§ 4022.26 - Benefit guarantee for participants who are majority owners.

§ 4022.26 Phase-in of benefit Benefit guarantee for participants who are substantial majority owners.

Cross Reference

Link to an amendment published at 83 FR 49804, Oct. 3, 2018.

(a) Scope. This section shall apply applies to the guarantee of all benefits described in subpart A of this part (subject to the limitations in § 4022.21) with respect to participants who are substantial majority owners at the termination date or who were substantial majority owners at any time within the 5five-year period preceding that date.

(b) Phase-in formula when there have been no benefit increasesFormula. Benefits provided by a plan under which there has been no benefit increase, other than the adoption of the plan, shall be are guaranteed to the extent provided in the following formula: The monthly amount computed under § 4022.22 amount of the participant's benefit that PBGC would otherwise guarantee under section 4022 of ERISA and this part if the participant were not a majority owner, multiplied by a fraction not to exceed 1one, 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 from the later of the effective 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 date 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 § 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

10.

(c) PPA 2006 bankruptcy termination. In a PPA 2006 bankruptcy termination, “bankruptcy filing date” is substituted for “termination date” in 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.

[61 FR 34028, July 1, 1996, as amended at 62 FR 67729, Dec. 30, 1997[83 FR 49804, Oct. 3, 2018]