§ 4041A.25 - Periodic determinations of plan solvency.

§ 4041A.25 Periodic determinations of plan solvency.

Cross Reference

Link to an amendment published at 84 FR 18723, May 2, 2019.

(a) Annual insolvency determination. The A plan sponsor of a plan that has been amended to eliminate all benefits that are no benefits 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 and has assets insufficient to discharge when due all of the plan's obligations with respect to nonforfeitable benefits must make periodic determinations of plan solvency in accordance with this paragraph (a). No later than six months before the beginning of the applicable plan year described in this paragraph (a), or as soon as practicable after the plan sponsor determines the applicable plan year, and no later than six months before each plan year thereafter, the plan sponsor must 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 appliesfor such plan year. The applicable plan year is -

(1) For a plan that had no benefits subject to reduction when it terminated, the plan year the plan terminated; or

(2) For a plan that eliminated benefits subject to reduction by amendment after termination, the plan year in which the amendment that eliminated all (or all remaining) benefits subject to reduction is effective.

(b) Other determination of insolvency. Whether or not a prior determination of plan solvency insolvency 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 insolvent in the current plan year or is expected to be insolvent for in the current or next plan year shall must determine in writing whether the plan is or 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 must suspend benefits in accordance with § 4281.41.

(d) Insolvency notices. If the plan sponsor determines that the plan is , insolvent in the current plan year or is expected to be , insolvent for a in the next plan year , it shall issue must provide notices of insolvency or annual updates and notices of insolvency benefit level to the PBGC and to plan participants and beneficiaries in accordance with subpart D of part 4281 , subpart Dof this chapter.

[61 FR 34052, July 1, 1996, as amended at 80 FR 55745, Sept. 17, 2015; 84 FR 18723, May 2, 2019]