which the 
document is mailed, provided that--
    (1) The postmark was made by the United States Postal Service; and
    (2) The document was mailed postage prepaid, properly packaged and 
addressed to the PBGC. If the conditions stated in both paragraphs 
(a)(1) and (a)(2) of this section are not met, the document is 
considered filed on the date it is received by the PBGC. Documents 
received after regular business hours are considered filed on the next 
regular business day.
    (b) Where to file. Payments of liability shall be clearly 
designated as such and include the name of the plan. Such payments 
shall be sent to the address specified in the notification or demand 
for liability issued by the PBGC under Sec. 4068.3 or, if not so 
specified, to the address provided, upon request, by the Investment 
Management Division, Pension Benefit Guaranty Corporation, 1200 K 
Street, NW., Washington, DC 20005-4026. Any document (including 
information) required or permitted to be filed under this part, except 
for documents relating to appeals, shall be submitted to the Insurance 
Operations Department, Pension Benefit Guaranty Corporation, at the 
above address. Any document submitted pursuant to part 4003 in 
connection with an appeal of an initial determination shall be 
submitted to the Appeals Board, Pension Benefit Guaranty Corporation, 
at the above address.


Sec. 4062.10  Computation of time.

    In computing any period of time prescribed or allowed by this 
subpart, the day of the act, event, or default from which the 
designated period of time begins to run is not counted. The last day of 
the period so computed shall be included, unless it is a Saturday, 
Sunday, or Federal holiday, in which event the period runs until the 
end of the next day which is not a Saturday, Sunday, or a Federal 
holiday. For the purpose of computing interest accrued, a Saturday, 
Sunday or Federal holiday referred to in the previous sentence shall be 
included.

(Approved by the Office of Management and Budget under control 
number 1212-0017.)

PART 4063--WITHDRAWAL LIABILITY; PLANS UNDER MULTIPLE CONTROLLED 
GROUPS

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


Sec. 4063.1  Cross-references.

    (a) Part 4062, subpart A, of this chapter sets forth rules for 
determination and payment of the liability incurred, under section 
4062(b) of ERISA, upon termination of any single-employer plan and, to 
the extent appropriate, determination of the liability incurred with 
respect to multiple employer plans under sections 4063 and 4064 of 
ERISA.
    (b) Part 4068 of this chapter includes rules regarding the PBGC's 
lien under section 4068 of ERISA with respect to liability arising 
under section 4062, 4063, or 4064.

PART 4064--LIABILITY ON TERMINATION OF SINGLE-EMPLOYER PLANS UNDER 
MULTIPLE CONTROLLED GROUPS

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


Sec. 4064.1  Cross-references.

    (a) Part 4062, subpart A, of this chapter sets forth rules for 
determination and payment of the liability incurred under section 
4062(b) of ERISA, upon termination of any single-employer plan and, to 
the extent appropriate, determination of the liability incurred with 
respect to multiple employer plans under sections 4063 and 4064 of 
ERISA.
    (b) Part 4068 of this chapter includes rules regarding the PBGC's 
lien under section 4068 of ERISA with respect to liability arising 
under section 4062, 4063, or 4064.

PART 4065--ANNUAL REPORT

Sec.
4065.1  Purpose and scope.
4065.2  Definitions.
4065.3  Filing requirement.

    Authority: 29 U.S.C. 1302, 1365.


Sec. 4065.1  Purpose and scope.

    The purpose of this part is to specify the form and content of the 
Annual Report required by section 4065 of ERISA. This part applies to 
all plans covered by title IV of ERISA.


Sec. 4065.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
ERISA, IRS, PBGC, and plan.


Sec. 4065.3  Filing requirement.

    Plan administrators shall file the Annual Report on IRS/DOL/PBGC 
Forms 5500, 5500-C, 5500-K or 5500-R, as appropriate, in accordance 
with the instructions therein. (Approved by the Office of Management 
and Budget under control number 1212-0026.)

PART 4067--RECOVERY OF LIABILITY FOR PLAN TERMINATIONS


Sec. 4067.1  Cross-reference.

    Section 4062.8 of this chapter contains rules on deferred payment 
and other arrangements for satisfaction of liability to the PBGC after 
termination of single-employer plans.

PART 4068--LIEN FOR LIABILITY

Sec.
4068.1  Purpose; cross-references.
4068.2  Definitions.
4068.3  Notification of and demand for liability.
4068.4  Lien.


[[Page 34083]]


    Authority: 29 U.S.C. 1302(b)(3), 1362-1364, 1367-1368.


Sec. 4068.1  Purpose; cross-references.

    This part contains rules regarding the PBGC's lien under section 
4068 of ERISA with respect to liability arising under section 4062, 
4063, or 4064 of ERISA.


Sec. 4068.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
ERISA, PBGC, person, plan, and termination date.
    Collective net worth of persons subject to liability in connection 
with a plan termination has the meaning in Sec. 4062.2.


Sec. 4068.3  Notification of and demand for liability.

    (a) Notification of liability. Except as provided in paragraph (c) 
of this section, when the PBGC has determined the amount of the 
liability under part 4062 and whether or not the liability has already 
been paid, the PBGC shall notify liable person(s) in writing of the 
amount of the liability. If the full liability has not yet been paid, 
the notification will include a request for payment of the full 
liability and will indicate that, as provided in Sec. 4062.8, the PBGC 
will prescribe commercially reasonable terms for payment of so much of 
the liability as it determines exceeds 30 percent of the collective net 
worth of persons subject to liability in connection with a plan 
termination. In all cases, the notification will include a statement of 
the right to appeal the assessment of liability pursuant to part 4003.
    (b) Demand for liability. Except as provided in paragraph (c) of 
this section, if person(s) liable to the PBGC fail to pay the full 
liability and no appeal is filed or an appeal is filed and the decision 
on appeal finds liability, the PBGC will issue a demand letter for the 
liability--
    (1) If no appeal is filed, upon the expiration of time to file an 
appeal under part 4003; or
    (2) If an appeal is filed, upon issuance of a decision on the 
appeal finding that there is liability under this part.
    The demand letter will indicate that, as provided in Sec. 4062.8, 
the PBGC will prescribe commercially reasonable terms for payment of so 
much of the liability as it determines exceeds 30 percent of the 
collective net worth of such persons.
    (c) Special rule. Notwithstanding paragraphs (a) and (b) of this 
section, the PBGC may, in any case in which it believes that its 
ability to assert or obtain payment of liability is in jeopardy, issue 
a demand letter for the liability under this part immediately upon 
determining the liability, without first issuing a notification of 
liability pursuant to paragraph (a) of this section. When the PBGC 
issues a demand letter under this paragraph, there is no right to an 
appeal pursuant to part 4003 of this chapter.


Sec. 4068.4  Lien.

    If any person liable to the PBGC under section 4062, 4063, or 4064 
of ERISA fails or refuses to pay the full amount of such liability 
within the time specified in the demand letter issued under 
Sec. 4068.3, the PBGC shall have a lien in the amount of the liability, 
including interest, arising as of the plan's termination date, upon all 
property and rights to property, whether real or personal, belonging to 
that person, except that such lien may not be in an amount in excess of 
30 percent of the collective net worth of all persons described in 
section 4062(a) of ERISA and part 4062 of this chapter.

PART 4203--EXTENSION OF SPECIAL WITHDRAWAL LIABILITY RULES

Sec.
4203.1  Purpose and scope.
4203.2  Definitions.
4203.3  Plan adoption of special withdrawal rules.
4203.4  Requests for PBGC approval of plan amendments.
4203.5  PBGC action on requests.
4203.6  OMB control number.

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


Sec. 4203.1  Purpose and scope.

    (a) Purpose. The purpose of this part is to prescribe procedures 
whereby a multiemployer plan may, pursuant to sections 4203(f) and 
4208(e)(3) of ERISA, request the PBGC to approve a plan amendment which 
establishes special complete or partial withdrawal liability rules.
    (b) Scope. This part applies to a multiemployer pension plan 
covered by Title IV of ERISA.


Sec. 4203.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
complete withdrawal, employer, ERISA, multiemployer plan, PBGC, person, 
plan, plan sponsor, and plan year.


Sec. 4203.3  Plan adoption of special withdrawal rules.

    (a) General rule. A plan may, subject to the approval of the PBGC, 
establish by plan amendment special complete or partial withdrawal 
liability rules. A complete withdrawal liability rule adopted pursuant 
to this part shall be similar to the rules for the construction and 
entertainment industries described in section 4203 (b) and (c) of 
ERISA. A partial withdrawal liability rule adopted pursuant to this 
part shall be consistent with the complete withdrawal rule adopted by 
the plan. A plan amendment adopted under this part may not be put into 
effect until it is approved by the PBGC.
    (b) Discretionary provisions of the plan amendment. A plan 
amendment adopted pursuant to this part may--
    (1) Cover an entire industry or industries, or be limited to a 
segment of an industry; and
    (2) Apply to cessations of the obligation to contribute that 
occurred prior to the adoption of the amendment.


Sec. 4203.4  Requests for PBGC approval of plan amendments.

    (a) Filing of request. A plan shall apply to the PBGC for approval 
of a plan amendment which establishes special complete or partial 
withdrawal liability rules. The request for approval shall be filed 
after the amendment is adopted. PBGC approval shall also be required 
for any subsequent modification of the plan amendment, other than a 
repeal of the amendment which results in employers being subject to the 
general statutory rules on withdrawal.
    (b) Who may request. The plan sponsor, or a duly authorized 
representative acting on behalf of the plan sponsor, shall sign and 
submit the request.
    (c) Where to file. The request shall be delivered by mail or 
submitted by hand to Reports Processing, Insurance Operations 
Department, Pension Benefit Guaranty Corporation, 1200 K Street NW., 
Washington, DC 20005-4026.
    (d) Information. Each request shall contain the following 
information:
    (1) The name and address of the plan for which the plan amendment 
is being submitted, and the telephone number of the plan sponsor or its 
authorized representative.
    (2) A copy of the executed amendment, including the proposed 
effective date.
    (3) A statement certifying that notice of the adoption of the 
amendment and the request for approval filed under this part has been 
given to all employers who have an obligation to contribute under the 
plan and to all employee organizations representing employees covered 
under the plan.
    (4) A statement indicating how the withdrawal rules in the plan 
amendment would operate in the event of a sale of assets by a 
contributing employer or the cessation of the obligation to contribute 
or the cessation of covered operations by all employers.
    (5) A copy of the plan's most recent actuarial valuation.

[[Page 34084]]

    (6) For each of the previous five plan years, information on the 
number of plan participants by category (active, retired and separate 
vested) and a complete financial statement. This requirement may be 
satisfied by the submission for each of those years of Form 5500, 
including schedule B, or similar reports required under prior law.
    (7) A detailed description of the industry to which the plan 
amendment will apply, including information sufficient to demonstrate 
the effect of withdrawals on the plan's contribution base, and 
information establishing industry characteristics which would indicate 
that withdrawals in the industry do not typically have an adverse 
effect on the plan's contribution base. Such industry characteristics 
include the mobility of employees, the intermittent nature of 
employment, the project-by-project nature of the work, extreme 
fluctuations in the level of an employer's covered work under the plan, 
the existence of a consistent pattern of entry and withdrawal by 
employers, and the local nature of the work performed.
    (e) Supplemental information. In addition to the information 
described in paragraph (d) of this section, a plan may submit any other 
information it believes is pertinent to its request. The PBGC may 
require the plan sponsor to submit any other information the PBGC 
determines it needs to review a request under this part.


Sec. 4203.5  PBGC action on requests.

    (a) General. The PBGC shall approve a plan amendment providing for 
the application of special complete or partial withdrawal liability 
rules upon a determination by the PBGC that the plan amendment--
    (1) Will apply only to an industry that has characteristics that 
would make use of the special withdrawal rules appropriate; and
    (2) Will not pose a significant risk to the insurance system.
    (b) Notice of pendency of request. As soon as practicable after 
receiving a request for approval of a plan amendment containing all the 
information required under Sec. 4203.4, the PBGC shall publish a notice 
of the pendency of the request in the Federal Register. The notice 
shall contain a summary of the request and invite interested persons to 
submit written comments to the PBGC concerning the request. The notice 
will normally provide for a comment period of 45 days.
    (c) PBGC decision on request. After the close of the comment 
period, PBGC shall issue its decision in writing on the request for 
approval of a plan amendment. Notice of the decision shall be published 
in the Federal Register.


Sec. 4203.6  OMB control number.

    The collections of information contained in this part have been 
approved by the Office of Management and Budget under OMB control 
number 1212-0050.

PART 4204--VARIANCES FOR SALE OF ASSETS

Subpart A--General

Sec.
4204.1  Purpose and scope.
4204.2  Definitions.

Subpart B--Variance of the Statutory Requirements

4204.11  Variance of the bond/escrow and sale-contract requirements.
4204.12  De minimis transactions.
4204.13  Net income and net tangible assets tests.

Subpart C--Procedures for Individual and Class Variances or Exemptions

4204.21  Requests to PBGC for variances and exemptions.
4204.22  PBGC action on requests.

    Authority: 29 U.S.C. 1302(b)(3), 1384(c).

Subpart A--General


Sec. 4204.1  Purpose and scope.

    (a) Purpose. Under section 4204 of ERISA, an employer that ceases 
covered operations under a multiemployer plan, or ceases to have an 
obligation to contribute for such operations, because of a bona fide, 
arm's-length sale of assets to an unrelated purchaser does not incur 
withdrawal liability if certain conditions are met. One condition is 
that the sale contract provide that the seller will be secondarily 
liable if the purchaser withdraws from the plan within five years and 
does not pay its withdrawal liability. Another condition is that the 
purchaser furnish a bond or place funds in escrow, for a period of five 
plan years, in a prescribed amount. Section 4204 also authorizes the 
PBGC to provide for variances or exemptions from these requirements. 
Subpart B of this part provides variances and exemptions from the 
requirements for certain sales of assets. Subpart C of this part 
establishes procedures under which a purchaser or seller may, when the 
conditions set forth in subpart B are not satisfied or when the parties 
decline to provide certain financial information to the plan, request 
the PBGC to grant individual or class variances or exemptions from the 
requirements.
    (b) Scope. In general, this part applies to any sale of assets 
described in section 4204(a)(1) of ERISA. However, this part does not 
apply to a sale of assets involving operations for which the seller is 
obligated to contribute to a plan described in section 404(c) of the 
Code, or a continuation of such a plan, unless the plan is amended to 
provide that section 4204 applies.


Sec. 4204.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
Code, employer, ERISA, IRS, multiemployer plan, PBGC, person, plan, 
plan administrator, plan sponsor, and plan year.
    In addition, for purposes of this part:
    Date of determination means the date on which a seller ceases 
covered operations or ceases to have an obligation to contribute for 
such operations as a result of a sale of assets within the meaning of 
section 4204(a) of ERISA.
    Net income after taxes means revenue minus expenses after taxes 
(excluding extraordinary and non-recurring income or expenses), as 
presented in an audited financial statement or, in the absence of such 
statement, in an unaudited financial statement, each prepared in 
conformance with generally accepted accounting principles.
    Net tangible assets means tangible assets (assets other than 
licenses, patents copyrights, trade names, trademarks, goodwill, 
experimental or organizational expenses, unamortized debt discounts and 
expenses and all other assets which, under generally accepted 
accounting principles, are deemed intangible) less liabilities (other 
than pension liabilities). Encumbered assets shall be excluded from net 
tangible assets only to the extent of the amount of the encumbrance.
    Purchaser means a purchaser described in section 4204(a)(1) of 
ERISA.
    Seller means a seller described in section 4204(a)(1) of ERISA.

Subpart B--Variance of the Statutory Requirements


Sec. 4204.11  Variance of the bond/escrow and sale-contract 
requirements.

    (a) General rule. A purchaser's bond or escrow under section 
4204(a)(1)(B) of ERISA and the sale-contract provision under section 
4204(a)(1)(C) are not required if the parties to the sale inform the 
plan in writing of their intention that the sale be covered by section 
4204 of ERISA and demonstrate to the satisfaction of the plan that at 
least one of the criteria contained in Sec. 4204.12 or Sec. 4204.13(a) 
is satisfied.
    (b) Requests after posting of bond or establishment of escrow. A 
request for a

[[Page 34085]]

variance may be filed at any time. If, after a purchaser has posted a 
bond or placed money in escrow pursuant to section 4204(a)(1)(B) of 
ERISA, the purchaser demonstrates to the satisfaction of the plan that 
the criterion in either Sec. 4204.13 (a)(1) or (a)(2) is satisfied, 
then the bond shall be cancelled or the amount in escrow shall be 
refunded. For purposes of considering a request after the bond or 
escrow is in place, the words ``the year preceding the date of the 
variance request'' shall be substituted for ``the date of 
determination'' for the first mention of that term in both Sec. 4204.13 
(a)(1) and (a)(2). In addition, in determining the purchaser's average 
net income after taxes under Sec. 4204.13(a)(1), for any year included 
in the average for which the net income figure does not reflect the 
interest expense incurred with respect to the sale, the purchaser's net 
income shall be reduced by the amount of interest paid with respect to 
the sale in the fiscal year following the date of determination.
    (c) Information required. A request for a variance shall contain 
financial or other information that is sufficient to establish that one 
of the criteria in Sec. 4204.12 or Sec. 4204.13(a) is satisfied. A 
request on the basis of either Sec. 4204.13 (a)(1) or (a)(2) shall also 
include a copy of the purchaser's audited (if available) or (if not) 
unaudited financial statements for the specified time period.
    (d) Limited exemption during pendency of request. Provided that all 
of the information required to be submitted is submitted before the 
first day of the first plan year beginning after the sale, a plan may 
not, pending its decision on the variance, require a purchaser to post 
a bond or place an amount in escrow pursuant to section 4204(a)(1)(B). 
In the event a bond or escrow is not in place pursuant to the preceding 
sentence, and the plan determines that the request does not qualify for 
a variance, the purchaser shall comply with section 4204(a)(1)(B) 
within 30 days after the date on which it receives notice of the plan's 
decision.

(Approved by the Office of Management and Budget under control 
number 1212--0021)


Sec. 4204.12  De minimis transactions.

    The criterion under this section is that the amount of the bond or 
escrow does not exceed the lesser of $250,000 or two percent of the 
average total annual contributions made by all employers to the plan, 
for the purposes of section 412(b)(3)(A) of the Code, for the three 
most recent plan years ending before the date of determination. For 
this purpose, ``contributions made'' shall have the same meaning as the 
term has under Sec. 4211.12(a) of this chapter.


Sec. 4204.13  Net income and net tangible assets tests.

    (a) General. The criteria under this section are that either--
    (1) Net income test. The purchaser's average net income after taxes 
for its three most recent fiscal years ending before the date of 
determination (as defined in Sec. 4204.12), reduced by any interest 
expense incurred with respect to the sale which is payable in the 
fiscal year following the date of determination, equals or exceeds 150 
percent of the amount of the bond or escrow required under ERISA 
section 4204(a)(1)(B); or
    (2) Net tangible assets test. The purchaser's net tangible assets 
at the end of the fiscal year preceding the date of determination (as 
defined in Sec. 4204.12), equal or exceed--
    (i) If the purchaser was not obligated to contribute to the plan 
before the sale, the amount of unfunded vested benefits allocable to 
the seller under section 4211 (with respect to the purchased 
operations), as of the date of determination, or
    (ii) If the purchaser was obligated to contribute to the plan 
before the sale, the sum of the amount of unfunded vested benefits 
allocable to the purchaser and to the seller under ERISA section 4211 
(with respect to the purchased operations), each as of the date of 
determination.
    (b) Special rule when more than one plan is covered by request. For 
the purposes of paragraphs (a)(1) and (a)(2), if the transaction 
involves the assumption by the purchaser of the seller's obligation to 
contribute to more than one multiemployer plan, then the total amount 
of the bond or escrow or of the unfunded vested benefits, as 
applicable, for all of the plans with respect to which the purchaser 
has not posted a bond or escrow shall be used to determine whether the 
applicable test is met.
    (c) Non-applicability of tests in event of purchaser's insolvency. 
A purchaser will not qualify for a variance under this subpart pursuant 
to paragraph (a)(1) or (a)(2) of this section if, as of the earlier of 
the date of the plan's decision on the variance request or the first 
day of the first plan year beginning after the date of determination, 
the purchaser is the subject of a petition under title 11, United 
States Code, or of a proceeding under similar provisions of state 
insolvency laws.

Subpart C--Procedures for Individual and Class Variances or 
Exemptions


Sec. 4204.21  Requests to PBGC for variances and exemptions.

    (a) General. If a transaction covered by this part does not satisfy 
the conditions set forth in subpart B of this part, or if the parties 
decline to provide to the plan privileged or confidential financial 
information within the meaning of section 552(b)(4) of the Freedom of 
Information Act (5 U.S.C. 552), the purchaser or seller may request 
from the PBGC an exemption or variance from the requirements of section 
4204(a)(1) (B) and (C) of ERISA.
    (b) Who may request. A purchaser or a seller may file a request for 
a variance or exemption. The request may be submitted by one or more 
duly authorized representatives acting on behalf of the party or 
parties. When a contributing employer withdraws from a plan as a result 
of related sales of assets involving several purchasers, or withdraws 
from more than one plan as a result of a single sale, the application 
may request a class variance or exemption for all the transactions.
    (c) Where to file. The request shall be delivered by mail or 
submitted by hand to Reports Processing, Insurance Operations 
Department, Pension Benefit Guaranty Corporation, 1200 K Street NW., 
Washington, DC 20005-4026.
    (d) Information. Each request shall contain the following 
information:
    (1) The name and address of the plan or plans for which the 
variance or exemption is being requested, and the telephone number of 
the plan administrator of each plan.
    (2) For each plan described in paragraph (d)(1) of this section, 
the nine-digit Employer Identification Number (EIN) assigned by the IRS 
to the plan sponsor and the three-digit Plan Identification Number (PN) 
assigned by the plan sponsor to the plan, and, if different, also the 
EIN and PN last filed with the PBGC. If an EIN or PN has not been 
assigned, that should be indicated.
    (3) The name, address and telephone number of the seller and of its 
duly authorized representative, if any.
    (4) The name, address and telephone number of the purchaser and of 
its duly authorized representative, if any.
    (5) A full description of each transaction for which the request is 
being made, including effective date.
    (6) A statement explaining why the requested variance or exemption 
would not significantly increase the risk of financial loss to the 
plan, including evidence, financial or otherwise, that supports that 
conclusion.

[[Page 34086]]

    (7) When the request for a variance or exemption is filed by the 
seller alone, a statement signed by the purchaser indicating its 
intention that section 4204 of ERISA apply to the sale of assets.
    (8) A statement indicating the amount of the purchaser's bond or 
escrow required under section 4204(a)(1)(B) of ERISA.
    (9) The estimated amount of withdrawal liability that the seller 
would otherwise incur as a result of the sale if section 4204 did not 
apply to the sale.
    (10) A certification that a complete copy of the request has been 
sent to each plan described in paragraph (d)(1) of this section and 
each collective bargaining representative of the seller's employees by 
certified mail, return receipt requested.
    (e) Additional information. In addition to the information 
described in paragraph (d) of this section, the PBGC may require the 
purchaser, the seller, or the plan to submit any other information the 
PBGC determines it needs to review the request.
    (f) Disclosure of information. Any party submitting information 
pursuant to this section may include a statement of whether any of the 
information is of a nature that its disclosure may not be required 
under the Freedom of Information Act, 5 U.S.C. 552. The statement 
should specify the information that may not be subject to disclosure 
and the grounds therefor.

(Approved by the Office of Management and Budget under control 
number 1212-0021)


Sec. 4204.22  PBGC action on requests.

    (a) General. The PBGC shall approve a request for a variance or 
exemption if PBGC determines that approval of the request is warranted, 
in that it--
    (1) Would more effectively or equitably carry out the purposes of 
title IV of ERISA; and
    (2) Would not significantly increase the risk of financial loss to 
the plan.
    (b) Notice of pendency of request. As soon as practicable after 
receiving a variance or exemption request containing all the 
information specified in Sec. 4204.21, the PBGC shall publish a notice 
of the pendency of the request in the Federal Register. The notice 
shall provide that any interested person may, within the period of time 
specified therein, submit written comments to the PBGC concerning the 
request. The notice will usually provide for a comment period of 45 
days.
    (c) PBGC decision on request. The PBGC shall issue a decision on a 
variance or exemption request as soon as practicable after the close of 
the comment period described in paragraph (b) of this section. PBGC's 
decision shall be in writing, and if the PBGC disapproves the request, 
the decision shall state the reasons therefor. Notice of the decision 
shall be published in the Federal Register.

PART 4206--ADJUSTMENT OF LIABILITY FOR A WITHDRAWAL SUBSEQUENT TO A 
PARTIAL WITHDRAWAL

Sec.
4206.1  Purpose and scope.
4206.2  Definitions.
4206.3  Credit against liability for a subsequent withdrawal.
4206.4  Amount of credit in plans using the presumptive method.
4206.5  Amount of credit in plans using the modified presumptive 
method.
4206.6  Amount of credit in plans using the rolling-5 method.
4206.7  Amount of credit in plans using the direct attribution 
method.
4206.8  Reduction of credit for abatement or other reduction of 
prior partial withdrawal liability.
4206.9  Amount of credit in plans using alternative allocation 
methods.
4206.10  Special rule for 70-percent decline partial withdrawals.

    Authority: 29 U.S.C. 1302(b)(3) and 1386(b).


Sec. 4206.1  Purpose and scope.

    (a) Purpose. The purpose of this part is to prescribe rules, 
pursuant to section 4206(b) of ERISA, for adjusting the partial or 
complete withdrawal liability of an employer that previously partially 
withdrew from the same multiemployer plan. Section 4206(b)(1) provides 
that when an employer that has partially withdrawn from a plan 
subsequently incurs liability for another partial or a complete 
withdrawal from that plan, the employer's liability for the subsequent 
withdrawal is to be reduced by the amount of its liability for the 
prior partial withdrawal (less any waiver or reduction of that prior 
liability). Section 4206(b)(2) requires the PBGC to prescribe 
regulations adjusting the amount of this credit to ensure that the 
liability for the subsequent withdrawal properly reflects the 
employer's share of liability with respect to the plan. The purpose of 
the credit is to protect a withdrawing employer from being charged 
twice for the same unfunded vested benefits of the plan. The reduction 
in the credit protects the other employers in the plan from becoming 
responsible for unfunded vested benefits properly allocable to the 
withdrawing employer. In the interests of simplicity, the rules in this 
part provide for, generally, a one-step calculation of the adjusted 
credit under section 4206(b)(2) against the subsequent liability, 
rather than for separate calculations first of the credit under section 
4206(b)(1) and then of the reduction in the credit under paragraph 
(b)(2) of that section. In cases where the withdrawal liability for the 
prior partial withdrawal was reduced by an abatement or other reduction 
of that liability, the adjusted credit is further reduced in accordance 
with Sec. 4206.8 of this part.
    (b) Scope. This part applies to multiemployer plans covered under 
Title IV of ERISA, and to employers that have partially withdrawn from 
such plans after September 25, 1980 and subsequently completely or 
partially withdraw from the same plan.


Sec. 4206.2  Definitions.

    The following are defined in Sec. 4001.2 of this chapter: Code, 
employer, ERISA, multiemployer plan, PBGC, plan, and plan year.
    In addition, for purposes of this part:
    Complete withdrawal means a complete withdrawal as described in 
section 4203 of ERISA.
    Partial withdrawal means a partial withdrawal as described in 
section 4205 of ERISA.


Sec. 4206.3  Credit against liability for a subsequent withdrawal.

    Whenever an employer that was assessed withdrawal liability for a 
partial withdrawal from a plan partially or completely withdraws from 
that plan in a subsequent plan year, it shall receive a credit against 
the new withdrawal liability in an amount greater than or equal to 
zero, determined in accordance with this part. If the credit determined 
under Secs. 4206.4 through 4206.9 is less than zero, the amount of the 
credit shall equal zero.


Sec. 4206.4  Amount of credit in plans using the presumptive method.

    (a) General. In a plan that uses the presumptive allocation method 
described in section 4211(b) of ERISA, the credit shall equal the sum 
of the unamortized old liabilities determined under paragraph (b) of 
this section, multiplied by the fractions described or determined under 
paragraph (c) of this section. When an employer's prior partial 
withdrawal liability has been reduced or waived, this credit shall be 
adjusted in accordance with Sec. 4206.8.
    (b) Unamortized old liabilities. The amounts determined under this 
paragraph are the employer's proportional shares, if any, of the 
unamortized amounts as of the end of the plan year preceding the 
withdrawal for which the credit is being calculated, of--

[[Page 34087]]

    (1) The plan's unfunded vested benefits as of the end of the last 
plan year ending before September 26, 1980;
    (2) The annual changes in the plan's unfunded vested benefits for 
plan years ending after September 25, 1980, and before the year of the 
prior partial withdrawal; and
    (3) The reallocated unfunded vested benefits (if any), as 
determined under section 4211(b)(4) of ERISA, for plan years ending 
before the year of the prior partial withdrawal.
    (c) Employer's allocable share of old liabilities. The sum of the 
amounts determined under paragraph (b) are multiplied by the two 
fractions described in this paragraph in order to determine the amount 
of the old liabilities that was previously assessed against the 
employer.
    (1) The first fraction is the fraction determined under section 
4206(a)(2) of ERISA for the prior partial withdrawal.
    (2) The second fraction is a fraction, the numerator of which is 
the amount of the liability assessed against the employer for the prior 
partial withdrawal, and the denominator of which is the product of--
    (i) The amount of unfunded vested benefits allocable to the 
employer as if it had completely withdrawn as of the date of the prior 
partial withdrawal (determined without regard to any adjustments), 
multiplied by--
    (ii) The fraction determined under section 4206(a)(2) of ERISA for 
the prior partial withdrawal.


Sec. 4206.5  Amount of credit in plans using the modified presumptive 
method.

    (a) General. In a plan that uses the modified presumptive method 
described in section 4211(c)(2) of ERISA, the credit shall equal the 
sum of the unamortized old liabilities determined under paragraph (b) 
of this section, multiplied by the fractions described or determined 
under paragraph (c) of this section. When an employer's prior partial 
withdrawal liability has been reduced or waived, this credit shall be 
adjusted in accordance with Sec. 4206.8.
    (b) Unamortized old liabilities. The amounts described in this 
paragraph shall be determined as of the end of the plan year preceding 
the withdrawal for which the credit is being calculated, and are the 
employer's proportional shares, if any, of--
    (1) The plan's unfunded vested benefits as of the end of the last 
plan year ending before September 26, 1980, reduced as if those 
obligations were being fully amortized in level annual installments 
over 15 years beginning with the first plan year ending on or after 
such date; and
    (2) The aggregate post-1980 change amount determined under section 
4211(c)(2)(C) of ERISA as if the employer had completely withdrawn in 
the year of the prior partial withdrawal, reduced as if those 
obligations were being fully amortized in level annual installments 
over the 5-year period beginning with the plan year in which the prior 
partial withdrawal occurred.
    (c) Employer's allocable share of old liabilities. The sum of the 
amounts determined under paragraph (b) are multiplied by the two 
fractions described in this paragraph in order to determine the amount 
of old liabilities that was previously assessed against the employer.
    (1) The first fraction is the fraction determined under section 
4206(a)(2) of ERISA for the prior partial withdrawal.
    (2) The second fraction is a fraction, the numerator of which is 
the amount of the liability assessed against the employer for the prior 
partial withdrawal, and the denominator of which is the product of--
    (i) The amount of unfunded vested benefits allocable to the 
employer as if it had completely withdrawn as of the date of the prior 
partial withdrawal (determined without regard to any adjustments), 
multiplied by--
    (ii) The fraction determined under section 4206(a)(2) of ERISA for 
the prior partial withdrawal.


Sec. 4206.6  Amount of credit in plans using the rolling-5 method.

    In a plan that uses the rolling-5 allocation method described in 
section 4211(c)(3) of ERISA, the credit shall equal the amount of the 
liability assessed for the prior partial withdrawal, reduced as if that 
amount was being fully amortized in level annual installments over the 
5-year period beginning with the plan year in which the prior partial 
withdrawal occurred. When an employer's prior partial withdrawal 
liability has been reduced or waived, this credit shall be adjusted in 
accordance with Sec. 4206.8.


Sec. 4206.7  Amount of credit in plans using the direct attribution 
method.

    In a plan that uses the direct attribution allocation method 
described in section 4211(c)(4) of ERISA, the credit shall equal the 
amount of the liability assessed for the prior partial withdrawal, 
reduced as if that amount was being fully amortized in level annual 
installments beginning with the plan year in which the prior partial 
withdrawal occurred, over the greater of 10 years or the amortization 
period for the resulting base when the combined charge base and the 
combined credit base are offset under section 412(b)(4) of the Code. 
When an employer's prior partial withdrawal liability has been reduced 
or waived, this credit shall be adjusted in accordance with 
Sec. 4206.8.


Sec. 4206.8  Reduction of credit for abatement or other reduction of 
prior partial withdrawal liability.

    (a) General. If an employer's withdrawal liability for a prior 
partial withdrawal has been reduced or waived, the credit determined 
pursuant to Secs. 4206.4 through 4206.7 shall be adjusted in accordance 
with this section.
    (b) Computation. The adjusted credit is calculated by multiplying 
the credit determined under the preceding sections of this part by a 
fraction--
    (1) the numerator of which is the excess of the total partial 
withdrawal liability of the employer for all partial withdrawals in 
prior years (excluding those partial withdrawals for which the credit 
is zero) over the present value of each abatement or other reduction of 
that prior withdrawal liability calculated as of the date on which that 
prior partial withdrawal liability was determined; and
    (2) the denominator of which is the total partial withdrawal 
liability of the employer for all partial withdrawals in prior years 
(excluding those partial withdrawals for which the credit is zero).


Sec. 4206.9  Amount of credit in plans using alternative allocation 
methods.

    A plan that has adopted an alternative method of allocating 
unfunded vested benefits pursuant to section 4211(c)(5) of ERISA and 
part 4211 of this chapter shall adopt, by plan amendment, a method of 
calculating the credit provided by Sec. 4206.3 that is consistent with 
the rules in Secs. 4206.4 through 4206.8 for plans using the statutory 
allocation method most similar to the plan's alternative allocation 
method.


Sec. 4206.10  Special rule for 70-percent decline partial withdrawals.

    For the purposes of applying the rules in Secs. 4206.4 through 
4206.9 in any case in which either the prior or subsequent partial 
withdrawal resulted from a 70-percent contribution decline (or a 35-
percent decline in the case of certain retail food industry plans), the 
first year of the 3-year testing period shall be deemed to be the plan 
year in which the partial withdrawal occurred.

[[Page 34088]]

PART 4207--REDUCTION OR WAIVER OF COMPLETE WITHDRAWAL LIABILITY

Sec.
4207.1  Purpose and scope.
4207.2  Definitions.
4207.3  Abatement.
4207.4  Withdrawal liability payments during pendency of abatement 
determination.
4207.5  Requirements for abatement.
4207.6  Partial withdrawals after reentry.
4207.7  Liability for subsequent complete withdrawals and related 
adjustments for allocating unfunded vested benefits.
4207.8  Liability for subsequent partial withdrawals.
4207.9  Special rules.
4207.10  Plan rules for abatement.

    Authority: 29 U.S.C. 1302(b)(3), 1387.


Sec. 4207.1  Purpose and scope.

    (a) Purpose. The purpose of this part is to prescribe rules, 
pursuant to section 4207(a) of ERISA, for reducing or waiving the 
withdrawal liability of certain employers that have completely 
withdrawn from a multiemployer plan and subsequently resume covered 
operations under the plan. This part prescribes rules pursuant to which 
the plan must waive the employer's obligation to make future liability 
payments with respect to its complete withdrawal and must calculate the 
amount of the employer's liability for a partial or complete withdrawal 
from the plan after its reentry into the plan. This part also provides 
procedures, pursuant to section 4207(b) of ERISA, for plan sponsors of 
multiemployer plans to apply to PBGC for approval of plan amendments 
that provide for the reduction or waiver of complete withdrawal 
liability under conditions other than those specified in section 
4207(a) of ERISA and this part.
    (b) Scope. This part applies to multiemployer plans covered under 
title IV of ERISA, and to employers that have completely withdrawn from 
such plans after September 25, 1980, and that have not, as of the date 
of their reentry into the plan, fully satisfied their obligation to pay 
withdrawal liability arising from the complete withdrawal.


Sec. 4207.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
employer, ERISA, IRS, Multiemployer Act, multiemployer plan, 
nonforfeitable benefit, PBGC, plan, and plan year .
    In addition, for purposes of this part:
    Complete withdrawal means a complete withdrawal as described in 
section 4203 of ERISA.
    Eligible employer means the employer, as defined in section 4001(b) 
of ERISA, as it existed on the date of its initial partial or complete 
withdrawal, as applicable. An eligible employer shall continue to be an 
eligible employer notwithstanding the occurrence of any of the 
following events:
    (1) A restoration involving a mere change in identity, form or 
place of organization, however effected;
    (2) A reorganization involving a liquidation into a parent 
corporation;
    (3) A merger, consolidation or division solely between (or among) 
trades or businesses (whether or not incorporated) of the employer; or
    (4) An acquisition by or of, or a merger or combination with 
another trade or business.
    Partial withdrawal means a partial withdrawal as described in 
section 4205 of ERISA.
    Period of withdrawal means the plan year in which the employer 
completely withdrew from the plan, the plan year in which the employer 
reentered the plan and all intervening plan years.


Sec. 4207.3  Abatement.

    (a) General. Whenever an eligible employer that has completely 
withdrawn from a multiemployer plan reenters the plan, it may apply to 
the plan for abatement of its complete withdrawal liability. 
Applications shall be filed by the date of the first scheduled 
withdrawal liability payment falling due after the employer resumes 
covered operations or, if later, the fifteenth calendar day after the 
employer resumes covered operations. Applications shall identify the 
eligible employer, the withdrawn employer, if different, the date of 
withdrawal, and the date of resumption of covered operations. Upon 
receiving an application for abatement, the plan sponsor shall 
determine, in accordance with paragraph (b) of this section, whether 
the employer satisfies the requirements for abatement of its complete 
withdrawal liability under Sec. 4207.5, Sec. 4207.9, or a plan 
amendment which has been approved by PBGC pursuant to Sec. 4207.10. If 
the plan sponsor determines that the employer satisfies the 
requirements for abatement of its complete withdrawal liability, the 
provisions of paragraph (c) of this section shall apply. If the plan 
sponsor determines that the employer does not satisfy the requirements 
for abatement of its complete withdrawal liability, the provisions of 
paragraphs (d) and (e) of this section shall apply.
    (b) Determination of abatement. As soon as practicable after an 
eligible employer that completely withdrew from a multiemployer plan 
applies for abatement, the plan sponsor shall determine whether the 
employer satisfies the requirements for abatement of its complete 
withdrawal liability under this part and shall notify the employer in 
writing of its determination and of the consequences of its 
determination, as described in paragraphs (c) or (d) and (e) of this 
section, as appropriate. If a bond or escrow has been provided to the 
plan under Sec. 4207.4, the plan sponsor shall send a copy of the 
notice to the bonding or escrow agent.
    (c) Effects of abatement. If the plan sponsor determines that the 
employer satisfies the requirements for abatement of its complete 
withdrawal liability under this part, then--
    (1) The employer shall have no obligation to make future withdrawal 
liability payments to the plan with respect to its complete withdrawal;
    (2) The employer's liability for a subsequent withdrawal shall be 
determined in accordance with Sec. 4207.7 or Sec. 4207.8, as 
applicable;
    (3) Any bonds furnished under Sec. 4207.4 shall be cancelled and 
any amounts held in escrow under Sec. 4207.4 shall be refunded to the 
employer; and
    (4) Any withdrawal liability payments due after the reentry and 
made by the employer to the plan shall be refunded by the plan without 
interest.
    (d) Effects of non-abatement. If the plan sponsor determines that 
the employer does not satisfy the requirements for abatement of its 
complete withdrawal liability under this part, then--
    (1) The bond or escrow furnished under Sec. 4207.4 shall be paid to 
the plan within 30 days after the date of the plan sponsor's notice 
under paragraph (b) of this section;
    (2) The employer shall pay to the plan within 30 days after the 
date of the plan sponsor's notice under paragraph (b) of this section, 
the amount of its withdrawal liability payment or payments, with 
respect to which the bond or escrow was furnished, in excess of the 
bond or escrow;
    (3) The employer shall resume making its withdrawal liability 
payments as they are due to the plan; and
    (4) The employer shall be treated as a new employer for purposes of 
any future application of the withdrawal liability rules in sections 
4201-4225 of title IV of ERISA with respect to its participation in the 
plan after its reentry into the plan, except that in plans using the 
``direct attribution'' method (section 4211(c)(4) of ERISA), the 
nonforfeitable benefits attributable to service with the employer shall 
include nonforfeitable benefits attributable to service prior to

[[Page 34089]]

reentry that were not nonforfeitable at that time.
    (e) Collection of payments due and review of non-abatement 
determination. The rules in part 4219, subpart C, of this chapter 
(relating to overdue, defaulted, and overpaid withdrawal liability) 
shall apply with respect to all payments required to be made under 
paragraphs (d)(2) and (d)(3) of this section. For this purpose, a 
payment required to be made under paragraph (d)(2) shall be treated as 
a withdrawal liability payment due on the 30th day after the date of 
the plan sponsor's notice under paragraph (b) of this section.
    (1) Review of non-abatement determination. A plan sponsor's 
determination that the employer does not satisfy the requirements for 
abatement under this part shall be subject to plan review under section 
4219(b)(2) of ERISA and to arbitration under section 4221 of ERISA, 
within the times prescribed by those sections. For this purpose, the 
plan sponsor's notice under paragraph (b) of this section shall be 
treated as a demand under section 4219(b)(1) of ERISA.
    (2) Determination of abatement. If the plan sponsor or an 
arbitrator determines that the employer satisfies the requirements for 
abatement of its complete withdrawal liability under this part, the 
plan sponsor shall immediately refund the following payments (plus 
interest, except as indicated below, determined in accordance with 
Sec. 4219.31(d) of this chapter as if the payments were overpayments of 
withdrawal liability) to the employer in a lump sum:
    (i) The amount of the employer's withdrawal liability payment or 
payments, without interest, due after its reentry and made by the 
employer.
    (ii) The bond or escrow paid to the plan under paragraph (d)(1) of 
this section.
    (iii) The amount of the employer's withdrawal liability payment or 
payments in excess of the bond or escrow, paid to the plan under 
paragraph (d)(2) of this section.
    (iv) Any withdrawal liability payment made by the employer to the 
plan pursuant to paragraph (d)(3) of this section after the plan 
sponsor's notice under paragraph (b) of this section.


Sec. 4207.4  Withdrawal liability payments during pendency of abatement 
determination.

    (a) General rule. An eligible employer that completely withdraws 
from a multiemployer plan and subsequently reenters the plan may, in 
lieu of making withdrawal liability payments due after its reentry, 
provide a bond to, or establish an escrow account for, the plan that 
satisfies the requirements of paragraph (b) of this section or any plan 
rules adopted under paragraph (d) of this section, pending a 
determination by the plan sponsor under Sec. 4207.3(b) of whether the 
employer satisfies the requirements for abatement of its complete 
withdrawal liability. An employer that applies for abatement and 
neither provides a bond/escrow nor pays its withdrawal liability 
payments remains eligible for abatement.
    (b) Bond/escrow. The bond or escrow allowed by this section shall 
be in an amount equal to 70 percent of the withdrawal liability 
payments that would otherwise be due. The bond or escrow relating to 
each payment shall be furnished before the due date of that payment. A 
single bond or escrow may be provided for more than one payment due 
during the pendency of the plan sponsor's determination. The bond or 
escrow agreement shall provide that if the plan sponsor determines that 
the employer does not satisfy the requirements for abatement of its 
complete withdrawal liability under this part, the bond or escrow shall 
be paid to the plan upon notice from the plan sponsor to the bonding or 
escrow agent. A bond provided under this paragraph shall be issued by a 
corporate surety company that is an acceptable surety for purposes of 
section 412 of ERISA.
    (c) Notice of bond/escrow. Concurrently with posting a bond or 
establishing an escrow account under paragraph (b) of this section, the 
employer shall notify the plan sponsor. The notice shall include a 
statement of the amount of the bond or escrow, the scheduled payment or 
payments with respect to which the bond or escrow is being furnished, 
and the name and address of the bonding or escrow agent.
    (d) Plan amendments concerning bond/escrow. A plan may, by 
amendment, adopt rules decreasing the amount specified in paragraph (b) 
of a bond or escrow allowed under this section. A plan amendment 
adopted under this paragraph may be applied only to the extent that it 
is consistent with the purposes of ERISA.


Sec. 4207.5  Requirements for abatement.

    (a) General rule. Except as provided in Sec. 4207.9 (d) and (e) 
(pertaining to acquisitions, mergers and other combinations), an 
eligible employer that completely withdraws from a multiemployer plan 
and subsequently reenters the plan shall have its liability for that 
withdrawal abated in accordance with Sec. 4207.3(c) if the employer 
resumes covered operations under the plan, and the number of 
contribution base units with respect to which the employer has an 
obligation to contribute under the plan for the measurement period (as 
defined in paragraph (b) of this section) after it resumes covered 
operations exceeds 30 percent of the number of contribution base units 
with respect to which the employer had an obligation to contribute 
under the plan for the base year (as defined in paragraph (c) of this 
section).
    (b) Measurement period. If the employer resumes covered operations 
under the plan at least six full months prior to the end of a plan year 
and would satisfy the test in paragraph (a) based on its contribution 
base units for that plan year, then the measurement period shall be the 
period from the date it resumes covered operations until the end of 
that plan year. If the employer would not satisfy this test, or if the 
employer resumes covered operations under the plan less than six full 
months prior to the end of the plan year, the measurement period shall 
be the first twelve months after it resumes covered operations.
    (c) Base year. For purposes of paragraph (a) of this section, the 
employer's number of contribution base units for the base year is the 
average number of contribution base units for the two plan years in 
which its contribution base units were the highest, within the five 
plan years immediately preceding the year of its complete withdrawal.


Sec. 4207.6  Partial withdrawals after reentry.

    (a) General rule. For purposes of determining whether there is a 
partial withdrawal of an eligible employer whose liability is abated 
under this part upon the employer's reentry into the plan or at any 
time thereafter, the plan sponsor shall apply the rules in section 4205 
of ERISA, as modified by the rules in this section, and section 108 of 
the Multiemployer Act. A partial withdrawal of an employer whose 
liability is abated under this part may occur under these rules upon 
the employer's reentry into the plan. However, a plan sponsor may not 
demand payment of withdrawal liability for a partial withdrawal 
occurring upon the employer's reentry before the plan sponsor has 
determined that the employer's liability for its complete withdrawal is 
abated under this part and has so notified the employer in accordance 
with Sec. 4207.3(b).
    (b) Partial withdrawal--70-percent contribution decline. The plan 
sponsor shall determine whether there is a partial withdrawal described 
in section 4205(a)(1) of ERISA (relating to a 70-

[[Page 34090]]

percent contribution decline) in accordance with the rules in section 
4205 of ERISA and section 108 of the Multiemployer Act, as modified by 
the rules in this paragraph, and shall determine the amount of an 
employer's liability for that partial withdrawal in accordance with the 
rules in Sec. 4207.8(b).
    (1) Definition of ``3-year testing period.'' For purposes of 
section 4205(b)(1) of ERISA, the term ``3-year testing period'' means 
the period consisting of the plan year for which the determination is 
made and the two immediately preceding plan years, excluding any plan 
year during the period of withdrawal.
    (2) Contribution base units for high base year. For purposes of 
section 4205(b)(1) of ERISA and except as provided in section 108(d)(3) 
of the Multiemployer Act, in determining the number of contribution 
base units for the high base year, if the five plan years immediately 
preceding the beginning of the 3-year testing period include a plan 
year during the period of withdrawal, the number of contribution base 
units for each such year of withdrawal shall be deemed to be the 
greater of--
    (i) The employer's contribution base units for that plan year; or
    (ii) The average of the employer's contribution base units for the 
three plan years preceding the plan year in which the employer 
completely withdrew from the plan.
    (c) Partial withdrawal--partial cessation of contribution 
obligation. The plan sponsor shall determine whether there is a partial 
withdrawal described in section 4205(a)(2) of ERISA (relating to a 
partial cessation of the employer's contribution obligation) in 
accordance with the rules in section 4205 of ERISA, as modified by the 
rules in this paragraph, and section 108 of the Multiemployer Act. In 
making this determination, the sponsor shall exclude all plan years 
during the period of withdrawal. A partial withdrawal under this 
paragraph can occur no earlier than the plan year of reentry. If the 
sponsor determines that there was a partial withdrawal, it shall 
determine the amount of an employer's liability for that partial 
withdrawal in accordance with the rules in Sec. 4207.8(c).


Sec. 4207.7  Liability for subsequent complete withdrawals and related 
adjustments for allocating unfunded vested benefits.

    (a) General. When an eligible employer that has had its liability 
for a complete withdrawal abated under this part completely withdraws 
from the plan, the employer's liability for that subsequent withdrawal 
shall be determined in accordance with the rules in sections 4201-4225 
of title IV, as modified by the rules in this section, and section 108 
of the Multiemployer Act. In the case of a combination described in 
Sec. 4207.9(d), the modifications described in this section shall be 
applied only with respect to that portion of the eligible employer that 
had previously withdrawn from the plan. In the case of a combination 
described in Sec. 4207.9(e), the modifications shall be applied 
separately with respect to each previously withdrawn employer that 
comprises the eligible employer. In addition, when a plan has abated 
the liability of a reentered employer, if the plan uses either the 
``presumptive'' or the ``direct attribution'' method (section 4211(b) 
or (c)(4), respectively) for allocating unfunded vested benefits, the 
plan shall modify those allocation methods as described in this section 
in allocating unfunded vested benefits to any employer that withdraws 
from the plan after the reentry.
    (b) Allocation of unfunded vested benefits for subsequent 
withdrawal in plans using ``presumptive'' method. In a plan using the 
``presumptive'' allocation method under section 4211(b) of ERISA, the 
amount of unfunded vested benefits allocable to a reentered employer 
for a subsequent withdrawal shall equal the sum of--
    (1) The unamortized amount of the employer's allocable shares of 
the amounts described in section 4211(b)(1), for the plan years 
preceding the initial withdrawal, determined as if the employer had not 
previously withdrawn;
    (2) The sum of the unamortized annual credits attributable to the 
year of the initial withdrawal and each succeeding year ending prior to 
reentry; and
    (3) The unamortized amount of the employer's allocable shares of 
the amounts described in section 4211(b)(1) (A) and (C) for plan years 
ending after its reentry. For purposes of paragraph (b)(2), the annual 
credit for a plan year is the amount by which the employer's withdrawal 
liability payments for the year exceed the greater of the employer's 
imputed contributions or actual contributions for the year. The 
employer's imputed contributions for a year shall equal the average 
annual required contributions of the employer for the three plan years 
preceding the initial withdrawal. The amount of the credit for a plan 
year is reduced by 5 percent of the original amount for each succeeding 
plan year ending prior to the year of the subsequent withdrawal.
    (c) Allocation of unfunded vested benefits for subsequent 
withdrawal in plans using ``modified presumptive'' or ``rolling-5'' 
method. In a plan using either the ``modified presumptive'' allocation 
method under section 4211(c)(2) of ERISA or the ``rolling-5'' method 
under section 4211(c)(3), the amount of unfunded vested benefits 
allocable to a reentered employer for a subsequent withdrawal shall 
equal the sum of--
    (1) The amount determined under section 4211 (c)(2) or (c)(3) of 
ERISA, as appropriate, as if the date of reentry were the employer's 
initial date of participation in the plan; and
    (2) The outstanding balance, as of the date of reentry, of the 
unfunded vested benefits allocated to the employer for its previous 
withdrawal (as defined in paragraph (c)(2)(i) of this section) reduced 
as if that amount were being fully amortized in level annual 
installments, at the plan's funding rate as of the date of reentry, 
over the period described in paragraph (c)(2)(ii), beginning with the 
first plan year after reentry.
    (i) The outstanding balance of the unfunded vested benefits 
allocated to an employer for its previous withdrawal is the excess of 
the amount determined under section 4211 (c)(2) or (c)(3) of ERISA as 
of the end of the plan year in which the employer initially withdrew, 
accumulated with interest at the plan's funding rate for that year, 
from that year to the date of reentry, over the withdrawal liability 
payments made by the employer, accumulated with interest from the date 
of payment to the date of reentry at the plan's funding rate for the 
year of entry.
    (ii) The period referred to in paragraph (c)(2) for plans using the 
modified presumptive method is the greater of five years, or the number 
of full plan years remaining on the amortization schedule under section 
4211(c)(2)(B)(i) of ERISA. For plans using the rolling-5 method, the 
period is five years.
    (d) Adjustments applicable to all employers in plans using 
``presumptive'' method. In a plan using the ``presumptive'' allocation 
method under section 4211(b) of ERISA, when the plan has abated the 
withdrawal liability of a reentered employer pursuant to this part, the 
following adjustments to the allocation method shall be made in 
computing the unfunded vested benefits allocable to any employer that 
withdraws from the plan in a plan year beginning after the reentry:
    (1) The sum of the unamortized amounts of the annual credits of a 
reentered employer shall be treated as a reallocated amount under 
section

[[Page 34091]]

4211(b)(4) of ERISA in the plan year in which the employer reenters.
    (2) In the event that the 5-year period used to compute the 
denominator of the fraction described in section 4211 (b)(2)(E) and 
(b)(4)(D) of ERISA includes a year during the period of withdrawal of a 
reentered employer, the contributions for a year during the period of 
withdrawal shall be adjusted to include any actual or imputed 
contributions of the employer, as determined under paragraph (b) of 
this section.
    (e) Adjustments applicable to all employers in plans using ``direct 
attribution'' method. In a plan using the ``direct attribution'' method 
under section 4211(c)(4) of ERISA, when the plan has abated the 
withdrawal liability of a reentered employer pursuant to this part, the 
following adjustments to the allocation method shall be made in 
computing the unfunded vested benefits allocable to any employer that 
withdraws from the plan in a plan year beginning after the reentry:
    (1) The nonforfeitable benefits attributable to service with a 
reentered employer prior to its initial withdrawal shall be treated as 
benefits that are attributable to service with that employer.
    (2) For purposes of section 4211(c)(4)(D) (ii) and (iii) of ERISA, 
withdrawal liability payments made by a reentered employer shall be 
treated as contributions made by the reentered employer.
    (f) Plans using alternative allocation methods under section 
4211(c)(5). A plan that has adopted an alternative method of allocating 
unfunded vested benefits pursuant to section 4211(c)(5) of ERISA and 
part 4211 of this chapter shall adopt by plan amendment a method of 
determining a reentered employer's allocable share of the plan's 
unfunded vested benefits upon its subsequent withdrawal. The method 
shall treat the reentered employer and other withdrawing employers in a 
manner consistent with the treatment under the paragraph(s) of this 
section applicable to plans using the statutory allocation method most 
similar to the plan's alternative allocation method.
    (g) Adjustments to amount of annual withdrawal liability payments 
for subsequent withdrawal. For purposes of section 4219(c)(1)(C) (i)(I) 
and (ii)(I) of ERISA, in determining the amount of the annual 
withdrawal liability payments for a subsequent complete withdrawal, if 
the period of ten consecutive plan years ending before the plan year in 
which the withdrawal occurs includes a plan year during the period of 
withdrawal, the employer's number of contribution base units, used in 
section 4219(c)(1)(C)(i)(I), or the required employer contributions, 
used in section 4219(c)(1)(C)(ii)(I), for each such plan year during 
the period of withdrawal shall be deemed to be the greater of--
    (1) The employer's contribution base units or the required employer 
contributions, as applicable, for that year; or
    (2) The average of the employer's contribution base units or of the 
required employer contributions, as applicable, for those plan years 
not during the period of withdrawal, within the ten consecutive plan 
years ending before the plan year in which the employer's subsequent 
complete withdrawal occurred.


Sec. 4207.8  Liability for subsequent partial withdrawals.

    (a) General. When an eligible employer that has had its liability 
for a complete withdrawal abated under this part partially withdraws 
from the plan, the employer's liability for that subsequent partial 
withdrawal shall be determined in accordance with the rules in sections 
4201-4225 of ERISA, as modified by the rules in Sec. 4207.7 (b) through 
(g) of this part and the rules in this section, and section 108 of the 
Multiemployer Act.
    (b) Liability for a 70-percent contribution decline. The amount of 
an employer's liability under section 4206(a) (relating to the 
calculation of liability for a partial withdrawal), section 4208 
(relating to the reduction of liability for a partial withdrawal) and 
section 4219(c)(1) (relating to the schedule of partial withdrawal 
liability payments) of ERISA, for a subsequent partial withdrawal 
described in section 4205(a)(1) of ERISA (relating to a 70-percent 
contribution decline) shall be modified in accordance with the rules in 
this paragraph.
    (1) Definition of ``3-year testing period.'' For purposes of 
sections 4206(a) and 4219(c)(1) of ERISA, and paragraphs (b)(2)-(b)(4) 
of this section, the term ``3-year testing period'' means the period 
consisting of the plan year for which the determination is made and the 
two immediately preceding plan years, excluding any plan year during 
the period of withdrawal.
    (2) Determination date of section 4211 allocable share. For 
purposes of section 4206(a)(1)(B) of ERISA, the amount determined under 
section 4211 shall be determined as if the employer had withdrawn from 
the plan in a complete withdrawal on the last day of the first plan 
year in the 3-year testing period or the last day of the plan year in 
which the employer reentered the plan, whichever is later.
    (3) Calculation of fractional share of section 4211 amount. For 
purposes of sections 4206(a)(2)(B)(ii) and 4219(c)(1)(E)(ii) of ERISA, 
if the five plan years immediately preceding the beginning of the 3-
year testing period include a plan year during the period of 
withdrawal, then, in determining the denominator of the fraction 
described in section 4206(a)(2), the employer's contribution base units 
for each such year of withdrawal shall be deemed to be the greater of--
    (i) The employer's contribution base units for that plan year; or
    (ii) The average of the employer's contribution base units for the 
three plan years preceding the plan year in which the employer 
completely withdrew from the plan.
    (4) Contribution base units for high base year. If the five plan 
years immediately preceding the beginning of the 3-year testing period 
include a plan year during the period of withdrawal, then for purposes 
of section 4208 (a) and (b)(1) of ERISA, the number of contribution 
base units for the high base year shall be the number of contribution 
base units determined under paragraph (b)(3) of this section.
    (c) Liability for partial cessation of contribution obligation. The 
amount of an employer's liability under section 4206(a) (relating to 
the calculation of liability for a partial withdrawal) and section 
4219(c)(1) (relating to the amount of the annual partial withdrawal 
liability payments) of ERISA, for a subsequent partial withdrawal 
described in section 4205(a)(2) of ERISA (relating to a partial 
cessation of the contribution obligation) shall be modified in 
accordance with the rules in this paragraph. For purposes of sections 
4206(a)(2)(B)(i) and 4219(c)(1)(E)(ii) of ERISA, if the five plan years 
immediately preceding the plan year in which the partial withdrawal 
occurs include a plan year during the period of withdrawal, the 
denominator of the fraction described in section 4206(a)(2) shall be 
determined in accordance with the rule set forth in paragraph (b)(3) of 
this section.


Sec. 4207.9  Special rules.

    (a) Employer that has withdrawn and reentered the plan before the 
effective date of this part. This part shall apply, in accordance with 
the rules in this paragraph, with respect to an eligible employer that 
completely withdraws from a multiemployer plan after September 25, 
1980, and is performing covered work under the plan on the effective 
date of this part. Upon the

[[Page 34092]]

application of an employer described in the preceding sentence, the 
plan sponsor of a multiemployer plan shall determine whether the 
employer satisfies the requirements for abatement of its complete 
withdrawal liability under this part. Pending the plan sponsor's 
determination, the employer may provide the plan with a bond or escrow 
that satisfies the requirements of Sec. 4207.4, in lieu of making its 
withdrawal liability payments due after its application for an 
abatement determination. The plan sponsor shall notify the employer in 
writing of its determination and the consequences of its determination 
as described in Sec. 4207.3 (c) or (d) and (e), as applicable. If the 
plan sponsor determines that the employer qualifies for abatement, only 
withdrawal liability payments made prior to the employer's reentry 
shall be retained by the plan; payments made by the employer after its 
reentry shall be refunded to the employer, with interest on those made 
prior to the application for abatement, in accordance with 
Sec. 4207.3(e)(2). If a bond or escrow has been provided to the plan in 
accordance with Sec. 4207.4, the plan sponsor shall send a copy of the 
notice to the bonding or escrow agent. Sections 4207.6 through 4207.8 
shall apply with respect to the employer's subsequent complete 
withdrawal occurring on or after the effective date of this part, or 
partial withdrawal occurring either before or after that date. This 
paragraph shall not negate reasonable actions taken by plans prior to 
the effective date of this part under plan rules implementing section 
4207(a) of ERISA that were validly adopted pursuant to section 405 of 
the Multiemployer Act.
    (b) Employer with multiple complete withdrawals that has reentered 
the plan before effective date of this part. If an employer described 
in paragraph (a) of this section has completely withdrawn from a 
multiemployer plan on two or more occasions before the effective date 
of this part, the rules in paragraph (a) of this section shall be 
applied as modified by this paragraph.
    (1) The plan sponsor shall determine whether the employer satisfies 
the requirements for abatement under Sec. 4207.5 based on the most 
recent complete withdrawal.
    (2) If the employer satisfies the requirements for abatement, the 
employer's liability with respect to all previous complete withdrawals 
shall be abated.
    (3) If the liability is abated, Secs. 4207.6 and 4207.7 shall be 
applied as if the employer's earliest complete withdrawal were its 
initial complete withdrawal.
    (c) Employer with multiple complete withdrawals that has not 
reentered the plan as of the effective date of this part. If an 
eligible employer has completely withdrawn from a multiemployer plan on 
two or more occasions between September 26, 1980 and the effective date 
of this part and is not performing covered work under the plan on the 
effective date of this regulation, the rules in this part shall apply, 
subject to the modifications specified in paragraphs (b)(1)-(b)(3) of 
this section, upon the employer's reentry into the plan.
    (d) Combination of withdrawn employer with contributing employer. 
If a withdrawn employer merges or otherwise combines with an employer 
that has an obligation to contribute to the plan from which the first 
employer withdrew, the combined entity is the eligible employer, and 
the rules of Sec. 4207.5 shall be applied--
    (1) By subtracting from the measurement period contribution base 
units the contribution base units for which the non-withdrawn portion 
of the employer was obligated to contribute in the last plan year 
ending prior to the combination;
    (2) By determining the base year contribution base units solely by 
reference to the contribution base units of the withdrawn portion of 
the employer; and
    (3) By using the date of the combination, rather than the date of 
resumption of covered operations, to begin the measurement period.
    (e) Combination of two or more withdrawn employers. If two or more 
withdrawn employers merge or otherwise combine, the combined entity is 
the eligible employer, and the rules of Sec. 4207.5 shall be applied by 
combining the number of contribution base units with respect to which 
each portion of the employer had an obligation to contribute under the 
plan for its base year. However, the combined number of contribution 
base units shall not include contribution base units of a withdrawn 
portion of the employer that had fully paid its withdrawal liability as 
of the date of the resumption of covered operations.


Sec. 4207.10  Plan rules for abatement.

    (a) General rule. Subject to the approval of the PBGC, a plan may, 
by amendment, adopt rules for the reduction or waiver of complete 
withdrawal liability under conditions other than those specified in 
Secs. 4207.5 and 4207.9 (c) and (d), provided that such conditions 
relate to events occurring or factors existing subsequent to a complete 
withdrawal year. The request for PBGC approval shall be filed after the 
amendment is adopted. A plan amendment under this section may not be 
put into effect until it is approved by the PBGC. However, an amendment 
that is approved by the PBGC may apply retroactively to the date of the 
adoption of the amendment. PBGC approval shall also be required for any 
subsequent modification of the amendment, other than repeal of the 
amendment. Sections 4207.6, 4207.7, and 4207.8 shall apply to all 
subsequent partial withdrawals after a reduction or waiver of complete 
withdrawal liability under a plan amendment approved by the PBGC 
pursuant to this section.
    (b) Who may request. The plan sponsor, or a duly authorized 
representative acting on behalf of the plan sponsor, shall sign and 
submit the request.
    (c) Where to file. The request shall be addressed to Reports 
Processing, Insurance Operations Department, Pension Benefit Guaranty 
Corporation, 1200 K Street, NW., Washington, DC 20005-4026.
    (d) Information. Each request shall contain the following 
information:
    (1) The name and address of the plan for which the plan amendment 
is being submitted and the telephone number of the plan sponsor or its 
duly authorized representative.
    (2) The nine-digit Employer Identification Number (EIN) assigned to 
the plan sponsor by the IRS and the three-digit Plan Identification 
Number (PN) assigned to the plan by the plan sponsor, and, if 
different, the EIN and PN last filed with the PBGC. If no EIN or PN has 
been assigned, that should be indicated.
    (3) A copy of the executed amendment, including--
    (i) The date on which the amendment was adopted;
    (ii) The proposed effective date; and
    (iii) The full text of the rules on the reduction or waiver of 
complete withdrawal liability.
    (4) A copy of the most recent actuarial valuation report of the 
plan.
    (5) A statement certifying that notice of the adoption of the 
amendment and of the request for approval filed under this section has 
been given to all employers that have an obligation to contribute under 
the plan and to all employee organizations representing employees 
covered under the plan.
    (e) Supplemental information. In addition to the information 
described in paragraph (d) of this section, a plan may submit any other 
information that it believes it pertinent to its request. The PBGC may 
require the plan sponsor to submit any other information that the

[[Page 34093]]

PBGC determines it needs to review a request under this section.
    (f) Criteria for PBGC approval. The PBGC shall approve a plan 
amendment authorized by paragraph (a) of this section if it determines 
that the rules therein are consistent with the purposes of ERISA. An 
abatement rule is not consistent with the purposes of ERISA if--
    (1) Implementation of the rule would be adverse to the interest of 
plan participants and beneficiaries; or
    (2) The rule would increase the PBGC's risk of loss with respect to 
the plan.

(Approved by the Office of Management and Budget under control 
number 1212-0044)

PART 4208--REDUCTION OR WAIVER OF PARTIAL WITHDRAWAL LIABILITY

Sec.
4208.1  Purpose and scope.
4208.2  Definitions.
4208.3  Abatement.
4208.4  Conditions for abatement.
4208.5  Withdrawal liability payments during pendency of abatement 
determination.
4208.6  Computation of reduced annual partial withdrawal liability 
payment.
4208.7  Adjustment of withdrawal liability for subsequent 
withdrawals.
4208.8  Multiple partial withdrawals in one plan year.
4208.9  Plan adoption of additional abatement conditions.

    Authority: 29 U.S.C. 1302(b)(3), 1388 (c) and (e).


Sec. 4208.1  Purpose and scope.

    (a) Purpose. The purpose of this part is to establish rules for 
reducing or waiving the liability of certain employers that have 
partially withdrawn from a multiemployer pension plan.
    (b) Scope. This part applies to multiemployer pension plans covered 
under title IV of ERISA and to employers that have partially withdrawn 
from such plans after September 25, 1980, and that have not, as of the 
date on which they satisfy the conditions for reducing or eliminating 
their partial withdrawal liability, fully satisfied their obligation to 
pay that partial withdrawal liability. This rule shall not negate 
reasonable actions taken by plans prior to the effective date of this 
part under plan rules implementing section 4208 of ERISA that were 
validly adopted pursuant to section 405 of the Multiemployer Act.


Sec. 4208.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
employer, ERISA, IRS, Multiemployer Act, multiemployer plan, PBGC, 
plan, and plan year.
    In addition, for purposes of this part:
    Complete withdrawal means a complete withdrawal as described in 
section 4203 of ERISA.
    Eligible employer means the employer, as defined in section 4001(b) 
of ERISA, as it existed on the date of its initial partial or complete 
withdrawal, as applicable. An eligible employer shall continue to be an 
eligible employer notwithstanding the occurrence of any of the 
following events:
    (1) A restoration involving a mere change in identity, form or 
place of organization, however effected;
    (2) A reorganization involving a liquidation into a parent 
corporation;
    (3) A merger, consolidation or division solely between (or among) 
trades or businesses (whether or not incorporated) of the employer; or
    (4) An acquisition by or of, or a merger or combination with 
another trade or business.
    Partial withdrawal means a partial withdrawal as described in 
section 4205 of ERISA.
    Partial withdrawal year means the third year of the 3-year testing 
period in the case of a partial withdrawal caused by a 70-percent 
contribution decline, or the year of the partial cessation in the case 
of a partial withdrawal caused by a partial cessation of the employer's 
contribution obligation.


Sec. 4208.3  Abatement.

    (a) General. Whenever an eligible employer that has partially 
withdrawn from a multiemployer plan satisfies the requirements in 
Sec. 4208.4 for the reduction or waiver of its partial withdrawal 
liability, it may apply to the plan for abatement of its partial 
withdrawal liability. Applications shall identify the eligible 
employer, the withdrawn employer (if different), the date of 
withdrawal, and the basis for reduction or waiver of its withdrawal 
liability. Upon receiving a complete application for abatement, the 
plan sponsor shall determine, in accordance with paragraph (b) of this 
section, whether the employer satisfies the requirements for abatement 
of its partial withdrawal liability under Sec. 4208.4. If the plan 
sponsor determines that the employer satisfies the requirements for 
abatement of its partial withdrawal liability, the provisions of 
paragraph (c) of this section shall apply. If the plan sponsor 
determines that the employer does not satisfy the requirements for 
abatement of its partial withdrawal liability, the provisions of 
paragraphs (d) and (e) of this section shall apply.
    (b) Determination of abatement. Within 60 days after an eligible 
employer that partially withdrew from a multiemployer plan applies for 
abatement in accordance with paragraph (a) of this section, the plan 
sponsor shall determine whether the employer satisfies the requirements 
for abatement of its partial withdrawal liability under Sec. 4208.4 and 
shall notify the employer in writing of its determination and of the 
consequences of its determination, as described in paragraphs (c) or 
(d) and (e) of this section, as appropriate. If a bond or escrow has 
been provided to the plan under Sec. 4208.5 of this part, the plan 
sponsor shall send a copy of the notice to the bonding or escrow agent.
    (c) Effects of abatement. If the plan sponsor determines that the 
employer satisfies the requirements for abatement of its partial 
withdrawal liability under Sec. 4208.4, then--
    (1) The employer's partial withdrawal liability shall be eliminated 
or its annual partial withdrawal liability payments shall be reduced in 
accordance with Sec. 4208.6, as applicable;
    (2) The employer's liability for a subsequent withdrawal shall be 
determined in accordance with Sec. 4208.7;
    (3) Any bonds furnished under Sec. 4208.5 shall be canceled and any 
amounts held in escrow under Sec. 4208.5 shall be refunded to the 
employer; and
    (4) Any withdrawal liability payments originally due and paid after 
the end of the plan year in which the conditions for abatement were 
satisfied, in excess of the amount due under this part after that date 
shall be credited to the remaining withdrawal liability payments, if 
any, owed by the employer, beginning with the first payment due after 
the revised payment schedule is issued pursuant to this paragraph. If 
the credited amount is greater than the outstanding amount of the 
employer's partial withdrawal liability, the amount remaining after 
satisfaction of the liability shall be refunded to the employer. 
Interest on the credited amount at the rate prescribed in part 4219, 
subpart C, of this chapter (relating to overdue, defaulted, and 
overpaid withdrawal liability) shall be added if the plan sponsor does 
not issue a revised payment schedule reflecting the credit or make the 
required refund within 60 days after receipt by the plan sponsor of a 
complete abatement application. Interest shall accrue from the 61st 
day.
    (d) Effects of non-abatement. If the plan sponsor determines that 
the employer does not satisfy the requirements for abatement of its 
partial withdrawal liability under Sec. 4208.4, then the employer shall 
take or cause to

[[Page 34094]]

be taken the actions set forth in paragraphs (d)(1)-(d)(3) of this 
section. The rules in part 4219, subpart C, shall apply with respect to 
all payments required to be made under paragraphs (d)(2) and (d)(3). 
For this purpose, a payment required under paragraph (d)(2) shall be 
treated as a withdrawal liability payment due on the 30th day after the 
date of the plan sponsor's notice under paragraph (b) of this section.
    (1) Any bond or escrow furnished under Sec. 4208.5 shall be paid to 
the plan within 30 days after the date of the plan sponsor's notice 
under paragraph (b) of this section.
    (2) The employer shall pay to the plan within 30 days after the 
date of the plan sponsor's notice under paragraph (b) of this section, 
the amount of its withdrawal liability payment or payments, with 
respect to which the bond or escrow was furnished, in excess of the 
bond or escrow.
    (3) The employer shall resume or continue making its partial 
withdrawal liability payments as they are due to the plan.
    (e) Review of non-abatement determination. A plan sponsor's 
determinations that the employer does not satisfy the requirements for 
abatement under Sec. 4208.4 and of the amount of reduction determined 
under Sec. 4208.6 shall be subject to plan review under section 
4219(b)(2) of ERISA and to arbitration under section 4221 of ERISA and 
part 4221 of this chapter, within the times prescribed by those 
provisions. For this purpose, the plan sponsor's notice under paragraph 
(b) of this section shall be treated as a demand under section 
4219(b)(1) of ERISA. If the plan sponsor upon review or an arbitrator 
determines that the employer satisfies the requirements for abatement 
of its partial withdrawal liability under Sec. 4208.4, the plan sponsor 
shall immediately refund the amounts described in paragraph (e)(1) of 
this section if the liability is waived, or credit and refund the 
amounts described in paragraph (e)(2) if the annual payment is reduced.
    (1) Refund for waived liability. If the employer's partial 
withdrawal liability is waived, the plan sponsor shall refund to the 
employer the payments made pursuant to paragraphs (d)(1)-(d)(3) of this 
section (plus interest determined in accordance with Sec. 4219.31(d) of 
this chapter as if the payments were overpayments of withdrawal 
liability).
    (2) Credit for reduced annual payment. If the employer's annual 
partial withdrawal liability payment is reduced, the plan sponsor shall 
credit the payments made pursuant to paragraphs (d)(1)-(d)(3) of this 
section (plus interest determined in accordance with Sec. 4219.31(d) of 
this chapter as if the payments were overpayments of withdrawal 
liability) to future withdrawal liability payments owed by the 
employer, beginning with the first payment that is due after the 
determination, and refund any credit (including interest) remaining 
after satisfaction of the outstanding amount of the employer's partial 
withdrawal liability.


Sec. 4208.4  Conditions for abatement.

    (a) Waiver of liability for a 70-percent contribution decline. An 
employer that has incurred a partial withdrawal under section 
4205(a)(1) of ERISA shall have no obligation to make payments with 
respect to that partial withdrawal (other than delinquent payments) for 
plan years beginning after the second consecutive plan year in which 
the conditions of either paragraph (a)(1) or (a)(2) are satisfied for 
each of the two years:
    (1) The number of contribution base units with respect to which the 
employer has an obligation to contribute under the plan for each year 
is not less than 90 percent of the total number of contribution base 
units with respect to which the employer had an obligation to 
contribute to the plan for the high base year (as defined in paragraph 
(d) of this section).
    (2) The conditions of this paragraph are satisfied if--
    (i) The number of contribution base units with respect to which the 
employer has an obligation to contribute for each year exceeds 30 
percent of the total number of contribution base units with respect to 
which the employer had an obligation to contribute to the plan for the 
high base year (as defined in paragraph (d) of this section); and
    (ii) The total number of contribution base units with respect to 
which all employers under the plan have obligations to contribute in 
each of the two years is not less than 90 percent of the total number 
of contribution base units for which all employers had obligations to 
contribute in the partial withdrawal year.
    (b) Waiver of liability for a partial cessation of the employer's 
contribution obligation. Except as provided in Sec. 4208.8, an employer 
that has incurred partial withdrawal liability under section 4205(a)(2) 
of ERISA shall have no obligation to make payments with respect to that 
partial withdrawal (other than delinquent payments) for plan years 
beginning after the second consecutive plan year in which the employer 
satisfies the conditions under either paragraph (b)(1) or (b)(2) of 
this section.
    (1) Partial restoration of withdrawn work. The employer satisfies 
the conditions under this paragraph if, for each of two consecutive 
plan years--
    (i) The employer makes contributions for the same facility or under 
the same collective bargaining agreement that gave rise to the partial 
withdrawal;
    (ii) The employer's contribution base units for that facility or 
under that agreement exceed 30 percent of the contribution base units 
with respect to which the employer had an obligation to contribute for 
that facility or under that agreement for the high base year (as 
defined in paragraph (d) of this section); and
    (iii) The total number of contribution base units with respect to 
which the employer has an obligation to contribute to the plan equals 
at least 90 percent of the total number of contribution base units with 
respect to which the employer had an obligation to contribute under the 
plan for the high base year (as defined in paragraph (d) of this 
section).
    (2) Substantial restoration of withdrawn work. The employer 
satisfies the conditions under this paragraph if, for each of two 
consecutive plan years--
    (i) The employer makes contributions for the same facility or under 
the same collective bargaining agreement that gave rise to the partial 
withdrawal;
    (ii) The employer's contribution base units for that facility or 
under that agreement are not less than 90 percent of the contribution 
base units with respect to which the employer had an obligation to 
contribute for that facility or under that agreement for the high base 
year (as defined in paragraph (d) of this section); and
    (iii) The total number of contribution base units with respect to 
which the employer has an obligation to contribute to the plan equals 
or exceeds the sum of--
    (A) The number of contribution base units with respect to which the 
employer had an obligation to contribute in the year prior to the 
partial withdrawal year, determined without regard to the contribution 
base units for the facility or under the agreement that gave rise to 
the partial withdrawal; and
    (B) 90 percent of the contribution base units with respect to which 
the employer had an obligation to contribute for that facility or under 
that agreement in either the year prior to the partial withdrawal year 
or the high base year (as defined in paragraph (d) of this section), 
whichever is less.
    (c) Reduction in annual partial withdrawal liability payment--

[[Page 34095]]

    (1) Partial withdrawals under section 4205(a)(1). An employer shall 
be entitled to a reduction of its annual partial withdrawal liability 
payment for a plan year if the number of contribution base units with 
respect to which the employer had an obligation to contribute during 
the plan year exceeds the greater of--
    (i) 110 percent (or such lower number as the plan may, by 
amendment, adopt) of the number of contribution base units with respect 
to which the employer had an obligation to contribute in the partial 
withdrawal year; or
    (ii) The total number of contribution base units with respect to 
which the employer had an obligation to contribute to the plan for the 
plan year following the partial withdrawal year.
    (2) Partial withdrawals under section 4205(a)(2). An employer that 
resumes the obligation to contribute with respect to a facility or 
collective bargaining agreement that gave rise to a partial withdrawal, 
but does not qualify to have that liability waived under paragraph (b) 
of this section, shall have its annual partial withdrawal liability 
payment reduced for any plan year in which the total number of 
contribution base units with respect to which the employer has an 
obligation to contribute equals or exceeds the sum of--
    (i) The number of contribution base units for the reentered 
facility or agreement during that year; and
    (ii) The total number of contribution base units with respect to 
which the employer had an obligation to contribute to the plan for the 
year following the partial withdrawal year.
    (d) High base year. For purposes of paragraphs (a) and (b)(1)(iii) 
of this section, the high base year contributions are the average of 
the total contribution base units for the two plan years for which the 
employer's total contribution base units were highest within the five 
plan years immediately preceding the beginning of the 3-year testing 
period defined in section 4205(b)(1)(B)(i) of ERISA, with respect to 
paragraph (a) of this section, or the partial withdrawal year, with 
respect to paragraph (b)(1)(iii) of this section. For purposes of 
paragraphs (b)(1)(ii) and (b)(2) of this section, the high base year 
contributions are the average number of contribution base units for the 
facility or under the agreement for the two plan years for which the 
employer's contribution base units for that facility or under that 
agreement were highest within the five plan years immediately preceding 
the partial withdrawal.


Sec. 4208.5   Withdrawal liability payments during pendency of 
abatement determination.

    (a) Bond/Escrow. An employer that has satisfied the requirements of 
Sec. 4208.4(a)(1) without regard to ``90 percent of'' or Sec. 4208.4(b) 
for one year with respect to all partial withdrawals it incurred in a 
plan year may, in lieu of making scheduled withdrawal liability 
payments in the second year for those withdrawals, provide a bond to, 
or establish an escrow account for, the plan that satisfies the 
requirements of paragraph (b) of this section or any plan rules adopted 
under paragraph (d) of this section, pending a determination by the 
plan sponsor of whether the employer satisfies the requirements of 
Sec. 4208.4 (a)(1) or (b) for the second consecutive plan year. An 
employer that applies for abatement and neither provides a bond/escrow 
nor makes its withdrawal liability payments remains eligible for 
abatement.
    (b) Amount of bond/escrow. The bond or escrow allowed by this 
section shall be in an amount equal to 50 percent of the withdrawal 
liability payments that would otherwise be due. The bond or escrow 
relating to each payment shall be furnished before the due date of that 
payment. A single bond or escrow may be provided for more than one 
payment due during the pendency of the plan sponsor's determination. 
The bond or escrow agreement shall provide that if the plan sponsor 
determines that the employer does not satisfy the requirements for 
abatement of its partial withdrawal liability under Sec. 4208.4 (a)(1) 
or (b), the bond or escrow shall be paid to the plan upon notice from 
the plan sponsor to the bonding or escrow agent. A bond provided under 
this paragraph shall be issued by a corporate surety company that is an 
acceptable surety for purposes of section 412 of ERISA.
    (c) Notice of bond/escrow. Concurrently with posting a bond or 
establishing an escrow account under this section, the employer shall 
notify the plan sponsor. The notice shall include a statement of the 
amount of the bond or escrow, the scheduled payment or payments with 
respect to which the bond or escrow is being furnished, and the name 
and address of the bonding or escrow agent.
    (d) Plan amendments concerning bond/escrow. A plan may, by 
amendment, adopt rules decreasing the amount of the bond or escrow 
specified in paragraph (b) of this section. A plan amendment adopted 
under this paragraph may be applied only to the extent that it is 
consistent with the purposes of ERISA. An amendment satisfies this 
requirement only if it does not create an unreasonable risk of loss to 
the plan.
    (e) Plan sponsor determination. Within 60 days after the end of the 
plan year in which the bond/escrow is furnished, the plan sponsor shall 
determine whether the employer satisfied the requirements of 
Sec. 4208.4 (a)(1) or (b) for the second consecutive plan year. The 
plan sponsor shall notify the employer and the bonding or escrow agent 
in writing of its determination and of the consequences of its 
determination, as described in Sec. 4208.3 (c) or (d) and (e), as 
appropriate.


Sec. 4208.6   Computation of reduced annual partial withdrawal 
liability payment.

    (a) Amount of reduced payment. An employer that satisfies the 
requirements of Sec. 4208.4 (c)(1) or (c)(2) shall have its annual 
partial withdrawal liability payment for that plan year reduced in 
accordance with paragraph (a)(1) or (a)(2) of this section, 
respectively.
    (1) The reduced annual payment amount for an employer that 
satisfies Sec. 4208.4(c)(1) shall be determined by substituting the 
number of contribution base units in the plan year in which the 
requirements are satisfied for the number of contribution base units in 
the year following the partial withdrawal year in the numerator of the 
fraction described in section 4206(a)(2)(A) of ERISA.
    (2) The reduced annual payment for an employer that satisfies 
Sec. 4208.4(c)(2) shall be determined by adding the contribution base 
units for which the employer is obligated to contribute with respect to 
the reentered facility or agreement in the year in which the 
requirements are satisfied to the numerator of the fraction described 
in section 4206(a)(2)(A) of ERISA.
    (b) Credit for reduction. The plan sponsor shall credit the account 
of an employer that satisfies the requirements of Sec. 4208.4(c)(1) or 
(c)(2) with the amount of annual withdrawal liability that it paid in 
excess of the amount described in paragraph (a)(1) or (a)(2) of this 
section, as appropriate. The credit shall be applied, a revised payment 
schedule issued, refund made and interest added, all in accordance with 
Sec. 4208.3(c)(4).


Sec. 4208.7   Adjustment of withdrawal liability for subsequent 
withdrawals.

    The liability of an employer for a partial or complete withdrawal 
from a plan subsequent to a partial withdrawal from that plan in a 
prior plan year shall be reduced in accordance with part 4206 of this 
chapter.

[[Page 34096]]

Sec. 4208.8   Multiple partial withdrawals in one plan year.

    (a) General rule. If an employer partially withdraws from the same 
multiemployer plan on two or more occasions during the same plan year, 
the rules of Sec. 4208.4 shall be applied as modified by this section.
    (b) Partial withdrawals under section 4205 (a)(1) and (a)(2) in the 
same plan year. If an employer partially withdraws from the same 
multiemployer plan as a result of a 70-percent contribution decline and 
a partial cessation of the employer's contribution obligation in the 
same plan year, the employer shall not be eligible for abatement under 
Sec. 4208.4 (b) or (c)(2) or under paragraph (c) of this section. The 
employer may qualify for abatement under Sec. 4208.4(a) and (c)(1) and 
under any rules adopted by the plan pursuant to Sec. 4208.9.
    (c) Multiple partial cessations of the employer's contribution 
obligation. If an employer permanently ceases to have an obligation to 
contribute for more than one facility, under more than one collective 
bargaining agreement, or for one or more facilities and under one or 
more collective bargaining agreements, resulting in multiple partial 
withdrawals under section 4205(b)(2)(A) in the same plan year, the 
abatement rules in Sec. 4208.4(b) shall be applied as modified by this 
paragraph. If an employer resumes work at all such facilities and under 
all such collective bargaining agreements, the determination of whether 
the employer qualifies for elimination of its liability under 
Sec. 4208.4(b) shall be made by substituting the test set forth in 
paragraph (c)(1) of this section for that prescribed by Sec. 4208.4 
(b)(1)(ii) or (b)(2)(ii), as applicable. If the employer resumes work 
at or under fewer than all the facilities or collective bargaining 
agreements described in this paragraph, the employer cannot qualify for 
elimination of its liability under Sec. 4208.4(b). However, the 
employer may qualify for a reduction in its partial withdrawal 
liability pursuant to paragraph (c)(2) of this section.
    (1) Resumption of work at all facilities and under all bargaining 
agreements. The test under this paragraph is satisfied if for each of 
the two consecutive plan years referred to in Sec. 4208.4(b), the 
employer's total contribution base units for the facilities and under 
the collective bargaining agreements with respect to which the employer 
incurred the multiple partial withdrawals exceed 30 percent of the 
total number of contribution base units with respect to which the 
employer had an obligation to contribute for those facilities and under 
those agreements for the base year (as defined in paragraph (d) of this 
section).
    (2) Resumption at fewer than all facilities or under fewer than all 
bargaining agreements. If the employer satisfies the conditions in 
Sec. 4208.4 (b)(1)(i) and (b)(1)(iii) and paragraph (c)(2)(i) of this 
section, or the conditions in Sec. 4208.4 (b)(2)(i) and (b)(2)(iii) and 
paragraph (c)(2)(ii) of this section, as applicable, the employer's 
withdrawal liability shall be partially waived as set forth in 
paragraph (c)(2)(iii) of this section.
    (i) With respect to a resumption of work under Sec. 4208.4(b)(1), 
the condition under this paragraph is satisfied if, for the two 
consecutive plan years referred to in Sec. 4208.4(b)(1), the employer's 
contribution base units for any reentered facility or agreement exceed 
30 percent of the number of contribution base units with respect to 
which the employer had an obligation to contribute for that facility or 
under that agreement for the base year (as defined in paragraph (d) of 
this section).
    (ii) With respect to a resumption of work under Sec. 4208.4(b)(2), 
the condition under this paragraph is satisfied if, for the two 
consecutive plan years referred to in Sec. 4208.4(b)(2), the employer's 
contribution base units for any reentered facility or agreement exceed 
90 percent of the number of contribution base units with respect to 
which the employer had an obligation to contribute for that facility or 
under that agreement for the base year (as defined in paragraph (d) of 
this section).
    (iii) The employer's reduced withdrawal liability and, if any, the 
reduced annual payments of the liability shall be determined by adding 
the average number of contribution base units that the employer is 
required to contribute for those two consecutive years for that 
facility(ies) or agreement(s) to the numerator of the fraction 
described in section 4206(a)(2)(A) of ERISA. The amount of any 
remaining partial withdrawal liability shall be paid over the schedule 
originally established starting with the first payment due after the 
revised payment schedule is issued under Sec. 4208.3(c)(4).
    (d) Base Year. For purposes of this section, the base year 
contribution base units for a reentered facility(ies) or under a 
reentered agreement(s) are the average number of contribution base 
units for the facility(ies) or under the agreement(s) for the two plan 
years for which the employer's contribution base units for that 
facility(ies) or under that agreement(s) were highest within the five 
plan years immediately preceding the partial withdrawal.


Sec. 4208.9   Plan adoption of additional abatement conditions.

    (a) General rule. A plan may by amendment, subject to the approval 
of the PBGC, adopt rules for the reduction or waiver of partial 
withdrawal liability under conditions other than those specified in 
Sec. 4208.4, provided that such conditions relate to events occurring 
or factors existing subsequent to a partial withdrawal year. The 
request for PBGC approval shall be filed after the amendment is 
adopted. PBGC approval shall also be required for any subsequent 
modification of the amendment, other than repeal of the amendment. A 
plan amendment under this section may not be put into effect until it 
is approved by the PBGC. An amendment that is approved by the PBGC may 
apply retroactively.
    (b) Who may request. The plan sponsor, or a duly authorized 
representative acting on behalf of the plan sponsor, shall sign and 
submit the request.
    (c) Where to file. The request shall be addressed to Reports 
Processing, Insurance Operations Department, Pension Benefit Guaranty 
Corporation, 1200 K Street NW., Washington, DC 20005-4026.
    (d) Information. Each request shall contain the following 
information:
    (1) The name and address of the plan for which the plan amendment 
is being submitted and the telephone number of the plan sponsor or its 
duly authorized representative.
    (2) The nine-digit Employer Identification Number (EIN) assigned to 
the plan sponsor by the IRS and the three-digit Plan Identification 
Number (PIN) assigned to the plan by the plan sponsor, and, if 
different, also the EIN-PIN last filed with the PBGC. If an EIN-PIN has 
not been assigned, that should be indicated.
    (3) A copy of the executed amendment, including--
    (i) the date on which the amendment was adopted;
    (ii) the proposed effective date;
    (iii) the full text of the rules on the reduction or waiver of 
partial withdrawal liability; and
    (iv) the full text of the rules adjusting the reduction in the 
employer's liability for a subsequent partial or complete withdrawal, 
as required by section 4206(b)(1) of ERISA.
    (4) A copy of the most recent actuarial valuation report of the 
plan.
    (5) A statement certifying that notice of the adoption of the 
amendment and of the request for approval filed under this section has 
been given to all employers that have an obligation to contribute under 
the plan and to all

[[Page 34097]]

employee organizations representing employees covered under the plan.
    (e) Supplemental information. In addition to the information 
described in paragraph (d) of this section, a plan may submit any other 
information that it believes is pertinent to its request. The PBGC may 
require the plan sponsor to submit any other information that the PBGC 
determines that it needs to review a request under this section.
    (f) Criteria for PBGC approval. The PBGC shall approve a plan 
amendment authorized by paragraph (a) of this section if it determines 
that the rules therein are consistent with the purposes of ERISA. An 
abatement amendment is not consistent with the purposes of ERISA unless 
the PBGC determines that--
    (1) The amendment is not adverse to the interests of plan 
participants and beneficiaries in the aggregate; and
    (2) The amendment would not significantly increase the PBGC's risk 
of loss with respect to the plan.

(Approved by the Office of Management and Budget under control no. 
1212-0039)

PART 4211--ALLOCATING UNFUNDED VESTED BENEFITS TO WITHDRAWING 
EMPLOYERS

Subpart A--General

Sec.
4211.1  Purpose and scope.
4211.2  Definitions.
4211.3  Special rules for construction industry and IRC section 
404(c) plans.

Subpart B--Changes Not Subject to PBGC Approval

4211.11  Changes not subject to PBGC approval.
4211.12  Modifications to the presumptive, modified presumptive and 
rolling-5 methods.
4211.13  Modifications to the direct attribution method.

Subpart C--Changes Subject to PBGC Approval

4211.21  Changes subject to PBGC approval.
4211.22  Requests for PBGC approval.
4211.23  Approval of alternative method.
4211.24  Special rule for certain alternative methods previously 
approved.

Subpart D--Allocation Methods for Merged Multiemployer Plans

4211.31  Allocation of unfunded vested benefits following the merger 
of plans.
4211.32  Presumptive method for withdrawals after the initial plan 
year.
4211.33  Modified presumptive method for withdrawals after the 
initial plan year.
4211.34  Rolling-5 method for withdrawals after the initial plan 
year.
4211.35  Direct attribution method for withdrawals after the initial 
plan year.
4211.36  Modifications to the determination of initial liabilities, 
the amortization of initial liabilities, and the allocation 
fraction.
4211.37  Allocating unfunded vested benefits for withdrawals before 
the end of the initial plan year.

    Authority: 29 U.S.C. 1302(b)(3); 1391(c)(1), (c)(2)(D), 
(c)(5)(A), (c)(5)(B), (c)(5)(D), and (f).

Subpart A--General


Sec. 4211.1  Purpose and scope.

    (a) Purpose. Section 4211 of ERISA provides four methods for 
allocating unfunded vested benefits to employers that withdraw from a 
multiemployer plan: the presumptive method (section 4211(b)); the 
modified presumptive method (section 4211(c)(2)); the rolling-5 method 
(section 4211(c)(3)); and the direct attribution method (section 
4211(c)(4)). With the minor exceptions covered in Sec. 4211.3, a plan 
determines the amount of unfunded vested benefits allocable to a 
withdrawing employer in accordance with the presumptive method, unless 
the plan is amended to adopt an alternative allocative method. 
Generally, the PBGC must approve the adoption of an alternative 
allocation method. On September 25, 1984, 49 FR 37686, the PBGC granted 
a class approval of all plan amendments adopting one of the statutory 
alternative allocation methods. Subpart C sets forth the criteria and 
procedures for PBGC approval of nonstatutory alternative allocation 
methods. Section 4211(c)(5) of ERISA also permits certain modifications 
to the statutory allocation methods. The PBGC is to prescribe these 
modifications in a regulation, and plans may adopt them without PBGC 
approval. Subpart B contains the permissible modifications to the 
statutory methods. Plans may adopt other modifications subject to PBGC 
approval under subpart C. Finally, under section 4211(f) of ERISA, the 
PBGC is required to prescribe rules governing the application of the 
statutory allocation methods or modified methods by plans following 
merger of multiemployer plans. Subpart D sets forth alternative 
allocative methods to be used by merged plans. In addition, such plans 
may adopt any of the allocation methods or modifications described 
under subparts B and C in accordance with the rules under subparts B 
and C.
    (b) Scope. This part applies to all multiemployer plans covered by 
title IV of ERISA.


Sec. 4211.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
Code, employer, IRS, multiemployer plan, nonforfeitable benefit, PBGC, 
plan, and plan year.
    In addition, for purposes of this part:
    Initial plan year means a merged plan's first complete plan year 
that begins after the establishment of the merged plan.
    Initial plan year unfunded vested benefits means the unfunded 
vested benefits as of the close of the initial plan year, less the 
value as of the end of the initial plan year of all outstanding claims 
for withdrawal liability that can reasonably be expected to be 
collected from employers that had withdrawn as of the end of the 
initial plan year.
    Merged plan means a plan that is the result of the merger of two or 
more multiemployer plans.
    Merger means the combining of two or more multiemployer plans into 
one multiemployer plan.
    Prior plan means the plan in which an employer participated 
immediately before that plan became a part of the merged plan.
    Unfunded vested benefits means an amount by which the value of 
nonforfeitable benefits under the plan exceeds the value of the assets 
of the plan.
    Withdrawing employer means the employer for whom withdrawal 
liability is being calculated under section 4201 of ERISA.
    Withdrawn employer means an employer who, prior to the withdrawing 
employer, has discontinued contributions to the plan or covered 
operations under the plan and whose obligation to contribute has not 
been assumed by a successor employer within the meaning of section 4204 
of ERISA. A temporary suspension of contributions, including a 
suspension described in section 4218(2) of ERISA, is not considered a 
discontinuance of contributions.


Sec. 4211.3  Special rules for construction industry and IRC section 
404(c) plans.

    (a) Construction plans. Except as provided in Secs. 4211.11(b) and 
4211.21(b), a plan that primarily covers employees in the building and 
construction industry shall use the presumptive method for allocating 
unfunded vested benefits.
    (b) Section 404(c) plans. A plan described in section 404(c) of the 
Code or a continuation of such a plan shall allocate unfunded vested 
benefits under the rolling-5 method unless the plan, by amendment, 
adopts an alternative method or modification.

[[Page 34098]]

Subpart B--Changes Not Subject to PBGC Approval


Sec. 4211.11  Changes not subject to PBGC approval.

    (a) General rule. A plan, other than a plan that primarily covers 
employees in the building and construction industry, may adopt, by 
amendment, any of the statutory allocation methods and any of the 
modifications set forth in Secs. 4211.12 and 4211.13, without the 
approval of the PBGC.
    (b) Building and construction industry plans. A plan that primarily 
covers employees in the building and construction industry may adopt, 
by amendment, any of the modifications to the presumptive rule set 
forth in Sec. 4211.12 without the approval of the PBGC.


Sec. 4211.12  Modifications to the presumptive, modified presumptive 
and rolling-5 methods.

    (a) ``Contributions made'' and ``total amount contributed''. Each 
of the allocation fractions used in the presumptive, modified 
presumptive and rolling-5 methods is based on contributions that 
certain employers have made to the plan for a five-year period. For 
purposes of these methods, and except as provided in paragraph (b) of 
this section, ``the sum of all contributions made'' or ``total amount 
contributed'' by employers for a plan year means the amounts (other 
than withdrawal liability payments) considered contributed to the plan 
for the plan year for purposes of section 412(b)(3)(A) of the Code. For 
plan years before section 412 applies to the plan, ``the sum of all 
contributions made'' or ``total amount contributed'' means the amount 
reported to the IRS or the Department of Labor as total contributions 
for the plan year; for example, for plan years in which the plan filed 
the Form 5500, the amount reported as total contributions on that form. 
Employee contributions, if any, shall be excluded from the totals.
    (b) Changing the period for counting contributions. A plan sponsor 
may amend a plan to modify the denominators in the presumptive, 
modified presumptive and rolling-5 methods in accordance with one of 
the alternatives described in this paragraph. Except as provided in 
paragraph (b)(4) of this section, any amendment adopted under this 
paragraph shall be applied consistently to all plan years. 
Contributions counted for one plan year may be not counted for any 
other plan year. If a contribution is counted as part of the ``total 
amount contributed'' for any plan year used to determine a denominator, 
that contribution may not also be counted as a contribution owed with 
respect to an earlier year used to determine the same denominator, 
regardless of when the plan collected that contribution.
    (1) A plan sponsor may amend a plan to provide that ``the sum of 
all contributions made'' or ``total amount contributed'' for a plan 
year means the amount of contributions that the plan actually received 
during the plan year, without regard to whether the contributions are 
treated as made for that plan year under section 412(b)(3)(A) of the 
Code.
    (2) A plan sponsor may amend a plan to provide that ``the sum of 
all contributions made'' or ``total amount contributed'' for a plan 
year means the amount of contributions actually received during the 
plan year, increased by the amount of contributions received during a 
specified period of time after the close of the plan year not to exceed 
the period described in section 412(c)(10) of the Code and regulations 
thereunder.
    (3) A plan sponsor may amend a plan to provide that ``the sum of 
all contributions made'' or ``total amount contributed'' for a plan 
year means the amount of contributions actually received during the 
plan year, increased by the amount of contributions accrued during the 
plan year and received during a specified period of time after the 
close of the plan year not to exceed the period described in section 
412(c)(10) of the Code and regulations thereunder.
    (4) A plan sponsor may amend a plan to provide that--
    (i) For plan years ending before September 26, 1980, ``the sum of 
all contributions made'' or ``total amount contributed'' means the 
amount of total contributions reported on Form 5500 and, for years 
before the plan was required to file Form 5500, the amount of total 
contributions reported on any predecessor reporting form required by 
the Department of Labor or the IRS; and
    (ii) For subsequent plan years, ``the sum of all contributions 
made'' or ``total amount contributed'' means the amount described in 
paragraph (a) of this section, or the amount described in paragraph 
(b)(1), (b)(2) or (b)(3) of this section.
    (c) Excluding contributions of significant withdrawn employers. 
Contributions of certain withdrawn employers are excluded from the 
denominator in each of the fractions used to determine a withdrawing 
employer's share of unfunded vested benefits under the presumptive, 
modified presumptive and rolling-5 methods. Except as provided in 
paragraph (c)(1) of this section, contributions of all employers that 
permanently cease to have an obligation to contribute to the plan or 
permanently cease covered operations before the end of the period of 
plan years used to determine the fractions for allocating unfunded 
vested benefits under each of those methods (and contributions of all 
employers that withdrew before September 26, 1980) are excluded from 
the denominators of the fractions.
    (1) The plan sponsor of a plan using the presumptive, modified 
presumptive or rolling-5 method may amend the plan to provide that only 
the contributions of significant withdrawn employers shall be excluded 
from the denominators of the fractions used in those methods.
    (2) For purposes of this paragraph (c), ``significant withdrawn 
employer'' means--
    (i) An employer to which the plan has sent a notice of withdrawal 
liability under section 4219 of ERISA; or
    (ii) A withdrawn employer that in any plan year used to determine 
the denominator of a fraction contributed at least $250,000 or, if 
less, 1% of all contributions made by employers for that year.
    (3) If a group of employers withdraw in a concerted withdrawal, the 
plan shall treat the group as a single employer in determining whether 
the members are significant withdrawn employers under paragraph (c)(2) 
of this section. A ``concerted withdrawal'' means a cessation of 
contributions to the plan during a single plan year--
    (i) By an employer association;
    (ii) By all or substantially all of the employers covered by a 
single collective bargaining agreement; or
    (iii) By all or substantially all of the employers covered by 
agreements with a single labor organization.


Sec. 4211.13  Modifications to the direct attribution method.

    (a) Error in direct attribution method. The unfunded vested 
benefits allocated to a withdrawing employer under the direct 
attribution method are the sum of the employer's attributable 
liability, determined under section 4211(c)(4) (A)(i) and (B) of ERISA, 
and the employer's share of the plan's unattributable liability, 
determined under section 4211(c)(4)(E) and allocated to the employer 
under section 4211(c)(4)(F). Plan sponsors should allocate 
unattributable liabilities on the basis of the employer's share of the 
attributable liabilities. However, section 4211(c)(4)(F) of ERISA, 
which describes the allocation of unattributable liabilities, contains 
a typographical

[[Page 34099]]

error. Therefore, plans adopting the direct attribution method shall 
modify the phrase ``as the amount determined under subparagraph (C) for 
the employer bears to the sum of the amounts determined under 
subparagraph (C) for all employers under the plan'' in section 
4211(c)(4)(F) by substituting ``subparagraph (B)'' for ``subparagraph 
(C)'' in both places it appears.
    (b) Allocating unattributable liability based on contributions in 
period before withdrawal. A plan that is amended to adopt the direct 
attribution method may provide that instead of allocating the 
unattributable liability in accordance with section 4211(c)(4)(F) of 
ERISA, the employer's share of the plan's unattributable liability 
shall be determined by multiplying the plan's unattributable liability 
determined under section 4211(c)(4)(E) by a fraction--
    (1) The numerator of which is the total amount of contributions 
required to be made by the withdrawing employer over a period of 
consecutive plan years (not fewer than five) ending before the 
withdrawal; and
    (2) The denominator of which is the total amount contributed under 
the plan by all employers for the same period of years used in 
paragraph (b)(1) of this section, decreased by any amount contributed 
by an employer that withdrew from the plan during those plan years.

Subpart C--Changes Subject to PBGC Approval


Sec. 4211.21  Changes subject to PBGC approval.

    (a) General rule. Subject to the approval of the PBGC pursuant to 
this subpart, a plan, other than a plan that primarily covers employees 
in the building and construction industry, may adopt, by amendment, any 
allocation method or modification to an allocation method that is not 
permitted under subpart B of this part.
    (b) Building and construction industry plans. Subject to the 
approval of the PBGC pursuant to this subpart, a plan that primarily 
covers employees in the building and construction industry may adopt, 
by amendment, any allocation method or modification to an allocation 
method that is not permitted under Sec. 4211.12 if the method or 
modification is applicable only to its employers that are not 
construction industry employers within the meaning of section 
4203(b)(1)(A) of ERISA.
    (c) Substantial overallocation not allowed. No plan may adopt an 
allocation method or modification to an allocation method that results 
in a systematic and substantial overallocation of the plan's unfunded 
vested benefits.
    (d) Use of method prior to approval. A plan may implement an 
alternative allocation method or modification to an allocation method 
that requires PBGC approval before that approval is given. However, the 
plan sponsor shall assess liability in accordance with this paragraph.
    (1) Demand for payment. Until the PBGC approves the allocation 
method or modification, a plan may not demand withdrawal liability 
under section 4219 of ERISA in an amount that exceeds the lesser of the 
amount calculated under the amendment or the amount calculated under 
the allocation method that the plan would be required to use if the 
PBGC did not approve the amendment. The plan must inform each 
withdrawing employer of both amounts and explain that the higher amount 
may become payable depending on the PBGC's decision on the amendment.
    (2) Adjustment of liability. When necessary because of the PBGC 
decision on the amendment, the plan shall adjust the amount demanded 
from each employer under paragraph (c)(1) of this section and the 
employer's withdrawal liability payment schedule. The length of the 
payment schedule shall be increased, as necessary. The plan shall 
notify each affected employer of the adjusted liability and payment 
schedule and shall collect the adjusted amount in accordance with the 
adjusted schedule.


Sec. 4211.22  Requests for PBGC approval.

    (a) General. A plan shall submit a request for approval of an 
alternative allocation method or modification to an allocation method 
to the PBGC in accordance with the requirements of this section as soon 
as practicable after the adoption of the amendment.
    (b) Who shall submit. The plan sponsor, or a duly authorized 
representative acting on behalf of the plan sponsor, shall sign the 
request.
    (c) Where to submit. The plan shall submit the request by first 
class mail or courier service to Reports Processing, Insurance 
Operations Department, Pension Benefit Guaranty Corporation, 1200 K 
Street, NW., Washington, DC 20005-4026, or by hand to the above 
address.
    (d) Content. Each request shall contain the following information:
    (1) The name, address and telephone number of the plan sponsor, and 
of the duly authorized representative, if any, of the plan sponsor.
    (2) The name of the plan.
    (3) The nine-digit Employer Identification Number (EIN) that the 
Internal Revenue Service assigned to the plan sponsor and the three-
digit Plan Identification Number (PIN) that the plan sponsor assigned 
to the plan, and, if different, also the EIN-PIN that the plan last 
filed with the PBGC. If the plan has no EIN-PIN, the request shall so 
indicate.
    (4) The date the amendment was adopted.
    (5) A copy of the amendment, setting forth the full text of the 
alternative allocation method or modification.
    (6) The allocation method that the plan currently uses and a copy 
of the plan amendment (if any) that adopted the method.
    (7) A statement certifying that notice of the adoption of the 
amendment has been given to all employers that have an obligation to 
contribute under the plan and to all employee organizations that 
represent employees covered by the plan.
    (e) Additional information. In addition to the information listed 
in paragraph (d) of this section, the PBGC may require the plan sponsor 
to submit any other information that the PBGC determines is necessary 
for the review of an alternative allocation method or modification to 
an allocation method.

(Approved by the Office of Management and Budget under control 
number 1212-0035)


Sec. 4211.23  Approval of alternative method.

    (a) General. The PBGC shall approve an alternative allocation 
method or modification to an allocation method if the PBGC determines 
that adoption of the method or modification would not significantly 
increase the risk of loss to plan participants and beneficiaries or to 
the PBGC.
    (b) Criteria. An alternative allocation method or modification to 
an allocation method satisfies the requirements of paragraph (a) of 
this section if it meets the following three conditions:
    (1) The method or modification allocates a plan's unfunded vested 
benefits, both for the adoption year and for the five subsequent plan 
years, to the same extent as any of the statutory allocation methods, 
or any modification to a statutory allocation method permitted under 
subpart B.
    (2) The method or modification allocates unfunded vested benefits 
to each employer on the basis of either the employer's share of 
contributions to the plan or the unfunded vested benefits attributable 
to each employer. The method or modification may take into account 
differences in contribution rates paid by different employers and

[[Page 34100]]

differences in benefits of different employers' employees.
    (3) The method or modification fully reallocates among employers 
that have not withdrawn from the plan all unfunded vested benefits that 
the plan sponsor has determined cannot be collected from withdrawn 
employers, or that are not assessed against withdrawn employers because 
of sections 4209, 4219(c)(1)(B) or 4225 of ERISA.
    (c) PBGC action on request. The PBGC's decision on a request for 
approval shall be in writing. If the PBGC disapproves the request, the 
decision shall state the reasons for the disapproval and shall include 
a statement of the sponsor's right to request a reconsideration of the 
decision pursuant to part 4003 of this chapter.


Sec. 4211.24  Special rule for certain alternative methods previously 
approved.

    A plan may not apply to any employer withdrawing on or after 
November 25, 1987, an allocation method approved by the PBGC before 
that date that allocates to the employer the greater of the amounts of 
unfunded vested benefits determined under two different allocation 
rules. Until a plan that has been using such a method is amended to 
adopt a valid allocation method, its allocation method shall be deemed 
to be the statutory allocation method that would apply if it had never 
been amended.

Subpart D--Allocation Methods for Merged Multiemployer Plans


Sec. 4211.31  Allocation of unfunded vested benefits following the 
merger of plans.

    (a) General Rule. Except as provided in paragraphs (b) through (d) 
of this section, when two or more multiemployer plans merge, the merged 
plan shall adopt one of the statutory allocation methods, in accordance 
with subpart B of this part, or one of the allocation methods 
prescribed in Secs. 4211.32 through 4211.35, and the method adopted 
shall apply to all employer withdrawals occurring after the initial 
plan year. Alternatively, a merged plan may adopt its own allocation 
method in accordance with subpart C of this part. If a merged plan 
fails to adopt an allocation method pursuant to this subpart or subpart 
B or C, it shall use the presumptive allocation method prescribed in 
Sec. 4211.32. In addition, a merged plan may adopt any of the 
modifications prescribed in Sec. 4211.36 or in subpart B of this part.
    (b) Construction plans. Except as provided in the next sentence, a 
merged plan that primarily covers employees in the building and 
construction industry shall use the presumptive allocation method 
prescribed in Sec. 4211.32. However, the plan may, with respect to 
employers that are not construction industry employers within the 
meaning of section 4203(b)(1)(A) of ERISA, adopt, by amendment, one of 
the alternative methods prescribed in Secs. 4211.33 through 4211.35 or 
any other allocation method. Any such amendment shall be adopted in 
accordance with subpart C of this part. A construction plan may, 
without the PBGC's approval, adopt by amendment any of the 
modifications set forth in Sec. 4211.36 or any of the modifications to 
the statutory presumptive method set forth in Sec. 4211.12.
    (c) Section 404(c) plans. A merged plan that is a continuation of a 
plan described in section 404(c) of the Code shall use the rolling-5 
allocation method prescribed in Sec. 4211.34, unless the plan, by 
amendment, adopts an alternative method. The plan may adopt one of the 
statutory allocation methods or one of the allocation methods set forth 
in Secs. 4211.32 through 4211.35 without PBGC approval; adoption of any 
other allocation method is subject to PBGC approval under subpart B of 
this plan. The plan may, without the PBGC's approval, adopt by 
amendment any of the modifications set forth in Sec. 4211.36 or in 
subpart B of this part.
    (d) Withdrawals before the end of the initial plan year. For 
employer withdrawals after the effective date of a merger and prior to 
the end of the initial plan year, the amount of unfunded vested 
benefits allocable to a withdrawing employer shall be determined in 
accordance with Sec. 4211.37.


Sec. 4211.32  Presumptive method for withdrawals after the initial plan 
year.

    (a) General rule. Under this section, the amount of unfunded vested 
benefits allocable to an employer that withdraws from a merged plan 
after the initial plan year is the sum (but not less than zero) of--
    (1) The employer's proportional share, if any, of the unamortized 
amount of the plan's initial plan year unfunded vested benefits, as 
determined under paragraph (b) of this section;
    (2) The employer's proportional share of the unamortized amount of 
the change in the plan's unfunded vested benefits for plan years ending 
after the initial plan year, as determined under paragraph (c) of this 
section; and
    (3) The employer's proportional share of the unamortized amounts of 
the reallocated unfunded vested benefits (if any) as determined under 
paragraph (d) of this section.
    (b) Share of initial plan year unfunded vested benefits. An 
employer's proportional share, if any, of the unamortized amount of the 
plan's initial plan year unfunded vested benefits is the sum of the 
employer's share of its prior plan's liabilities (determined under 
paragraph (b)(1) of this section) and the employer's share of the 
adjusted initial plan year unfunded vested benefits (determined under 
paragraph (b)(2) of this section), with such sum reduced by five 
percent of the original amount for each plan year subsequent to the 
initial year.
    (1) Share of prior plan liabilities. An employer's share of its 
prior plan's liabilities is the amount of unfunded vested benefits that 
would have been allocable to the employer if it had withdrawn on the 
first day of the initial plan year, determined as if each plan had 
remained a separate plan.
    (2) Share of adjusted initial plan year unfunded vested benefits. 
An employer's share of the adjusted initial plan year unfunded vested 
benefits equals the plan's initial plan year unfunded vested benefits, 
less the amount that would be determined under paragraph (b)(1) of this 
section for each employer that had not withdrawn as of the end of the 
initial plan year, multiplied by a fraction--
    (i) The numerator of which is the amount determined under paragraph 
(b)(1) of this section; and
    (ii) The denominator of which is the sum of the amounts that would 
be determined under paragraph (b)(1) of this section for each employer 
that had not withdrawn as of the end of the initial plan year.
    (c) Share of annual changes. An employer's proportional share of 
the unamortized amount of the change in the plan's unfunded vested for 
the plan years ending after the end of the initial plan year is the sum 
of the employer's proportional shares (determined under paragraph 
(c)(2) of this section) of the unamortized amount of the change in 
unfunded vested benefits (determined under paragraph (c)(1) of this 
section) for each plan year in which the employer has an obligation to 
contribute under the plan ending after the initial plan year and before 
the plan year in which the employer withdraws.
    (1) Change in plan's unfunded vested benefits. The change in a 
plan's unfunded vested benefits for a plan year is the amount by which 
the unfunded vested benefits at the end of a plan year, less the value 
as of the end of such year of all outstanding claims for withdrawal 
liability that can reasonably be expected

[[Page 34101]]

to be collected from employers that had withdrawn as of the end of the 
initial plan year, exceed the sum of the unamortized amount of the 
initial plan year unfunded vested benefits (determined under paragraph 
(c)(1)(i) of this section) and the unamortized amounts of the change in 
unfunded vested benefits for each plan year ending after the initial 
plan year and preceding the plan year for which the change is 
determined (determined under paragraph (c)(1)(ii) of this section).
    (i) Unamortized amount of initial plan year unfunded vested 
benefits. The unamortized amount of the initial plan year unfunded 
vested benefits is the amount of those benefits reduced by five percent 
of the original amount for each succeeding plan year.
    (ii) Unamortized amount of the change. The unamortized amount of 
the change in a plan's unfunded vested benefits with respect to a plan 
year is the change in unfunded vested benefits for the plan year, 
reduced by five percent of such change for each succeeding plan year.
    (2) Employer's proportional share. An employer's proportional share 
of the amount determined under paragraph (c)(1) of this section is 
computed by multiplying that amount by a fraction--
    (i) The numerator of which is the total amount required to be 
contributed under the plan (or under the employer's prior plan) by the 
employer for the plan year in which the change arose and the four 
preceding full plan years; and
    (ii) The denominator of which is the total amount contributed under 
the plan (or under employer's prior plan) for the plan year in which 
the change arose and the four preceding full plan years by all 
employers that had an obligation to contribute under the plan for the 
plan year in which such change arose, reduced by any amount contributed 
by an employer that withdrew from the plan in the year in which the 
change arose.
    (d) Share of reallocated amounts. An employer's proportional share 
of the unamortized amounts of the reallocated unfunded vested benefits, 
if any, is the sum of the employer's proportional shares (determined 
under paragraph (d)(2) of this section) of the unamortized amount of 
the reallocated unfunded vested benefits (determined under paragraph 
(d)(1) of this section) for each plan year ending before the plan year 
in which the employer withdrew from the plan.
    (1) Unamortized amount of reallocated unfunded vested benefits. The 
unamortized amount of the reallocated unfunded vested benefits with 
respect to a plan year is the sum of the amounts described in 
paragraphs (d)(1)(i), (d)(1)(ii), and (d)(1)(iii) of this section for 
the plan year, reduced by five percent of such sum for each succeeding 
plan year.
    (i) Uncollectible amounts. Amounts included as reallocable under 
this paragraph are those that the plan sponsor determines in that plan 
year to be uncollectible for reasons arising out of cases or 
proceedings under Title 11, United States Code, or similar proceedings, 
with respect to an employer that withdrew after the close of the 
initial plan year.
    (ii) Relief amounts. Amounts included as reallocable under this 
paragraph are those that the plan sponsor determines in that plan year 
will not be assessed as a result of the operation of sections 4209, 
4219(c)(1)(B), or 4225 of ERISA with respect to an employer that 
withdrew after the close of the initial plan year.
    (iii) Other amounts. Amounts included as reallocable under this 
paragraph are those that the plan sponsor determines in that plan year 
to be uncollectible or unassessable for other reasons under standards 
not inconsistent with regulations prescribed by the PBGC.
    (2) Employer's proportional share. An employer's proportional share 
of the amount of the reallocated unfunded vested benefits with respect 
to a plan year is computed by multiplying the unamortized amount of the 
reallocated unfunded vested benefits (as of the end of the year 
preceding the plan year in which the employer withdraws) by the 
allocation fraction described in paragraph (c)(2) of this section for 
the same plan year.


Sec. 4211.33   Modified presumptive method for withdrawals after the 
initial plan year.

    (a) General rule. Under this section, the amount of unfunded vested 
benefits allocable to an employer that withdraws from a merged plan 
after the initial plan year is the sum of the employer's proportional 
share, if any, of the unamortized amount of the plan's initial plan 
year unfunded vested benefits (determined under paragraph (b) of this 
section) and the employer's proportional share of the unamortized 
amount of the unfunded vested benefits arising after the initial plan 
year (determined under paragraph (c) of this section).
    (b) Share of initial plan year unfunded vested benefits. An 
employer's proportional share, if any, of the unamortized amount of the 
plan's initial plan year unfunded vested benefits is the sum of the 
employer's share of its prior plan's liabilities, as determined under 
Sec. 4211.32(b)(1), and the employer's share of the adjusted initial 
plan year unfunded vested benefits, as determined under 
Sec. 4211.32(b)(2), with such sum reduced as if it were being fully 
amortized in level annual installments over fifteen years beginning 
with the first plan year after the initial plan year.
    (c) Share of unfunded vested benefits arising after the initial 
plan year. An employer's proportional share of the amount of the plan's 
unfunded vested benefits arising after the initial plan year is the 
employer's proportional share (determined under paragraph (c)(2) of 
this section) of the plan's unfunded vested benefits as of the end of 
the plan year preceding the plan year in which the employer withdraws, 
reduced by the amount of the plan's unfunded vested benefits as of the 
close of the initial plan year (determined under paragraph (c)(1) of 
this section).
    (1) Amount of unfunded vested benefits. The plan's unfunded vested 
benefits as of the end of the plan year preceding the plan year in 
which the employer withdraws shall be reduced by the sum of--
    (i) The value as of that date of all outstanding claims for 
withdrawal liability that can reasonably be expected to be collected, 
with respect to employers that withdrew before that plan year; and
    (ii) The sum of the amounts that would be allocable under paragraph 
(b) of this section to all employers that have an obligation to 
contribute in the plan year preceding the plan year in which the 
employer withdraws and that also had an obligation to contribute in the 
first plan year ending after the initial plan year.
    (2) Employer's proportional share. An employer's proportional share 
of the amount determined under paragraph (c)(1) of this section is 
computed by multiplying that amount by a fraction--
    (i) The numerator of which is the total amount required to be 
contributed under the plan (or under the employer's prior plan) by the 
employer for the last five full plan years ending before the date on 
which the employer withdraws; and
    (ii) The denominator of which is the total amount contributed under 
the plan (or under each employer's prior plan) by all employers for the 
last five full plan years ending before the date on which the employer 
withdraws, increased by the amount of any employer contributions owed 
with respect to earlier periods that were collected in those plan 
years, and decreased by any amount contributed by an employer that

[[Page 34102]]

withdrew from the plan (or prior plan) during those plan years.


Sec. 4211.34   Rolling-5 method for withdrawals after the initial plan 
year.

    (a) General rule. Under this section, the amount of unfunded vested 
benefits allocable to an employer that withdraws from a merged plan 
after the initial plan year is the sum of the employer's proportional 
share, if any, of the unamortized amount of the plan's initial plan 
year unfunded vested benefits (determined under paragraph (b) of this 
section) and the employer's proportional share of the unamortized 
amount of the unfunded vested benefits arising after the initial plan 
year (determined under paragraph (c) of this section).
    (b) Share of initial plan year unfunded vested benefits. An 
employer's proportional share, if any, of the unamortized amount of the 
plan's initial plan year unfunded vested benefits is the sum of the 
employer's share of its prior plan's liabilities, as determined under 
Sec. 4211.32(b)(1), and the employer's share of the adjusted initial 
plan year unfunded vested benefits, as determined under 
Sec. 4211.32(b)(2), with such sum reduced as if it were being fully 
amortized in level annual installments over five years beginning with 
the first plan year after the initial plan year.
    (c) Share of unfunded vested benefits arising after the initial 
plan year. An employer's proportional share of the amount of the plan's 
unfunded vested benefits arising after the initial plan year is the 
employer's proportional share determined under Sec. 4211.33(c).


Sec. 4211.35   Direct attribution method for withdrawals after the 
initial plan year.

    The allocation method under this section is the allocation method 
described in section 4211(c)(4) of ERISA.


Sec. 4211.36  Modifications to the determination of initial 
liabilities, the amortization of initial liabilities, and the 
allocation fraction.

    (a) General rule. A plan using any of the allocation methods 
described in Secs. 4211.32 through 4211.34 may, by plan amendment and 
without PBGC approval, adopt any of the modifications described in this 
section.
    (b) Restarting initial liabilities. A plan may be amended to 
allocate the initial plan year unfunded vested benefits under 
Sec. 4211.32(b), Sec. 4211.33(b), or Sec. 4211.34(b) without separately 
allocating to employers the liabilities attributable to their 
participation under their prior plans. An amendment under this 
paragraph must include an allocation fraction under paragraph (d) of 
this section for determining the employer's proportional share of the 
total unfunded benefits as of the close of the initial plan year.
    (c) Amortizing initial liabilities. A plan may by amendment modify 
the amortization of initial liabilities in either of the following 
ways:
    (1) If two or more plans that use the presumptive allocation method 
of section 4211(b) of ERISA merge, the merged plan may adjust the 
amortization of initial liabilities under Sec. 4211.32(b) to amortize 
those unfunded vested benefits over the remaining length of the prior 
plans' amortization schedules.
    (2) A plan that has adopted the allocation method under 
Sec. 4211.33 or Sec. 4211.34 may adjust the amortization of initial 
liabilities under Sec. 4211.33(b) or Sec. 4211.34(b) to amortize those 
unfunded vested benefits in level annual installments over any period 
of at least five and not more than fifteen years.
    (d) Changing the allocation fraction. A plan may by amendment 
replace the allocation fraction under Sec. 4211.32(b), Sec. 4211.33(b), 
or Sec. 4211.34(b) with any of the following contribution-based 
fractions--
    (1) A fraction, the numerator of which is the total amount required 
to be contributed under the merged and prior plans by the withdrawing 
employer in the 60-month period ending on the last day of the initial 
plan year, and the denominator of which is the sum for that period of 
the contributions made by all employers that had not withdrawn as of 
the end of the initial plan year;
    (2) A fraction, the numerator of which is the total amount required 
to be contributed by the withdrawing employer for the initial plan year 
and the four preceding full plan years of its prior plan, and the 
denominator of which is the sum of all contributions made over that 
period by employers that had not withdrawn as of the end of the initial 
plan year; or
    (3) A fraction, the numerator of which is the total amount required 
to be contributed to the plan by the withdrawing employer since the 
effective date of the merger, and the denominator of which is the sum 
of all contributions made over that period by employers that had not 
withdrawn as of the end of the initial plan year.


Sec. 4211.37  Allocating unfunded vested benefits for withdrawals 
before the end of the initial plan year.

    If an employer withdraws after the effective date of a merger and 
before the end of the initial plan year, the amount of unfunded vested 
benefits allocable to the employer shall be determined as if each plan 
had remained a separate plan. In making this determination, the plan 
sponsor shall use the allocation method of the withdrawing employer's 
prior plan and shall compute the employer's allocable share of the 
plan's unfunded vested benefits as if the day before the effective date 
of the merger were the end of the last plan year prior to the 
withdrawal.

PART 4219--NOTICE, COLLECTION, AND REDETERMINATION OF WITHDRAWAL 
LIABILITY

Subpart A--General

Sec.
4219.1  Purpose and scope.
4219.2  Definitions.

Subpart B--Redetermination of Withdrawal Liability Upon Mass Withdrawal

4219.11  Withdrawal liability upon mass withdrawal.
4219.12  Employers liable upon mass withdrawal.
4219.13  Amount of liability for de minimis amounts.
4219.14  Amount of liability for 20-year-limitation amounts.
4219.15  Determination of reallocation liability.
4219.16  Imposition of liability.
4219.17  Filings with PBGC.
4219.18  Withdrawal in a plan year in which substantially all 
employers withdraw.
4219.19  Information collection.

Subpart C--Overdue, Defaulted, and Overpaid Withdrawal Liability

4219.31  Overdue and defaulted withdrawal liability; overpayment.
4219.32  Interest on overdue, defaulted and overpaid withdrawal 
liability.
4219.33  Plan rules concerning overdue and defaulted withdrawal 
liability.

    Authority: 29 U.S.C. 1302(b)(3) and 1399(c)(6).

Subpart A--General


Sec. 4219.1  Purpose and scope.

    (a) Subpart A. Subpart A of this part describes the purpose and 
scope of the provisions in this part and defined terms used in this 
part.
    (b) Subpart B.
    (1) Purpose. When a multiemployer plan terminates by the withdrawal 
of every employer from the plan, or when substantially all employers 
withdraw from a multiemployer plan pursuant to an agreement or 
arrangement to withdraw from the plan, section 4219(c)(1)(D)(i) of 
ERISA requires that the liability of such withdrawing employers be 
determined (or redetermined) without regard to the 20-year limitation 
on annual payments established in section 4219(c)(1)(B) of ERISA. In 
addition, section 4219(c)(1)(D)(ii) requires that, upon the

[[Page 34103]]

occurrence of a withdrawal described above, the total unfunded vested 
benefits of the plan be fully allocated among such withdrawing 
employers in a manner that is not inconsistent with PBGC regulations. 
Section 4209(c) of ERISA provides that the de minimis reduction 
established in sections 4209 (a) and (b) of ERISA shall not apply to an 
employer that withdraws in a plan year in which substantially all 
employers withdraw from the plan, or to an employer that withdraws 
pursuant to an agreement to withdraw during a period of one or more 
plan years during which substantially all employers withdraw pursuant 
to an agreement or arrangement to withdraw. The purpose of subpart B of 
this part is to prescribe rules, pursuant to sections 4219(c)(1)(D) and 
4209(c) of ERISA, for redetermining an employer's withdrawal liability 
and fully allocating the unfunded vested benefits of a multiemployer 
plan in either of two mass-withdrawal situations: the termination of a 
plan by the withdrawal of every employer and the withdrawal of 
substantially all employers pursuant to an agreement or arrangement to 
withdraw. Subpart B also prescribes rules for redetermining the 
liability of an employer without regard to section 4209 (a) or (b) when 
the employer withdraws in a plan year in which substantially all 
employers withdraw, regardless of the occurrence of a mass withdrawal. 
(See part 4281 regarding the valuation of unfunded vested benefits to 
be fully allocated under subpart B, and parts 4041A and 4281 regarding 
the powers and duties of the plan sponsor of a plan terminated by mass 
withdrawal.)
    (2) Scope. Subpart B applies to multiemployer plans covered by 
title IV of ERISA, with respect to which there is a termination by the 
withdrawal of every employer (including a plan created by a partition 
pursuant to section 4233 of ERISA) or a withdrawal of substantially all 
employers in the plan pursuant to an agreement or arrangement to 
withdraw from the plan, and to employers that withdraw from such 
multiemployer plans. The obligations of a plan sponsor of a mass-
withdrawal-terminated plan under subpart B shall cease to apply when 
the plan assets are distributed in full satisfaction of all 
nonforfeitable benefits under the plan. Subpart B also applies, to the 
extent appropriate, to multiemployer plans with respect to which there 
is a withdrawal of substantially all employers in a single plan year 
and to employers that withdraw from such plans in that plan year.
    (c) Subpart C. Subpart C establishes the interest rate to be 
charged on overdue, defaulted and overpaid withdrawal liability under 
section 4219(c)(6) of ERISA, and authorizes multiemployer plans to 
adopt alternative rules concerning assessment of interest and related 
matters. Subpart C applies to multiemployer plans covered under title 
IV of ERISA, and to employers that have withdrawn from such plans after 
April 28, 1980 (May 2, 1979, for certain employers in the seagoing 
industry).


Sec. 4219.2   Definitions.

    (a) The following terms are defined in section 4001.2 of this 
chapter: employer, ERISA, IRS, mass withdrawal, multiemployer plan, 
nonforfeitable benefit, PBGC, plan, and plan year.
    (b) For purposes of this part:
    Initial withdrawal liability means the amount of withdrawal 
liability determined in accordance with sections 4201 through 4225 of 
title IV without regard to the occurrence of a mass withdrawal.
    Mass withdrawal liability means the sum of an employer's liability 
for de minimis amounts, liability for 20-year-limitation amounts, and 
reallocation liability.
    Mass withdrawal valuation date means--
    (1) In the case of a termination by mass withdrawal, the last day 
of the plan year in which the plan terminates; or
    (2) in the case of a withdrawal of substantially all employers 
pursuant to an agreement or arrangement to withdraw, the last day of 
the plan year as of which substantially all employers have withdrawn.
    Reallocation liability means the amount of unfunded vested benefits 
allocated to an employer in the event of a mass withdrawal.
    Reallocation record date means a date selected by the plan sponsor, 
which shall be not earlier than the date of the plan's actuarial report 
for the year of the mass withdrawal and not later than one year after 
the mass withdrawal valuation date.
    Redetermination liability means the sum of an employer's liability 
for de minimis amounts and the employer's liability for 20-year-
limitation amounts.
    Unfunded vested benefits means the amount by which the present 
value of a plan's vested benefits exceeds the value of plan assets 
(including claims of the plan for unpaid initial withdrawal liability 
and redetermination liability), determined in accordance with section 
4281 of ERISA and part 4281, subpart B.
    (c) For purposes of subpart B--
    Withdrawal means a complete withdrawal as defined in section 4203 
of ERISA.

Subpart B--Redetermination of Withdrawal Liability Upon Mass 
Withdrawal


Sec. 4219.11   Withdrawal liability upon mass withdrawal.

    (a) Initial withdrawal liability. The plan sponsor of a 
multiemployer plan that experiences a mass withdrawal shall determine 
initial withdrawal liability pursuant to section 4201 of ERISA of every 
employer that has completely or partially withdrawn from the plan and 
for whom the liability has not previously been determined and, in 
accordance with section 4202 of ERISA, notify each employer of the 
amount of the initial withdrawal liability and collect the amount of 
the initial withdrawal liability from each employer.
    (b) Mass withdrawal liability. The plan sponsor of a multiemployer 
plan that experiences a mass withdrawal shall also--
    (1) Notify withdrawing employers, in accordance with 
Sec. 4219.16(a), that a mass withdrawal has occurred;
    (2) Within 150 days after the mass withdrawal valuation date, 
determine the liability of withdrawn employers for de minimis amounts 
and for 20-year-limitation amounts in accordance with Secs. 4219.13 and 
4219.14;
    (3) Within one year after the reallocation record date, determine 
the reallocation liability of withdrawn employers in accordance with 
Sec. 4219.15;
    (4) Notify each withdrawing employer of the amount of mass 
withdrawal liability determined pursuant to this subpart and the 
schedule for payment of such liability, and demand payment of and 
collect that liability, in accordance with Sec. 4219.16; and
    (5) Notify the PBGC of the occurrence of a mass withdrawal and 
certify, in accordance with Sec. 4219.17, that determinations of mass 
withdrawal liability have been completed.
    (c) Extensions of time. The plan sponsor of a multiemployer plan 
that experiences a mass withdrawal may apply to the PBGC for an 
extension of the deadlines contained in paragraph (b) of this section. 
The PBGC shall approve such a request only if it finds that failure to 
grant the extension will create an unreasonable risk of loss to plan 
participants or the PBGC.


Sec. 4219.12   Employers liable upon mass withdrawal.

    (a) Liability for de minimis amounts. An employer shall be liable 
for de

[[Page 34104]]

minimis amounts to the extent provided in section 4219(c)(1)(D) of 
ERISA if the employer's initial withdrawal liability was reduced 
pursuant to section 4209 (a) or (b) of ERISA.
    (b) Liability for 20-year-limitation amounts. An employer shall be 
liable for 20-year-limitation amounts to the extent provided in section 
4219(c)(1)(D) of ERISA.
    (c) Liability for reallocation liability. An employer shall be 
liable for reallocation liability if the employer withdrew pursuant to 
an agreement or arrangement to withdraw from a multiemployer plan from 
which substantially all employers withdrew pursuant to an agreement or 
arrangement to withdraw, or if the employer withdrew after the 
beginning of the second full plan year preceding the termination date 
from a plan that terminated by the withdrawal of every employer, and, 
as of the reallocation record date--
    (1) The employer has not been completely liquidated or dissolved;
    (2) The employer is not the subject of a case or proceeding under 
title 11, United States Code, or any case or proceeding under similar 
provisions of state insolvency laws, except that a plan sponsor may 
determine that such an employer is liable for reallocation liability if 
the plan sponsor determines that the employer is reasonably expected to 
be able to pay its initial withdrawal liability and its redetermination 
liability in full and on time to the plan; and
    (3) The plan sponsor has not determined that the employer's initial 
withdrawal liability or its redetermination liability is limited by 
section 4225 of ERISA.
    (d) General exclusion. In the event that a plan experiences 
successive mass withdrawals, an employer that has been determined to be 
liable under this subpart for any component of mass withdrawal 
liability shall not be liable as a result of the same withdrawal for 
that component of mass withdrawal liability with respect to a 
subsequent mass withdrawal.
    (e) Free-look rule. An employer that is not liable for initial 
withdrawal liability pursuant to a plan amendment adopting section 
4210(a) of ERISA shall not be liable for de minimis amounts or for 20-
year-limitation amounts, but shall be liable for reallocation liability 
in accordance with paragraph (c) of this section.
    (f) Payment of initial withdrawal liability. An employer's payment 
of its total initial withdrawal liability, whether by prepayment or 
otherwise, for a withdrawal which is later determined to be part of a 
mass withdrawal shall not exclude the employer from or otherwise limit 
the employer's mass withdrawal liability under this subpart.
    (g) Agreement presumed. Withdrawal by an employer during a period 
of three consecutive plan years within which substantially all 
employers withdraw from a plan shall be presumed to be a withdrawal 
pursuant to an agreement or arrangement to withdraw unless the employer 
proves otherwise by a preponderance of the evidence.


Sec. 4219.13   Amount of liability for de minimis amounts.

    An employer that is liable for de minimis amounts shall be liable 
to the plan for the amount by which the employer's allocable share of 
unfunded vested benefits for the purpose of determining its initial 
withdrawal liability was reduced pursuant to section 4209 (a) or (b) of 
ERISA. Any liability for de minimis amounts determined under this 
section shall be limited by section 4225 of ERISA to the extent that 
section would have been limiting had the employer's initial withdrawal 
liability been determined without regard to the de minimis reduction.


Sec. 4219.14  Amount of liability for 20-year-limitation amounts.

    An employer that is liable for 20-year-limitation amounts shall be 
liable to the plan for an amount equal to the present value of all 
initial withdrawal liability payments for which the employer was not 
liable pursuant to section 4219(c)(1)(B) of ERISA. The present value of 
such payments shall be determined as of the end of the plan year 
preceding the plan year in which the employer withdrew, using the 
assumptions that were used to determine the employer's payment schedule 
for initial withdrawal liability pursuant to section 4219(c)(1)(A)(ii) 
of ERISA. Any liability for 20-year-limitation amounts determined under 
this section shall be limited by section 4225 of ERISA to the extent 
that section would have been limiting had the employer's initial 
withdrawal liability been determined without regard to the 20-year 
limitation.


Sec. 4219.15  Determination of reallocation liability.

    (a) General rule. In accordance with the rules in this section, the 
plan sponsor shall determine the amount of unfunded vested benefits to 
be reallocated and shall fully allocate those unfunded vested benefits 
among all employers liable for reallocation liability.
    (b) Amount of unfunded vested benefits to be reallocated. For 
purposes of this section, the amount of a plan's unfunded vested 
benefits to be reallocated shall be the amount of the plan's unfunded 
vested benefits, determined as of the mass withdrawal valuation date, 
adjusted to exclude from plan assets the value of the plan's claims for 
unpaid initial withdrawal liability and unpaid redetermination 
liability that are deemed to be uncollectible under Sec. 4219.12(c)(1) 
or (c)(2).
    (c) Amount of reallocation liability. An employer's reallocation 
liability shall be equal to the sum of the employer's initial allocable 
share of the plan's unfunded vested benefits, as determined under 
paragraph (c)(1) of this section, plus any unassessable amounts 
allocated to the employer under paragraph (c)(2), limited by section 
4225 of ERISA to the extent that section would have been limiting had 
the employer's reallocation liability been included in the employer's 
initial withdrawal liability. If a plan is determined to have no 
unfunded vested benefits to be reallocated, the reallocation liability 
of each liable employer shall be zero.
    (1) Initial allocable share. Except as otherwise provided in rules 
adopted by the plan pursuant to paragraph (d) of this section, and in 
accordance with paragraph (c)(3) of this section, an employer's initial 
allocable share shall be equal to the product of the plan's unfunded 
vested benefits to be reallocated, multiplied by a fraction--
    (i) The numerator of which is the sum of the employer's initial 
withdrawal liability and the employer's redetermination liability, if 
any; and
    (ii) The denominator of which is the sum of all initial withdrawal 
liabilities and all the redetermination liabilities of all employers 
liable for reallocation liability.
    (2) Allocation of unassessable amounts. If after computing each 
employer's initial allocable share of unfunded vested benefits, the 
plan sponsor knows that any portion of an employer's initial allocable 
share is unassessable as withdrawal liability because of the 
limitations in section 4225 of ERISA, the plan sponsor shall allocate 
any such unassessable amounts among all other liable employers. This 
allocation shall be done by prorating the unassessable amounts on the 
basis of each such employer's initial allocable share. No employer 
shall be liable for unfunded vested benefits allocated under paragraph 
(c)(1) or this paragraph to another employer that are determined to be 
unassessable or uncollectible

[[Page 34105]]

subsequent to the plan sponsor's demand for payment of reallocation 
liability.
    (3) Special rule for certain employers with no or reduced initial 
withdrawal liability. If an employer has no initial withdrawal 
liability because of the application of the free-look rule in section 
4210 of ERISA, then, in computing the fraction prescribed in paragraph 
(c)(1), the plan sponsor shall use the employer's allocable share of 
unfunded vested benefits, determined under section 4211 of ERISA at the 
time of the employer's withdrawal and adjusted in accordance with 
section 4225 of ERISA, if applicable. If an employer's initial 
withdrawal liability was reduced pursuant to section 4209(a) or (b) of 
ERISA and the employer is not liable for de minimis amounts pursuant to 
Sec. 4219.13, then, in computing the fraction prescribed in paragraph 
(c)(1) of this section, the plan sponsor shall use the employer's 
allocable share of unfunded vested benefits, determined under section 
4211 of ERISA at the time of the employer's withdrawal and adjusted in 
accordance with section 4225 of ERISA, if applicable.
    (d) Plan rules. Plans may adopt rules for calculating an employer's 
initial allocable share of the plan's unfunded vested benefits in a 
manner other than that prescribed in paragraph (c)(1) of this section, 
provided that those rules allocate the plan's unfunded vested benefits 
to substantially the same extent the prescribed rules would. Plan rules 
adopted under this paragraph shall operate and be applied uniformly 
with respect to each employer. If such rules would increase the 
reallocation liability of any employer, they may be effective with 
respect to that employer earlier than three full plan years after their 
adoption only if the employer consents to the application of the rules 
to itself. The plan sponsor shall give a written notice to each 
contributing employer and each employee organization that represents 
employees covered by the plan of the adoption of plan rules under this 
paragraph.


Sec. 4219.16  Imposition of liability.

    (a) Notice of mass withdrawal. Within 30 days after the mass 
withdrawal valuation date, the plan sponsor shall give written notice 
of the occurrence of a mass withdrawal to each employer that the plan 
sponsor reasonably expects may be a liable employer under Sec. 4219.12. 
The notice shall include--
    (1) The mass withdrawal valuation date;
    (2) A description of the consequences of a mass withdrawal under 
this subpart; and
    (3) A statement that each employer obligated to make initial 
withdrawal liability payments shall continue to make those payments in 
accordance with its schedule. Failure of the plan sponsor to notify an 
employer of a mass withdrawal as required by this paragraph shall not 
cancel the employer's mass withdrawal liability or waive the plan's 
claim for such liability.
    (b) Notice of redetermination liability. Within 30 days after the 
date as of which the plan sponsor is required under Sec. 4219.11(b)(2) 
to have determined the redetermination liability of employers, the plan 
sponsor shall issue a notice of redetermination liability in writing to 
each employer liable under Sec. 4219.12 for de minimis amounts or 20-
year-limitation amounts, or both. The notice shall include--
    (1) The amount of the employer's liability, if any, for de minimis 
amounts determined pursuant to Sec. 4219.13;
    (2) The amount of the employer's liability, if any, for 20-year-
limitation amounts determined pursuant to Sec. 4219.14;
    (3) The schedule for payment of the liability determined under 
paragraph (f) of this section;
    (4) A demand for payment of the liability in accordance with the 
schedule; and
    (5) A statement of when the plan sponsor expects to issue notices 
of reallocation liability to liable employers.
    (c) Notice of reallocation liability. Within 30 days after the date 
as of which the plan sponsor is required under Sec. 4219.11(b)(3) to 
have determined the reallocation liability of employers, the plan 
sponsor shall issue a notice of reallocation liability in writing to 
each employer liable for reallocation liability. The notice shall 
include--
    (1) The amount of the employer's reallocation liability determined 
pursuant to Sec. 4219.15;
    (2) The schedule for payment of the liability determined under 
paragraph (f) of this section; and
    (3) A demand for payment of the liability in accordance with the 
schedule.
    (d) Notice to employers not liable. The plan sponsor shall notify 
in writing any employer that receives a notice of mass withdrawal under 
paragraph (a) of this section and subsequently is determined not to be 
liable for mass withdrawal liability or any component thereof. The 
notice shall specify the liability from which the employer is excluded 
and shall be provided to the employer not later than the date by which 
liable employers are to be provided notices of reallocation liability 
pursuant to paragraph (c) of this section. If the employer is not 
liable for mass withdrawal liability, the notice shall also include a 
statement, if applicable, that the employer is obligated to continue to 
make initial withdrawal liability payments in accordance with its 
existing schedule for payment of such liability.
    (e) Combined notices. A plan sponsor may combine a notice of 
redetermination liability with the notice of and demand for payment of 
initial withdrawal liability. If a mass withdrawal and a withdrawal 
described in Sec. 4219.18 occur concurrently, a plan sponsor may 
combine--
    (1) A notice of mass withdrawal with a notice of withdrawal issued 
pursuant to Sec. 4219.18(d); and
    (2) A notice of redetermination liability with a notice of 
liability issued pursuant to Sec. 4219.18(e).
    (f) Payment schedules. The plan sponsor shall establish payment 
schedules for payment of an employer's mass withdrawal liability in 
accordance with the rules in section 4219(c) of ERISA, as modified by 
this paragraph. For an employer that owes initial withdrawal liability 
as of the mass withdrawal valuation date, the plan sponsor shall 
establish new payment schedules for each element of mass withdrawal 
liability by amending the initial withdrawal liability payment schedule 
in accordance with the paragraph (f)(1) of this section. For all other 
employers, the payment schedules shall be established in accordance 
with paragraph (f)(2).
    (1) Employers owing initial withdrawal liability as of mass 
withdrawal valuation date. For an employer that owes initial withdrawal 
liability as of the mass withdrawal valuation date, the plan sponsor 
shall amend the existing schedule of payments in order to amortize the 
new amounts of liability being assessed, i.e., redetermination 
liability and reallocation liability. With respect to redetermination 
liability, the plan sponsor shall add that liability to the total 
initial withdrawal liability and determine a new payment schedule, in 
accordance with section 4219(c)(1) of ERISA, using the interest 
assumptions that were used to determine the original payment schedule. 
For reallocation liability, the plan sponsor shall add that liability 
to the present value, as of the date following the mass withdrawal 
valuation date, of the unpaid portion of the amended payment schedule 
described in the preceding sentence and determine a new payment 
schedule of level annual payments, calculated as if the first payment 
were made on the day

[[Page 34106]]

following the mass withdrawal valuation date using the interest 
assumptions used for determining the amount of unfunded vested benefits 
to be reallocated.
    (2) Other employers. For an employer that had no initial withdrawal 
liability, or had fully paid its liability prior to the mass withdrawal 
valuation date, the plan sponsor shall determine the payment schedule 
for redetermination liability, in accordance with section 4219(c)(1) of 
ERISA, in the same manner and using the same interest assumptions as 
were used or would have been used in determining the payment schedule 
for the employer's initial withdrawal liability. With respect to 
reallocation liability, the plan sponsor shall follow the rules 
prescribed in paragraph (f)(1) of this section.
    (g) Review of mass withdrawal liability determinations. 
Determinations of mass withdrawal liability made pursuant to this 
subpart shall be subject to plan review under section 4219(b)(2) of 
ERISA and to arbitration under section 4221 of ERISA within the times 
prescribed by those sections. Matters that relate solely to the amount 
of, and schedule of payments for, an employer's initial withdrawal 
liability are not matters relating to the employer's liability under 
this subpart and are not subject to review pursuant to this paragraph.
    (h) Cessation of withdrawal liability obligations. If the plan 
sponsor of a terminated plan distributes plan assets in full 
satisfaction of all nonforfeitable benefits under the plan, the plan 
sponsor's obligation to impose and collect liability, and each 
employer's obligation to pay liability, in accordance with this subpart 
ceases on the date of such distribution.
    (i) Determination that a mass withdrawal has not occurred. If a 
plan sponsor determines, after imposing mass withdrawal liability 
pursuant to this subpart, that a mass withdrawal has not occurred, the 
plan sponsor shall refund to employers all payments of mass withdrawal 
liability with interest, except that a plan sponsor shall not refund 
payments of liability for de minimis amounts to an employer that 
remains liable for such amounts under Sec. 4219.18. Interest shall be 
credited at the interest rate prescribed in subpart C and shall accrue 
from the date the payment was received by the plan until the date of 
the refund.


Sec. 4219.17  Filings with PBGC.

    (a) Filing requirements. The plan sponsor shall file with PBGC a 
notice that a mass withdrawal has occurred and separate certifications 
that determinations of redetermination liability and reallocation 
liability have been made and notices provided to employers in 
accordance with this subpart.
    (b) Who shall file. The plan sponsor or a duly authorized 
representative acting on behalf of the plan sponsor shall sign and file 
the notice and the certifications.
    (c) When to file. A notice of mass withdrawal for a plan from which 
substantially all employers withdraw pursuant to an agreement or 
arrangement to withdraw shall be filed with the PBGC no later than 30 
days after the mass withdrawal valuation date. A notice of mass 
withdrawal termination shall be filed within the time prescribed for 
the filing of that notice in part 4041A, subparts A and B, of this 
chapter. Certifications of liability determinations shall be filed with 
the PBGC no later than 30 days after the date on which the plan sponsor 
is required to have provided employers with notices pursuant to 
Sec. 4219.16.
    (d) Where to file. The notice and certifications may be sent by 
mail or submitted by hand during normal working hours to Reports 
Processing, Insurance Operations Department, Pension Benefit Guaranty 
Corporation, 1200 K Street NW., Washington, DC 20005-4026.
    (e) Filing date. For purposes of paragraph (c)--
    (1) The notice is considered filed on the date of the postmark 
stamped on the cover in which the notice is mailed if--
    (i) The postmark was made by the United States Postal Service; and
    (ii) The notice was mailed postage prepaid, properly packaged and 
addressed to the PBGC.
    (2) If both conditions described in paragraph (e)(1) are not met, 
the notice is considered filed on the date it is received by the PBGC, 
except that notices received after regular business hours are 
considered filed on the next regular business day.
    (f) Contents of notice of mass withdrawal. If a plan terminates by 
the withdrawal of every employer, a notice of termination filed in 
accordance with part 4041A, subparts A and B, of this chapter shall 
satisfy the requirements for a notice of mass withdrawal under this 
subpart. If substantially all employers withdraw from a plan pursuant 
to an agreement or arrangement to withdraw, the notice of mass 
withdrawal shall contain the following information:
    (1) The name of the plan.
    (2) The name, address and telephone number of the plan sponsor and 
of the duly authorized representative, if any, of the plan sponsor.
    (3) The nine-digit Employer Identification Number (EIN) assigned by 
the IRS to the plan sponsor and the three-digit Plan Identification 
Number (PIN) assigned by the plan sponsor to the plan, and, if 
different, the EIN or PIN last filed with the PBGC. If no EIN or PIN 
has been assigned, the notice shall so indicate.
    (4) The mass withdrawal valuation date.
    (5) A description of the facts on which the plan sponsor has based 
its determination that a mass withdrawal has occurred, including the 
number of contributing employers withdrawn and the number remaining in 
the plan, and a description of the effect of the mass withdrawal on the 
plan's contribution base.
    (g) Contents of certifications. Each certification shall contain 
the following information:
    (1) The name of the plan.
    (2) The name, address and telephone number of the plan sponsor and 
of the duly authorized representative, if any, of the plan sponsor.
    (3) The nine-digit Employer Identification Number (EIN) assigned by 
the IRS to the plan sponsor and the three-digit Plan Identification 
Number (PIN) last assigned by the plan sponsor to the plan, and, if 
different, the EIN or PIN filed with the PBGC. If no EIN or PIN has 
been assigned, the notice shall so indicate.
    (4) Identification of the liability determination to which the 
certification relates.
    (5) A certification, signed by the plan sponsor or a duly 
authorized representative, that the determinations have been made and 
the notices given in accordance with this subpart.
    (6) For reallocation liability certifications--
    (i) A certification, signed by the plan's actuary, that the 
determination of unfunded vested benefits has been done in accordance 
with part 4281, subpart B; and
    (ii) A copy of plan rules, if any, adopted pursuant to 
Sec. 4219.15(d).
    (h) Additional information. In addition to the information 
described in paragraph (g) of this section, the PBGC may require the 
plan sponsor to submit any other information the PBGC determines it 
needs in order to monitor compliance with this subpart.


Sec. 4219.18  Withdrawal in a plan year in which substantially all 
employers withdraw.

    (a) General rule. An employer that withdraws in a plan year in 
which substantially all employers withdraw

[[Page 34107]]

from the plan shall be liable to the plan for de minimis amounts if the 
employer's initial withdrawal liability was reduced pursuant to section 
4209(a) or (b) of ERISA.
    (b) Amount of liability. An employer's liability for de minimis 
amounts under this section shall be determined pursuant to 
Sec. 4219.13.
    (c) Plan sponsor's obligations. The plan sponsor of a plan that 
experiences a withdrawal described in paragraph (a) shall--
    (1) Determine and collect initial withdrawal liability of every 
employer that has completely or partially withdrawn, in accordance with 
sections 4201 and 4202 of ERISA;
    (2) Notify each employer that is or may be liable under this 
section, in accordance with paragraph (d) of this section;
    (3) Within 90 days after the end of the plan year in which the 
withdrawal occurred, determine, in accordance with paragraph (b) of 
this section, the liability of each withdrawing employer that is liable 
under this section;
    (4) Notify each liable employer, in accordance with paragraph (e) 
of this section, of the amount of its liability under this section, 
demand payment of and collect that liability; and
    (5) Certify to the PBGC that determinations of liability have been 
completed, in accordance with paragraph (g) of this section.
    (d) Notice of withdrawal. Within 30 days after the end of a plan 
year in which a plan experiences a withdrawal described in paragraph 
(a), the plan sponsor shall notify in writing each employer that is or 
may be liable under this section. The notice shall specify the plan 
year in which substantially all employers have withdrawn, describe the 
consequences of such withdrawal under this section, and state that an 
employer obligated to make initial withdrawal liability payments shall 
continue to make those payments in accordance with its schedule.
    (e) Notice of liability. Within 30 days after the determination of 
liability, the plan sponsor shall issue a notice of liability in 
writing to each liable employer. The notice shall include--
    (1) The amount of the employer's liability for de minimis amounts;
    (2) A schedule for payment of the liability, determined under 
Sec. 4219.16(f); and
    (3) A demand for payment of the liability in accordance with the 
schedule.
    (f) Review of liability determinations. Determinations of liability 
made pursuant to this section shall be subject to plan review under 
section 4219(b)(2) of ERISA and to arbitration under section 4221 of 
ERISA, subject to the limitations contained in Sec. 4219.16(g).
    (g) Notice to the PBGC. No later than 30 days after the notices of 
liability under this section are required to be provided to liable 
employers, the plan sponsor shall file with the PBGC a notice. The 
notice shall include the items described in Sec. 4219.17 (g)(1) through 
(g)(3), as well as the information listed below. In addition, the PBGC 
may require the plan sponsor to submit any further information that the 
PBGC determines it needs in order to monitor compliance with this 
section.
    (1) The plan year in which the withdrawal occurred.
    (2) A description of the effect of the withdrawal, including the 
number of contributing employers that withdrew in the plan year in 
which substantially all employers withdrew, the number of employers 
remaining in the plan, and a description of the effect of the 
withdrawal on the plan's contribution base.
    (3) A certification, signed by the plan sponsor or duly authorized 
representative, that determinations have been made and notices given in 
accordance with this section.


Sec. 4219.19  Information collection.

    The information collection requirements contained in Secs. 4219.16, 
4219.17, and 4219.18 have been approved by the Office of Management and 
Budget under control number 1212-0034.

Subpart C--Overdue, Defaulted, and Overpaid Withdrawal Liability


Sec. 4219.31  Overdue and defaulted withdrawal liability; overpayment.

    (a) Overdue withdrawal liability payment. Except as otherwise 
provided in rules adopted by the plan in accordance with Sec. 4219.33, 
a withdrawal liability payment is overdue if it is not paid on the date 
set forth in the schedule of payments established by the plan sponsor.
    (b) Default.
    (1) Except as provided in paragraph (c)(1), ``default'' means--
    (i) The failure of an employer to pay any overdue withdrawal 
liability payment within 60 days after the employer receives written 
notification from the plan sponsor that the payment is overdue; and
    (ii) Any other event described in rules adopted by the plan which 
indicates a substantial likelihood that an employer will be unable to 
pay its withdrawal liability.
    (2) In the event of a default, a plan sponsor may require immediate 
payment of all or a portion of the outstanding amount of an employer's 
withdrawal liability, plus interest. In the event that the plan sponsor 
accelerates only a portion of the outstanding amount of an employer's 
withdrawal liability, the plan sponsor shall establish a new schedule 
of payments for the remaining amount of the employer's withdrawal 
liability.
    (c) Plan review or arbitration of liability determination. The 
following rules shall apply with respect to the obligation to make 
withdrawal liability payments during the period for plan review and 
arbitration and with respect to the failure to make such payments:
    (1) A default as a result of failure to make any payments shall not 
occur until the 61st day after the last of--
    (i) Expiration of the period described in section 4219(b)(2)(A) of 
ERISA;
    (ii) If the employer requests review under section 4219(b)(2)(A) of 
ERISA of the plan's withdrawal liability determination or the schedule 
of payments established by the plan, expiration of the period described 
in section 4221(a)(1) of ERISA for initiation of arbitration; or
    (iii) If arbitration is timely initiated either by the plan, the 
employer or both, issuance of the arbitrator's decision.
    (2) Any amounts due before the expiration of the period described 
in paragraph (c)(1) shall be paid in accordance with the schedule 
established by the plan sponsor. If a payment is not made when due 
under the schedule, the payment is overdue and interest shall accrue in 
accordance with the rules and at the same rate set forth in 
Sec. 4219.32.
    (d) Overpayments. If the plan sponsor or an arbitrator determines 
that payments made in accordance with the schedule of payments 
established by the plan sponsor have resulted in an overpayment of 
withdrawal liability, the plan sponsor shall refund the overpayment, 
with interest, in a lump sum. The plan sponsor shall credit interest on 
the overpayment from the date of the overpayment to the date on which 
the overpayment is refunded to the employer at the same rate as the 
rate for overdue withdrawal liability payments, as established under 
Sec. 4219.32 or by the plan pursuant to Sec. 4219.33.


Sec. 4219.32   Interest on overdue, defaulted and overpaid withdrawal 
liability.

    (a) Interest assessed. The plan sponsor of a multiemployer plan--
    (1) Shall assess interest on overdue withdrawal liability payments 
from the due date, as defined in paragraph (d) of

[[Page 34108]]

this section, until the date paid, as defined in paragraph (e); and
    (2) In the event of a default, may assess interest on any 
accelerated portion of the outstanding withdrawal liability from the 
due date, as defined in paragraph (d) of this section, until the date 
paid, as defined in paragraph (e).
    (b) Interest rate. Except as otherwise provided in rules adopted by 
the plan pursuant to Sec. 4219.33, interest under this section shall be 
charged or credited for each calendar quarter at an annual rate equal 
to the average quoted prime rate on short-term commercial loans for the 
fifteenth day (or next business day if the fifteenth day is not a 
business day) of the month preceding the beginning of each calendar 
quarter, as reported by the Board of Governors of the Federal Reserve 
System in Statistical Release H.15 (``Selected Interest Rates'').
    (c) Calculation of interest. The interest rate under paragraph (b) 
of this section is the nominal rate for any calendar quarter or portion 
thereof. The amount of interest due the plan for overdue or defaulted 
withdrawal liability, or due the employer for overpayment, is equal to 
the overdue, defaulted, or overpaid amount multiplied by:
    (1) For each full calendar quarter in the period from the due date 
(or date of overpayment) to the date paid (or date of refund), one-
fourth of the annual rate in effect for that quarter;
    (2) For each full calendar month in a partial quarter in that 
period, one-twelfth of the annual rate in effect for that quarter; and
    (3) For each day in a partial month in that period, one-three-
hundred-sixtieth of the annual rate in effect for that month.
    (d) Due date. Except as otherwise provided in rules adopted by the 
plan, the due date from which interest accrues shall be, for an overdue 
withdrawal liability payment and for an amount of withdrawal liability 
in default, the date of the missed payment that gave rise to the 
delinquency or the default.
    (e) Date paid. Any payment of withdrawal liability shall be deemed 
to have been paid on the date on which it is received.


Sec. 4219.33  Plan rules concerning overdue and defaulted withdrawal 
liability.

    Plans may adopt rules relating to overdue and defaulted withdrawal 
liability, provided that those rules are consistent with ERISA. These 
rules may include, but are not limited to, rules for determining the 
rate of interest to be charged on overdue, defaulted and overpaid 
withdrawal liability (provided that the rate reflects prevailing market 
rates for comparable obligations); rules providing reasonable grace 
periods during which late payments may be made without interest; 
additional definitions of default which indicate a substantial 
likelihood that an employer will be unable to pay its withdrawal 
liability; and rules pertaining to acceleration of the outstanding 
balance on default. Plan rules adopted under this section shall be 
reasonable. Plan rules shall operate and be applied uniformly with 
respect to each employer, except that the rules may take into account 
the creditworthiness of an employer. Rules which take into account the 
creditworthiness of an employer shall state with particularity the 
categories of creditworthiness the plan will use, the specific 
differences in treatment accorded employers in different categories, 
and the standards and procedures for assigning an employer to a 
category.

PART 4220--PROCEDURES FOR PBGC APPROVAL OF PLAN AMENDMENTS

Sec.
4220.1  Purpose and scope.
4220.2  Definitions.
4220.3  Requests for PBGC approval.
4220.4  PBGC action on requests.

    Authority: 29 U.S.C. 1302(b)(3), 1400.


Sec. 4220.1  Purpose and scope.

    (a) General. This part establishes procedures under which a plan 
sponsor shall request the PBGC to approve a plan amendment under 
section 4220 of ERISA. This part applies to all multiemployer plans 
covered by title IV of ERISA that adopt amendments pursuant to the 
authorization of sections 4201-4219 of ERISA (except for amendments 
adopted pursuant to section 4211(c)(5)). (The covered amendments are 
set forth in paragraph (b) of this section.) The subsequent 
modification of a plan amendment adopted by authorization of those 
sections is also covered by this part. This part does not, however, 
cover a plan amendment that merely repeals a previously adopted 
amendment, returning the plan to the statutorily prescribed rule.
    (b) Covered amendments. Amendments made pursuant to the following 
sections of ERISA are covered by this part:
    (1) Section 4203 (b)(1)(B)(ii).
    (2) Section 4203(c)(4).
    (3) Section 4205(c)(1).
    (4) Section 4205(d).
    (5) Section 4209(b).
    (6) Section 4210(b)(2).
    (7) Section 4211(c)(1).
    (8) Section 4211(c)(4)(D).
    (9) Section 4211(d)(1).
    (10) Section 4211(d)(2).
    (11) Section 4219(c)(1)(C)(ii)(I).
    (12) Section 4219(c)(1)(C)(iii).
    (c) Exception. Submission of a request for approval under this part 
is not required for a plan amendment for which the PBGC has published a 
notice in the Federal Register granting class approval.


Sec. 4220.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
employer, ERISA, IRS, multiemployer plan, PBGC, plan, and plan sponsor.


Sec. 4220.3  Requests for PBGC approval.

    (a) Filing of request. A request for approval of an amendment filed 
with the PBGC in accordance with this section shall constitute notice 
to the PBGC for purposes of the 90-day period specified in section 4220 
of ERISA. A request is deemed filed on the date on which a request 
containing all information required by paragraph (d) of this section is 
received by the PBGC.
    (b) Who may request. The plan sponsor, or a duly authorized 
representative acting on behalf of a plan sponsor, shall sign and 
submit the request.
    (c) Where to file. The request shall be delivered by hand or by 
mail to Reports Processing, Insurance Operations Department, Pension 
Benefit Guaranty Corporation, 1200 K Street NW., Washington, DC 20005-
4026.
    (d) Information. Each request filed shall contain the following 
information:
    (1) The name of the plan for which the amendment is being 
submitted, and the name, address and the telephone number of the plan 
sponsor or its duly authorized representative.
    (2) The nine-digit Employer Identification Number (EIN) assigned by 
the IRS to the plan sponsor and the three-digit Plan Identification 
Number (PIN) assigned by the plan sponsor to the plan, and, if 
different, the EIN or PIN last filed with PBGC. If no EIN or PIN has 
been assigned, that fact must be indicated.
    (3) A copy of the amendment as adopted, including its proposed 
effective date.
    (4) A copy of the most recent actuarial valuation of the plan.
    (5) A statement containing a certification that notice of the 
adoption of the amendment has been given to all employers who have an 
obligation to contribute under the plan and to all employee 
organizations representing employees covered by the plan.

[[Page 34109]]

    (6) Any other information that the plan sponsor believes to be 
pertinent to its request.
    (e) Supplemental information. The PBGC may require a plan sponsor 
to submit any other information that the PBGC determines to be 
necessary to review a request under this part. The PBGC may suspend the 
running of the 90-day period pursuant to Sec. 4220.4(c), pending the 
submission of the supplemental information.

(Approved by the Office of Management and Budget under control 
number 1212-0031)


Sec. 4220.4  PBGC action on requests.

    (a) General. Upon receipt of a complete request, the PBGC shall 
notify the plan sponsor in writing of the date of commencement of the 
90-day period specified in section 4220 of ERISA. Except as provided in 
paragraph (c) of this section, the PBGC shall approve or disapprove a 
plan amendment submitted to it under this part within 90 days after 
receipt of a complete request for approval. If the PBGC fails to act 
within the 90-day period, or within that period notifies the plan 
sponsor that it will not disapprove the amendment, the amendment may be 
made effective without the approval of the PBGC.
    (b) Decision on request. The PBGC's decision on a request for 
approval shall be in writing. If the PBGC disapproves the plan 
amendment, the decision shall state the reasons for the disapproval. An 
approval by the PBGC constitutes its finding only with respect to the 
issue of risk as set forth in section 4220(c) of ERISA, and not with 
respect to whether the amendment is otherwise properly adopted in 
accordance with the terms of ERISA and the plan in question.
    (c) Suspension of the 90-day period. The PBGC may suspend the 
running of the 90-day period referred to in paragraph (a) of this 
section if it determines that additional information is required under 
Sec. 4220.3(e). When it does so, PBGC's request for additional 
information will advise the plan sponsor that the running of 90-day 
period has been suspended. The 90-day period will resume running on the 
date on which the additional information is received by the PBGC, and 
the PBGC will notify the plan sponsor of that date upon receipt of the 
information.

PART 4221--ARBITRATION OF DISPUTES IN MULTIEMPLOYER PLANS

Sec.
    4221.1  Purpose and scope.
    4221.2  Definitions.
    4221.3  Initiation of arbitration.
    4221.4  Appointment of the arbitrator.
    4221.5  Powers and duties of the arbitrator.
    4221.6  Hearing.
    4221.7  Reopening of proceedings.
    4221.8  Award.
    4221.9  Reconsideration of award.
    4221.10  Costs.
    4221.11  Waiver of rules.
    4221.12  Calculation of periods of time.
    4221.13  Filing or service of documents.
    4221.14  PBGC-approved arbitration procedures.

    Authority: 29 U.S.C. 1302(b)(3), 1401.


Sec. 4221.1  Purpose and scope.

    (a) Purpose. The purpose of this part is to establish procedures 
for the arbitration, pursuant to section 4221 of ERISA, of withdrawal 
liability disputes arising under sections 4201 through 4219 and 4225 of 
ERISA.
    (b) Scope. This part applies to arbitration proceedings initiated 
pursuant to section 4221 of ERISA and this part on or after September 
26, 1985. On and after the effective date, any plan rules governing 
arbitration procedures (other than a plan rule adopting a PBGC-approved 
arbitration procedure in accordance with Sec. 4221.14) are effective 
only to the extent that they are consistent with this part and adopted 
by the arbitrator in a particular proceeding.


Sec. 4221.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
ERISA, IRS, multiemployer plan, PBGC, plan, and plan sponsor.
    In addition, for purposes of this part:
    Arbitrator means an individual or panel of individuals selected 
according to this part to decide a dispute concerning withdrawal 
liability.
    Employer means an individual, partnership, corporation or other 
entity against which a plan sponsor has made a demand for payment of 
withdrawal liability pursuant to section 4219(b)(1) of ERISA.
    Party or parties means the employer and the plan sponsor involved 
in a withdrawal liability dispute.
    Withdrawal liability dispute means a dispute described in 
Sec. 4221.1(a) of this chapter.


Sec. 4221.3  Initiation of arbitration.

    (a) Time limits--in general. Arbitration of a withdrawal liability 
dispute may be initiated within the time limits described in section 
4221(a)(1) of ERISA.
    (b) Waiver or extension of time limits. Arbitration shall be 
initiated in accordance with this section, notwithstanding any 
inconsistent provision of any agreement entered into by the parties 
before the date on which the employer received notice of the plan's 
assessment of withdrawal liability. The parties may, however, agree at 
any time to waive or extend the time limits for initiating arbitration.
    (c) Establishment of timeliness of initiation. A party that 
unilaterally initiates arbitration is responsible for establishing that 
the notice of initiation of arbitration was timely received by the 
other party. If arbitration is initiated by agreement of the parties, 
the date on which the agreement to arbitrate was executed establishes 
whether the arbitration was timely initiated.
    (d) Contents of agreement or notice. If the employer initiates 
arbitration, it shall include in the notice of initiation a statement 
that it disputes the plan sponsor's determination of its withdrawal 
liability and is initiating arbitration. A copy of the demand for 
withdrawal liability and any request for reconsideration, and the 
response thereto, shall be attached to the notice. If a party other 
than an employer initiates arbitration, it shall include in the notice 
a statement that it is initiating arbitration and a brief description 
of the questions on which arbitration is sought. If arbitration is 
initiated by agreement, the agreement shall include a brief description 
of the questions submitted to arbitration. In no case is compliance 
with formal rules of pleading required.
    (e) Effect of deficient agreement or notice. If a party fails to 
object promptly in writing to deficiencies in an initiation agreement 
or a notice of initiation of arbitration, it waives its right to 
object.


Sec. 4221.4  Appointment of the arbitrator.

    (a) Appointment of and acceptance by arbitrator. The parties shall 
select the arbitrator within 45 days after the arbitration is 
initiated, or within such other period as is mutually agreed after the 
initiation of arbitration, and shall mail to the designated arbitrator 
a notice of his or her appointment. The notice of appointment shall 
include a copy of the notice or agreement initiating arbitration, a 
statement that the arbitration is to be conducted in accordance with 
this part, and a request for a written acceptance by the arbitrator. 
The arbitrator's appointment becomes effective upon his or her written 
acceptance, stating his or her availability to serve and making any 
disclosures required by paragraph (b) of this section. If the 
arbitrator does not accept in writing within 15 days after the notice 
of appointment is mailed or delivered to him or her, he or she is 
deemed to have declined to act, and the parties shall select a new 
arbitrator in accordance with paragraph (d) of this section.

[[Page 34110]]

    (b) Disclosure by arbitrator and disqualification. Upon accepting 
the appointment, the arbitrator shall disclose to the parties any 
circumstances likely to affect his or her impartiality, including any 
bias or any financial or personal interest in the result of the 
arbitration and any past or present relationship with the parties or 
their counsel. If any party determines that the arbitrator should be 
disqualified because of the information disclosed, that party shall 
notify all other parties and the arbitrator no later than 10 days after 
the arbitrator makes the disclosure required by this paragraph (but in 
no event later than the commencement of the hearing under Sec. 4221.6). 
The arbitrator shall then withdraw, and the parties shall select 
another arbitrator in accordance with paragraph (d) of this section.
    (c) Challenge and withdrawal. After the arbitrator has been 
selected, a party may request that he or she withdraw from the 
proceedings at any point before a final award is rendered on the ground 
that he or she is unable to render an award impartially. The request 
for withdrawal shall be served on all other parties and the arbitrator 
by hand or by certified or registered mail and shall include a 
statement of the circumstances that, in the requesting party's view, 
affect the arbitrator's impartiality and a statement that the 
requesting party has brought these circumstances to the attention of 
the arbitrator and the other parties at the earliest practicable point 
in the proceedings. If the arbitrator determines that the circumstances 
adduced are likely to affect his or her impartiality and have been 
presented in a timely fashion, he or she shall withdraw from the 
proceedings and notify the parties of the reasons for his or her 
withdrawal. The parties shall then select a new arbitrator in 
accordance with paragraph (d) of this section.
    (d) Filling vacancies. If the designated arbitrator declines his or 
her appointment or, after accepting his or her appointment, is 
disqualified, resigns, dies, withdraws, or is unable to perform his or 
her duties at any time before a final award is rendered, the parties 
shall select another arbitrator to fill the vacancy. The selection 
shall be made, in accordance with the procedure used in the initial 
selection, within 20 days after the parties receive notice of the 
vacancy. The matter shall then be reheard by the newly chosen 
arbitrator, who may, in his or her discretion, rely on all or any 
portion of the record already established.
    (e) Failure to select arbitrator. If the parties fail to select an 
arbitrator within the time prescribed by this section, either party or 
both may seek the designation and appointment of an arbitrator in a 
United States district court pursuant to the provisions of title 9 of 
the United States Code.


Sec. 4221.5   Powers and duties of the arbitrator.

    (a) Arbitration hearing. Except as otherwise provided in this part, 
the arbitrator shall conduct the arbitration hearing under Sec. 4221.6 
in the same manner, and shall possess the same powers, as an arbitrator 
conducting a proceeding under title 9 of the United States Code.
    (1) Application of the law. In reaching his or her decision, the 
arbitrator shall follow applicable law, as embodied in statutes, 
regulations, court decisions, interpretations of the agencies charged 
with the enforcement of ERISA, and other pertinent authorities.
    (2) Prehearing discovery. The arbitrator may allow any party to 
conduct prehearing discovery by interrogatories, depositions, requests 
for the production of documents, or other means, upon a showing that 
the discovery sought is likely to lead to the production of relevant 
evidence and will not be disproportionately burdensome to the other 
parties. The arbitrator may impose appropriate sanctions if he or she 
determines that a party has failed to respond to discovery in good 
faith or has conducted discovery proceedings in bad faith or for the 
purpose of harassment. The arbitrator may, at the request of any party 
or on his or her own motion, require parties to give advance notice of 
expert or other witnesses that they intend to introduce.
    (3) Admissibility of evidence. The arbitrator determines the 
relevance and materiality of the evidence offered during the course of 
the hearing and is the judge of the admissibility of evidence offered. 
Conformity to legal rules of evidence is not necessary. To the extent 
reasonably practicable, all evidence shall be taken in the presence of 
the arbitrator and the parties. The arbitrator may, however, consider 
affidavits, transcripts of depositions, and similar documents.
    (4) Production of documents or other evidence. The arbitrator may 
subpoena witnesses or documents upon his or her own initiative or upon 
request by any party after determining that the evidence is likely to 
be relevant to the dispute.
    (b) Prehearing conference. If it appears that a prehearing 
conference will expedite the proceedings, the arbitrator may, at any 
time before the commencement of the arbitration hearing under 
Sec. 4221.6, direct the parties to appear at a conference to consider 
settlement of the case, clarification of issues and stipulation of 
facts not in dispute, admission of documents to avoid unnecessary 
proof, limitations on the number of expert or other witnesses, and any 
other matters that could expedite the disposition of the proceedings.
    (c) Proceeding without hearing. The arbitrator may render an award 
without a hearing if the parties agree and file with the arbitrator 
such evidence as the arbitrator deems necessary to enable him or her to 
render an award under Sec. 4221.8.


Sec. 4221.6   Hearing.

    (a) Time and place of hearing established. Unless the parties agree 
to proceed without a hearing as provided in Sec. 4221.5(c), the parties 
and the arbitrator shall, no later than 15 days after the written 
acceptance by the arbitrator is mailed to the parties, establish a date 
and place for the hearing. If agreement is not reached within the 15-
day period, the arbitrator shall, within 10 additional days, choose a 
location and set a hearing date. The date set for the hearing may be no 
later than 50 days after the mailing date of the arbitrator's written 
acceptance.
    (b) Notice. After the time and place for the hearing have been 
established, the arbitrator shall serve a written notice of the hearing 
on the parties by hand or by certified or registered mail.
    (c) Appearances. The parties may appear in person or by counsel or 
other representatives. Any party that, after being duly notified and 
without good cause shown, fails to appear in person or by 
representative at a hearing or conference, or fails to file documents 
in a timely manner, is deemed to have waived all rights with respect 
thereto and is subject to whatever orders or determinations the 
arbitrator may make.
    (d) Record and transcript of hearing. Upon the request of either 
party, the arbitrator shall arrange for a record of the arbitration 
hearing to be made by stenographic means or by tape recording. The cost 
of making the record and the costs of transcription and copying are 
costs of the arbitration proceedings payable as provided in 
Sec. 4221.10(b) except that, if only one party requests that a 
transcript of the record be made, that party shall pay the cost of the 
transcript.
    (e) Order of hearing. The arbitrator shall conduct the hearing in 
accordance with the following rules:
    (1) Opening. The arbitrator shall open the hearing and place in the 
record the

[[Page 34111]]

notice of initiation of arbitration or the initiation agreement. The 
arbitrator may ask for statements clarifying the issues involved.
    (2) Presentation of claim and response. The arbitrator shall 
establish the procedure for presentation of claim and response in such 
a manner as to afford full and equal opportunity to all parties for the 
presentation of their cases.
    (3) Witnesses. All witnesses shall testify under oath or 
affirmation and are subject to cross-examination by opposing parties. 
If testimony of an expert witness is offered by a party without prior 
notice to the other party, the arbitrator shall grant the other party a 
reasonable time to prepare for cross-examination and to produce expert 
witnesses on its own behalf. The arbitrator may on his or her own 
initiative call expert witnesses on any issue raised in the 
arbitration. The cost of any expert called by the arbitrator is a cost 
of the proceedings payable as provided in Sec. 4221.10(b).
    (f) Continuance of hearing. The arbitrator may, for good cause 
shown, grant a continuance for a reasonable period. When granting a 
continuance, the arbitrator shall set a date for resumption of the 
hearing.
    (g) Filing of briefs. Each party may file a written statement of 
facts and argument supporting the party's position. The parties' briefs 
are due no later than 30 days after the close of the hearing. Within 15 
days thereafter, each party may file a reply brief concerning matters 
contained in the opposing brief. The arbitrator may establish a 
briefing schedule and may reduce or extend these time limits. Each 
party shall deliver copies of all of its briefs to the arbitrator and 
to all opposing parties.


Sec. 4221.7   Reopening of proceedings.

    (a) Grounds for reopening. At any time before a final award is 
rendered, the proceedings may be reopened, on the motion of the 
arbitrator or at the request of any party, for the purpose of taking 
further evidence or rehearing or rearguing any matter, if the 
arbitrator determines that--
    (1) The reopening is likely to result in new information that will 
have a material effect on the outcome of the arbitration;
    (2) Good cause exists for the failure of the party that requested 
reopening to present such information at the hearing; and
    (3) The delay caused by the reopening will not be unfairly 
injurious to any party.
    (b) Comments on and notice of reopening. The arbitrator shall allow 
all affected parties the opportunity to comment on any motion or 
request to reopen the proceedings. If he or she determines that the 
proceedings should be reopened, he or she shall give all parties 
written notice of the reasons for reopening and of the schedule of the 
reopened proceedings.


Sec. 4221.8   Award.

    (a) Form. The arbitrator shall render a written award that--
    (1) States the basis for the award, including such findings of fact 
and conclusions of law (which need not be explicitly designated as 
such) as are necessary to resolve the dispute;
    (2) Adjusts (or provides a method for adjusting) the amount or 
schedule of payments to be made after the award to reflect overpayments 
or underpayments made before the award was rendered or requires the 
plan sponsor to refund overpayments in accordance with Sec. 4219.31(d); 
and
    (3) Provides for an allocation of costs in accordance with 
Sec. 4221.10.
    (b) Time of award. Except as provided in paragraphs (c), (d), and 
(e) of this section, the arbitrator shall render the award no later 
than 30 days after the proceedings close. The award is rendered when 
filed or served on the parties as provided in Sec. 4221.13. The award 
is final when the period for seeking modification or reconsideration in 
accordance with Sec. 4221.9(a) has expired or the arbitrator has 
rendered a revised award in accordance with Sec. 4221.9(c).
    (c) Reopened proceedings. If the proceedings are reopened in 
accordance with Sec. 4221.7 after the close of the hearing, the 
arbitrator shall render the award no later than 30 days after the date 
on which the reopened proceedings are closed.
    (d) Absence of hearing. If the parties have chosen to proceed 
without a hearing, the arbitrator shall render the award no later than 
30 days after the date on which final statements and proofs are filed 
with him or her.
    (e) Agreement for extension of time. Notwithstanding paragraphs 
(b), (c), and (d), the parties may agree to an extension of time for 
the arbitrator's award in light of the particular facts and 
circumstances of their dispute.
    (f) Close of proceedings. For purposes of paragraphs (b) and (c) of 
this section, the proceedings are closed on the date on which the last 
brief or reply brief is due or, if no briefs are to be filed, on the 
date on which the hearing or rehearing closes.
    (g) Publication of award. After a final award has been rendered, 
the plan sponsor shall make copies available upon request to the PBGC 
and to all companies that contribute to the plan. The plan sponsor may 
impose reasonable charges for copying and postage.


Sec. 4221.9  Reconsideration of award.

    (a) Motion for reconsideration and objections. A party may seek 
modification or reconsideration of the arbitrator's award by filing a 
written motion with the arbitrator and all opposing parties within 20 
days after the award is rendered. Opposing parties may file objections 
to modification or reconsideration within 10 days after the motion is 
filed. The filing of a written motion for modification or 
reconsideration suspends the 30-day period under section 4221(b)(2) of 
ERISA for requesting court review of the award. The 30-day statutory 
period again begins to run when the arbitrator denies the motion 
pursuant to paragraph (c) of this section or renders a revised award.
    (b) Grounds for modification or reconsideration. The arbitrator may 
grant a motion for modification or reconsideration of the award only 
if--
    (1) There is a numerical error or a mistake in the description of 
any person, thing, or property referred to in the award; or
    (2) The arbitrator has rendered an award upon a matter not 
submitted to the arbitrator and the matter affects the merits of the 
decision; or
    (3) The award is imperfect in a matter of form not affecting the 
merits of the dispute.
    (c) Decision of arbitrator. The arbitrator shall grant or deny the 
motion for modification or reconsideration, and may render an opinion 
to support his or her decision within 20 days after the motion is filed 
with the arbitrator, or within 30 days after the motion is filed if an 
objection is also filed.


Sec. 4221.10  Costs.

    The costs of arbitration under this part shall be borne by the 
parties as follows:
    (a) Witnesses. Each party to the dispute shall bear the costs of 
its own witnesses.
    (b) Other costs of arbitration. Except as provided in 
Sec. 4221.6(d) with respect to a transcript of the hearing, the parties 
shall bear the other costs of the arbitration proceedings equally 
unless the arbitrator determines otherwise. The parties may, however, 
agree to a different allocation of costs if their agreement is entered 
into after the employer has received notice of the plan's assessment of 
withdrawal liability.

[[Page 34112]]

    (c) Attorneys' fees. The arbitrator may require a party that 
initiates or contests an arbitration in bad faith or engages in 
dilatory, harassing, or other improper conduct during the course of the 
arbitration to pay reasonable attorneys' fees of other parties.


Sec. 4221.11  Waiver of rules.

    Any party that fails to object in writing in a timely manner to any 
deviation from any provision of this part is deemed to have waived the 
right to interpose that objection thereafter.


Sec. 4221.12  Calculation of periods of time.

    For purposes of calculating any period of time under this part, the 
period begins to run on the day following the day that a communication 
is received or an act is completed. If the last day of the period is a 
Federal, State, or local holiday or a non-business day for one of the 
parties or the arbitrator, the period runs until the end of the first 
business day that follows. Holidays or non-business days occurring 
during the running of the period of time are included in calculating 
the period.


Sec. 4221.13  Filing or service of documents.

    (a) By mail. A document that is to be filed or served under this 
part is considered filed or served on--
    (1) The date of the receipt provided to the sender by the United 
States Postal Service, if the document was sent by certified or 
registered mail, postage prepaid, properly packaged, and properly 
addressed; or
    (2) The date of the United States Postal Service postmark stamped 
on the cover in which the document is mailed, if paragraph (a)(1) is 
not applicable, a legible postmark was made, and the document was sent 
postage prepaid, properly packaged, and properly addressed.
    (b) By means other than mail. A document required to be delivered 
under this part that is not mailed in accordance with paragraph (a) of 
this section is considered filed or served on the date on which it is 
received.


Sec. 4221.14  PBGC-approved arbitration procedures.

    (a) Use of PBGC-approved arbitration procedures. In lieu of the 
procedures prescribed by this part, an arbitration may be conducted in 
accordance with an alternative arbitration procedure approved by the 
PBGC in accordance with paragraph (c) of this section. A plan may by 
plan amendment require the use of a PBGC-approved procedure for all 
arbitrations of withdrawal liability disputes, or the parties may agree 
to the use of a PBGC-approved procedure in a particular case.
    (b) Scope of alternative procedures. If an arbitration is conducted 
in accordance with a PBGC-approved arbitration procedure, the 
alternative procedure shall govern all aspects of the arbitration, with 
the following exceptions:
    (1) The time limits for the initiation of arbitration may not 
differ from those provided for by Sec. 4221.3.
    (2) The arbitrator shall be selected after the initiation of the 
arbitration.
    (3) The arbitrator shall give the parties opportunity for 
prehearing discovery substantially equivalent to that provided by 
Sec. 4221.5(a)(2).
    (4) The award shall be made available to the public to at least the 
extent provided by Sec. 4221.8(g).
    (5) The costs of arbitration shall be allocated in accordance with 
Sec. 4221.10.
    (c) Procedure for approval of alternative procedures. The PBGC may 
approve arbitration procedures on its own initiative by publishing an 
appropriate notice in the Federal Register. The sponsor of an 
arbitration procedure may request PBGC approval of its procedures by 
submitting an application to the PBGC. The application shall be 
submitted to Reports Processing, Insurance Operations Department, 
Pension Benefit Guaranty Corporation, 1200 K Street, NW., Washington, 
DC 20005-4026, and shall include:
    (1) A copy of the procedures for which approval is sought;
    (2) A description of the history, structure and membership of the 
organization that sponsors the procedures; and
    (3) A discussion of the reasons why, in the sponsoring 
organization's opinion, the procedures satisfy the criteria for 
approval set forth in this section.
    (d) Criteria for approval of alternative procedures. The PBGC shall 
approve an application if it determines that the proposed procedures 
will be substantially fair to all parties involved in the arbitration 
of a withdrawal liability dispute and that the sponsoring organization 
is neutral and able to carry out its role under the procedures. The 
PBGC may request comments on the application by publishing an 
appropriate notice in the Federal Register. Notice of the PBGC's 
decision on the application shall be published in the Federal Register. 
Unless the notice of approval specifies otherwise, approval will remain 
effective until revoked by the PBGC through a Federal Register notice.

PART 4231--MERGERS AND TRANSFERS BETWEEN MULTIEMPLOYER PLANS

Sec.
4231.1  Purpose and scope.
4231.2  Definitions.
4231.3  Requirements for mergers and transfers.
4231.4  Preservation of accrued benefits.
4231.5  Valuation requirement.
4231.6  Plan solvency tests.
4231.7  De minimis mergers and transfers.
4231.8  Notice of merger or transfer.
4231.9  Request for compliance determination.
4231.10  Actuarial calculations and assumptions.

    Authority: 29 U.S.C. 1302(b)(3), 1411.


Sec. 4231.1  Purpose and scope.

    (a) Purpose. The purpose of this part is to prescribe notice 
requirements under section 4231 of ERISA for mergers and transfers of 
assets or liabilities among multiemployer pension plans. This part also 
interprets the other requirements of section 4231 and prescribes 
special rules for de minimis mergers and transfers.
    (b) Scope. This part applies to mergers and transfers among 
multiemployer plans where all of the plans immediately before and 
immediately after the transaction are multiemployer plans covered by 
title IV of ERISA.


Sec. 4231.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
ERISA, fair market value, IRS, multiemployer plan, PBGC, plan, and plan 
year.
    In addition, for purposes of this part:
    Actuarial valuation means a valuation of assets and liabilities 
performed by an enrolled actuary using the actuarial assumptions used 
for purposes of determining the charges and credits to the funding 
standard account under section 302 of ERISA and section 412 of the 
Code.
    Certified change of collective bargaining representative means a 
change of collective bargaining representative certified under the 
Labor-Management Relations Act of 1947, as amended, or the Railway 
Labor Act, as amended.
    Fair market value of assets has the same meaning as the term has 
for minimum funding purposes under section 302 of ERISA and section 412 
of the Code.
    Merger means the combining of two or more plans into a single plan. 
For example, a consolidation of two plans into a new plan is a merger.
    Significant transfer means the transfer of assets that equal or 
exceed 15% of the assets of the transferor plan before the transfer or 
the transfer of unfunded

[[Page 34113]]

accrued benefits that equal or exceed 15% of the assets of the 
transferee plan (including a plan that did not exist prior to the 
transfer) before the transfer.
    Transfer and transfer of assets or liabilities mean a diminution of 
assets or liabilities with respect to one plan and the acquisition of 
these assets or the assumption of these liabilities by another plan or 
plans (including a plan that did not exist prior to the transfer). 
However, the shifting of assets or liabilities pursuant to a written 
reciprocity agreement between two multiemployer plans in which one plan 
assumes liabilities of another plan is not a transfer of assets or 
liabilities. In addition, the shifting of assets between several 
funding media used for a single plan (such as between trusts, between 
annuity contracts, or between trusts and annuity contracts) is not a 
transfer of assets or liabilities.


Sec. 4231.3  Requirements for mergers and transfers.

    (a) General requirements. A plan sponsor may not cause a 
multiemployer plan to merge with one or more multiemployer plans or 
transfer assets or liabilities to or from another multiemployer plan 
unless the merger or transfer satisfies all of the following 
requirements:
    (1) No participant's or beneficiary's accrued benefit may be lower 
immediately after the effective date of the merger or transfer than the 
benefit immediately before the merger or transfer.
    (2) Actuarial valuations of the plans involved in the merger or 
transfer shall have been performed in accordance with Sec. 4231.5.
    (3) For each plan involved in the transaction, an enrolled actuary 
shall-
    (i) Determine that the plan meets the applicable plan solvency 
requirement set forth in Sec. 4231.6; or
    (ii) Otherwise demonstrate that benefits under the plan are not 
reasonably expected to be subject to suspension under section 4245 of 
ERISA.
    (4) The plan sponsor shall notify the PBGC of the merger or 
transfer in accordance with Sec. 4231.8.
    (b) Compliance determination. If a plan sponsor requests a 
determination that a merger or transfer that may otherwise be 
prohibited by section 406(a) or (b)(2) of ERISA satisfies the 
requirements of section 4231 of ERISA, the plan sponsor shall submit 
the information described in Sec. 4231.9 in addition to the information 
required by Sec. 4231.8. PBGC may request additional information if 
necessary to determine whether a merger or transfer complies with the 
requirements of section 4231 and this part. Plan sponsors are not 
required to request a compliance determination. Under section 4231(c) 
of ERISA, if the PBGC determines that the merger or transfer complies 
with section 4231 of ERISA and this part, the merger or transfer will 
not constitute a violation of the prohibited transaction provisions of 
section 406(a) and (b)(2) of ERISA.
    (c) Certified change in bargaining representative. Transfers of 
assets and liabilities pursuant to a certified change in bargaining 
representative are governed by section 4235 of ERISA. Plan sponsors 
involved in such transfers are not required to comply with this part. 
However, under section 4235(f)(1) of ERISA, the plan sponsors of the 
plans involved in the transfer may agree to a transfer that complies 
with sections 4231 and 4234 of ERISA. Plan sponsors that elect to 
comply with sections 4231 and 4234 must comply with the rules in this 
part.

(Approved by the Office of Management and Budget under control 
number 1212-0022)


Sec. 4231.4  Preservation of accrued benefits.

    Section 4231(b)(2) of ERISA and Sec. 4231.3(a)(1) require that no 
participant's or beneficiary's accrued benefit may be lower immediately 
after the effective date of the merger or transfer than the benefit 
immediately before the merger or transfer. A plan that assumes an 
obligation to pay benefits for a group of participants satisfies this 
requirement only if the plan contains a provision preserving all 
accrued benefits. The determination of what is an accrued benefit shall 
be made in accordance with section 411 of the Code and the regulations 
thereunder.


Sec. 4231.5  Valuation requirement.

    (a) Mergers and non-significant transfers. A merger or a transfer 
that is not significant (``non-significant transfer'') satisfies 
section 4231(b)(4) of ERISA and Sec. 4231.3(a)(2) (requiring an 
actuarial valuation) if an actuarial valuation has been performed for 
each plan involved in the merger or transfer, based on the assets and 
liabilities of the plan as of a date not more than three years before 
the date on which the notice of the merger or transfer is filed.
    (b) Significant transfers. A significant transfer satisfies section 
4231(b)(4) of ERISA and Sec. 4231.3(a)(2) if an actuarial valuation has 
been performed for each plan involved in the transfer, based on the 
assets and liabilities of the plan as of a date not earlier than the 
first day of the last plan year ending before the proposed effective 
date of the transfer. The valuation shall separately identify assets, 
contributions and liabilities being transferred, and shall be based on 
the actuarial assumptions and methods that are expected to be used for 
the first plan year beginning after the transfer.


Sec. 4231.6  Plan solvency tests.

    (a) Significant transfers. A significant transfer satisfies the 
plan solvency requirement of section 4231(b)(3) of ERISA and 
Sec. 4231.3(a)(3)(i) if all of the following requirements are met by 
each plan involved in the transfer:
    (1) Expected contributions shall equal or exceed the estimated 
amount necessary to satisfy the minimum funding requirement of section 
412(a) of the Code (including reorganization funding, if applicable) 
for the five plan years beginning on or after the proposed effective 
date of the transfer.
    (2) The fair market value of plan assets immediately after the 
transfer shall equal or exceed the total amount of expected benefit 
payments during the first five plan years beginning on or after the 
proposed effective date of the transfer.
    (3) Expected contributions for the first plan year beginning on or 
after the proposed effective date of the transfer shall equal or exceed 
expected benefit payments for that plan year.
    (4) Contributions for the amortization period shall equal or exceed 
unfunded accrued benefits plus expected normal costs.
    (i) Notwithstanding paragraph (c)(4) of this section, ``unfunded 
accrued benefits'' means the excess of the present value of accrued 
benefits over the fair market value of the assets, determined on the 
basis of the actuarial valuation required under Sec. 4231.5(b).
    (ii) ``Amortization period'' means either 25 plan years or the 
amortization period for the resulting base when the combined charge 
base and the combined credit base are offset under section 412(b)(4) of 
the Code. The actuary may select either period.
    (b) Mergers and non-significant transfers. A merger or non-
significant transfer satisfies the plan solvency requirement of section 
4231(b)(3) of ERISA and Sec. 4231.3(a)(3)(i) if, for the merged plan or 
for each plan that continues after the transfer--
    (1) The fair market value of plan assets immediately after the 
merger or transfer equals or exceeds five times the benefit payments in 
the last plan year ending before the proposed effective date of the 
merger or transfer; or
    (2) In each of the first five plan years beginning after the 
proposed effective date of the merger or transfer, expected plan assets 
plus expected contributions and investment earnings equal or

[[Page 34114]]

exceed expected expenses and benefit payments for the plan year.
    (c) Rules for determinations. In determining whether a transaction 
satisfies the plan solvency requirements set forth in this section, the 
following rules apply:
    (1) Expected contributions after a merger or transfer shall be 
determined by assuming that contributions will equal contributions 
received in or accrued for the last full plan year ending before the 
date on which the notice of merger or transfer is filed with the PBGC. 
Contributions shall be adjusted, however, to reflect any change in the 
rate of employer contributions that has been negotiated (whether or not 
in effect), or a trend of changing contribution base units over the 
preceding five plan years or other period of time that can be 
demonstrated to be more appropriate.
    (2) Expected normal costs shall be determined under the funding 
method and assumptions used by the plan actuary for purposes of 
determining the minimum funding requirement under section 412 of the 
Code (which requires that such assumptions be reasonable in the 
aggregate). If the plan is using an aggregate funding method, normal 
costs shall be determined under the entry age normal method.
    (3) Expected benefit payments shall be determined by assuming that 
current benefits remain in effect and that all scheduled increases in 
benefits occur.
    (4) The fair market value of plan assets immediately after the 
merger or transfer shall be based on the most recent data available to 
the plan sponsor immediately before the date on which the notice is 
filed.
    (5) Expected investment earnings shall be determined using the same 
interest assumption used for determining the minimum funding 
requirement under section 412 of the Code.
    (6) Expected expenses shall be determined using expenses in the 
last plan year ending before the notice is filed, adjusted to reflect 
any anticipated changes.
    (7) Expected plan assets for a plan year shall be determined by 
adjusting the most current data on fair market value of plan assets to 
reflect expected contributions, investment earnings, benefit payments 
and expenses for each plan year between the date of the most current 
data and the beginning of the plan year for which expected assets are 
being determined.


Sec. 4231.7  De minimis mergers and transfers.

    (a) Special plan solvency rule. In order to determine whether a de 
minimis merger or transfer satisfies the plan solvency requirement in 
Sec. 4231.6(b), the plan assets, expected contributions and expected 
benefits may be determined without regard to any de minimis mergers or 
transfers that have occurred since the last valuation performed to 
establish charges and credits to the minimum funding standard account 
under section 412(b) of the Code.
    (b) De minimis merger defined. A merger is de minimis if the 
present value of accrued benefits (whether or not vested) of one plan 
is less than 3 percent of the fair market value of the other plan's 
assets.
    (c) De minimis transfer defined. A transfer of assets or 
liabilities is de minimis if--
    (1) The fair market value of the assets transferred, if any, is 
less than 3 percent of the fair market value of all the assets of the 
transferor plan; and
    (2) The present value of the accrued benefits transferred (whether 
or not vested) is less than 3 percent of the fair market value of all 
the assets of the transferee plan.
    (d) Value of assets and benefits. For purposes of paragraphs (b) 
and (c) of this section, the value of plan assets and accrued benefits 
may be determined as of any date prior to the proposed effective date 
of the merger or transfer, but not earlier than the date of the most 
recent valuation performed for purposes of section 412(b) of the Code.
    (e) Aggregation required. In determining whether a merger or 
transfer is de minimis, the assets and accrued benefits transferred in 
previous de minimis mergers and transfers within the same plan year 
shall be aggregated as described in paragraphs (e)(1) and (e)(2) of 
this section. For the purposes of those paragraphs, the value of plan 
assets may be determined as of the date during the plan year on which 
the total value of the plan's assets is the highest.
    (1) A merger is not de minimis if the total present value of 
accrued benefits merged into a plan, when aggregated with all prior de 
minimis mergers of and transfers to that plan effective within the same 
plan year, equals or exceeds 3 percent of the value of the plan's 
assets.
    (2) A transfer is not de minimis if, when aggregated with all 
previous mergers and transfers effective within the same plan year--
    (i) The value of all assets transferred from the plan equals or 
exceeds 3 percent of the value of the plan's assets; or
    (ii) The present value of all accrued benefits transferred to the 
plan equals or exceeds 3 percent of the plan's assets.


Sec. 4231.8  Notice of merger or transfer.

    (a) When to file. Except as provided in paragraph (f) of this 
section, a notice of a proposed merger or transfer shall be filed not 
less than 120 days before the effective date of the transaction. For 
purposes of this part, the effective date of a merger or transfer is 
the earlier of--
    (1) The date on which one plan assumes liability for benefits 
accrued under another plan involved in the transaction; or
    (2) The date on which one plan transfers assets to another plan 
involved in the transaction.
    (b) Who shall file. The plan sponsors of all plans involved in a 
merger or transfer, or the duly authorized representative(s) acting on 
behalf of the plan sponsors, shall jointly file the notice required by 
this section.
    (c) Where to file. The notice shall be delivered by mail or 
submitted by hand to Reports Processing, Insurance Operations 
Department, Pension Benefit Guaranty Corporation, 1200 K Street NW., 
Washington, DC 20005-4026.
    (d) Filing date. For purposes of paragraph (a) of this section, the 
notice is not considered filed until all of the information required by 
paragraph (e) of this section has been submitted. Except as provided in 
the next sentence, the notice is considered filed on the date it is 
received by the PBGC, unless it is received after regular business 
hours, in which event it is considered filed on the next regular 
business day. The notice is considered filed on the date of the 
postmark stamped on the cover in which the notice is mailed if--
    (1) The postmark was made by the United States Postal Service; and
    (2) The notice was mailed postage prepaid, properly packaged and 
addressed to the PBGC.
    (e) Information required. Each notice shall contain the following 
information:
    (1) For each plan involved in the merger or transfer--
    (i) The name of the plan;
    (ii) The name, address and telephone number of the plan sponsor and 
of the plan sponsor's duly authorized representative, if any; and
    (iii) The nine-digit employer Identification Number (EIN) assigned 
by the IRS to the plan sponsor and the three-digit Plan Identification 
Number (PIN) assigned by the plan sponsor to the plan, and, if 
different, the EIN or PIN last filed with the PBGC. If no EIN or PIN 
has been assigned, the notice shall so indicate.

[[Page 34115]]

    (2) The kind of transaction being reported (merger, significant 
transfer or non-significant transfer).
    (3) The proposed effective date of the merger or transfer.
    (4) A copy of the plan provision stating that no participant's or 
beneficiary's accrued benefit will be lower immediately after the 
merger or transfer than the benefit immediately before the transaction.
    (5) One of the following statements, certified by an enrolled 
actuary:
    (i) A statement that the merger or transfer is de minimis as 
defined in Sec. 4231.7. A notice of a de minimis merger or transfer is 
not required to include the information described in paragraph (e)(6) 
or (e)(7) of this section.
    (ii) A statement that the merger or transfer satisfies the 
applicable plan solvency test set forth in Sec. 4231.6, indicating 
which is the applicable test.
    (iii) A statement of the basis on which the actuary has determined 
that benefits under the plan are not reasonably expected to be subject 
to suspension under section 4245 of ERISA, including the supporting 
data or calculations, assumptions and methods.
    (6) For mergers or transfers (other than de minimis mergers or 
transfers), a copy of the most recent actuarial valuation report that 
satisfies the requirements of Sec. 4231.5.
    (7) For a significant transfer, the following information used in 
making the plan solvency determination under Sec. 4231.6(a):
    (i) The present value of the accrued benefits and fair market value 
of plan assets under the valuation required by Sec. 4231.5(b), 
allocable to each plan after the transfer.
    (ii) The fair market value of assets in each plan after the 
transfer (determined in accordance with Sec. 4231.6(c)(4)).
    (iii) The expected benefit payments for each plan in the first plan 
year beginning on or after the proposed effective date of the transfer 
(determined in accordance with Sec. 4231.6(c)(3)).
    (iv) The contribution rates in effect for each plan for the first 
plan year beginning on or after the proposed effective date of the 
transfer.
    (v) The expected contributions for each plan in the first plan year 
beginning on or after the proposed effective date of the transfer 
(determined in accordance with Sec. 4231.6(c)(1)).
    (f) Waiver of notice. PBGC may waive the notice requirements of 
this section and section 4231(b)(1) of ERISA if the plan sponsor 
demonstrates to the satisfaction of the PBGC that failure to complete 
the merger or transfer in less than 120 days after filing the notice 
will cause harm to participants or beneficiaries of the plans involved 
in the transaction.

(Approved by the Office of Management and Budget under control 
number 1212-0022)


Sec. 4231.9  Request for compliance determination.

    (a) General. A request for a determination that a merger or 
transfer complies with the requirements of section 4231 of ERISA may be 
filed by the plan sponsor or sponsors of one or more plans involved in 
a merger or transfer. The request shall contain the information 
described in paragraph (b) or (c) of this section, as applicable.
    (1) The place of filing. The request shall be delivered to the 
address set forth in Sec. 4231.8(c).
    (2) Single request permitted for all de minimis transactions. 
Because the plan solvency test for de minimis mergers and transfers is 
based on the most recent valuation (without adjustment for intervening 
de minimis transactions), a plan sponsor may submit a single request 
for a compliance determination covering all de minimis mergers or 
transfers that occur between one plan valuation and the next. However, 
the plan sponsor must still notify PBGC of each de minimis merger or 
transfer separately, in accordance with Sec. 4231.8. The single request 
for a compliance determination may be filed concurrently with any one 
of the notices of a de minimis merger or transfer.
    (b) Contents of request: merger or transfer that is not de minimis. 
A request for a compliance determination concerning a merger or 
transfer that is not de minimus shall contain--
    (1) A copy of the merger or transfer agreement;
    (2) A summary of the required calculations, including a complete 
description of assumptions and methods, on which the enrolled actuary 
based the certification that the merger or transfer satisfied a plan 
solvency test described in Sec. 4231.6; and
    (3) For a significant transfer, copies of all actuarial valuations 
performed within the 5 years preceding the proposed effective date of 
the transfer.
    (c) Contents of request: De minimus merger or transfer. A request 
for a compliance determination concerning a de minimis merger or 
transfer shall contain one of the following statements, certified by an 
enrolled actuary:
    (1) A statement that the merger or transfer satisfies one of the 
plan solvency tests set forth in Sec. 4231.6(b), indicating which test 
is satisfied.
    (2) A statement of the basis on which the actuary has determined 
that benefits under the plan are not reasonably expected to be subject 
to suspension under section 4245 of ERISA, including supporting data or 
calculations, assumptions and methods.

(Approved by the Office of Management and Budget under control 
number 1212-0022)


Sec. 4231.10  Actuarial calculations and assumptions.

    (a) Most recent valuation. All calculations required by this part 
shall be based on the most recent actuarial valuation as of the date of 
filing the notice, updated to show any material changes.
    (b) Assumptions. All calculations required by this part shall be 
based on methods and assumptions that are reasonable in the aggregate, 
based on generally accepted actuarial principles.
    (c) Updated calculations. If the actual date of the merger or 
transfer is more than one year after the date the notice is filed with 
the PBGC, PBGC may require the plans involved to provide updated 
calculations and representations based on the actual effective date of 
the transaction.

(Approved by the Office of Management and Budget under control 
number 1212-0022)

PART 4245--NOTICE OF INSOLVENCY

Sec.
4245.1  Purpose and scope.
4245.2  Definitions.
4245.3  Notice of insolvency.
4245.4  Contents of notice of insolvency.
4245.5  Notice of insolvency benefit level.
4245.6  Contents of notice of insolvency benefit level.
4245.7  PBGC address.

    Authority: 29 U.S.C. 1302(b)(3), 1426(e).


Sec. 4245.1  Purpose and scope.

    (a) Purpose. The purpose of this part is to prescribe notice 
requirements pertaining to insolvent multiemployer plans that are in 
reorganization.
    (b) Scope. This part applies to multiemployer plans in 
reorganization covered by title IV of ERISA, other than plans that have 
terminated by mass withdrawal under section 4041A(a)(2) of ERISA.


Sec. 4245.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
employer, ERISA, IRS, multiemployer plan, nonforfeitable benefit, PBGC, 
person, plan, and plan year.
    In addition, for purposes of this part:
    Actuarial valuation means a report submitted to the plan in 
connection with a valuation of plan assets and liabilities, which, in 
the case of a plan covered by subparts C and D of part 4281, shall be 
performed in accordance with subpart B of part 4281.

[[Page 34116]]

    Available resources means, for a plan year, available resources as 
described in section 4245(b)(3) of ERISA.
    Benefits subject to reduction means those benefits accrued under 
plan amendments (or plans) adopted after March 26, 1980, or under 
collective bargaining agreements entered into after March 26, 1980, 
that are not eligible for the PBGC's guarantee under section 4022A(b) 
of ERISA.
    Financial assistance means financial assistance from the PBGC under 
section 4261 of ERISA.
    Insolvency benefit level means the greater of the resource benefit 
level or the benefit level guaranteed by the PBGC for each participant 
and beneficiary in pay status.
    Insolvency year means insolvency year as described in section 
4245(b)(4) of ERISA.
    Insolvent means that a plan is unable to pay benefits when due 
during the plan year. A plan terminated by mass withdrawal is not 
insolvent unless it has been amended to eliminate all benefits that are 
subject to reduction under section 4281(c) of ERISA, or, in the absence 
of an amendment, no benefits under the plan are subject to reduction 
under section 4281(c) of ERISA.
    Reasonably expected to enter pay status means, with respect to plan 
participants and beneficiaries, persons (other than those in pay 
status) who, according to plan records, are disabled, have applied for 
benefits, or have reached or will reach during the applicable period 
the normal retirement age under the plan, and any others whom it is 
reasonable for the plan sponsor to expect to enter pay status during 
the applicable period.
    Reorganization means reorganization under section 4241(a) of ERISA.
    Resource benefit level means resource benefit level as described in 
section 4245(b)(2) of ERISA.


Sec. 4245.3  Notice of insolvency.

    (a) Requirement of notice. A plan sponsor of a multiemployer plan 
in reorganization that determines under section 4245 (b)(1), (d)(1) or 
(d)(2) of ERISA that the plan's available resources are or may be 
insufficient to pay benefits when due for a plan year shall so notify 
the PBGC and the interested parties, as defined in paragraph (d) of 
this section. A single notice may cover more than one plan year. The 
notices shall be delivered in the manner and within the time prescribed 
in this section and shall contain the information described in 
Sec. 4245.4.
    (b) When delivered. A plan sponsor shall mail or otherwise deliver 
the notices of insolvency no later than 30 days after it determines 
that the plan is or may become insolvent, as described in paragraph (a) 
of this section. However, the notice to participants and beneficiaries 
in pay status may be delivered concurrently with the first benefit 
payment made more than 30 days after the determination of insolvency.
    (c) Methods of delivery. The notice of insolvency shall be 
delivered by mail or by hand to the PBGC and the interested parties 
described in paragraph (d) of this section, other than participants and 
beneficiaries who are not in pay status when the notice is required to 
be delivered. The notice to participants and beneficiaries who are not 
in pay status shall be provided in any manner reasonably calculated to 
reach those participants and beneficiaries. Reasonable methods of 
notification include, but are not limited to, posting the notice at 
participants' worksites or publishing the notice in a union newsletter 
or in a newspaper of general circulation in the area or areas where 
participants reside. Notice to a participant shall be deemed notice to 
that participant's beneficiary or beneficiaries.
    (d) Interested parties. For purposes of this part, the term 
``interested parties'' means--
    (1) Employers required to contribute to the plan;
    (2) Employee organizations that, for collective bargaining 
purposes, represent plan participants employed by such employers; and
    (3) Plan participants and beneficiaries.


Sec. 4245.4  Contents of notice of insolvency.

    (a) Notice to the PBGC. A notice of insolvency required to be filed 
with the PBGC pursuant to Sec. 4245.3 shall contain the information set 
forth below:
    (1) The name of the plan.
    (2) The name, address and telephone number of the plan sponsor and 
of the plan sponsor's duly authorized representative, if any.
    (3) The nine-digit Employer Identification Number (EIN) assigned by 
the IRS to the plan sponsor and the three-digit Plan Identification 
Number (PIN) assigned by the plan sponsor to the plan, and, if 
different, the EIN or PIN last filed with the PBGC. If no EIN or PIN 
has been assigned, the notice shall so indicate.
    (4) The IRS key district that has jurisdiction over determination 
letters with respect to the plan.
    (5) The case number assigned to the plan by the PBGC. If the plan 
has no case number, the notice shall state whether the plan has 
previously filed a notice of insolvency with the PBGC and, if so, the 
date on which the notice was filed.
    (6) The plan year or years for which the plan sponsor has 
determined that the plan is or may become insolvent.
    (7) A copy of the plan document, including the last restatement of 
the plan and all subsequent amendments in effect, or to become 
effective, during the insolvency year or years. However, if a copy of 
the plan document was submitted to the PBGC with a previous notice of 
insolvency or notice of insolvency benefit level, only subsequent plan 
amendments need be submitted, and the notice shall state when the copy 
of the plan document was filed.
    (8) A copy of the most recent actuarial valuation for the plan and 
a copy of the most recent Schedule B (Form 5500) filed for the plan, if 
the Schedule B contains more recent information than the actuarial 
valuation. If the actuarial valuation or Schedule B was previously 
submitted to the PBGC, it may be omitted, and the notice shall state 
the date on which the document was filed and that the information is 
still accurate and complete.
    (9) The estimated amount of annual benefit payments under the plan 
(determined without regard to the insolvency) for each insolvency year.
    (10) The estimated amount of the plan's available resources for 
each insolvency year.
    (11) A certification, signed by the plan sponsor (or a duly 
authorized representative), that notices of insolvency have been given 
to all interested parties in accordance with the requirements of this 
part.
    (b) Notices to interested parties. A notice of insolvency required 
under Sec. 4245.3 to be given to an interested party, as defined in 
Sec. 4245.3(d), shall contain the information set forth below:
    (1) The name of the plan.
    (2) The plan year or years for which the plan sponsor has 
determined that the plan is or may become insolvent.
    (3) The estimated amount of annual benefit payment under the plan 
(determined without regard to the insolvency) for each insolvency year.
    (4) The estimated amount of the plan's available resources for each 
insolvency year.
    (5) A statement that, during the insolvency year, benefits above 
the amount that can be paid from available resources or the level 
guaranteed by the PBGC, whichever is greater, will be suspended, with a 
brief explanation of which benefits are guaranteed by the PBGC. The 
following statement may be

[[Page 34117]]

included as an explanation of PBGC-guaranteed benefits:
    Should the plan become insolvent, each participant's benefit 
guaranteed by the Pension Benefit Guaranty Corporation (PBGC) is 
determined as follows. Each participant's nonforfeitable monthly 
benefit payable under the plan at retirement is computed. This benefit 
is then divided by the participant's years of credited service under 
the plan. Of the resulting figure (the accrual rate), the first $5 is 
guaranteed at 100%. Any additional amount (up to $15) is either 75% or 
65% guaranteed, depending on the past funding practices of the plan. 
Any remaining amount that exceeds $20 is not guaranteed. The PBGC 
guarantees the payment of a monthly benefit equal to this adjusted 
accrual rate times years of credited service. The PBGC does not 
guarantee benefits or benefit increases that have been in effect for 
fewer than 60 months before the plan becomes insolvent or is amended to 
reduce accrued benefits.
    (6) The name, address, and telephone number of the plan 
administrator or other person designated by the plan sponsor to answer 
inquiries concerning benefits during the plan's insolvency.


Sec. 4245.5  Notice of insolvency benefit level.

    (a) Requirement of notice. Except as provided in paragraph (b) of 
this section, for each insolvency year the plan sponsor shall notify 
the PBGC and the interested parties, as defined in Sec. 4245.3(d), of 
the level of benefits expected to be paid during the year (the 
``insolvency benefit level''). These notices shall be delivered in the 
manner and within the time prescribed in this section and shall contain 
the information described in Sec. 4245.6.
    (b) Waiver of notice to certain interested parties. The notice of 
insolvency benefit level required under this section need not be given 
to interested parties, other than participants and beneficiaries who 
are in pay status or are reasonably expected to enter pay status during 
the insolvency year, for an insolvency year immediately following the 
plan year in which a notice of insolvency was required to be delivered 
pursuant to Sec. 4245.3, provided that the notice of insolvency was in 
fact delivered.
    (c) When delivered. The plan sponsor shall mail or otherwise 
deliver the required notices of insolvency benefit level no later than 
60 days before the beginning of the insolvency year, except that if the 
determination of insolvency is made fewer than 120 days before the 
beginning of the insolvency year, the notices shall be delivered within 
60 days after the date of the plan sponsor's determination.
    (d) Methods of delivery. The notice of insolvency benefit level 
shall be delivered by mail or by hand to the PBGC and to the interested 
parties described in Sec. 4245.3(d), other than participants and 
beneficiaries who are neither in pay status nor reasonably expected to 
enter pay status during the insolvency year for which the notice is 
given. The notice to participants and beneficiaries not in pay status, 
nor reasonably expected to enter pay status during the insolvency year, 
shall be provided in any manner reasonably calculated to reach those 
participants and beneficiaries. Reasonable methods of notification 
include, but are not limited to, posting the notice at participants' 
worksites or publishing the notice in a union newsletter or in a 
newspaper of general circulation in the area or areas where 
participants reside. Notice to a participant shall be deemed notice to 
that participant's beneficiary or beneficiaries.


Sec. 4245.6  Contents of notice of insolvency benefit level.

    (a) Notice to the PBGC. A notice of insolvency benefit level 
required to be filed with the PBGC pursuant to Sec. 4245.5(a) shall 
contain the information set forth below, except as provided in the next 
sentence. The information required in paragraphs (a)(7) to (a)(10) need 
be submitted only if it is different from the information submitted to 
the PBGC with the notice of insolvency filed for that insolvency year 
(see Sec. 4245.4 (a)(7) to (a)(10)) or the notice of insolvency benefit 
level filed for a prior year. When any information is omitted under 
this exception, the notice shall so state and indicate when the notice 
of insolvency or prior notice of insolvency benefit level was filed.
    (1) The name of the plan.
    (2) The name, address and telephone number of the plan sponsor and 
of the plan sponsor's authorized representative, if any.
    (3) The nine-digit Employer Identification Number (EIN) assigned by 
the IRS to the plan sponsor and the three-digit Plan Identification 
Number (PIN) assigned by the plan sponsor to the plan, and, if 
different, the EIN or PIN last filed with the PBGC. If no EIN or PIN 
has been assigned, the notice shall so indicate.
    (4) The IRS key district that has jurisdiction over determination 
letters with respect to the plan.
    (5) The case number assigned to the plan by the PBGC.
    (6) The plan year for which the notice is filed.
    (7) A copy of the plan document, including any amendments, in 
effect during the insolvency year.
    (8) A copy of the most recent actuarial valuation for the plan and 
a copy of the most recent Schedule B (Form 5500) filed for the plan, if 
the Schedule B contains more recent information than the actuarial 
valuation.
    (9) The estimated amount of annual benefit payments under the plan 
(determined without regard to the insolvency) for the insolvency year.
    (10) The estimated amount of the plan's available resources for the 
insolvency year.
    (11) The estimated amount of the annual benefit payments guaranteed 
by the PBGC for the insolvency year.
    (12) The amount of financial assistance, if any, requested from the 
PBGC.
    (13) A certification, signed by the plan sponsor (or a duly 
authorized representative), that notices of insolvency benefit level 
have been given to all interested parties in accordance with the 
requirements of this part.
    When financial assistance is requested, the PBGC may require the 
plan sponsor to submit additional information necessary to process the 
request.
    (b) Notices to interested parties other than participants in or 
entering pay status. A notice of insolvency benefit level required by 
Sec. 4245.5(a) to be delivered to interested parties, as defined in 
Sec. 4245.3(d), other than a notice to a participant or beneficiary who 
is in pay status or is reasonably expected to enter pay status during 
the insolvency year, shall include the information set forth below:
    (1) The name of the plan.
    (2) The plan year for which the notice is issued.
    (3) The estimated amount of annual benefit payments under the plan 
(determined without regard to the insolvency) for the insolvency year.
    (4) The estimated amount of the plan's available resources for the 
insolvency year.
    (5) The amount of financial assistance, if any, requested from the 
PBGC.
    (c) Notices to participants and beneficiaries in or entering pay 
status. A notice of insolvency benefit level required by Sec. 4245.5(a) 
to be delivered to participants and beneficiaries who are in pay status 
or are reasonably expected to enter pay status during the insolvency 
year for which the notice is given, shall include the following 
information:
    (1) The name of the plan.
    (2) The plan year for which the notice is issued.

[[Page 34118]]

    (3) A statement of the monthly benefit expected to be paid to the 
participant or beneficiary during the insolvency year.
    (4) A statement that in subsequent plan years, depending on the 
plan's available resources, this benefit level may be increased or 
decreased but will not fall below the level guaranteed by the PBGC, and 
that the participant or beneficiary will be notified in advance of the 
new benefit level if it is less than his full nonforfeitable benefit 
under the plan.
    (5) The name, address, and telephone number of the plan 
administrator or other person designated by the plan sponsor to answer 
inquiries concerning benefits during the plan's insolvency.


Sec. 4245.7   PBGC address.

    All notices required to be filed with the PBGC under this part 
shall be addressed to Reports Processing, Insurance Operations 
Department, Pension Benefit Guaranty Corporation, 1200 K Street NW., 
Washington, DC 20005-4026.

(Approved by the Office of Management and Budget under control 
number 1212-0033)

PART 4261--FINANCIAL ASSISTANCE TO MULTIEMPLOYER PLANS


Sec. 4261.1  Cross-reference.

    See Sec. 4281.47 for procedures for applying to the PBGC for 
financial assistance under section 4261 of ERISA.

PART 4281--DUTIES OF PLAN SPONSOR FOLLOWING MASS WITHDRAWAL

Subpart A--General

Sec.
4281.1  Purpose and scope.
4281.2  Definitions.
4281.3  Submission of documents.
4281.4  Collection of information.

Subpart B--Valuation of Plan Benefits and Plan Assets

4281.11  Valuation dates.
4281.12  Benefits to be valued.
4281.13  Benefit valuation methods--in general.
4281.14  Mortality assumptions--in general.
4281.15  Mortality assumptions--lump sums under trusteed plans.
4281.16  Benefit valuation methods--plans closing out.
4281.17  Asset valuation methods--in general.
4281.18  Outstanding claims for withdrawal liability.

Subpart C--Benefit Reductions

4281.31  Plan amendment.
4281.32  Notices of benefit reductions.
4281.33  Restoration of benefits.

Subpart D--Benefit Suspensions

4281.41  Benefit suspensions.
4281.42  Retroactive payments.
4281.43  Notices of insolvency and annual updates.
4281.44  Contents of notices of insolvency and annual updates.
4281.45  Notices of insolvency benefit level.
4281.46  Contents of notices of insolvency benefit level.
4281.47  Application for financial assistance.

    Authority: 29 U.S.C. 1302(b)(3), 1341a, 1399(c)(1)(D), and 1441.

Subpart A--General Provisions


Sec. 4281.1  Purpose and scope.

    (a) General.
    (1) Purpose. When a multiemployer plan terminates by mass 
withdrawal under section 4041A(a)(2) of ERISA, the plan's assets and 
benefits must be valued annually under section 4281(b) of ERISA, and 
plan benefits may have to be reduced or suspended to the extent 
provided in section 4281 (c) or (d). This part implements the 
provisions of section 4281 and provides rules for applying for 
financial assistance from the PBGC under section 4261 of ERISA. The 
plan valuation rules in this part also apply to the determination of 
reallocation liability under section 4219(c)(1)(D) of ERISA and subpart 
B of part 4219 of this chapter for multiemployer plans that undergo 
mass withdrawal (with or without termination).
    (2) Scope. This part applies to multiemployer plans covered by 
Title IV of ERISA that have terminated by mass withdrawal under section 
4041A(a)(2) of ERISA (including plans created by partition pursuant to 
section 4233 of ERISA). Subpart B of this part also applies to covered 
multiemployer plans that have undergone mass withdrawal without 
terminating.
    (b) Subpart B. Subpart B establishes rules for determining the 
value of multiemployer plan benefits and assets, including outstanding 
claims for withdrawal liability, for plans required to perform annual 
valuations under section 4281(b) of ERISA or allocate unfunded vested 
benefits under section 4219(c)(1)(D) of ERISA.
    (c) Subpart C. Subpart C sets forth procedures under which the plan 
sponsor of a terminated plan shall amend the plan to reduce benefits 
subject to reduction in accordance with section 4281(c) of ERISA and 
Sec. 4041A.24(b) of this chapter. Subpart C applies to a plan for which 
the annual valuation required by Sec. 4041A.24(a) indicates that the 
value of nonforfeitable benefits under the plan exceeds the value of 
the plan's assets (including claims for withdrawal liability) if, at 
the end of the plan year for which that valuation was done, the plan 
provided any benefits subject to reduction. Benefit reductions required 
to be made under subpart C shall not apply to accrued benefits under 
plans or plan amendments adopted on or before March 26, 1980, or under 
collective bargaining agreements entered into on or before March 26, 
1980.
    (d) Subpart D. Subpart D sets forth the procedures under which the 
plan sponsor of an insolvent plan must suspend benefit payments and 
issue insolvency notices in accordance with section 4281(d) of ERISA 
and Sec. 4041A.25 (c) and (d) of this chapter. Subpart D applies to a 
plan that has been amended under section 4281(c) of ERISA and subpart C 
of this part to eliminate all benefits subject to reduction and to a 
plan that provided no benefits subject to reduction as of the date on 
which the plan terminated.


Sec. 4281.2  Definitions.

    The following terms are defined in section 4001.2 of this chapter: 
annuity, employer, ERISA, fair market value, IRS, insurer, irrevocable 
commitment, mass withdrawal, multiemployer plan, nonforfeitable 
benefit, normal retirement age, PBGC, person, plan, plan administrator, 
and plan year.
    In addition, for purposes of this part:
    Available resources means, for a plan year, available resources as 
described in section 4245(b)(3) of ERISA.
    Benefits subject to reduction means those benefits accrued under 
plan amendments (or plans) adopted after March 26, 1980, or under 
collective bargaining agreements entered into after March 26, 1980, 
that are not eligible for the PBGC's guarantee under section 4022A(b) 
of ERISA.
    Financial assistance means financial assistance from the PBGC under 
section 4261 of ERISA.
    Insolvency benefit level means the greater of the resource benefit 
level or the benefit level guaranteed by the PBGC for each participant 
and beneficiary in pay status.
    Insolvency year means insolvency year as described in section 
4245(b)(4) of ERISA.
    Insolvent means that a plan is unable to pay benefits when due 
during the plan year. A plan terminated by mass withdrawal is not 
insolvent unless it has been amended to eliminate all benefits that are 
subject to reduction under section 4281(c), or, in the absence of an 
amendment, no benefits under the plan are subject to reduction under 
section 4281(c) of ERISA.
    Pro rata means that the required benefit reduction or payment shall 
be allocated among affected participants in the same proportion that 
each such

[[Page 34119]]

participant's nonforfeitable benefits under the plan bear to all 
nonforfeitable benefits of those participants under the plan.
    Reasonably expected to enter pay status means, with respect to plan 
participants and beneficiaries, persons (other than those in pay 
status) who, according to plan records, are disabled, have applied for 
benefits, or have reached or will reach during the applicable period 
the normal retirement age under the plan, and any others whom it is 
reasonable for the plan sponsor to expect to enter pay status during 
the applicable period.
    Resource benefit level means resource benefit level as described in 
section 4245(b)(2) of ERISA.
    Valuation date means the last day of the plan year in which the 
plan terminates and the last day of each plan year thereafter.


Sec. 4281.3  Submission of documents.

    (a) Filing date. Any notice, document or information required to be 
filed with the PBGC under this part shall be considered filed on the 
date of the United States postmark stamped on the cover in which the 
document or information is mailed, provided that the postmark was made 
by the United States Postal Service and the document was mailed postage 
prepaid, properly packaged and addressed to the PBGC. If these 
conditions are not met, the document shall be considered filed on the 
date on which it was received by the PBGC.
    (b) Address. All notices, documents and information required to be 
filed with the PBGC under this part shall be addressed to Reports 
Processing, Insurance Operations Department, Pension Benefit Guaranty 
Corporation, 1200 K Street NW., Washington, DC 20005-4026.


Sec. 4281.4  Collection of information.

    The collection of information requirements contained in this part 
have been approved by the Office of Management and Budget under control 
number 1212-0032.

Subpart B--Valuation of Plan Benefits and Plan Assets


Sec. 4281.11  Valuation dates.

    (a) Annual valuations of mass-withdrawal-terminated plans. The 
valuation dates for the annual valuation required under section 4281(b) 
of ERISA shall be the last day of the plan year in which the plan 
terminates and the last day of each plan year thereafter.
    (b) Valuations related to mass withdrawal reallocation liability. 
The valuation date for determining the value of unfunded vested 
benefits (for purposes of allocation) under section 4219(c)(1)(D) of 
ERISA shall be--
    (1) If the plan terminates by mass withdrawal, the last day of the 
plan year in which the plan terminates; or
    (2) If substantially all the employers withdraw from the plan 
pursuant to an agreement or arrangement to withdraw from the plan, the 
last day of the plan year as of which substantially all employers have 
withdrawn from the plan pursuant to the agreement or arrangement.


Sec. 4281.12  Benefits to be valued.

    (a) Form of benefit. The plan sponsor shall determine the form of 
each benefit to be valued, without regard to the form of benefit valued 
in any prior year, in accordance with the following rules:
    (1) If a benefit is in pay status as of the valuation date, the 
plan sponsor shall value the form of benefit being paid.
    (2) If a benefit is not in pay status as of the valuation date but 
a valid election with respect to the form of benefit has been made on 
or before the valuation date, the plan sponsor shall value the form of 
benefit so elected.
    (3) If a benefit is not in pay status as of the valuation date and 
no valid election with respect to the form of benefit has been made on 
or before the valuation date, the plan sponsor shall value the form of 
benefit that, under the terms of the plan or applicable law, is payable 
in the absence of a valid election.
    (b) Timing of benefit. The plan sponsor shall value benefits whose 
starting date is subject to election--
    (1) By assuming that the starting date of each benefit is the 
earliest date, not preceding the valuation date, that could be elected; 
or
    (2) By using any other assumption that the plan sponsor 
demonstrates to the satisfaction of the PBGC is more reasonable under 
the circumstances.


Sec. 4281.13  Benefit valuation methods--in general.

    (a) General rule. Except as otherwise provided in paragraph (b) of 
this section (regarding the valuation of benefits payable as lump sums 
under trusteed plans) and Sec. 4281.16 (regarding plans that are 
closing out), the plan sponsor shall value benefits as of the valuation 
date by--
    (1) Using the interest assumptions described in Table I of appendix 
B to part 4044 of this chapter;
    (2) Using the mortality assumptions described in Sec. 4281.14;
    (3) Using interpolation methods, where necessary, at least as 
accurate as linear interpolation;
    (4) Applying valuation formulas that accord with generally accepted 
actuarial principles and practices; and
    (5) Adjusting the values to reflect the loading for expenses in 
accordance with appendix C to part 4044 of this chapter (substituting 
the term ``benefits'' for the term ``benefit liabilities (as defined in 
29 U.S.C. Sec. 1301(a)(16))'').
    (b) Benefits payable as lump sums under trusteed plans. If the PBGC 
is trustee of a multiemployer plan, for determining whether the value 
of a benefit is $3,500 or less under Sec. 4022.7(b)(1) and for 
calculating the amount of a lump sum benefit, the PBGC shall value 
benefits to be paid as lump sums in the same manner as benefits to be 
paid as annuities except that the interest assumptions prescribed by 
Table II of appendix B to part 4044 of this chapter and the mortality 
assumptions prescribed by Sec. 4281.15 shall apply, and there shall be 
no adjustment to reflect the loading for expenses.


Sec. 4281.14  Mortality assumptions--in general.

    (a) General rule. Except as otherwise provided in Sec. 4281.15 
(regarding the valuation of benefits payable as lump sums under 
trusteed plans), and subject to paragraph (b) of this section 
(regarding certain death benefits), the plan administrator shall use 
the mortality factors prescribed in paragraphs (c), (d), and (e) of 
this section to value benefits under Sec. 4281.13.
    (b) Certain death benefits. If an annuity for one person is in pay 
status on the valuation date, and if the payment of a death benefit 
after the valuation date to another person, who need not be 
identifiable on the valuation date, depends in whole or in part on the 
death of the pay status annuitant, then the plan administrator shall 
value the death benefit using--
    (1) the mortality rates that are applicable to the annuity in pay 
status under this section to represent the mortality of the pay status 
annuitant; and
    (2) the mortality rates applicable to annuities not in pay status 
and to deferred benefits other than annuities, under paragraph (c) of 
this section, to represent the mortality of the death beneficiary.
    (c) Mortality rates for healthy lives. The mortality rates 
applicable to annuities in pay status on the valuation date that are 
not being received as disability benefits, to annuities not in

[[Page 34120]]

pay status on the valuation date, and to deferred benefits other than 
annuities, are,--
    (1) For male participants, the rates in Table 1 of appendix A to 
part 4044 of this chapter, and
    (2) For female participants, the rates in Table 1 of appendix A to 
part 4044 of this chapter, set back 6 years.
    (d) Mortality rates for disabled lives (other than Social Security 
disability). The mortality rates applicable to annuities in pay status 
on the valuation date that are being received as disability benefits 
and for which neither eligibility for, nor receipt of, Social Security 
disability benefits is a prerequisite, are,--
    (1) For male participants, the rates in Table 1 of appendix A to 
part 4044 of this chapter, set forward 3 years, and
    (2) For female participants, the rates in Table 1 of appendix A to 
part 4044 of this chapter, set back 3 years.
    (e) Mortality rates for disabled lives (Social Security 
disability). The mortality rates applicable to annuities in pay status 
on the valuation date that are being received as disability benefits 
and for which either eligibility for, or receipt of, Social Security 
disability benefits is a prerequisite, are the rates in Tables 2-M and 
2-F of appendix A to part 4044 of this chapter.


Sec. 4281.15  Mortality assumptions--lump sums under trusteed plans.

    (a) General rule. If the PBGC is trustee of a multiemployer plan, 
for determining whether the value of a benefit is $3,500 or less under 
Sec. 4022.7(b)(1) and for calculating the amount of a lump sum benefit, 
the PBGC will use the mortality rates in Table 3 of appendix A to part 
4044 of this chapter.


Sec. 4281.16  Benefit valuation methods--plans closing out.

    (a) Applicability. For purposes of the annual valuation required by 
section 4281(b) of ERISA, the plan sponsor shall value the plan's 
benefits in accordance with paragraph (b) of this section if,--
    (1) Plans closed out before valuation. Before the time when the 
valuation is performed, the plan has satisfied in full all liabilities 
for payment of nonforfeitable benefits, in a manner consistent with the 
terms of the plan and applicable law, by the purchase of one or more 
nonparticipating irrevocable commitments from one or more insurers, 
with respect to all benefits payable as annuities, and by the payment 
of single-sum cash distributions, with respect to benefits not payable 
as annuities; or
    (2) Plans to be closed out after valuation. As of the time when the 
valuation is performed, the plan sponsor reasonably expects that the 
plan will close out before the next annual valuation date and the plan 
sponsor has a currently exercisable bid or bids to provide the 
irrevocable commitment(s) described in paragraph (a)(1) of this section 
and the total cost of the irrevocable commitment(s) under the bid, plus 
the total amount of the single-sum cash distributions described in 
paragraph (a)(1), does not exceed the value of the plan's assets, 
exclusive of outstanding claims for withdrawal liability, as determined 
under this subpart.
    (b) Valuation rule. The present value of nonforfeitable benefits 
under this section is the total amount of single-sum cash distributions 
made or to be made plus the cost of the irrevocable commitment(s) 
purchased or to be purchased in order to satisfy in full all 
liabilities of the plan for nonforfeitable benefits.


Sec. 4281.17  Asset valuation methods--in general.

    (a) General rule. The plan sponsor shall value plan assets as of 
the valuation date, using the valuation methods prescribed by this 
section and Sec. 4281.18 (regarding outstanding claims for withdrawal 
liability), and deducting administrative liabilities in accordance with 
paragraph (c) of this section.
    (b) Assets other than withdrawal liability claims. The plan sponsor 
shall value any plan asset (other than an outstanding claim for 
withdrawal liability) by such method or methods as the plan sponsor 
reasonably believes most accurately determine fair market value.
    (c) Adjustment for administrative liabilities. In determining the 
total value of plan assets, the plan sponsor shall subtract all plan 
liabilities, other than liabilities to pay benefits. For this purpose, 
any obligation to repay financial assistance received from the PBGC 
under section 4261 of ERISA is a plan liability other than a liability 
to pay benefits. The obligation to repay financial assistance shall be 
valued by determining the value of the scheduled payments in the same 
manner as prescribed in Sec. 4281.18(a) for valuing claims for 
withdrawal liability.


Sec. 4281.18  Outstanding claims for withdrawal liability.

    (a) Value of claim. The plan sponsor shall value an outstanding 
claim for withdrawal liability owed by an employer described in 
paragraph (b) of this section in accordance with paragraphs (a)(1) and 
(a)(2) of this section:
    (1) If the schedule of withdrawal liability payments provides for 
one or more series of equal payments, the plan sponsor shall value each 
series of payments as an annuity certain in accordance with the 
provisions of Sec. 4281.13.
    (2) If the schedule of withdrawal liability payments provides for 
one or more payments that are not part of a series of equal payments as 
described in paragraph (a)(1) of this section, the plan sponsor shall 
value each such unequal payment as a lump-sum payment in accordance 
with the provisions of Sec. 4281.13.
    (b) Employers neither liquidated nor in insolvency proceedings. The 
plan sponsor shall value an outstanding claim for withdrawal liability 
under paragraph (a) of this section if, as of the valuation date--
    (1) The employer has not been completely liquidated or dissolved; 
and
    (2) The employer is not the subject of any case or proceeding under 
title 11, United States Code, or any case or proceeding under similar 
provisions of state insolvency laws; except that the claim for 
withdrawal liability of an employer that is the subject of a proceeding 
described in this paragraph (b)(2) shall be valued under paragraph (a) 
of this section if the plan sponsor determines that the employer is 
reasonably expected to be able to pay its withdrawal liability in full 
and on time.
    (c) Claims against other employers. The plan sponsor shall value at 
zero any outstanding claim for withdrawal liability owed by an employer 
that does not meet the conditions set forth in paragraph (b) of this 
section.

Subpart C--Benefit Reductions


Sec. 4281.31  Plan amendment.

    The plan sponsor of a plan described in Sec. 4281.31 shall amend 
the plan to eliminate those benefits subject to reduction in excess of 
the value of benefits that can be provided by plan assets. Such 
reductions shall be effected by a pro rata reduction of all benefits 
subject to reduction or by elimination or pro rata reduction of any 
category of benefit. Benefit reductions required by this section shall 
apply only prospectively. An amendment required under this section 
shall take effect no later than six months after the end of the plan 
year for which it is determined that the value of nonforfeitable 
benefits exceeds the value of the plan's assets.


Sec. 4281.32  Notices of benefit reductions.

    (a) Requirement of notices. A plan sponsor of a multiemployer plan 
under which a plan amendment reducing

[[Page 34121]]

benefits is adopted pursuant to section 4281(c) of ERISA shall so 
notify the PBGC and plan participants and beneficiaries whose benefits 
are reduced by the amendment. The notices shall be delivered in the 
manner and within the time prescribed, and shall contain the 
information described, in this section. The notice required in this 
section shall be filed in lieu of the notice described in section 
4244A(b)(2) of ERISA.
    (b) When delivered. The plan sponsor shall mail or otherwise 
deliver the notices of benefit reduction no later than the earlier of--
    (1) 45 days after the amendment reducing benefits is adopted; or
    (2) The date of the first reduced benefit payment.
    (c) Method of delivery. The notices of benefit reductions shall be 
delivered by mail or by hand to the PBGC and to plan participants and 
beneficiaries who are in pay status when the notice is required to be 
delivered or who are reasonably expected to enter pay status before the 
end of the plan year after the plan year in which the amendment is 
adopted. The notice to other participants and beneficiaries whose 
benefit is reduced by the amendment shall be provided in any manner 
reasonably calculated to reach those participants and beneficiaries. 
Reasonable methods of notification include, but are not limited to, 
posting the notice at participants' worksites or publishing the notice 
in a union newsletter or newspaper of general circulation in the area 
or areas where participants reside. Notice to a participant shall be 
deemed notice to the participant's beneficiary or beneficiaries.
    (d) Contents of notice to the PBGC. A notice of benefit reduction 
required to be filed with the PBGC pursuant to paragraph (a) of this 
section shall contain the following information:
    (1) The name of the plan.
    (2) The name, address, and telephone number of the plan sponsor and 
of the plan sponsor's duly authorized representative, if any.
    (3) The nine-digit Employer Identification Number (EIN) assigned by 
the IRS to the plan sponsor and the three-digit Plan Number (PN) 
assigned by the plan sponsor to the plan, and, if different, the EIN or 
PN last filed with the PBGC. If no EIN or PN has been assigned, the 
notice shall so state.
    (4) The case number assigned by the PBGC to the filing of the 
plan's notice of termination pursuant to part 4041A, subpart B, of this 
chapter.
    (5) A statement that a plan amendment reducing benefits has been 
adopted, listing the date of adoption and the effective date of the 
amendment.
    (6) A certification, signed by the plan sponsor or its duly 
authorized representative, that notice of the benefit reductions has 
been given to all participants and beneficiaries whose benefits are 
reduced by the plan amendment, in accordance with the requirements of 
this section.
    (e) Contents of notice to participants and beneficiaries. A notice 
of benefit reductions required under paragraph (a) of this section to 
be given to plan participants and beneficiaries whose benefits are 
reduced by the amendment shall contain the following information:
    (1) The name of the plan.
    (2) A statement that a plan amendment reducing benefits has been 
adopted, listing the date of adoption and the effective date of the 
amendment.
    (3) A summary of the amendment, including a description of the 
effect of the amendment on the benefits to which it applies.
    (4) The name, address, and telephone number of the plan 
administrator or other person designated by the plan sponsor to answer 
inquiries concerning benefits.


Sec. 4281.33   Restoration of benefits.

    (a) General. The plan sponsor of a plan that has been amended to 
reduce benefits under this subpart shall amend the plan to restore 
those benefits before adopting any amendment increasing benefits under 
the plan. A plan is not required to make retroactive benefit payments 
with respect to any benefit that was reduced and subsequently restored 
in accordance with this section.
    (b) Notice to the PBGC. The plan sponsor shall notify the PBGC in 
writing of any restoration under this section. The notice shall include 
the information specified in Sec. 4281.32 (d)(1) through (d)(4); a 
statement that a plan amendment restoring benefits has been adopted, 
the date of adoption, and the effective date of the amendment; and a 
certification, signed by the plan sponsor or its duly authorized 
representative, that the amendment has been adopted in accordance with 
this section.

Subpart D--Benefit Suspensions


Sec. 4281.41   Benefit suspensions.

    If the plan sponsor determines that the plan is or is expected to 
be insolvent for a plan year, the plan sponsor shall suspend benefits 
to the extent necessary to reduce the benefits to the greater of the 
resource benefit level or the level of guaranteed benefits.


Sec. 4281.42   Retroactive payments.

    (a) Erroneous resource benefit level. If, by the end of a year in 
which benefits were suspended under Sec. 4281.41, the plan sponsor 
determines in writing that the plan's available resources in that year 
could have supported benefit payments above the resource benefit level 
determined for that year, the plan sponsor may distribute the excess 
resources to each affected participant and beneficiary who received 
benefit payments that year on a pro rata basis. The amount distributed 
to each participant under this paragraph may not exceed the amount 
that, when added to benefit payments already made, brings the total 
benefit for the plan year up to the total benefit provided under the 
plan.
    (b) Benefits paid below resource benefit level. If, by the end of a 
plan year in which benefits were suspended under Sec. 4281.41, any 
benefit has not been paid at the resource benefit level, amounts up to 
the resource benefit level that were unpaid shall be distributed to 
each affected participant and beneficiary on a pro rata basis to the 
extent possible, taking into account the plan's total available 
resources in that year.


Sec. 4281.43   Notices of insolvency and annual updates.

    (a) Requirement of notices of insolvency. A plan sponsor that 
determines that the plan is, or is expected to be, insolvent for a plan 
year shall issue notices of insolvency to the PBGC and to plan 
participants and beneficiaries. Once notices of insolvency have been 
issued to the PBGC and to plan participants and beneficiaries, no 
notice of insolvency needs to be issued for subsequent insolvency 
years. Notices shall be delivered in the manner and within the time 
prescribed in this section and shall contain the information described 
in Sec. 4281.44.
    (b) Requirement of annual updates. A plan sponsor that has issued 
notices of insolvency to the PBGC and to plan participants and 
beneficiaries shall thereafter issue annual updates to the PBGC and 
participants and beneficiaries for each plan year beginning after the 
plan year for which the notice of insolvency was issued. However, the 
plan sponsor need not issue an annual update to plan participants and 
beneficiaries who are issued notices of insolvency benefit level in 
accordance with Sec. 4281.45 for the same insolvency year. A plan 
sponsor that, after issuing annual updates for a plan year, determines 
under Sec. 4041A.25(b) that the plan is or may be insolvent for that 
plan

[[Page 34122]]

year need not issue revised annual updates. Annual updates shall be 
delivered in the manner and within the time prescribed in this section 
and shall contain the information described in Sec. 4281.44.
    (c) Notices of insolvency--when delivered. Except as provided in 
the next sentence, the plan sponsor shall mail or otherwise deliver the 
notices of insolvency no later than 30 days after the plan sponsor 
determines that the plan is or may be insolvent. However, the notice to 
plan participants and beneficiaries in pay status may be delivered 
concurrently with the first benefit payment made after the 
determination of insolvency.
    (d) Annual updates--when delivered. Except as provided in the next 
sentence, the plan sponsor shall mail or otherwise deliver annual 
updates no later than 60 days before the beginning of the plan year for 
which the annual update is issued. A plan sponsor that determines under 
Sec. 4041A.25(b) that the plan is or may be insolvent for a plan year 
and that has not at that time issued annual updates for that year, 
shall mail or otherwise deliver the annual updates by the later of 60 
days before the beginning of the plan year or 30 days after the date of 
the plan sponsor's determination under Sec. 4041A.25(b).
    (e) Notices of insolvency--method of delivery. The notices of 
insolvency shall be delivered by mail or by hand to the PBGC and to 
plan participants and beneficiaries in pay status when the notice is 
required to be delivered. Notice to participants and beneficiaries not 
in pay status shall be provided in any manner reasonably calculated to 
reach those participants and beneficiaries. Reasonable methods of 
notification include, but are not limited to, posting the notice at 
participants' worksites or publishing the notice in a union newsletter 
or newspaper of general circulation in the area or areas where 
participants reside. Notice to a participant shall be deemed notice to 
that participant's beneficiary or beneficiaries.
    (f) Annual updates--method of delivery. Each annual update shall be 
delivered by mail or by hand to the PBGC. Each annual update to plan 
participants and beneficiaries shall be provided in any manner 
reasonably calculated to reach participants and beneficiaries. 
Reasonable methods of notification include, but are not limited to, 
posting the notice at participants' worksites and publishing the notice 
in a union newsletter of general circulation in the area or areas where 
participants reside. Notice to a participant shall be deemed notice to 
that participant's beneficiary or beneficiaries.


Sec. 4281.44   Contents of notices of insolvency and annual updates.

    (a) Notice of insolvency to the PBGC. A notice of insolvency 
required under Sec. 4281.43(a) to be filed with the PBGC shall contain 
the following information:
    (1) The name of the plan.
    (2) The name, address, and telephone number of the plan sponsor and 
of the plan sponsor's duly authorized representative, if any.
    (3) The nine-digit Employer Identification Number (EIN) assigned by 
the IRS to the plan sponsor and the three-digit Plan Number (PN) 
assigned by the plan sponsor to the plan, and, if different, the EIN or 
PN last filed with the PBGC. If no EIN or PN has been assigned, the 
notice shall so state.
    (4) The IRS Key District that has jurisdiction over determination 
letters with respect to the plan.
    (5) The case number assigned by the PBGC to the filing of the 
plan's notice of termination pursuant to part 4041A, subparts A and B, 
of this chapter.
    (6) The plan year for which the plan sponsor has determined that 
the plan is or may be insolvent.
    (7) A copy of the plan document currently in effect, i.e., a copy 
of the last restatement of the plan and all subsequent amendments. 
However, if a copy of the plan document was submitted to the PBGC with 
a previous filing, only subsequent plan amendments need be submitted, 
and the notice shall state when the copy of the plan document was 
filed.
    (8) A copy of the most recent actuarial valuation for the plan 
(i.e., the most recent report submitted to the plan in connection with 
a valuation of plan assets and liabilities, which shall be performed in 
accordance with subpart B of this part). If the actuarial valuation was 
previously submitted to the PBGC, it may be omitted, and the notice 
shall state the date on which the document was filed and that the 
information is still accurate and complete.
    (9) The estimated amount of annual benefit payments under the plan 
(determined without regard to the insolvency) for the insolvency year.
    (10) The estimated amount of the plan's available resources for the 
insolvency year.
    (11) The estimated amount of the annual benefits guaranteed by the 
PBGC for the insolvency year.
    (12) A statement indicating whether the notice of insolvency is the 
result of an insolvency determination under Sec. 4041A.25 (a) or (b).
    (13) A certification, signed by the plan sponsor or its duly 
authorized representative, that notices of insolvency have been given 
to all plan participants and beneficiaries in accordance with this 
part.
    (b) Notice of insolvency to participants and beneficiaries. A 
notice of insolvency required under Sec. 4281.43(a) to be issued to 
plan participants and beneficiaries shall contain the following 
information:
    (1) The name of the plan.
    (2) A statement of the plan year for which the plan sponsor has 
determined that the plan is or may be insolvent.
    (3) A statement that benefits above the amount that can be paid 
from available resources or the level guaranteed by the PBGC, whichever 
is greater, will be suspended during the insolvency year, with a brief 
explanation of which benefits are guaranteed by the PBGC.
    (4) The name, address, and telephone number of the plan 
administrator or other person designated by the plan sponsor to answer 
inquiries concerning benefits.
    (c) Annual update to the PBGC. Each annual update required by 
Sec. 4281.43(b) to be filed with the PBGC shall contain the following 
information:
    (1) The case number assigned by the PBGC to the filing of the 
plan's notice of termination pursuant to part 4041A, subparts A and B, 
of this chapter.
    (2) A copy of the annual update to plan participants and 
beneficiaries, as described in paragraph (d) of this section, for the 
plan year.
    (3) A statement indicating whether the annual update is the result 
of an insolvency determination under Sec. 4041A.25(a) or (b).
    (4) A certification, signed by the plan sponsor or a duly 
authorized representative, that the annual update has been given to all 
plan participants and beneficiaries in accordance with this part.
    (d) Annual updates to participants and beneficiaries. Each annual 
update required by Sec. 4281.43(b) to be issued to plan participants 
and beneficiaries shall contain the following information:
    (1) The name of the plan.
    (2) The date the notice of insolvency was issued and the insolvency 
year identified in the notice.
    (3) The plan year to which the annual update pertains and the plan 
sponsor's determination whether the plan may be insolvent in that year.
    (4) If the plan may be insolvent for the plan year, a statement 
that benefits above the amount that can be paid from available 
resources or the level guaranteed by the PBGC, whichever is greater, 
will be suspended during the insolvency year, with a brief

[[Page 34123]]

explanation of which benefits are guaranteed by the PBGC.
    (5) If the plan will not be insolvent for the plan year, a 
statement that full nonforfeitable benefits under the plan will be 
paid.
    (6) The name, address, and telephone number of the plan 
administrator or other person designated by the plan sponsor to answer 
inquiries concerning benefits.


Sec. 4281.45  Notices of insolvency benefit level.

    (a) Requirement of notices. For each insolvency year, the plan 
sponsor shall issue a notice of insolvency benefit level to the PBGC 
and to plan participants and beneficiaries in pay status or reasonably 
expected to enter pay status during the insolvency year. The notices 
shall be delivered in the manner and within the time prescribed in this 
section and shall contain the information described in Sec. 4281.46.
    (b) When delivered. The plan sponsor shall mail or otherwise 
deliver the notices of insolvency benefit level no later than 60 days 
before the beginning of the insolvency year. A plan sponsor that 
determines under Sec. 4041A.25(b) that the plan is or may be insolvent 
for a plan year shall mail or otherwise deliver the notices of 
insolvency benefit level by the later of 60 days before the beginning 
of the insolvency year or 60 days after the date of the plan sponsor's 
determination under Sec. 4041A.25(b).
    (c) Method of delivery. The notices of insolvency benefit level 
shall be delivered by mail or by hand to the PBGC and to plan 
participants and beneficiaries in pay status or reasonably expected to 
enter pay status during the insolvency year.


Sec. 4281.46  Contents of notices of insolvency benefit level.

    (a) Notice to the PBGC. A notice of insolvency benefit level 
required by Sec. 4281.45(a) to be filed with the PBGC shall contain the 
information specified in Sec. 4281.44(a)(1) through (a)(5) and (a)(7) 
through (a)(11) and:
    (1) The insolvency year for which the notice is being filed.
    (2) The amount of financial assistance, if any, requested from the 
PBGC. (When financial assistance is requested, the plan sponsor shall 
submit an application in accordance with Sec. 4281.47.)
    (3) A statement indicating whether the notice of insolvency benefit 
level is the result of an insolvency determination under 
Sec. 4041A.25(a) or (b).
    (4) A certification, signed by the plan sponsor or its duly 
authorized representative, that a notice of insolvency benefit level 
has been sent to all plan participants and beneficiaries in pay status 
or reasonably expected to enter pay status during the insolvency year, 
in accordance with this part.
    (b) Notice to participants in or entering pay status. A notice of 
insolvency benefit level required by Sec. 4281.45(a) to be delivered to 
plan participants and beneficiaries in pay status or reasonably 
expected to enter pay status during the insolvency year for which the 
notice is given, shall contain the following information:
    (1) The name of the plan.
    (2) The insolvency year for which the notice is being sent.
    (3) The monthly benefit that the participant or beneficiary may 
expect to receive during the insolvency year.
    (4) A statement that in subsequent plan years, depending on the 
plan's available resources, this benefit level may be increased or 
decreased but not below the level guaranteed by the PBGC, and that the 
participant or beneficiary will be notified in advance of the new 
benefit level if it is less than the participant's full nonforfeitable 
benefit under the plan.
    (5) The amount of the participant's or beneficiary's monthly 
nonforfeitable benefit under the plan.
    (6) The amount of the participant's or beneficiary's monthly 
benefit that is guaranteed by the PBGC.
    (7) The name, address, and telephone number of the plan 
administrator or other person designated by the plan sponsor to answer 
inquiries concerning benefits.


Sec. 4281.47  Application for financial assistance.

    (a) General. If the plan sponsor determines that the plan's 
resource benefit level for an insolvency year is below the level of 
benefits guaranteed by PBGC or that the plan will be unable to pay 
guaranteed benefits when due for any month during the year, the plan 
sponsor shall apply to the PBGC for financial assistance pursuant to 
section 4261 of ERISA. The application shall be filed within the time 
prescribed in paragraph (b) of this section. When the resource benefit 
level is below the guarantee level, the application shall contain the 
information set forth in paragraph (c) of this section. When the plan 
is unable to pay guaranteed benefits for any month, the application 
shall contain the information set forth in paragraph (d) of this 
section.
    (b) When to apply. When the plan sponsor determines a resource 
benefit level that is less than guaranteed benefits, it shall apply for 
financial assistance at the same time that it submits its notice of 
insolvency benefit level pursuant to Sec. 4281.45. When the plan 
sponsor determines an inability to pay guaranteed benefits for any 
month, it shall apply for financial assistance within 15 days after 
making that determination.
    (c) Contents of application--resource benefit level below level of 
guaranteed benefits. A plan sponsor applying for financial assistance 
because the plan's resource benefit level is below the level of 
guaranteed benefits shall file an application that includes the 
information specified in Sec. 4281.44 (a)(1) through (a)(5) and:
     (1) The insolvency year for which the application is being filed.
    (2) A participant data schedule showing each participant and 
beneficiary in pay status or reasonably expected to enter pay status 
during the year for which financial assistance is requested, listing 
for each--
    (i) Name;
    (ii) Sex;
    (iii) Date of birth;
    (iv) Credited service;
    (v) Vested accrued monthly benefit;
    (vi) Monthly benefit guaranteed by PBGC;
    (vii) Benefit commencement date; and
    (viii) Type of benefit.
    (d) Contents of application--unable to pay guaranteed benefits for 
any month. A plan sponsor applying for financial assistance because the 
plan is unable to pay guaranteed benefits for any month shall file an 
application that includes the data described in Sec. 4281.44 (a)(1) 
through (a)(5), the month for which financial assistance is requested, 
and the plan's available resources and guaranteed benefits payable in 
that month. The participant data schedule described in paragraph (c)(2) 
of this section shall be submitted upon the request of the PBGC.
    (e) Additional information. The PBGC may request any additional 
information that it needs to calculate or verify the amount of 
financial assistance necessary as part of the conditions of granting 
financial assistance pursuant to section 4261 of ERISA.

PART 4901--EXAMINATION AND COPYING OF PENSION BENEFIT GUARANTY 
CORPORATION RECORDS

Subpart A--General

Sec.
4901.1  Purpose and scope.
4901.2  Definitions.
4901.3  Disclosure facilities.
4901.4  Information maintained in public reference room.
4901.5  Disclosure of other information.

[[Page 34124]]

Subpart B--Procedure for Formal Requests

4901.11  Submittal of requests for access to records.
4901.12  Description of information requested.
4901.13  Receipt by agency of request.
4901.14  Action on request.
4901.15  Appeals from denial of requests.
4901.16  Extensions of time.
4901.17  Exhaustion of administrative remedies.

Subpart C--Restrictions on Disclosure

4901.21  Restrictions in general.
4901.22  Partial disclosure.
4901.23  Records of concern to more than one agency.
4901.24  Special rules for trade secrets and confidential commercial 
or financial information submitted to the PBGC.

Subpart D--Fees

4901.31  Charges for services.
4901.32  Fee schedule.
4901.33  Payment of fees.
4901.34  Waiver or reduction of charges.

    Authority: 5 U.S.C. 552; 29 U.S.C. 1302(b)(3); E.O. 12600, 52 FR 
23781.

Subpart A--General


Sec. 4901.1   Purpose and scope.

    This part contains the general rules of the PBGC implementing the 
Freedom of Information Act. This part sets forth generally the 
categories of records accessible to the public, the types of records 
subject to prohibitions or restrictions on disclosure, and the 
procedure whereby members of the public may obtain access to and 
inspect and copy information from records in the custody of the PBGC.


Sec. 4901.2   Definitions.

    In addition to terminology in part 4001 of this chapter, as used in 
this part--
    Agency, person, party, rule, rulemaking, order, and adjudication 
have the meanings attributed to these terms by the definitions in 5 
U.S.C. 551, except where the context demonstrates that a different 
meaning is intended, and except that for purposes of the Freedom of 
Information Act the term agency as defined in 5 U.S.C. 551 includes any 
executive department, military department, Government corporation, 
Government controlled corporation, or other establishment in the 
executive branch of the Government (including the Executive Office of 
the President) or any independent regulatory agency.
    Disclosure officer means the designated official in the 
Communications and Public Affairs Department, PBGC.
    FOIA means the Freedom of Information Act, as amended (5 U.S.C. 
552).
    Working day means any weekday excepting Federal holidays.


Sec. 4901.3   Disclosure facilities.

    (a) Public reference room. The PBGC will maintain a public 
reference room in its offices located at 1200 K Street NW., Washington, 
DC 20005-4026, wherein persons may inspect and copy all records made 
available for such purposes under this part.
    (b) No withdrawal of records. No person may remove any record made 
available for inspection or copying under this part from the place 
where it is made available except with the written consent of the 
General Counsel of the PBGC.


Sec. 4901.4   Information maintained in public reference room.

    The PBGC shall make available in its public reference room for 
inspection and copying without formal request--
    (a) Information published in the Federal Register. Copies of 
Federal Register documents published by the PBGC, and copies of Federal 
Register indexes;
    (b) Information in PBGC publications. Copies of informational 
material, such as press releases, pamphlets, and other material 
ordinarily made available to the public without cost as part of a 
public information program;
    (c) Rulemaking proceedings. All papers and documents made a part of 
the official record in administrative proceedings conducted by the PBGC 
in connection with the issuance, amendment, or revocation of rules and 
regulations or determinations having general applicability or legal 
effect with respect to members of the public or a class thereof (with a 
register being kept to identify the persons who inspect the records and 
the times at which they do so);
    (d) Except to the extent that deletion of identifying details is 
required to prevent a clearly unwarranted invasion of personal privacy 
(in which case the justification for the deletion shall be fully 
explained in writing)--
    (1) Adjudication proceedings. Final opinions, orders, and (except 
to the extent that an exemption provided by FOIA must be asserted in 
the public interest to prevent a clearly unwarranted invasion of 
personal privacy or violation of law or to ensure the proper discharge 
of the functions of the PBGC) other papers and documents made a part of 
the official record in adjudication proceedings conducted by the PBGC,
    (2) Policy statements and interpretations. Statements of policy and 
interpretations affecting a member of the public which have been 
adopted by the PBGC and which have not been published in the Federal 
Register, and
    (3) Staff manuals and instructions. Administrative staff manuals 
and instructions to staff issued by the PBGC that affect any member of 
the public, and
    (e) Indexes to certain records. Current indexes (updated at least 
quarterly) identifying materials described in paragraph (a)(2) of FOIA 
and paragraph (d) of this section.


Sec. 4901.5   Disclosure of other information.

    (a) In general. Upon the request of any person submitted in 
accordance with subpart B of this part, the disclosure officer shall 
make any document (or portion thereof) from the records of the PBGC in 
the custody of any official of the PBGC available for inspection and 
copying unless exempt from disclosure under the provisions of 
subsection (b) of FOIA and subpart C of this part. The subpart B 
procedures must be used for records that are not made available in the 
PBGC's public reference room under Sec. 4901.4 and may be used for 
records that are available in the public reference room. Records that 
could be produced only by manipulation of existing information (such as 
computer analyses of existing data), thus creating information not 
previously in being, are not records of the PBGC and are not required 
to be furnished under FOIA.
    (b) Discretionary disclosure. Notwithstanding the applicability of 
an exemption under subsection (b) of FOIA and subpart C of this part 
(other than an exemption under paragraph (b)(1) or (b)(3) of FOIA and 
Sec. 4901.21 (a)(2) and (a)(3)), the disclosure officer may (subject to 
18 U.S.C. 1905 and Sec. 4901.21(a)(1)) make any document (or portion 
thereof) from the records of the PBGC available for inspection and 
copying if the disclosure officer determines that disclosure furthers 
the public interest and does not impede the discharge of any of the 
functions of the PBGC.

Subpart B--Procedure for Formal Requests


Sec. 4901.11   Submittal of requests for access to records.

    A request to inspect or copy any record subject to this subpart 
shall be submitted in writing to the Disclosure Officer, Communications 
and Public Affairs Department, Pension Benefit Guaranty Corporation, 
1200 K Street NW., Washington, DC 20005-4026. To expedite processing, 
the words ``FOIA request'' should appear clearly on the request and its 
envelope.

[[Page 34125]]

Sec. 4901.12   Description of information requested.

    (a) In general. Each request should reasonably describe the record 
or records sought in sufficient detail to permit identification and 
location with a reasonable amount of effort. So far as practicable, the 
request should specify the subject matter of the record, the place 
where and date or approximate date when made, the person or office that 
made it, and any other pertinent identifying details.
    (b) Deficient descriptions. If the description is insufficient to 
enable a professional employee familiar with the subject area of the 
request to locate the record with a reasonable amount of effort, the 
disclosure officer will notify the requester and, to the extent 
possible, indicate the additional information required. Every 
reasonable effort shall be made to assist a requester in the 
identification and location of the record or records sought. Records 
will not be withheld merely because it is difficult to find them.
    (c) Requests for categories of records. Requests calling for all 
records falling within a reasonably specific category will be regarded 
as reasonably described within the meaning of this section and 
paragraph (a)(3) of FOIA if the PBGC is reasonably able to determine 
which records come within the request and to search for and collect 
them without unduly interfering with PBGC operations. If PBGC 
operations would be unduly disrupted, the disclosure officer shall 
promptly notify the requester and provide an opportunity to confer in 
an attempt to reduce the request to manageable proportions.


Sec. 4901.13  Receipt by agency of request.

    The disclosure officer shall note the date and time of receipt on 
each request for access to records. A request shall be deemed received 
and the period within which action on the request shall be taken, as 
set forth in Sec. 4901.14 of this part, shall begin on the next 
business day following such date, except that a request shall be deemed 
received only if and when the PBGC receives--
    (a) A sufficient description under Sec. 4901.12;
    (b) Payment or assurance of payment if required under 
Sec. 4901.33(b); and
    (c) The requester's consent to pay substantial search, review, and/
or duplication charges under subpart D of this part if the PBGC 
determines that such charges may be substantial and so notifies the 
requester. Consent may be in the form of a statement that costs under 
subpart D will be acceptable either in any amount or up to a specified 
amount. To avoid possible delay, a requester may include such a 
statement in a request.


Sec. 4901.14  Action on request.

    (a) Time for action. Promptly and in any event within 10 working 
days after receipt of a disclosure request (subject to extension under 
Sec. 4901.16), the disclosure officer shall take action with respect to 
each requested item (or portion of an item) under either paragraph (b), 
(c), or (d) of this section.
    (b) Request granted. If the disclosure officer determines that the 
request should be granted, the requester shall be so advised and the 
records shall be promptly made available to the requester.
    (c) Request denied. If the disclosure officer determines that the 
request should be denied, the requester shall be so advised in writing 
with a brief statement of the reasons for the denial, including a 
reference to the specific exemption(s) authorizing the denial and an 
explanation of how each such exemption applies to the matter withheld. 
The denial shall also include the name and title or position of the 
person(s) responsible for the denial and outline the appeal procedure 
available.
    (d) Records not promptly located. As to records that are not 
located in time to make an informed determination, the disclosure 
officer may deny the request and so advise the requester in writing 
with an explanation of the circumstances. The denial shall also include 
the name and title or position of the person(s) responsible for the 
denial, outline the appeal procedure available, and advise the 
requester that the search or examination will be continued and that the 
denial may be withdrawn, modified, or confirmed when processing of the 
request is completed.


Sec. 4901.15  Appeals from denial of requests.

    (a) Submittal of appeals. If a disclosure request is denied in 
whole or in part by the disclosure officer, the requester may file a 
written appeal within 30 days from the date of the denial or, if later 
(in the case of a partial denial), 30 days from the date the requester 
receives the disclosed material. The appeal shall state the grounds for 
appeal and any supporting statements or arguments, and shall be 
addressed to the General Counsel, Pension Benefit Guaranty Corporation, 
1200 K Street NW., Washington, DC 20005-4026. To expedite processing, 
the words ``FOIA appeal'' should appear clearly on the appeal and its 
envelope.
    (b) Receipt and consideration of appeal. The General Counsel shall 
note the date and time of receipt on each appeal and notify the 
requester thereof. Promptly and in any event within 20 working days 
after receipt of an appeal (subject to extension under Sec. 4901.16), 
the General Counsel shall issue a decision on the appeal.
    (1) The General Counsel may determine de novo whether the denial of 
disclosure was in accordance with FOIA and this part.
    (2) If the denial appealed from was under Sec. 4901.14(d), the 
General Counsel shall consider any supplementary determination by the 
disclosure officer in deciding the appeal.
    (3) Unless otherwise ordered by the court, the General Counsel may 
act on an appeal notwithstanding the pendency of an action for judicial 
relief in the same matter and, if no appeal has been filed, may treat 
such an action as the filing of an appeal.
    (c) Decision on appeal. As to each item (or portion of an item) 
whose nondisclosure is appealed, the General Counsel shall either--
    (1) Grant the appeal and so advise the requester in writing, in 
which case the records with respect to which the appeal is granted 
shall be promptly made available to the requester; or
    (2) Deny the appeal and so advise the requester in writing with a 
brief statement of the reasons for the denial, including a reference to 
the specific exemption(s) authorizing the denial, an explanation of how 
each such exemption applies to the matter withheld, and notice of the 
provisions for judicial review in paragraph (a)(4) of FOIA. The General 
Counsel's decision shall be the final action of the PBGC with respect 
to the request.
    (d) Records of appeals. Copies of both grants and denials of 
appeals shall be collected in one file available in the PBGC's public 
reference room under Sec. 4901.4(d)(1) and indexed under 
Sec. 4901.4(e).


Sec. 4901.16  Extensions of time.

    In unusual circumstances (as described in subparagraph (a)(6)(B) of 
FOIA), the time to respond to a disclosure request under 
Sec. 4901.14(a) or an appeal under Sec. 4901.15(b) may be extended as 
reasonably necessary to process the request or appeal. The disclosure 
officer (with the prior approval of the General Counsel) or the General 
Counsel, as appropriate, shall notify the requester in writing within 
the original time period of the reasons for the extension and the date 
when a response is expected to be sent. The maximum extension for 
responding to a disclosure request shall be 10 working days, and the 
maximum extension for responding to an appeal shall be 10

[[Page 34126]]

working days minus the amount of any extension on the request to which 
the appeal relates.


Sec. 4901.17  Exhaustion of administrative remedies.

    If the disclosure officer fails to make a determination to grant or 
deny access to requested records, or the General Counsel does not make 
a decision on appeal from a denial of access to PBGC records, within 
the time prescribed (including any extension) for making such 
determination or decision, the requester's administrative remedies 
shall be deemed exhausted and the requester may apply for judicial 
relief under FOIA. However, since a court may allow the PBGC additional 
time to act as provided in FOIA, processing of the request or appeal 
shall continue and the requester shall be so advised.

Subpart C--Restrictions on Disclosure


Sec. 4901.21  Restrictions in general.

    (a) Records not disclosable. Records shall not be disclosed to the 
extent prohibited by--
    (1) 18 U.S.C. 1905, dealing in general with commercial and 
financial information;
    (2) Paragraph (b)(1) of FOIA, dealing in general with matters of 
national defense and foreign policy; or
    (3) Paragraph (b)(3) of FOIA, dealing in general with matters 
specifically exempted from disclosure by statute, including information 
or documentary material submitted to the PBGC pursuant to sections 4010 
and 4043 of ERISA.
    (b) Records disclosure of which may be refused. Records need not 
(but may, as provided in Sec. 4901.5(b)) be disclosed to the extent 
provided by--
    (1) Paragraph (b)(2) of FOIA, dealing in general with internal 
agency personnel rules and practices;
    (2) Paragraph (b)(4) of FOIA, dealing in general with trade secrets 
and commercial and financial information;
    (3) Paragraph (b)(5) of FOIA, dealing in general with inter-agency 
and intra-agency memoranda and letters;
    (4) Paragraph (b)(6) of FOIA, dealing in general with personnel, 
medical, and similar files;
    (5) Paragraph (b)(7) of FOIA, dealing in general with records or 
information compiled for law enforcement purposes;
    (6) Paragraph (b)(8) of FOIA, dealing in general with reports on 
financial institutions; or
    (7) Paragraph (b)(9) of FOIA, dealing in general with information 
about wells.


Sec. 4901.22  Partial disclosure.

    If an otherwise disclosable record contains some material that is 
protected from disclosure, the record shall not for that reason be 
withheld from disclosure if deletion of the protected material is 
feasible. This principle shall be applied in particular to identifying 
details the disclosure of which would constitute an unwarranted 
invasion of personal privacy.


Sec. 4901.23  Record of concern to more than one agency.

    If the release of a record in the custody of the PBGC would be of 
concern not only to the PBGC but also to another Federal agency, the 
record will be made available by the PBGC only if its interest in the 
record is the primary interest and only after coordination with the 
other interested agency. If the interest of the PBGC in the record is 
not primary, the request will be transferred promptly to the agency 
having the primary interest, and the requester will be so notified.


Sec. 4901.24  Special rules for trade secrets and confidential 
commercial or financial information submitted to the PBGC.

    (a) Application. To the extent permitted by law, this section 
applies to a request for disclosure of a record that contains 
information that has been designated by the submitter in good faith in 
accordance with paragraph (b) of this section or a record that the PBGC 
has reason to believe contains such information, unless--
    (1) Access to the information is denied;
    (2) The information has been published or officially made available 
to the public;
    (3) Disclosure of the information is required by law other than 
FOIA; or
    (4) The designation under paragraph (b) of this section appears 
obviously frivolous, except that in such a case the PBGC will notify 
the submitter in writing of a determination to disclose the information 
within a reasonable time before the disclosure date (which shall be 
specified in the notice).
    (b) Designation by submitter. To designate information as being 
subject to this section, the submitter shall, at the time of submission 
or by a reasonable time thereafter, assert that information being 
submitted is confidential business information and designate, with 
appropriate markings, the portion(s) of the submission to which the 
assertion applies. Any designation under this paragraph shall expire 10 
years after the date of submission unless a longer designation period 
is requested and reasonable justification is provided therefor.
    (c) Notification to submitter of disclosure request. When 
disclosure of information subject to this section may be made, the 
disclosure officer or (where disclosure may be made in response to an 
appeal) the General Counsel shall promptly notify the submitter, 
describing (or providing a copy of) the information that may be 
disclosed, and afford the submitter a reasonable period of time to 
object in writing to the requested disclosure. (The notification to the 
submitter may be oral or written; if oral, it will be confirmed in 
writing.) When a submitter is notified under this paragraph, the 
requester shall be notified that the submitter is being afforded an 
opportunity to object to disclosure.
    (d) Objection of submitter. A submitter's statement objecting to 
disclosure should specify all grounds relied upon for opposing 
disclosure of any portion(s) of the information under subsection (b) of 
FOIA and, with respect to the exemption in paragraph (b)(4) of FOIA, 
demonstrate why the information is a trade secret or is commercial or 
financial information that is privileged or confidential. Facts 
asserted should be certified or otherwise supported. (Information 
provided pursuant to this paragraph may itself be subject to disclosure 
under FOIA.) Any timely objection of a submitter under this paragraph 
shall be carefully considered in determining whether to grant a 
disclosure request or appeal.
    (e) Notification to submitter of decision to disclose. If the 
disclosure officer or (where disclosure is in response to an appeal) 
the General Counsel decides to disclose information subject to this 
section despite the submitter's objections, the disclosure officer (or 
General Counsel) shall give the submitter written notice, explaining 
briefly why the information is to be disclosed despite those 
objections, describing the information to be disclosed, and specifying 
the date when the information will be disclosed to the requester. The 
notification shall, to the extent permitted by law, be provided a 
reasonable number of days before the disclosure date so specified, and 
a copy shall be provided to the requester.
    (f) Notification to submitter of action to compel disclosure. The 
disclosure officer or the General Counsel shall promptly notify the 
submitter if a requester brings suit seeking to compel disclosure.

Subpart D--Fees


Sec. 4901.31  Charges for services.

    (a) Generally. Pursuant to the provisions of FOIA, as amended, 
charges will be assessed to cover the direct costs of searching for, 
reviewing,

[[Page 34127]]

and/or duplicating records requested under FOIA from the PBGC, except 
where the charges are limited or waived under paragraph (b) or (d) of 
this section, according to the fee schedule in Sec. 4901.32 of this 
part. No charge will be assessed if the costs of routine collection and 
processing of the fee would be equal to or greater than the fee itself.
    (1) ``Direct costs'' means those expenditures which the PBGC 
actually incurs in searching for and duplicating (and in the case of 
commercial requesters, reviewing) documents to respond to a request 
under FOIA and this part. Direct costs include, for example, the salary 
of the employee performing work (i.e., the basic rate of pay plus 
benefits) or an established average pay for a homogeneous class of 
personnel (e.g., all administrative/clerical or all professional/
executive), and the cost of operating duplicating machinery. Not 
included in direct costs are overhead expenses such as costs of space, 
and heating or lighting the facility in which the records are stored.
    (2) ``Search'' means all time spent looking for material that is 
responsive to a request under FOIA and this part, including page-by-
page or line-by-line identification of materials within a document, if 
required, and may be done manually or by computer using existing 
programming. ``Search'' should be distinguished from ``review'' which 
is defined in paragraph (a)(3) of this section.
    (3) ``Review'' means the process of examining documents located in 
response to a request under FOIA and this part to determine whether any 
portion of any document located is permitted or required to be 
withheld. It also includes processing any documents for disclosure, 
e.g., doing all that is necessary to excise them and otherwise prepare 
them for release. Review does not include time spent resolving general 
legal or policy issues regarding the application of exemptions.
    (4) ``Duplication'' means the process of making a copy of a 
document necessary to respond to a request under FOIA and this part, in 
a form that is reasonably usable by the requester. Copies can take the 
form of paper copy, microform, audio-visual materials, or machine 
readable documentation (e.g., magnetic tape or disk), among others.
    (b) Categories of requesters. Requesters who seek access to records 
under FOIA and this part are divided into four categories: commercial 
use requesters, educational and noncommercial scientific institutions, 
representatives of the news media, and all other requesters. The PBGC 
will determine the category of a requester and charge fees according to 
the following rules.
    (1) Commercial use requesters. When records are requested for 
commercial use, the PBGC will assess charges, as provided in this 
subpart, for the full direct costs of searching for, reviewing for 
release, and duplicating the records sought. Fees for search and review 
may be charged even if the record searched for is not found or if, 
after it is found, it is determined that the request to inspect it may 
be denied under the provisions of subsection (b) of FOIA and this part.
    (i) ``Commercial use'' request means a request from or on behalf of 
one who seeks information for a use or purpose that furthers the 
commercial, trade, or profit interests of the requester or the person 
on whose behalf the request is made.
    (ii) In determining whether a request properly belongs in this 
category, the PBGC will look to the use to which a requester will put 
the documents requested. Moreover, where the PBGC has reasonable cause 
to doubt the use to which a requester will put the records sought, or 
where that use is not clear from the request itself, the PBGC will 
require the requester to provide clarification before assigning the 
request to this category.
    (2) Educational and noncommercial scientific institution 
requesters. When records are requested by an educational or 
noncommercial scientific institution, the PBGC will assess charges, as 
provided in this subpart, for the full direct cost of duplication only, 
excluding charges for the first 100 pages.
    (i) ``Educational institution'' means a preschool, a public or 
private elementary or secondary school, an institution of graduate 
higher education, an institution of undergraduate higher education, an 
institution of professional education, and an institution of vocational 
education, which operates a program or programs of scholarly research.
    (ii) ``Noncommercial scientific institution'' means an institution 
that is not operated on a ``commercial'' basis as that term is defined 
in paragraph (b)(1)(i) of this section, and which is operated solely 
for the purpose of conducting scientific research the results of which 
are not intended to promote any particular product or industry.
    (iii) To be eligible for inclusion in this category, requesters 
must show that the request is being made as authorized by and under the 
auspices of a qualifying institution and that the records are not 
sought for a commercial use, but are sought in furtherance of scholarly 
(if the request is from an educational institution) or scientific (if 
the request is from a noncommercial scientific institution) research.
    (3) Requesters who are representatives of the news media. When 
records are requested by representatives of the news media, the PBGC 
will assess charges, as provided in this subpart, for the full direct 
cost of duplication only, excluding charges for the first 100 pages.
    (i) ``Representative of the news media'' means any person actively 
gathering news for an entity that is organized and operated to publish 
or broadcast news to the public. The term ``news'' means information 
that is about current events or that would be of current interest to 
the public. Examples of news media entities include television or radio 
stations broadcasting to the public at large, and publishers of 
periodicals (but only in those instances when they can qualify as 
disseminators of ``news'') who make their products available for 
purchase or subscription by the general public. These examples are not 
intended to be all-inclusive. ``Freelance'' journalists may be regarded 
as working for a news organization if they can demonstrate a solid 
basis for expecting publication through that organization, even though 
not actually employed by it.
    (ii) To be eligible for inclusion in this category, the request 
must not be made for a commercial use. A request for records supporting 
the news dissemination function of the requester who is a 
representative of the news media shall not be considered to be a 
request that is for a commercial use.
    (4) All other requesters. When records are requested by requesters 
who do not fit into any of the categories in paragraphs (b)(1) through 
(b)(3) of this section, the PBGC will assess charges, as provided in 
this subpart, for the full direct cost of searching for and duplicating 
the records sought, with the exceptions that there will be no charge 
for the first 100 pages of duplication and the first two hours of 
manual search time (or its cost equivalent in computer search time). 
Notwithstanding the preceding sentence, there will be no charge for 
search time in the event of requests under the Privacy Act of 1974 from 
subjects of records filed in the PBGC's systems of records for the 
disclosure of records about themselves. Search fees, where applicable, 
may be charged even if the record searched for is not found.
    (c) Aggregation of requests. If the PBGC reasonably believes that a

[[Page 34128]]

requester or group of requesters is attempting to break a request down 
into a series of requests for the purpose of evading the assessment of 
fees, the PBGC will aggregate any such requests and charge accordingly. 
In no case will the PBGC aggregate multiple requests on unrelated 
subjects from one requester.
     (d) Waiver or reduction of charges. Circumstances under which 
searching, review, and duplication facilities or services may be made 
available to the requester without charge or at a reduced charge are 
set forth in Sec. 4901.34 of this part.


Sec. 4901.32   Fee schedule.

    (a) Charges for searching and review of records. Charges applicable 
under this subpart to the search for and review of records will be made 
according to the following fee schedule:
    (1) Search and review time. (i) Ordinary search and review by 
custodial or clerical personnel, $1.75 for each one-quarter hour or 
fraction thereof of employee worktime required to locate or obtain the 
records to be searched and to make the necessary review; and (ii) 
search or review requiring services of professional or supervisory 
personnel to locate or review requested records, $4.00 for each one-
quarter hour or fraction thereof of professional or supervisory 
personnel worktime.
    (2) Additional search costs. If the search for a requested record 
requires transportation of the searcher to the location of the records 
or transportation of the records to the searcher, at a cost in excess 
of $5.00, actual transportation costs will be added to the search time 
cost.
    (3) Search in computerized records. Charges for information that is 
available in whole or in part in computerized form will include the 
cost of operating the central processing unit (CPU) for that portion of 
operating time that is directly attributable to searching for records 
responsive to the request, personnel salaries apportionable to the 
search, and tape or printout production or an established agency-wide 
average rate for CPU operating costs and operator/programmer salaries 
involved in FOIA searches. Charges will be computed at the rates 
prescribed in paragraphs (a) and (b) of this section.
    (b) Charges for duplication of records. Charges applicable under 
this subpart for obtaining requested copies of records made available 
for inspection will be made according to the following fee schedule and 
subject to the following conditions.
    (1) Standard copying fee. $0.15 for each page of record copies 
furnished. This standard fee is also applicable to the furnishing of 
copies of available computer printouts as stated in paragraph (a)(3) of 
this section.
    (2) Voluminous material. If the volume of page copy desired by the 
requester is such that the reproduction charge at the standard page 
rate would be in excess of $50, the person desiring reproduction may 
request a special rate quotation from the PBGC.
    (3) Limit of service. Not more than 10 copies of any document will 
be furnished.
    (4) Manual copying by requester. No charge will be made for manual 
copying by the requesting party of any document made available for 
inspection under the provisions of this part. The PBGC shall provide 
facilities for such copying without charge at reasonable times during 
normal working hours.
    (5) Indexes. Pursuant to paragraph (a)(2) of FOIA copies of indexes 
or supplements thereto which are maintained as therein provided but 
which have not been published will be provided on request at a cost not 
to exceed the direct cost of duplication.
    (c) Other charges. The scheduled fees, set forth in paragraphs (a) 
and (b) of this section, for furnishing records made available for 
inspection and duplication represent the direct costs of furnishing the 
copies at the place of duplication. Upon request, single copies of the 
records will be mailed, postage prepaid, free of charge. Actual costs 
of transmitting records by special methods such as registered, 
certified, or special delivery mail or messenger, and of special 
handling or packaging, if required, will be charged in addition to the 
scheduled fees.


Sec. 4901.33   Payment of fees.

    (a) Medium of payment. Payment of the applicable fees as provided 
in this subsection shall be made in cash, by U.S. postal money order, 
or by check payable to the PBGC. Postage stamps will not be accepted in 
lieu of cash, checks, or money orders as payment for fees specified in 
the schedule. Cash should not be sent by mail.
    (b) Advance payment or assurance of payment. Payment or assurance 
of payment before work is begun or continued on a request may be 
required under the following rules.
    (1) Where the PBGC estimates or determines that charges allowable 
under the rules in this subpart are likely to exceed $250, the PBGC may 
require advance payment of the entire fee or assurance of payment, as 
follows:
    (i) Where the requester has a history of prompt payment of fees 
under this part, the PBGC will notify the requester of the likely cost 
and obtain satisfactory assurance of full payment; or
    (ii) Where the requester has no history of payment for requests 
made pursuant to FOIA and this part, the PBGC may require the requester 
to make an advance payment of an amount up to the full estimated 
charges.
    (2) Where the requester has previously failed to pay a fee charged 
in a timely fashion (i.e., within 30 days of the date of the billing), 
the PBGC may require the requester to pay the full amount owed plus any 
applicable interest as provided in paragraph (c) of this section (or 
demonstrate that he has, in fact, paid the fee) and to make an advance 
payment of the full amount of the estimated fee.
    (c) Late payment interest charges. The PBGC may assess late payment 
interest charges on any amounts unpaid by the 31st day after the date a 
bill is mailed to a requester. Interest will be assessed at the rate 
prescribed in 31 U.S.C. 3717 and will accrue from the date the bill is 
mailed.


Sec. 4901.34   Waiver or reduction of charges.

    (a) The disclosure officer may waive or reduce fees otherwise 
applicable under this subpart when disclosure of the information is in 
the public interest because it is likely to contribute significantly to 
public understanding of the operations or activities of the government 
and is not primarily in the commercial interest of the requester. A fee 
waiver request shall set forth full and complete information upon which 
the request for waiver is based.
    (b) The disclosure officer may reduce or waive fees applicable 
under this subpart when the requester has demonstrated his inability to 
pay such fees.

PART 4902--DISCLOSURE AND AMENDMENT OF RECORDS PERTAINING TO 
INDIVIDUALS UNDER THE PRIVACY ACT

Sec.
4902.1  Purpose and scope.
4902.2  Definitions.
4902.3  Procedures for determining existence of and requesting 
access to records.
4902.4  Disclosure of record to an individual.
4902.5  Procedures for requesting amendment of a record.
4902.6  Action on request for amendment of a record.
4902.7  Appeal of a denial of a request for amendment of a record.
4902.8  Fees.
4902.9  Specific exemptions.

    Authority: 5 U.S.C. 552a.

[[Page 34129]]

Sec. 4902.1  Purpose and scope.

    This part establishes procedures whereby an individual can 
determine whether the PBGC maintains any system of records that 
contains a record pertaining to the individual, procedures to effect 
access to an individual's record upon his or her request, and 
procedures for making requests to amend records, for making the initial 
determinations on such requests, and for appealing denials of such 
requests. This part also prescribes the fees for making copies of an 
individual's record. Finally, this part sets forth those systems of 
records that are exempted from certain disclosure and other provisions 
of the Privacy Act (5 U.S.C. 552a).


Sec. 4902.2  Definitions.

    In addition to terminology in part 4001 of this chapter, as used in 
this part:
    Disclosure officer means the designated official in the 
Communications and Public Affairs Department, PBGC.
    Record means any item, collection, or grouping of information about 
an individual that is maintained by an agency, including, but not 
limited to, his or her education, financial transactions, medical 
history, and criminal or employment history and that contains his or 
her name, or the identifying number, symbol, or other identifying 
particular assigned to the individual, such as a finger or voice print 
or a photograph.
    System of records means a group of any records under the control of 
any agency from which information is retrieved by the name of the 
individual or by some identifying number, symbol, or other identifying 
particular assigned to the individual.
    Working day means any weekday excepting Federal holidays.


Sec. 4902.3  Procedures for determining existence of and requesting 
access to records.

    (a) Any individual may submit a written request, either by mail to 
the Disclosure Officer, Communications and Public Affairs Department, 
Pension Benefit Guaranty Corporation, 1200 K Street NW., Washington, DC 
20005-4026, or in person between the hours of 9 a.m. and 4 p.m. on any 
working day in Suite 240 at the above address, for the purpose of--
    (1) Learning whether a system of records maintained by the PBGC 
contains any record pertaining to the requester, or
    (2) Obtaining access to such a record.
    (b) Each request submitted pursuant to paragraph (a) of this 
section shall include the name of the system of records to which the 
request pertains and the requester's full name, home address and date 
of birth, and shall clearly state on the envelope and on the request 
``Privacy Act Request.'' If this information is insufficient to enable 
the PBGC to identify the record in question, the disclosure officer 
shall request such further identifying data as the disclosure officer 
deems necessary to locate the record.
    (c) Unless the request is only for notification of the existence of 
a record and such notification is required under the Freedom of 
Information Act (5 U.S.C. 552), the requester shall be required to 
provide verification of his or her identity to the PBGC as set forth in 
paragraph (c) (1) or (2) of this section, as appropriate.
    (1) If the request is made by mail, the requester shall submit a 
notarized statement establishing his or her identity.
    (2) If the request is made in person, the requester shall show 
identification satisfactory to the disclosure officer, such as a 
driver's license, employee identification, annuitant identification or 
Medicare card.
    (d) The disclosure officer shall respond to the request in writing 
within 10 working days after receipt of the request or of such 
additional information as may be required under paragraph (b) of this 
section. If a request for access to a record is granted, the response 
shall state when the record will be made available.


Sec. 4902.4  Disclosure of record to an individual.

    (a) When the disclosure officer grants a request for access to 
records under Sec. 4902.3, such records shall be made available when 
the requester is advised of the determination or as promptly thereafter 
as possible. At the requester's option, the record will be made 
available for the requester's inspection and copying at the 
Communications and Public Affairs Department, Pension Benefit Guaranty 
Corporation, 1200 K Street NW., Washington, DC 20005-4026, between the 
hours of 9 a.m. and 4 p.m. on any working day, or a copy of the record 
will be mailed to the requester.
    (b) If the requester desires to be accompanied by another 
individual during the inspection and/or copying of the record, the 
requester shall, either when the record is made available or at any 
earlier time, submit to the disclosure officer a signed statement 
identifying such other individual and authorizing such other individual 
to be present during the inspection and/or copying of the record.


Sec. 4902.5  Procedures for requesting amendment of a record.

    (a) Any individual about whom the PBGC maintains a record contained 
in a system of records may request that the record be amended. Such a 
request shall be submitted in the same manner described in 
Sec. 4902.3(a).
    (b) Each request submitted under paragraph (a) of this section 
shall include the information described in Sec. 4902.3(b) and a 
statement specifying the changes to be made in the record and the 
justification therefor. The disclosure officer may request further 
identifying data as described in Sec. 4902.3(b).
    (c) An individual who desires assistance in the preparation of a 
request for amendment of a record shall submit such request for 
assistance in writing to the Deputy General Counsel, Pension Benefit 
Guaranty Corporation, 1200 K Street NW., Washington, DC 20005-4026. The 
Deputy General Counsel shall respond to such request as promptly as 
possible.


Sec. 4902.6  Action on request for amendment of a record.

    (a) Within 20 working days after receipt by the PBGC of a request 
for amendment of a record under Sec. 4902.5, unless for good cause 
shown the Executive Director of the PBGC extends such 20-day period, 
the disclosure officer shall notify the requester in writing whether 
and to what extent the request shall be granted. To the extent that the 
request is granted, the disclosure officer shall cause the requested 
amendment to be made promptly.
    (b) When a request for amendment of a record is denied in whole or 
in part, the denial shall include a statement of the reasons therefor, 
the procedures for appealing such denial, and a notice that the 
requester has a right to assistance in preparing an appeal of the 
denial.
    (c) An individual who desires assistance in preparing an appeal of 
a denial under this section shall submit a request in writing to the 
Deputy General Counsel, Pension Benefit Guaranty Corporation, 1200 K 
Street NW., Washington, DC 20005-4026. The Deputy General Counsel shall 
respond to the request as promptly as possible, but in no event more 
than 30 days after receipt.


Sec. 4902.7  Appeal of a denial of a request for amendment of a record.

    (a) An appeal from a denial of a request for amendment of a record 
under Sec. 4902.6 shall be submitted, within 45 days of receipt of the 
denial, to the General Counsel, Pension Benefit

[[Page 34130]]

Guaranty Corporation, 1200 K Street NW., Washington, DC 20005-4026, 
unless the record subject to such request is one maintained by the 
Office of the General Counsel, in which event the appeal shall be 
submitted to the Deputy Executive Director at the same address. The 
appeal shall state in detail the basis on which it is made and both the 
envelope and the appeal shall clearly state ``Privacy Act Request''.
    (b) Within 30 working days after the receipt of the appeal, unless 
for good cause shown the Executive Director of the PBGC extends such 
30-day period, the General Counsel or, where appropriate, the Deputy 
Executive Director, shall issue a decision in writing granting or 
denying the appeal in whole or in part. To the extent that the appeal 
is granted, the General Counsel or, where appropriate, the Deputy 
Executive Director, shall cause the requested amendment to be made 
promptly. To the extent that the appeal is denied, the decision shall 
include the reasons for the denial and a notice of the requester's 
right to submit a brief statement setting forth reasons for disputing 
the denial of appeal, to seek judicial review of the denial pursuant to 
5 U.S.C. 552a(g)(1)(A), and to obtain further information concerning 
the provisions for judicial review under that section.
    (c) An individual whose appeal has been denied in whole or in part 
may submit a brief summary statement setting forth reasons for 
disputing such denial. Such statement shall be submitted within 30 days 
of receipt of the denial of the appeal to the Disclosure Officer. Any 
such statement shall be made available by the PBGC to anyone to whom 
the record is subsequently furnished and may also be accompanied, at 
the discretion of the PBGC, by a brief statement summarizing the PBGC's 
reasons for refusing to amend the record. The PBGC shall also provide 
copies of the individual's statement of dispute to all prior recipients 
of the record with respect to whom an accounting of the disclosure of 
the record was maintained pursuant to 5 U.S.C. 552a(c)(1).
    (d) To request further information concerning the provisions for 
judicial review, an individual shall submit such request in writing to 
the Deputy General Counsel, who shall respond to such request as 
promptly as possible.


Sec. 4902.8  Fees.

    When an individual requests a copy of his or her record under 
Sec. 4902.4, charges for the copying shall be made according to the 
following fee schedule:
    (a) Standard copying fee. There shall be a charge of $0.15 per page 
of record copies furnished. Where the copying fee is less than $1.50, 
it shall not be assessed.
    (b) Voluminous material. If the volume of page copy desired by the 
requester is such that the reproduction charge at the standard page 
rate would be in excess of $50, the individual desiring reproduction 
may request a special rate quotation from the PBGC.
    (c) Manual copying by requester. No charge will be made for manual 
copying by the requester of any document made available for inspection 
under Sec. 4902.4. The PBGC shall provide facilities for such copying 
without charge between the hours of 9 a.m. and 4 p.m. on any working 
day.


Sec. 4902.9  Specific exemptions.

    (a) Under the authority granted by 5 U.S.C. 552a(k)(5), the PBGC 
hereby exempts the system of records entitled ``Personnel Security 
Investigation Records--PBGC'' from the provisions of 5 U.S.C. 
Secs. 552a (c)(3), (d), (e)(1), (e)(4) (G), (H), and (I), and (f), to 
the extent that the disclosure of such material would reveal the 
identity of a source who furnished information to PBGC under an express 
promise of confidentiality or, before September 27, 1975, under an 
implied promise of confidentiality.
    (b) The reasons for asserting this exemption are to insure the 
gaining of information essential to determining suitability and fitness 
for PBGC employment, access to information, and security clearances, to 
insure that full and candid disclosures are obtained in making such 
determinations, to prevent subjects of such determinations from 
thwarting the completion of such determinations, and to avoid revealing 
the identities of persons who furnish information to the PBGC in 
confidence.

PART 4903--DEBT COLLECTION

Subpart A--General

Sec.
4903.1  Purpose and scope.
4903.2  General.
4903.3  Definitions.

Subpart B--Administrative Offset

4903.21  Application of Federal Claims Collection Standards.
4903.22  Administrative offset procedures.
4903.23  PBGC requests for offset by other agencies.
4903.24  Requests for offset from other agencies.

Subpart C--Tax Refund Offset

4903.31  Eligibility of debt for tax refund offset.
4903.32  Tax refund offset procedures.
4903.33  Referral of debt for tax refund offset.

Subpart D--Salary Offset [Reserved]

    Authority: 29 U.S.C. 1302(b); 31 U.S.C. 3701, 3711(f), 3720A; 4 
CFR part 102; 26 CFR 301.6402--6.

Subpart A--General


Sec. 4903.1  Purpose and scope.

    (a) Subpart A. Subpart A of this part contains definitions and 
general provisions applicable to debt collection generally.
    (b) Subpart B. Subpart B of this part prescribes procedures for 
debt collection by administrative offset, as authorized by the Federal 
Claims Collection Act (31 U.S.C. 3716), and consistent with applicable 
provisions of the Federal Claims Collection Standards. These procedures 
apply when the PBGC determines that collection by administrative offset 
of a claim that is liquidated or certain in amount is feasible and not 
otherwise prohibited or when another agency seeks administrative offset 
against a payment to be made by the PBGC.
    (c) Subpart C. Subpart C of this part prescribes procedures for 
debt collection by tax refund offset, as authorized by section 3720A of 
subchapter II, chapter 37 of title 31 of the United States Code (31 
U.S.C. 3720A) and in accordance with applicable IRS regulations (26 CFR 
301-6402.6), including a related procedure for disclosure to a consumer 
reporting agency. These procedures apply to determinations that a debt 
of at least $25 is past-due and legally enforceable, to referrals by 
the PBGC of past-due, legally enforceable debts to the IRS for offset, 
and to any subsequent corrections of information contained in such 
referrals.


Sec. 4903.2  General.

    (a) Certain PBGC efforts to obtain payment of debts arising out of 
activities under ERISA are authorized by and subject to requirements 
prescribed under other federal statutes. When, and to the extent, such 
requirements apply to collection of a debt by the PBGC, PBGC activities 
will be consistent with such requirements, as well as with any other 
applicable requirements (see, e.g., parts 4003, 4007, and 4062 of this 
chapter).
    (b)(1) The Executive Director of the PBGC has delegated to the 
Director of the Financial Operations Department primary responsibility 
for PBGC debt collection activities. This delegation includes 
responsibility for procedures implementing requirements prescribed 
under federal statutes other than ERISA,

[[Page 34131]]

and for coordinating the activities of other PBGC departments with 
functional responsibilities for different types of claims.
    (2) PBGC departments are responsible for ascertaining indebtedness 
and other aspects of agency collection activities within their areas of 
functional responsibility.


Sec. 4903.3  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
IRS, PBGC, and person. In addition, for purposes of this part:
    Administrative offset has the meaning set forth in 31 U.S.C. 
3701(a)(1).
    Agency means an executive or legislative agency (within the meaning 
of 31 U.S.C. 3701(a)(4)).
    Claim and debt, as defined in the Federal Claims Collection 
Standards (4 CFR 101.2(a)), are used synonymously and interchangeably 
to refer to an amount of money or property which has been determined by 
an appropriate agency official to be owed to the United States from any 
person, organization, or entity, except another Federal agency.
    Consumer reporting agency has the meaning set forth in 31 U.S.C. 
3701(a)(3).
    Federal Claims Collection Act means the Federal Claims Collection 
Act of 1966, as amended (31 U.S.C. 3701 et seq.).
    Federal Claims Collection Standards means 4 CFR parts 101 through 
105, which are regulations issued jointly by the Comptroller General of 
the United States and the Attorney General of the United States that 
implement the Federal Claims Collection Act.
    Repayment agreement means a written agreement by a debtor to repay 
a debt to the PBGC.
    Tax refund offset means the reduction by the IRS of a tax 
overpayment payable to a taxpayer by the amount of past-due, legally 
enforceable debt owed by that taxpayer to a federal agency that has 
entered into an agreement with the IRS with regard to its participation 
in the tax refund offset program, pursuant to IRS regulations (26 CFR 
301.6402-6).

Subpart B--Administrative Offset


Sec. 4903.21  Application of Federal Claims Collection Standards.

    The PBGC will determine the feasibility of collection by 
administrative offset, whether to accept a repayment agreement in lieu 
of offset, and how to apply amounts collected by administrative offset 
on multiple debts as provided in the Federal Claims Collection 
Standards (4 CFR 102.3).
    (a) Feasibility. The PBGC will determine whether collection by 
administrative offset is feasible on a case-by-case basis in the 
exercise of sound discretion. In making such determinations, the PBGC 
will consider:
    (1) Whether administrative offset can be accomplished, both 
practically and legally;
    (2) Whether administrative offset is best suited to further and 
protect all governmental interests;
    (3) In appropriate circumstances, the debtor's financial condition; 
and
    (4) Whether offset would tend to interfere substantially with or 
defeat the purposes of the program authorizing the payments against 
which offset is contemplated.
    (b) Repayment agreements. The PBGC will exercise its discretion in 
determining whether to accept a repayment agreement in lieu of offset, 
balancing the Government's interest in collecting the debt against 
fairness to the debtor. If the debt is delinquent (within the meaning 
of 4 CFR 101.2(b)) and the debtor has not disputed its existence or 
amount, the PBGC will accept a repayment agreement in lieu of offset 
only if the debtor is able to establish that offset would result in 
undue financial hardship or would be against equity and good 
conscience.
    (c) Multiple debts. When the PBGC collects multiple debts by 
administrative offset, it will apply the recovered amounts to those 
debts in accordance with the best interests of the United States, as 
determined by the facts and circumstances of the particular case, 
paying special attention to applicable statutes of limitations.


Sec. 4903.22  Administrative offset procedures.

    (a) General. Except as otherwise required by law or as provided in 
paragraph (e) of this section, the PBGC will not effect administrative 
offset against a payment to be made to a debtor prior to the completion 
of the procedures specified in paragraphs (b) and (c) of this section. 
However, the PBGC will not duplicate any notice or other procedural 
protection it previously provided in connection with the same debt 
under some other statutory or regulatory authority, such as part 4003 
of this chapter.
    (b) Notice. The PBGC will provide written notice informing the 
debtor of the following:
    (1) The nature and amount of the debt, and the PBGC's intention to 
collect by offset;
    (2) That the debtor may inspect and copy PBGC records pertaining to 
the debt in accordance with part 4901 or part 4902 of this chapter, as 
applicable (access under the Freedom of Information Act (5 U.S.C. 552) 
or the Privacy Act (5 U.S.C. 552a), respectively);
    (3) How and from whom the debtor may obtain administrative review 
of a determination of indebtedness;
    (4) The facts and circumstances that the PBGC will consider in 
determining whether to accept a repayment agreement in lieu of offset; 
and
    (5) If the PBGC has not previously demanded payment of the debt, 
the date by which payment must be made to avoid further collection 
action.
    (c) Administrative review. (1) A debtor may obtain review within 
the PBGC of a determination of indebtedness by submitting a written 
request for review, designated as such, to the PBGC official specified 
in the notice of indebtedness. Unless another regulation in this 
chapter specifies a different period of time, such a request must be 
submitted within 30 days after the date of a PBGC notice under 
paragraph (b) of this section.
    (2) A request for review must:
    (i) State the ground(s) on which the debtor disputes the debt; and
    (ii) Reference all pertinent information already in the possession 
of the PBGC and include any additional information believed to be 
relevant.
    (3) The PBGC will review a determination of indebtedness, when 
requested to do so in a timely manner. The PBGC will issue a written 
decision, based on the written record, and will notify the debtor of 
its decision.
    (i) The review will be conducted by an official of at least the 
same level of authority as the person who made the determination of 
indebtedness.
    (ii) The notice of the PBGC's decision on review will include a 
brief statement of the reason(s) why the determination of indebtedness 
has or has not been changed.
    (4) Upon receipt of a request for administrative review, the PBGC 
may, in its discretion, temporarily suspend transactions in any of the 
debtor's accounts maintained by the PBGC. If the PBGC resolves the 
dispute in the debtor's favor, it will lift the suspension immediately.
    (d) Repayment agreement in lieu of offset. (1) The PBGC will not 
consider entering a repayment agreement in lieu of offset unless a 
debtor submits a copy of the debtor's most recent audited (or if not 
available, unaudited) financial statement (with balance sheets, income 
statements, and statements of changes in financial position), to the 
extent such documents have been prepared, and other information 
regarding the debtor's financial condition (e.g., the types of 
information on assets, liabilities,

[[Page 34132]]

earnings, and other factors specified in paragraphs (b)(3) through 
(b)(7) of Sec. 4062.6 of this chapter).
    (2) The PBGC may require appropriate security as a condition of 
accepting a repayment agreement in lieu of offset.
    (e) Exception. (1) The PBGC may effect administrative offset 
against a payment to be made to the debtor prior to completing the 
procedures specified in paragraphs (b) and (c) of this section if:
    (i) Failure to take the offset would substantially prejudice the 
government's ability to collect the debt; and
    (ii) The time before the payment is to be made does not reasonably 
permit the completion of those procedures.
    (2) The PBGC has determined that a case in which it applies the 
special rule in Sec. 4068.3(c) of this chapter meets the criteria in 
paragraph (e)(1) of this section.
    (3) If the PBGC effects administrative offset against a payment to 
be made to a debtor prior to completing the procedures specified in 
paragraphs (b) and (c) of this section, the PBGC--
    (i) Will promptly complete those procedures; and
    (ii) Will promptly refund any amounts recovered by offset but later 
found not to be owed to the Government.


Sec. 4903.23  PBGC requests for offset by other agencies.

    (a) General. The PBGC may request that funds payable to its debtor 
by another agency be administratively offset to collect a debt owed to 
the PBGC by the debtor. A PBGC request for administrative offset 
against amounts due and payable from the Civil Service Retirement and 
Disability Fund will be made in accordance with 5 CFR part 831, subpart 
R (Agency Requests to OPM for Recovery of a Debt from the Civil Service 
Retirement and Disability Fund).
    (b) Certification. In requesting administrative offset, the 
Director of the Financial Operations Department (or a department 
official designated by the Director) will certify in writing to the 
agency holding funds of the debtor--
    (1) That the debtor owes the debt (including the amount) and that 
the PBGC has fully complied with the provisions of 4 CFR 102.3; and
    (2) In a request for administrative offset against amounts due and 
payable from the Civil Service Retirement and Disability Fund, that the 
PBGC has complied with applicable statutes and the regulations and 
procedures of the Office of Personnel Management.


Sec. 4903.24  Requests for offset from other agencies.

    (a) General. As provided in the Federal Claims Collections 
Standards (4 CFR 102.3(d)), the PBGC generally will comply with 
requests from other agencies to initiate administrative offset to 
collect debts owed to the United States unless the requesting agency 
has not complied with the applicable provisions of the Federal Claims 
Collection Standards or the offset would be otherwise contrary to law.
    (b) Submission of requests. (1) Any agency may request that funds 
payable to its debtor by the PBGC be administratively offset to collect 
a debt owed to such agency by the debtor by submitting the 
certification described in paragraph (c) of this section.
    (2) All such requests should be directed to the Director, Financial 
Operations Department, Pension Benefit Guaranty Corporation, 1200 K 
Street, NW., Washington, DC 20005-4026.
    (c) Certification required. The PBGC will not initiate 
administrative offset in response to a request from another agency 
until it receives written certification from the requesting agency, 
signed by an appropriate agency official, that the debtor owes the debt 
(including the amount) and that the requesting agency has fully 
complied with the provisions of 4 CFR 102.3 (with a citation to the 
agency's own administrative offset regulations).

Subpart C--Tax Refund Offset


Sec. 4903.31   Eligibility of debt for tax refund offset.

    The PBGC will determine whether a debt is eligible for tax refund 
offset in accordance with IRS regulations (26 CFR 301.6402-6 (c) and 
(d)). The PBGC may refer a past-due, legally enforceable debt to the 
IRS for offset if:
    (a) The debt is a judgment debt, or the PBGC's right of action 
accrued not more than 10 years earlier (unless the debt is specifically 
exempt from this requirement);
    (b) The PBGC cannot currently collect the debt by salary offset 
(pursuant to 5 U.S.C. 5514(a)(1));
    (c) The debt is ineligible for administrative offset (by reason of 
31 U.S.C. 3716(c)(2)), or the PBGC cannot currently collect the debt by 
administrative offset (under 31 U.S.C. 3716 and subpart B of this part) 
against amounts payable by the debtor to the PBGC;
    (d) The PBGC has notified, or attempted to notify, the debtor of 
its intent to refer the debt, given the debtor an opportunity to 
present evidence that all or part of the debt is not past-due or not 
legally enforceable, considered any evidence presented by the debtor in 
accordance with Sec. 4903.32, and determined that the debt is past-due 
and legally enforceable;
    (e) If the debt is a consumer debt and exceeds $100, the PBGC has 
disclosed the debt to a consumer reporting agency (as authorized by 31 
U.S.C. 3711(f) and provided in Sec. 4903.32), unless a consumer 
reporting agency would be prohibited from reporting information 
concerning the debt (by reason of 15 U.S.C. 1681c); and
    (f) The debt is at least $25.


Sec. 4903.32   Tax refund offset procedures.

    (a) General. Before referring a debt for tax refund offset, the 
PBGC will complete the procedures specified in paragraph (b) and, if 
applicable, paragraph (c) of this section. The PBGC may satisfy these 
requirements in conjunction with any other procedures that apply to the 
same debt, such as those prescribed in Sec. 4903.22 or part 4003 of 
this chapter.
    (b) Notice, opportunity to present evidence, and determination of 
indebtedness.
    (1) The PBGC will notify, or make a reasonable attempt to notify, a 
person owing a debt (a ``debtor'') that a debt is past-due and if not 
repaid within 60 days, the PBGC will refer the debt to the IRS for 
offset against any overpayment of tax. For this purpose, compliance 
with IRS procedures (26 CFR 301.6402-6(d)(1)) constitutes a reasonable 
attempt to notify a debtor.
    (2) A debtor will have at least 60 days to present evidence, for 
consideration by the PBGC, that all or part of a debt is not past-due 
or not legally enforceable.
    (3) If evidence that all or part of a debt is not past-due or not 
legally enforceable is considered by an agent or person other than a 
PBGC employee acting on behalf of the PBGC, a debtor will have at least 
30 days from the date of the determination on the debt to request 
review by the Director of the Financial Operations Department (or a 
department official designated by the Director).
    (4) The PBGC will notify a debtor of its determination as to 
whether all or part of a debt is past-due and legally enforceable.
    (c) Consumer reporting agency disclosure.
    (1)(i) If a consumer debt exceeds $100, the Director of the 
Financial Operations Department (or a department official designated by 
the Director), after verifying the validity and overdue status of the 
debt and that section 605 of the Consumer Credit Protection Act (15 
U.S.C. 1681c) does not prohibit a

[[Page 34133]]

consumer reporting agency from reporting information concerning the 
debt because it is obsolete, will send the individual who owes the debt 
a written notice--
    (A) That the debt is past-due;
    (B) That the PBGC intends to disclose to a consumer reporting 
agency that the individual is responsible for the debt and the specific 
information to be disclosed; and
    (C) How the individual may obtain an explanation of the debt, 
dispute the information in PBGC's records, and obtain administrative 
review of the debt.
    (ii) If the PBGC does not have a current address for an individual, 
the Director of the Financial Operations Department (or a department 
official designated by the Director) will take reasonable action to 
locate the individual.
    (2) The Director of the Financial Operations Department (or a 
department official designated by the Director) will disclose the debt 
if, within 60 days (or, at his or her discretion, more than 60 days) 
after sending the notice described in paragraph (c)(1) of this section, 
the individual has not repaid the debt, or agreed to repay the debt 
under a written agreement, or requested administrative review of the 
debt.


Sec. 4903.33   Referral of debt for tax refund offset.

    The Director of the Financial Operations Department (or a 
department official designated by the Director) will refer debts to the 
IRS for refund offset, and will correct referrals, in accordance with 
IRS regulations (26 CFR 301.6402-6(e) and (f)).

Subpart D--Salary Offset [Reserved]

PART 4904--ETHICAL CONDUCT OF EMPLOYEES

Sec.
4904.1  Outside employment and other activity.
    Authority: 29 U.S.C. 1302(b); E.O. 11222, 30 FR 6469; 5 CFR 
735.104.


Sec. 4904.1   Outside employment and other activity.

    (a)-(c) [Reserved].
    (d) An employee who is engaged in or is planning to engage in 
outside employment, business, professional or other such activities for 
pay shall obtain clearance:
    (1) When such activities raise a question of conflict with this 
subpart or any applicable laws, orders, regulations or standards, or
    (2) When applicable laws, orders or regulations require clearance 
of such activities.
    (e) A request for clearance shall be in writing and shall include a 
statement of the nature of and the amount of time to be devoted to the 
activity. The heads of offices shall receive and review requests for 
clearance submitted by members of their staff. The Executive Director 
or his designee shall receive and review requests for clearance 
submitted by the heads of offices and special Government employees. The 
employee reviewing the request for clearance may require the employee 
making the request to furnish such other information as may be 
appropriate in considering the request and shall consult with the 
Corporation's Ethics Counselor where appropriate. The request may be 
granted only if such activity would be consistent with applicable laws, 
orders and regulations. If the request for clearance is not granted, 
the employee making the request shall not commence or continue in the 
activity unless the Executive Director or his designee, upon written 
request of the employee, determines that such activity would be 
consistent with applicable laws, orders and regulations.

PART 4905--APPEARANCES IN CERTAIN PROCEEDINGS

Sec.
4905.1  Purpose and scope.
4905.2  Definitions.
4905.3  General.
4905.4  Appearances by PBGC employees.
4905.5  Requests for authenticated copies of PBGC records.
4905.6  Penalty.

    Authority: 29 U.S.C. 1302(b); E.O. 11222, 30 FR 6469; 5 CFR 
735.104.


Sec. 4905.1   Purpose and scope.

    (a) Purpose. This part sets forth the rules and procedures to be 
followed when a PBGC employee or former employee is requested or served 
with compulsory process to appear as a witness or produce documents in 
a proceeding in which the PBGC is not a party, if such appearance 
arises out of, or is related to, his or her employment with the PBGC. 
It provides a centralized decisionmaking mechanism for responding to 
such requests and compulsory process.
    (b) Scope. (1) This part applies when, in a judicial, 
administrative, legislative, or other proceeding, a PBGC employee or 
former employee is requested or served with compulsory process to 
provide testimony concerning information acquired in the course of 
performing official duties or because of official status and/or to 
produce material acquired in the course of performing official duties 
or contained in PBGC files.
    (2) This part does not apply to:
    (i) Proceedings in which the PBGC is a party;
    (ii) Congressional requests or subpoenas for testimony or 
documents; or
    (iii) Appearances by PBGC employees in proceedings that do not 
arise out of, or relate to, their employment with PBGC (e.g., outside 
activities that are engaged in consistent with applicable standards of 
ethical conduct).


Sec. 4905.2   Definitions.

    For purposes of this part:
    Appearance means testimony or production of documents or other 
material, including an affidavit, deposition, interrogatory, 
declaration, or other required written submission.
    Compulsory Process means any subpoena, order, or other demand of a 
court or other authority (e.g., an administrative agency or a state or 
local legislative body) for the appearance of a PBGC employee or former 
employee.
    Employee means any officer or employee of the PBGC, including a 
special government employee.
    Proceeding means any proceeding before any federal, state, or local 
court; federal, state, or local agency; state or local legislature; or 
other authority responsible for administering regulatory requirements 
or adjudicating disputes or controversies, including arbitration, 
mediation, and other similar proceedings.
    Special government employee means an employee of the PBGC who is 
retained, designated, appointed or employed to perform, with or without 
compensation, for not to exceed one hundred and thirty days during any 
three hundred and sixty-five consecutive days, temporary duties either 
on a full-time or intermittent basis (18 U.S.C. 202).


Sec. 4905.3  General.

    No PBGC employee or former employee may appear in any proceeding to 
which this part applies to testify and/or produce documents or other 
material unless authorized under this part.


Sec. 4905.4  Appearances by PBGC employees.

    (a) Whenever a PBGC employee or former employee is requested or 
served with compulsory process to appear in a proceeding to which this 
part applies, he or she will promptly notify the General Counsel.
    (b) The General Counsel or his or her designee will authorize an 
appearance by a PBGC employee or former employee if, and to the extent, 
he or she determines that such appearance is in the interest of the 
PBGC.

[[Page 34134]]

    (1) In determining whether an appearance is in the interest of the 
PBGC, the General Counsel or his or her designee will consider relevant 
factors, including:
    (i) What, if any, objective of the PBGC (and, where relevant, any 
federal agency, if the United States is a party) would be promoted by 
the appearance;
    (ii) Whether the appearance would unnecessarily interfere with the 
employee's official duties;
    (iii) Whether the appearance would result in the appearance of 
improperly favoring one litigant over another; and
    (iv) Whether the appearance is appropriate under applicable 
substantive and procedural rules.
    (2) If the General Counsel or his or her designee concludes that 
compulsory process is essentially a request for PBGC record 
information, it will be treated as a request under the Freedom of 
Information Act, as amended, in accordance with part 4901 of this 
chapter, except to the extent that the Privacy Act of 1974, as amended, 
and part 4902 of this chapter govern disclosure of a record maintained 
on an individual.
    (c) If, in response to compulsory process in a proceeding to which 
this part applies, the General Counsel or his or her designee has not 
authorized an appearance by the return date, the employee or former 
employee shall appear at the stated time and place (unless advised by 
the General Counsel or his or her designee that process either was not 
validly issued or served or has been withdrawn), accompanied by a PBGC 
attorney, produce a copy of this part of the regulations, and 
respectfully decline to provide any testimony or produce any documents 
or other material. When the demand is under consideration, the employee 
shall respectfully request that the court or other authority stay the 
demand pending the employee's receipt of instructions from the General 
Counsel.


Sec. 4905.5  Requests for authenticated copies of PBGC records.

    The PBGC will grant requests for authenticated copies of PBGC 
records, for purposes of admissibility under 28 U.S.C. 1733 and Rule 44 
of the Federal Rules of Civil Procedure, for records that are to be 
disclosed pursuant to this part or part 4901 of this chapter. 
Appropriate fees will be charged for providing authenticated copies of 
PBGC records, in accordance with part 4901, subpart D, of this chapter.


Sec. 4905.6  Penalty.

    A PBGC employee who testifies or produces documents or other 
material in violation of a provision of this part of the regulations 
shall be subject to disciplinary action.

PART 4907--ENFORCEMENT OF NONDISCRIMINATION ON THE BASIS OF 
HANDICAP IN PROGRAMS OR ACTIVITIES CONDUCTED BY THE PENSION BENEFIT 
GUARANTY CORPORATION

Sec.
4907.101  Purpose.
4907.102  Application.
4907.103  Definitions.
4907.104-4907.109  [Reserved]
4907.110  Self-evaluation.
4907.111  Notice.
4907.112-4907.129  [Reserved]
4907.130  General prohibitions against discrimination.
4907.131-4907.139  [Reserved]
4907.140  Employment.
4907.141-4907.148  [Reserved]
4907.149  Program accessibility: Discrimination prohibited.
4907.150  Program accessibility: Existing facilities.
4907.151  Program accessibility: New construction and alterations.
4907.152-4907.159  [Reserved]
4907.160  Communications.
4907.161-4907.169  [Reserved]
4907.170  Compliance procedures.
4907.171-4907.999  [Reserved]

    Authority: 29 U.S.C. 794, 1302(b)(3).


Sec. 4907.101  Purpose.

    This part effectuates section 119 of the Rehabilitation, 
Comprehensive Services, and Developmental Disabilities Amendments of 
1978, which amended section 504 of the Rehabilitation Act of 1973 to 
prohibit discrimination on the basis of handicap in programs or 
activities conducted by Executive agencies or the United States Postal 
Service.


Sec. 4907.102  Application.

    This part applies to all programs or activities conducted by the 
agency.


Sec. 4907.103  Definitions.

    For purposes of this part, the term--
    Assistant Attorney General means the Assistant Attorney General, 
Civil Rights Division, United States Department of Justice.
    Auxiliary aids means services or devices that enable persons with 
impaired sensory, manual, or speaking skills to have an equal 
opportunity to participate in, and enjoy the benefits of, programs or 
activities conducted by the agency. For example, auxiliary aids useful 
for persons with impaired vision include readers, brailled materials, 
audio recordings, telecommunications devices and other similar services 
and devices. Auxiliary aids useful for persons with impaired hearing 
include telephone handset amplifiers, telephones compatible with 
hearing aids, telecommunication devices for deaf persons (TDD's), 
interpreters, notetakers, written materials, and other similar services 
and devices.
    Complete complaint means a written statement that contains the 
complainant's name and address and describes the agency's alleged 
discriminatory action in sufficient detail to inform the agency of the 
nature and date of the alleged violation of section 504. It shall be 
signed by the complainant or by someone authorized to do so on his or 
her behalf. Complaints filed on behalf of classes or third parties 
shall describe or identify (by name, if possible) the alleged victims 
of discrimination.
    Facility means all or any portion of buildings, structures, 
equipment, roads, walks, parking lots, rolling stock or other 
conveyances, or other real or personal property.
    Handicapped person means any person who has a physical or mental 
impairment that substantially limits one or more major life activities, 
has a record of such an impairment, or is regarded as having such an 
impairment.
    As used in this definition, the phrase:
    (1) Physical or mental impairment includes--
    (i) Any physiological disorder or condition, cosmetic 
disfigurement, or anatomical loss affecting one or more of the 
following body systems: Neurological; musculoskeletal; special sense 
organs; respiratory, including speech organs; cardiovascular; 
reproductive; digestive; genitourinary; hemic and lymphatic; skin; and 
endocrine; or
    (ii) Any mental or psychological disorder, such as mental 
retardation, organic brain syndrome, emotional or mental illness, and 
specific learning disabilities. The term ``physical or mental 
impairment'' includes, but is not limited to, such diseases and 
conditions as orthopedic, visual, speech, and hearing impairments, 
cerebral palsy, epilepsy, muscular dystrophy, multiple sclerosis, 
cancer, heart disease, diabetes, mental retardation, emotional illness, 
and drug addiction and alcoholism.
    (2) Major life activities includes functions such as caring for 
one's self, performing manual tasks, walking, seeing, hearing, 
speaking, breathing, learning, and working.
    (3) Has a record of such an impairment means has a history of, or 
has been misclassified as having, a mental or physical impairment that 
substantially limits one or more major life activities.

[[Page 34135]]

    (4) Is regarded as having an impairment means--
    (i) Has a physical or mental impairment that does not substantially 
limit major life activities but is treated by the agency as 
constituting such a limitation;
    (ii) Has a physical or mental impairment that substantially limits 
major life activities only as a result of the attitudes of others 
toward such impairment; or
    (iii) Has none of the impairments defined in subparagraph (1) of 
this definition but is treated by the agency as having such an 
impairment.
    Historic preservation programs means programs conducted by the 
agency that have preservation of historic properties as a primary 
purpose.
    Historic properties means those properties that are listed or 
eligible for listing in the National Register of Historic Places or 
properties designated as historic under a statute of the appropriate 
State or local government body.
    Qualified handicapped person means--
    (1) With respect to preschool, elementary, or secondary education 
services provided by the agency, a handicapped person who is a member 
of a class of persons otherwise entitled by statute, regulation, or 
agency policy to receive education services from the agency.
    (2) With respect to any other agency program or activity under 
which a person is required to perform services or to achieve a level of 
accomplishment, a handicapped person who meets the essential 
eligibility requirements and who can achieve the purpose of the program 
or activity without modifications in the program or activity that the 
agency can demonstrate would result in a fundamental alteration in its 
nature;
    (3) With respect to any other program or activity, a handicapped 
person who meets the essential eligibility requirements for 
participation in, or receipt of benefits from, that program or 
activity; and
    (4) Qualified handicapped person is defined for purposes of 
employment in 29 CFR 1613.702(f), which is made applicable to this part 
by Sec. 4907.140.
    Section 504 means section 504 of the Rehabilitation Act of 1973 
(Pub. L. 93-112, 87 Stat. 394 (29 U.S.C. 794)), as amended by the 
Rehabilitation Act Amendments of 1974 (Pub. L. 93-516, 88 Stat. 1617), 
and the Rehabilitation, Comprehensive Services, and Developmental 
Disabilities Amendments of 1978 (Pub. L. 95-602, 92 Stat. 2955). As 
used in this part, section 504 applies only to programs or activities 
conducted by Executive agencies and not to federally assisted programs.
    Substantial impairment means a significant loss of the integrity of 
finished materials, design quality, or special character resulting from 
a permanent alteration.


Secs. 4907.104-4907.109  [Reserved]


Sec. 4907.110  Self-evaluation.

    (a) The agency shall, by August 24, 1987, evaluate its current 
policies and practices, and the effects thereof, that do not or may not 
meet the requirements of this part, and, to the extent modification of 
any such policies and practices is required, the agency shall proceed 
to make the necessary modifications.
    (b) The agency shall provide an opportunity to interested persons, 
including handicapped persons or organizations representing handicapped 
persons, to participate in the self-evaluation process by submitting 
comments (both oral and written).
    (c) The agency shall, until three years following the completion of 
the self-evaluation, maintain on file and make available for public 
inspection:
    (1) a description of areas examined and any problems identified, 
and
     (2) a description of any modifications made.


Sec. 4907.111  Notice.

    The agency shall make available to employees, applicants, 
participants, beneficiaries, and other interested persons such 
information regarding the provisions of this part and its applicability 
to the programs or activities conducted by the agency, and make such 
information available to them in such manner as the head of the agency 
finds necessary to apprise such persons of the protections against 
discrimination assured them by section 504 and this regulation.


Secs. 4907.112-4907.129  [Reserved]


Sec. 4907.130  General prohibitions against discrimination.

    (a) No qualified handicapped person shall, on the basis of 
handicap, be excluded from participation in, be denied the benefits of, 
or otherwise be subjected to discrimination under any program or 
activity conducted by the agency.
    (b)(1) The agency, in providing any aid, benefit, or service, may 
not, directly or through contractual, licensing, or other arrangements, 
on the basis of handicap--
    (i) Deny a qualified handicapped person the opportunity to 
participate in or benefit from the aid, benefit, or service;
    (ii) Afford a qualified handicapped person an opportunity to 
participate in or benefit from the aid, benefit, or service that is not 
equal to that afforded others;
    (iii) Provide a qualified handicapped person with an aid, benefit, 
or service that is not as effective in affording equal opportunity to 
obtain the same result, to gain the same benefit, or to reach the same 
level of achievement as that provided to others;
    (iv) Provide different or separate aid, benefits, or services to 
handicapped persons or to any class of handicapped persons than is 
provided to others unless such action is necessary to provide qualified 
handicapped persons with aid, benefits, or services that are as 
effective as those provided to others;
    (v) Deny a qualified handicapped person the opportunity to 
participate as a member of planning or advisory boards; or
    (vi) Otherwise limit a qualified handicapped person in the 
enjoyment of any right, privilege, advantage, or opportunity enjoyed by 
others receiving the aid, benefit, or service.
    (2) The agency may not deny a qualified handicapped person the 
opportunity to participate in programs or activities that are not 
separate or different, despite the existence of permissibly separate or 
different programs or activities.
    (3) The agency may not, directly or through contractual or other 
arrangements, utilize criteria or methods of administration the purpose 
or effect of which would--
    (i) Subject qualified handicapped persons to discrimination on the 
basis of handicap; or
    (ii) Defeat or substantially impair accomplishment of the 
objectives of a program or activity with respect to handicapped 
persons.
    (4) The agency may not, in determining the site or location of a 
facility, make selections the purpose or effect of which would--
    (i) Exclude handicapped persons from, deny them the benefits of, or 
otherwise subject them to discrimination under any program or activity 
conducted by the agency; or
    (ii) Defeat or substantially impair the accomplishment of the 
objectives of a program or activity with respect to handicapped 
persons.
    (5) The agency, in the selection of procurement contractors, may 
not use criteria that subject qualified handicapped persons to 
discrimination on the basis of handicap.

[[Page 34136]]

    (6) The agency may not administer a licensing or certification 
program in a manner that subjects qualified handicapped persons to 
discrimination on the basis of handicap, nor may the agency establish 
requirements for the programs or activities of licensees or certified 
entities that subject qualified handicapped persons to discrimination 
on the basis of handicap. However, the programs or activities of 
entities that are licensed or certified by the agency are not, 
themselves, covered by this part.
    (c) The exclusion of nonhandicapped persons from the benefits of a 
program limited by Federal statute or Executive Order to handicapped 
persons or the exclusion of a specific class of handicapped persons 
from a program limited by Federal statute or Executive Order to a 
different class of handicapped persons is not prohibited by this part.
    (d) The agency shall administer programs and activities in the most 
integrated setting appropriate to the needs of qualified handicapped 
persons.


Secs. 4907.131-4907.139  [Reserved]


Sec. 4907.140  Employment.

    No qualified handicapped person shall, on the basis of handicap, be 
subjected to discrimination in employment under any program or activity 
conducted by the agency. The definitions, requirements, and procedures 
of section 501 of the Rehabilitation Act of 1973 (29 U.S.C. 791), as 
established by the Equal Employment Opportunity Commission in 29 CFR 
part 1613, shall apply to employment in federally-conducted programs or 
activities.


Secs. 4907.141-4907.148  [Reserved]


Sec. 4907.149   Program accessibility: Discrimination prohibited.

    Except as otherwise provided in Sec. 4907.150, no qualified 
handicapped person shall, because the agency's facilities are 
inaccessible to or unusable by handicapped persons, be denied the 
benefits of, be excluded from participation in, or otherwise be 
subjected to discrimination under any program or activity conducted by 
the agency.


Sec. 4907.150   Program accessibility: Existing facilities.

    (a) General. The agency shall operate each program or activity so 
that the program or activity, when viewed in its entirety, is readily 
accessible to and usable by handicapped persons. This paragraph does 
not--
    (1) Necessarily require the agency to make each of its existing 
facilities accessible to and usable by handicapped persons;
    (2) In the case of historic preservation programs, require the 
agency to take any action that would result in a substantial impairment 
of significant historic features of an historic property; or
    (3) Require the agency to take any action that it can demonstrate 
would result in a fundamental alteration in the nature of a program or 
activity or in undue financial and administrative burdens. In those 
circumstances where agency personnel believe that the proposed action 
would fundamentally alter the program or activity or would result in 
undue financial and administrative burdens, the agency has the burden 
of proving that compliance with Sec. 4907.150(a) would result in such 
alteration or burdens. The decision that compliance would result in 
such alteration or burdens must be made by the agency head or his or 
her designee after considering all agency resources available for use 
in the funding and operation of the conducted program or activity, and 
must be accompanied by a written statement of the reasons for reaching 
that conclusion. If an action would result in such an alteration or 
such burdens, the agency shall take any other action that would not 
result in such an alteration or such burdens but would nevertheless 
ensure that handicapped persons receive the benefits and services of 
the program or activity.
    (b) Methods--
    (1) General. The agency may comply with the requirements of this 
section through such means as redesign of equipment, reassignment of 
services to accessible buildings, assignment of aides to beneficiaries, 
home visits, delivery of services at alternate accessible sites, 
alteration of existing facilities and construction of new facilities, 
use of accessible rolling stock, or any other methods that result in 
making its programs or activities readily accessible to and usable by 
handicapped persons. The agency is not required to make structural 
changes in existing facilities where other methods are effective in 
achieving compliance with this section. The agency, in making 
alterations to existing buildings, shall meet accessibility 
requirements to the extent compelled by the Architectural Barriers Act 
of 1968, as amended (42 U.S.C. 4151-4157), and any regulations 
implementing it. In choosing among available methods for meeting the 
requirements of this section, the agency shall give priority to those 
methods that offer programs and activities to qualified handicapped 
persons in the most integrated setting appropriate.
    (2) Historic preservation programs. In meeting the requirements of 
Sec. 4907.150(a) in historic preservation programs, the agency shall 
give priority to methods that provide physical access to handicapped 
persons. In cases where a physical alteration to an historic property 
is not required because of Sec. 4907.150 (a)(2) or (a)(3), alternative 
methods of achieving program accessibility include--
    (i) Using audio-visual materials and devices to depict those 
portions of an historic property that cannot otherwise be made 
accessible;
    (ii) Assigning persons to guide handicapped persons into or through 
portions of historic properties that cannot otherwise be made 
accessible; or
    (iii) Adopting other innovative methods.
    (c) Time period for compliance. The agency shall comply with the 
obligations established under this section by October 21, 1986, except 
that where structural changes in facilities are undertaken, such 
changes shall be made by August 22, 1989, but in any event as 
expeditiously as possible.
    (d) Transition plan. In the event that structural changes to 
facilities will be undertaken to achieve program accessibility, the 
agency shall develop, by February 23, 1987 a transition plan setting 
forth the steps necessary to complete such changes. The agency shall 
provide an opportunity to interested persons, including handicapped 
persons or organizations representing handicapped persons, to 
participate in the development of the transition plan by submitting 
comments (both oral and written). A copy of the transition plan shall 
be made available for public inspection. The plan shall, at a minimum--
    (1) Identify physical obstacles in the agency's facilities that 
limit the accessibility of its programs or activities to handicapped 
persons;
    (2) Describe in detail the methods that will be used to make the 
facilities accessible;
    (3) Specify the schedule for taking the steps necessary to achieve 
compliance with this section and, if the time period of the transition 
plan is longer than one year, identify steps that will be taken during 
each year of the transition period; and
    (4) Indicate the official responsible for implementation of the 
plan.


Sec. 4907.151   Program accessibility: New construction and 
alterations.

    Each building or part of a building that is constructed or altered 
by, on behalf of, or for the use of the agency shall be designed, 
constructed, or

[[Page 34137]]

altered so as to be readily accessible to and usable by handicapped 
persons. The definitions, requirements, and standards of the 
Architectural Barriers Act (42 U.S.C. 4151-4157), as established in 41 
CFR 101-19.600 to 101-19.607, apply to buildings covered by this 
section.


Secs. 4907.152-4907.159 [Reserved]

Sec. 4907.160   Communications.

    (a) The agency shall take appropriate steps to ensure effective 
communication with applicants, participants, personnel of other Federal 
entities, and members of the public.
    (1) The agency shall furnish appropriate auxiliary aids where 
necessary to afford a handicapped person an equal opportunity to 
participate in, and enjoy the benefits of, a program or activity 
conducted by the agency.
    (i) In determining what type of auxiliary aid is necessary, the 
agency shall give primary consideration to the requests of the 
handicapped person.
    (ii) The agency need not provide individually prescribed devices, 
readers for personal use or study, or other devices of a personal 
nature.
    (2) Where the agency communicates with applicants and beneficiaries 
by telephone, telecommunication devices for deaf person (TDD's) or 
equally effective telecommunication systems shall be used.
    (b) The agency shall ensure that interested persons, including 
persons with impaired vision or hearing, can obtain information as to 
the existence and location of accessible services, activities, and 
facilities.
    (c) The agency shall provide signage at a primary entrance to each 
of its inaccessible facilities, directing users to a location at which 
they can obtain information about accessible facilities. The 
international symbol for accessibility shall be used at each primary 
entrance of an accessible facility.
    (d) This section does not require the agency to take any action 
that it can demonstrate would result in a fundamental alteration in the 
nature of a program or activity or in undue financial and 
administrative burdens. In those circumstances where agency personnel 
believe that the proposed action would fundamentally alter the program 
or activity or would result in undue financial and administrative 
burdens, the agency has the burden of proving that compliance with 
Sec. 4907.160 would result in such alteration or burdens. The decision 
that compliance would result in such alteration or burdens must be made 
by the agency head or his or her designee after considering all agency 
resources available for use in the funding and operation of the 
conducted program or activity, and must be accompanied by a written 
statement of the reasons for reaching that conclusion. If an action 
required to comply with this section would result in such an alteration 
or such burdens, the agency shall take any other action that would not 
result in such an alteration or such burdens but would nevertheless 
ensure that, to the maximum extent possible, handicapped persons 
receive the benefits and services of the program or activity.


Secs. 4907.161-4907.169  [Reserved]


Sec. 4907.170  Compliance procedures.

    (a) Except as provided in paragraph (b) of this section, this 
section applies to all allegations of discrimination on the basis of 
handicap in programs or activities conducted by the agency.
    (b) The agency shall process complaints alleging violations of 
section 504 with respect to employment according to the procedures 
established by the Equal Employment Opportunity Commission in 29 CFR 
part 1613 pursuant to section 501 of the Rehabilitation Act of 1973 (29 
U.S.C. 791).
    (c) The Equal Opportunity Manager shall be responsible for 
coordinating implementation of this section. Complaints may be sent to 
Equal Opportunity Manager, Human Resources Department, Pension Benefit 
Guaranty Corporation, 1200 K Street NW., Washington, DC 20005-4026.
    (d) The agency shall accept and investigate all complete complaints 
for which it has jurisdiction. All complete complaints must be filed 
within 180 days of the alleged act of discrimination. The agency may 
extend this time period for good cause.
    (e) If the agency receives a complaint over which it does not have 
jurisdiction, it shall promptly notify the complainant and shall make 
reasonable efforts to refer the complaint to the appropriate government 
entity.
    (f) The agency shall notify the Architectural and Transportation 
Barriers Compliance Board upon receipt of any complaint alleging that a 
building or facility that is subject to the Architectural Barriers Act 
of 1968, as amended (42 U.S.C. 4151-4157), or section 502 of the 
Rehabilitation Act of 1973, as amended (29 U.S.C. 792), is not readily 
accessible to and usable by handicapped persons.
    (g) Within 180 days of the receipt of a complete complaint for 
which it has jurisdiction, the agency shall notify the complainant of 
the results of the investigation in a letter containing--
    (1) Findings of fact and conclusions of law;
    (2) A description of a remedy for each violation found; and
    (3) A notice of the right to appeal.
    (h) Appeals of the findings of fact and conclusions of law or 
remedies must be filed by the complainant within 90 days of receipt 
from the agency of the letter required by Sec. 4907.170(g). The agency 
may extend this time for good cause.
    (i) Timely appeals shall be accepted and processed by the head of 
the agency.
    (j) The head of the agency shall notify the complainant of the 
results of the appeal within 60 days of the receipt of the request. If 
the head of the agency determines that additional information is needed 
from the complainant, he or she shall have 60 days from the date of 
receipt of the additional information to make his or her determination 
on the appeal.
    (k) The time limits cited in paragraphs (g) and (j) of this section 
may be extended with the permission of the Assistant Attorney General.
    (l) The agency may delegate its authority for conducting complaint 
investigations to other Federal agencies, except that the authority for 
making the final determination may not be delegated to another agency.


Secs. 4907.171-4907.999  [Reserved]

[FR Doc. 96-16398 Filed 6-28-96; 8:45 am]
BILLING CODE 7708-01-P