96-16398. Reorganization, Renumbering, and Reinvention of Regulations

[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]]

_______________________________________________________________________

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regulations that are outdated or otherwise in need of reform.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

[[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

Subpart D--Administrative Appeals

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:

VBadj=VBPAY x .94^{(RIR-BIR)+VBNON-PAY
x .94^{(RIR-BIR) x ((100+BIA)/(100+RIR))^{(ARA-50);

where--
(i) VBadj 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) VBPAY 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) VBNON-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 ^{(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:

UVBadj=(VBadj-Aadj) x (1+RIR/100)^{Y;

where--
(i) UVBadj is the amount of the plan's adjusted unfunded
vested benefits;
(ii) VBadj is the value of the adjusted vested benefits
calculated in accordance with paragraphs (c)(1) and (c)(2) of this
section;
(iii) Aadj 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

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

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.
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].
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.]
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.]
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.
The PBGC does not guarantee benefits for which you have
not met all age, service, or other requirements at the time the plan
ends.
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.
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.
Benefits other than pension benefits, such as health
insurance, life insurance, death benefits, vacation pay, or
severance pay, are not guaranteed.
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

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

Subpart C--Distress Termination Process

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

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

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

[[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 qX that an individual aged x will not survive to
attain age x+1.

Table 1.--Mortality Table for Healthy Male Participants
------------------------------------------------------------------------
Age x qx
------------------------------------------------------------------------
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 ^{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 qx
------------------------------------------------------------------------
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 qx
------------------------------------------------------------------------
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 i1, i2, . . ., and
referred to generally as it) 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 i1 are:
For valuation dates occurring in the month-- -----------------------------------------------
i1 for t= i1 for t= i1 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="">1), interest rate i1 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 n1 < y="">1 + n2); interest rate i2 shall apply from the valuation
date for a period of y-n1 years, interest rate i1 shall apply for the following n1 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 > n1 + n2), interest rate i3 shall apply from the valuation date for a period of y-n1-n2 years;
interest rate i2 shall apply for the following n2 years; interest rate i1 shall apply for the following n1
years; thereafter the immediate annuity rate shall apply.]
----------------------------------------------------------------------------------------------------------------
For plans with a Deferred annuities (percent)
valuation date Immediate ---------------------------------------
Rate set ---------------------- annuity
On or rate i1 i2 i3 n1 n2
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

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

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

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

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.

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

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

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

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

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

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

Subpart C--Restrictions on Disclosure

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

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]
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Document Information

Effective Date:: 7/1/1996
Published:: 07/01/1996
Department:: Pension Benefit Guaranty Corporation
Entry Type:: Rule
Action:: Final rule.
Document Number:: 96-16398
Dates:: July 1, 1996.
Pages:: 34002-34137 (136 pages)
RINs:: 1212-AA75: Reorganizing and Renumbering of Regulations
RIN Links:: https://www.federalregister.gov/regulations/1212-AA75/reorganizing-and-renumbering-of-regulations
PDF File:: 96-16398.pdf
CFR: (815): 29 CFR 4010.9); 29 CFR 4022.22); 11 CFR 4050.12); 11 CFR 4901.16); 11 CFR 301.6402-6); More ...