97-6500. Termination of Single Employer Plans  

  • [Federal Register Volume 62, Number 50 (Friday, March 14, 1997)]
    [Proposed Rules]
    [Pages 12508-12520]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 97-6500]
    
    
    
    [[Page 12507]]
    
    _______________________________________________________________________
    
    Part III
    
    
    
    
    
    Pension Benefit Guaranty Corporation
    
    
    
    
    
    _______________________________________________________________________
    
    
    
    29 CFR Parts 4001 et al.
    
    
    
    Termination of Single Employer Plans; Proposed Rule
    
    
    
    Assessment of Penalties for Failure to Provide Required Information; 
    Policy Statement
    
    Federal Register / Vol. 62, No. 50 / Friday, March 14, 1997 / 
    Proposed Rules
    
    [[Page 12508]]
    
    
    
    PENSION BENEFIT GUARANTY CORPORATION
    
    29 CFR Parts 4001, 4006, 4041, 4050
    
    RIN 1212-AA82
    
    
    Termination of Single Employer Plans
    
    AGENCY: Pension Benefit Guaranty Corporation.
    
    ACTION: Proposed rule.
    
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    SUMMARY: In order to extend deadlines and otherwise to simplify the 
    standard termination process, the Pension Benefit Guaranty Corporation 
    is proposing amendments to its termination regulation. The amendments 
    also require that plan administrators provide participants and 
    beneficiaries with information on state guaranty association coverage.
    
    DATES: Comments must be received on or before May 13, 1997.
    
    ADDRESSES: Comments may be mailed to the Office of the General Counsel, 
    Pension Benefit Guaranty Corporation, 1200 K Street NW., Washington, DC 
    20005-4026, or delivered to Suite 340 at the above address. Comments 
    also may be sent by Internet e-mail to reg.comments@pbgc.gov. Comments 
    will be available for public inspection at the PBGC's Communications 
    and Public Affairs Department, Suite 240.
    
    FOR FURTHER INFORMATION CONTACT: Harold J. Ashner, Assistant General 
    Counsel, or Catherine B. Klion, Attorney, Office of the General 
    Counsel, PBGC, 1200 K Street NW., Washington, DC 20005-4026, 202-326-
    4024 (202-326-4179 for TTY and TDD).
    
    SUPPLEMENTARY INFORMATION:
    
    Background
    
        A single-employer plan covered by the PBGC's insurance program may 
    be voluntarily terminated only in a standard or distress termination. 
    The rules governing voluntary terminations are in section 4041 of the 
    Employee Retirement Income Security Act of 1974 and part 4041 of the 
    PBGC's regulations.
        Once the decision is made to terminate a plan in a standard 
    termination, the plan administrator must meet specific statutory and 
    regulatory requirements. These requirements have caused difficulty for 
    some plan administrators and participants. For example, a plan 
    administrator who misses a deadline must restart the termination 
    process, resulting in additional cost for the plan administrator and 
    delayed distributions for participants.
        The PBGC proposes to amend its regulations in order to extend 
    certain deadlines and otherwise to simplify the termination process. 
    The proposal was developed after conducting focus groups with plan 
    practitioners and takes into account participant concerns and the 
    PBGC's experience.
        The amendment lessens the likelihood of errors, thereby reducing 
    burdens on plan administrators and expediting distributions to 
    participants. The amendment also implements a General Accounting Office 
    recommendation that plan administrators provide information on state 
    guaranty association coverage to participants, and makes a limited 
    number of conforming changes to the distress termination and premium 
    regulations, along with some conforming and simplifying changes to the 
    missing participants regulations.
        The major changes in the amendment are discussed below.
    Standard Termination Process
        Notice of intent to terminate: The amendment expands the notice to 
    include information on state guaranty association coverage. The 
    amendment also clarifies the language in the notice on freezing of 
    benefit accruals to better coordinate with section 204(h) of ERISA. The 
    PBGC's standard termination forms and instructions package will include 
    a model notice of intent to terminate, along with state guaranty 
    association coverage information.
        Notice of plan benefits: The amendment simplifies and clarifies the 
    information requirements.
        Standard termination notice: The amendment extends the deadline for 
    filing the standard termination notice with the PBGC from 120 days to 
    180 days after the proposed termination date. Upon review of the 
    standard termination notice, the PBGC may require the submission of 
    additional information relevant to the termination proceeding (e.g., 
    where there is a question whether the plan is sufficient for all 
    benefit liabilities). Such information will normally be due within 30 
    days after the date of the PBGC's request. The PBGC may shorten the 
    time period where it determines that the interests of the PBGC or 
    participants may be prejudiced by a delay in receipt of the 
    information.
        Close-out of plan: The amendment extends the close-out period for 
    plan administrators that timely apply for an IRS determination letter 
    from 60 to 120 days after receipt of a favorable letter, and eliminates 
    the requirement that plan administrators notify the PBGC of the need 
    for the extension.
        In the case of benefits that must be provided in annuity form, the 
    distribution must be made by purchasing irrevocable commitments from an 
    insurer. In order to have a valid standard termination under Title IV 
    of ERISA, the plan administrator must select the insurer in accordance 
    with the fiduciary standards of Title I of ERISA (see Department of 
    Labor Interpretive Bulletin 95-1, 60 FR 12328 (March 6, 1995)). The 
    PBGC intends, as part of its standard termination audit program, to 
    audit insurer selections for compliance with these standards and to 
    take appropriate corrective action.
        Post-distribution certification: The amendment provides that the 
    PBGC will not assess a penalty if the post-distribution certification, 
    which ERISA requires be filed within 30 days after the final 
    distribution, is filed within 90 days after the distribution deadline. 
    As discussed elsewhere in today's Federal Register, the PBGC is 
    implementing this penalty policy immediately.
        Extension of deadlines: The PBGC may in its discretion grant case-
    by-case extensions in narrow circumstances. The PBGC will grant an 
    extension where it finds compelling reasons why it is not 
    administratively feasible for the plan administrator (or other persons 
    acting on behalf of the plan administrator) to take the action until 
    the later date and the delay is brief. The PBGC will consider the 
    length of the delay and whether ordinary business care and prudence in 
    attempting to meet the deadline is exercised.
        PBGC discretion not to nullify: The amendment also incorporates 
    section 778(a) of the Retirement Protection Act of 1994, which gives 
    the PBGC discretion not to nullify defective standard terminations in 
    certain circumstances if it determines that nullification ``would be 
    inconsistent with the interests of participants and beneficiaries.''
    Distress Termination Process
        A plan that is sufficient for at least guaranteed benefits closes 
    out under procedures that parallel those used in a standard 
    termination. The amendment makes conforming changes to the distress 
    termination procedures, primarily with respect to the rules that apply 
    after the PBGC issues a distribution notice authorizing a plan to close 
    out in the private sector. The time limits governing the initial 
    processing of a distress termination are not changed. The PBGC may 
    address other distress termination issues in a separate rulemaking.
    
    [[Page 12509]]
    
    General Provisions
    
        Filing rules: The amendment changes the date of filing a notice 
    with the PBGC from the date of receipt to the date of mailing with the 
    United States Postal Service (as evidenced by a postmark) or deposit 
    with a commercial delivery service (provided the notice is received by 
    the PBGC within two regular business days). The amendment also allows 
    electronic filing with the PBGC and, in certain circumstances, 
    electronic issuance to third parties.
        Maintenance of plan records. The amendment clarifies that, while 
    the plan administrator and each contributing sponsor of a terminating 
    plan are subject to the requirement to maintain records used to compute 
    benefits, if any one of them complies with that requirement, the others 
    need not comply.
        Post-termination amendments: The amendment provides that, except to 
    the extent necessary to meet a qualification requirement under section 
    401 of the Code, a plan amendment adopted or effective after a plan's 
    termination date is disregarded with respect to a participant or 
    beneficiary to the extent the amendment (1) decreases the amount or 
    value of the participant's or beneficiary's benefits (e.g., by adopting 
    less favorable assumptions for calculating a lump sum distribution or 
    by eliminating an ancillary benefit such as a Social Security 
    supplement under section 204(b)(1)(G) of ERISA), or (2) eliminates or 
    restricts an optional form of benefit for the participant or 
    beneficiary.
        Missing Participants: The amendment provides that the diligent 
    search procedures for a missing participant whose designated benefit is 
    paid to the PBGC also apply for a missing participant for whom the plan 
    administrator purchases an annuity. The amendment requires plan 
    administrators who purchase an annuity for a missing participant to 
    provide the PBGC with the amount of the participant's normal retirement 
    benefit (to the extent that information is known). This information 
    will facilitate the PBGC's ability to respond to participant inquiries 
    and to target its search efforts.
        The amendment eliminates detailed rules that apply in the unusual 
    circumstance of an individual located or discovered to be missing late 
    in the distribution process. The PBGC can more effectively deal with 
    such situations by granting discretionary extensions as appropriate on 
    a case-by-case basis in order to ensure that adequate time is 
    available.
        The amendment also provides penalty relief for the late filing of 
    certain information about missing participants comparable to that 
    provided for late post-distribution certifications.
    
    Effective Date
    
        While the changes will generally apply to new terminations 
    initiated on or after the effective date of the final rule, the PBGC 
    intends to allow plan administrators to apply certain portions of the 
    final rule to terminations in process.
    
    Paperwork Reduction Act
    
        The information requirements contained in this proposed rule have 
    been submitted to the Office of Management and Budget for review under 
    the Paperwork Reduction Act of 1995, with a request for a three-year 
    approval. As part of this request, the PBGC has made clarifying and 
    other changes (related to the proposed rule) to its implementing forms 
    and instructions under its regulations on termination of single-
    employer plans and missing participants. Copies of the PBGC's request 
    may be obtained free of charge by writing to the PBGC Communications 
    and Public Affairs Department, suite 240, 1200 K Street, NW., 
    Washington, DC 20005, or by visiting that office between the hours of 9 
    a.m. and 4 p.m.
        The PBGC needs the information required to be submitted to ensure 
    that a voluntary termination is completed in accordance with statutory 
    and regulatory requirements and to facilitate the payment of benefits 
    to missing participants. Participants need the information required to 
    be disclosed so that they will be informed about the status of the 
    proposed termination of their plan and about their benefits upon 
    termination.
        Much of the work associated with terminating a plan is performed 
    for purposes other than meeting the collection of information 
    requirements in the PBGC's termination and missing participants 
    regulations. The PBGC estimates that 3,640 plan administrators will be 
    subject to these requirements each year, and that the total annual 
    burden of complying with these requirements is 4,983 hours and 
    $3,139,560.
        Comments on the paperwork provisions under this proposed rule 
    should be mailed to the Office of Information and Regulatory Affairs, 
    Office of Management and Budget, Attention: Desk Officer for the 
    Pension Benefit Guaranty Corporation, Washington, DC 20503. Comments 
    may address (among other things)--
         Whether the proposed collection of information is needed 
    for the proper performance of the PBGC's functions and will have 
    practical utility;
         The accuracy of the PBGC's estimate of the burden of the 
    proposed collection of information, including the validity of the 
    methodology and assumptions used;
         Enhancement of the quality, utility, and clarity of the 
    information to be collected; and
         Minimizing the burden of the collection of information on 
    those who are to respond, including through the use of appropriate 
    automated, electronic, mechanical, or other technological collection 
    techniques or other forms of information technology, e.g., permitting 
    electronic submission of responses.
        The PBGC already allows electronic submission of participant and 
    beneficiary data in a distress termination and has been actively 
    considering whether to allow other information to be provided 
    electronically. In certain circumstances, this proposed rule allows 
    electronic filing with the PBGC and electronic issuance of notices to 
    third parties. The PBGC welcomes comments on electronic filing and 
    issuance requirements, particularly on how to ensure that notices 
    issued electronically to third parties are actually received by the 
    persons entitled to receive them.
        The PBGC also invites comments on whether, given the PBGC's limited 
    role in standard terminations, the burden of the standard termination 
    filing process could be further reduced.
    
    Compliance With Rulemaking Guidelines
    
        The PBGC has determined that this action is not a ``significant 
    regulatory action'' under the criteria set forth in Executive Order 
    12866.
        The PBGC certifies under section 605(b) of the Regulatory 
    Flexibility Act that this rule will not have a significant economic 
    impact on a substantial number of small entities. While this rule 
    simplifies procedures and extends deadlines, the actions required to 
    terminate a plan are essentially unchanged. Accordingly, sections 603 
    and 604 of the Regulatory Flexibility Act do not apply.
    
    List of Subjects
    
    29 CFR Part 4001
    
        Pension insurance, Pensions, Reporting and recordkeeping 
    requirements.
    
    [[Page 12510]]
    
    29 CFR Part 4006
    
        Penalties, Pension insurance, Pensions, Reporting and recordkeeping 
    requirements.
    
    29 CFR Part 4041
    
        Pension insurance, Pensions, Reporting and recordkeeping 
    requirements.
    
    29 CFR Part 4050
    
        Pensions, Reporting and recordkeeping requirements.
        For the reasons set forth above, the PBGC proposes to amend parts 
    4001, 4006, 4041, and 4050 of 29 CFR chapter LX as follows.
    
    PART 4041--TERMINATION OF SINGLE-EMPLOYER PLANS
    
        1. The authority citation for Part 4041 continues to read as 
    follows:
    
        Authority: 29 U.S.C. 1302(b)(3), 1341, 1344, 1350.
    
    Secs. 4041.46 and 4041.48  [Removed]
    
        2. Section 4041.46 is removed.
    
    
    Sec. 4041.47 and Secs. 4041.41 Through 4041.45  [Redesignated as 
    Secs. 4041.49 and 4041.43 through 4041.47]
    
        3. Sec. 4041.47 is redesignated as Sec. 4041.49; and Secs. 4041.41 
    through 4041.45 are redesignated as Secs. 4041.43 through 4041.47.
    
    
    Sec. 4041.3  [Amended and Redesignated as Sec. 4041.41]
    
        4. In Sec. 4041.3, the section heading is amended by removing the 
    words ``a standard termination or''; paragraphs (a) and (b) are 
    removed; paragraphs (c) through (g) are redesignated as paragraphs (a) 
    through (e); and as so amended, Sec. 4041.3 is redesignated as 
    Sec. 4041.41. (Redesignated Sec. 4041.41 is the first section under 
    Subpart C.)
    
    
    Sec. 4041.4  [Amended and Redesignated]
    
        5. In 4041.4, paragraphs (b), (d) and (e) are removed; paragraphs 
    (c) and (f) through (h) are redesignated as paragraphs (b) through (e); 
    and as so amended, Sec. 4041.4 is redesignated as Sec. 4041.42.
    
    Subparts A and B [Amended]
    
        6. Subparts A and B of Part 4041 are revised to read as follows:
    
    PART 4041--TERMINATION OF SINGLE-EMPLOYER PLANS
    
    Subpart A--General Provisions
    
    Sec.
    4041.1  Purpose and scope.
    4041.2  Definitions.
    4041.3  Computation of time; filing and issuance rules.
    4041.4  Disaster relief.
    4041.5  Maintenance of plan records.
    4041.6  Effect of failure to provide required information.
    4041.7  Collective bargaining agreement challenges.
    4041.8  Post-termination amendments.
    
    Subpart B--Standard Termination Process
    
    4041.21  Requirements for a standard termination.
    4041.22  Administration of plan during termination process.
    4041.23  Notice of intent to terminate.
    4041.24  Notices of plan benefits.
    4041.25  Standard termination notice.
    4041.26  PBGC review of standard termination notice.
    4041.27  Notice of annuity information.
    4041.28  Closeout of plan.
    4041.29  Post-distribution certification.
    4041.30  Requests for deadline extensions.
    4041.31  Notice of noncompliance.
    
    Subpart A--General Provisions.
    
    
    Sec. 4041.1  Purpose and scope.
    
        This part sets forth the rules and procedures for terminating a 
    single-employer plan in a standard or distress termination under 
    section 4041 of ERISA, the exclusive means of voluntarily terminating a 
    plan.
    
    
    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, 
    EIN, employer, ERISA, guaranteed benefit, insurer, irrevocable 
    commitment, IRS, mandatory employee contributions, normal retirement 
    age, notice of intent to terminate, PBGC, person, plan administrator, 
    plan year, PN, 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 Sec. 4041.45.
        Distribution notice means the notice issued to the plan 
    administrator by the PBGC pursuant to Sec. 4041.47(c) upon the PBGC's 
    determination that the plan has sufficient assets to pay at least 
    guaranteed benefits.
        Majority owner means an individual who owns, directly or 
    indirectly, 50 percent or more (taking into account the constructive 
    ownership rules of section 414 (b) and (c) of the Code) 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.
        Notice of noncompliance means a notice issued to a plan 
    administrator by the PBGC pursuant to Sec. 4041.31 advising the plan 
    administrator that the requirements for a standard 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 Sec. 4041.24.
        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 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 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 or distress termination notice.
        Residual assets means the plan assets remaining after all benefit 
    liabilities and other liabilities (e.g., PBGC premiums) of the plan 
    have been satisfied.
        Standard termination notice means the notice filed with the PBGC 
    pursuant to Sec. 4041.25.
        State guaranty association means an association of insurers created 
    by a State, the District of Columbia, or the Commonwealth of Puerto 
    Rico to pay benefits and to continue coverage, within statutory limits, 
    under life and health insurance policies and annuity contracts when an 
    insurer fails.
    
    [[Page 12511]]
    
    Sec. 4041.3  Computation of time; filing and issuance rules.
    
        (a) Computation of time. In computing any period of time under this 
    part, the day of the event from which the period begins is not counted. 
    The last day of the period is included. If the last day falls on a 
    Saturday, Sunday, or Federal holiday, the period runs until the end of 
    the next regular business day. A proposed termination date may be any 
    day, including a Saturday, Sunday, or Federal holiday.
        (b) Filing with the PBGC.
        (1) Method of filing. Any document to be filed under this part 
    shall be delivered to the PBGC in accordance with the applicable PBGC 
    termination forms and instructions package.
        (2) Date of filing. Any information required or permitted to be 
    filed with the PBGC shall be deemed filed--
        (i) On the date of the United States postmark, if the postmark was 
    made by the United States Postal Service and the document was mailed 
    postage prepaid to the PBGC;
        (ii) On the date it is deposited for delivery to the PBGC with a 
    commercial delivery service, provided it is received by the PBGC within 
    two regular business days; or
        (iii) Except as provided in paragraphs (b)(2)(i) or (b)(2)(ii), 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.
        (c) Issuance to other parties. The following rules apply to 
    affected parties (other than the PBGC). For purposes of this paragraph 
    (c), a person entitled to notice under the spin-off/termination 
    transaction rules of Secs. 4041.23(c) or 4041.24(f) is treated as an 
    affected party.
        (1) Permissible methods of issuance. The plan administrator shall 
    issue any notice to an affected party individually--
        (i) By hand delivery;
        (ii) By first-class mail or commercial delivery service to the 
    affected party's last known address; or
        (iii) By electronic means reasonably calculated to ensure actual 
    receipt by the affected party.
        (2) Date of issuance. Any notice is deemed issued to an affected 
    party on the date on which it is--
        (i) Handed to the affected party;
        (ii) Deposited with the mail or a commercial delivery service (as 
    evidenced by a postmark or written receipt); or
        (iii) Transmitted electronically to the affected party.
        (3) Omission of affected parties. The failure to issue any notice 
    to an affected party (other than any employee organization) within the 
    specified time period will not cause the notice to be untimely if--
        (i) After-discovered affected parties. The plan administrator could 
    not reasonably have been expected to know of the affected party, and 
    issues the notice promptly after discovering the affected party; or
        (ii) De minimis administrative errors. The failure was due to 
    administrative error involving only a de minimis percentage of affected 
    parties, and the plan administrator issues the notice to each such 
    affected party promptly after discovering the error.
        (4) Form of notices to affected parties. All notices to affected 
    parties shall be readable and written in a manner calculated to be 
    understood by the average plan participant.
        (5) Foreign languages. The plan administrator of a plan that (as of 
    the proposed termination date) covers the numbers or percentages in 
    Sec. 2520.104b-10(e) of this title of participants literate only in the 
    same non-English language shall, for any notice to affected parties--
        (i) Include a prominent legend in that common non-English language 
    advising them how to obtain assistance in understanding the notice; or
        (ii) Provide the notice in that common non-English language to 
    those affected parties literate only in that language.
    
    
    Sec. 4041.4  Disaster relief.
    
        When the President of the United States declares that, under the 
    Disaster Relief Act (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 any due date under this part.
    
    
    Sec. 4041.5  Maintenance of plan records.
    
        (a) Retention requirement.
        (1) Persons subject to requirement. Each contributing sponsor and 
    the plan administrator of a plan terminating in a standard termination, 
    or in a distress termination that closes out in accordance with 
    Sec. 4041.50, shall maintain 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. If a contributing 
    sponsor or the plan administrator complies with part or all of the 
    requirements of this paragraph (a), the other(s) need not comply with 
    respect to such information.
        (2) Retention period. The records described in paragraph (a)(1) 
    shall be preserved for six years after the date when the post-
    distribution certification under this part is filed with the PBGC.
        (b) Availability of records. The contributing sponsor or plan 
    administrator shall make records related to the termination available 
    to the PBGC upon request for inspection and photocopying, and shall 
    submit such records to the PBGC within 30 days after the date of a 
    written request by the PBGC or by a later date specified therein.
    
    
    Sec. 4041.6  Effect of failure to provide required information.
    
        If a plan administrator fails to provide any information required 
    under this part within the specified time limit, 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. The PBGC may also pursue any other 
    equitable or legal remedies available to it under the law, including, 
    if appropriate, the issuance of a notice of noncompliance under 
    Sec. 4041.31.
    
    
    Sec. 4041.7  Challenges to plan termination under collective bargaining 
    agreement.
    
        (a) Suspension upon formal challenge to termination.
        (1) Notice of formal challenge.
        (i) If the PBGC is advised, before its review period under 
    Sec. 4041.26(a) ends, or before issuance of a notice of inability to 
    determine sufficiency or a distribution notice under Sec. 4041.47 (b) 
    or (c), that a formal challenge to the termination has been initiated 
    as described in paragraph (c), the PBGC shall suspend the termination 
    proceeding and 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 time specified therein, the PBGC 
    may suspend the termination proceeding and shall so advise the plan 
    administrator in writing.
        (2) Standard terminations. During any period of suspension 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. 4041.22.
        (3) Distress terminations. During any period of suspension in a 
    distress termination--
        (i) The issuance by the PBGC of any notice of inability to 
    determine sufficiency or distribution notice shall be stayed or, if any 
    such notice was previously issued, its effectiveness shall be stayed;
    
    [[Page 12512]]
    
        (ii) The plan administrator shall comply with the prohibitions in 
    Sec. 4041.42; and
        (iii) The plan administrator shall file a distress termination 
    notice with the PBGC pursuant to Sec. 4041.45.
        (b) Existing collective bargaining agreement. For purposes of this 
    section, an existing collective bargaining agreement means a collective 
    bargaining agreement that has not been made inoperative by a judicial 
    ruling and, 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. 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.
        (c) Formal challenge to termination. A formal challenge to a plan 
    termination asserting that the termination would violate the terms and 
    conditions of an existing collective bargaining agreement is initiated 
    when--
        (1) Any procedure specified in the collective bargaining agreement 
    for resolving disputes under the agreement commences; or
        (2) Any action before an arbitrator, administrative agency or 
    board, or court under applicable labor-management relations law 
    commences.
        (d) Resolution of challenge. Immediately upon the final resolution 
    of the challenge, the plan administrator shall notify the PBGC in 
    writing of the outcome of the challenge, provide the PBGC with a copy 
    of any award or order, and, if the validity of the proposed termination 
    has been upheld, advise the PBGC whether the proposed termination is to 
    proceed. The final resolution ends the suspension period under 
    paragraph (a) of this section.
        (1) Challenge sustained. If the final resolution is 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. 4041.42(d) shall apply as of the date of the 
    dismissal by the PBGC.
        (2) Termination sustained. If the final resolution is that the 
    proposed termination does not violate an existing collective bargaining 
    agreement and the plan administrator has notified the PBGC that the 
    termination is to proceed, the PBGC shall reactivate the termination 
    proceeding by sending a written notice thereof to the plan 
    administrator, and--
        (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. 4041.45(c).
        (e) Final resolution of challenge. 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.
        (f) 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. 4041.8  Post-termination amendments.
    
        Except to the extent necessary to meet a qualification requirement 
    under section 401 of the Code, a plan amendment that is adopted or 
    effective after a plan's termination date shall be disregarded with 
    respect to a participant or beneficiary to the extent the amendment--
        (a) Decreases the amount or value of the participant's or 
    beneficiary's benefits (e.g., by adopting less favorable assumptions 
    for calculating a lump sum distribution or by eliminating an ancillary 
    benefit such as a Social Security supplement under section 204(b)(1)(G) 
    of ERISA); or
        (b) Eliminates or restricts an optional form of benefit for the 
    participant or beneficiary.
    
    Subpart B--Standard Termination Process
    
    
    Sec. 4041.21  Requirements for a standard termination.
    
        (a) Notice and distribution requirements. A standard termination is 
    valid if the plan administrator--
        (1) Issues a notice of intent to terminate to all affected parties 
    (other than the PBGC) in accordance with Sec. 4041.23;
        (2) Issues notices of plan benefits to all affected parties 
    entitled to plan benefits in accordance with Sec. 4041.24;
        (3) Files a standard termination notice with the PBGC in accordance 
    with Sec. 4041.25;
        (4) Distributes the plan's assets in satisfaction of all of the 
    plan's benefit liabilities in accordance with Sec. 4041.28(a); and
        (5) In the case of a spin-off/termination transaction (as defined 
    in Sec. 4041.23(c)), provides the notices required by Sec. 4041.23(c), 
    Sec. 4041.24(f), and Sec. 4041.27(a)(2).
        (b) Plan sufficiency.
        (1) Commitment to make plan sufficient. A contributing sponsor of a 
    plan or any other member of the plan's controlled group may make a 
    commitment to contribute any additional sums necessary to enable the 
    plan to satisfy benefit liabilities in accordance with Sec. 4041.28(a). 
    A commitment shall be valid only if--
        (i) It is made to the plan;
        (ii) It is in writing, signed by the contributing sponsor or 
    controlled group member(s); and
        (iii) In any case in which the person making the commitment is the 
    subject of a bankruptcy liquidation or reorganization proceeding, as 
    described in Sec. 4041.41(c) (1) or (c)(2), the commitment is approved 
    by the court before which the liquidation or reorganization proceeding 
    is pending or a person not in bankruptcy unconditionally guarantees to 
    meet the commitment at or before the time distribution of assets is 
    required.
        (2) Alternative treatment of majority owner's benefit. A majority 
    owner may elect to forego receipt of his or her benefit to the extent 
    necessary to enable the plan to satisfy all other benefit liabilities 
    in accordance with Sec. 4041.28(a). Any such alternative treatment of 
    the majority owner's benefit is valid only if--
        (i) The election is in writing;
        (ii) In any case in which section 205(g) of ERISA requires spousal 
    consent to the majority owner's receipt of his or her benefit in a form 
    other than a qualified joint and survivor annuity, the spouse of the 
    majority owner
    
    [[Page 12513]]
    
    consents in accordance with such section; and
        (iii) The majority owner's election is not inconsistent with a 
    qualified domestic relations order (as defined in section 206(d)(3) of 
    ERISA).
    
    
    Sec. 4041.22  Administration of plan during pendency of termination 
    process.
    
        (a) In general. A plan administrator may distribute plan assets in 
    connection with the termination of the plan only in accordance with the 
    provisions of this part. From the first day the plan administrator 
    issues a notice of intent to terminate to the last day of the PBGC's 
    review period under Sec. 4041.26(a), the plan administrator shall 
    continue to carry out the normal operations of the plan. During that 
    time period, except as provided in paragraph (b), the plan 
    administrator shall not--
        (1) Purchase irrevocable commitments to provide any plan benefits; 
    or
        (2) Pay benefits attributable to employer contributions, other than 
    death benefits, in any form other than an annuity.
        (b) Exception. The plan administrator may pay benefits attributable 
    to employer contributions either through the purchase of irrevocable 
    commitments 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.
    
    
    Sec. 4041.23  Notice of intent to terminate.
    
        (a) Notice requirement.
        (1) In general. At least 60 days and no more than 90 days before 
    the proposed termination date, the plan administrator shall issue a 
    notice of intent to terminate to each person (other than the PBGC) that 
    is, as of the proposed termination date, an affected party. (The PBGC's 
    standard termination forms and instructions package includes a model 
    notice of intent to terminate.)
        (2) Early issuance of NOIT. The PBGC may consider a notice of 
    intent to terminate to be timely under paragraph (a)(1) if the notice 
    was early by a de minimis number of days and the PBGC finds that the 
    early issuance was the result of administrative error.
        (b) Contents of notice. The notice of intent to terminate shall 
    include--
        (1) Identifying information. The name and PN of the plan, the name 
    and EIN of each contributing sponsor, and the name, address, and 
    telephone number of the person who may be contacted by an affected 
    party with questions concerning the plan's termination;
        (2) Intent to terminate plan. A statement that the plan 
    administrator intends to terminate the plan in a standard termination 
    as of a specified proposed termination date and will notify the 
    affected party if the proposed termination date is changed to a later 
    date or if the termination does not occur;
        (3) Sufficiency requirement. A statement that, in order to 
    terminate in a standard termination, plan assets must be sufficient to 
    provide all benefit liabilities under the plan;
        (4) Cessation of accruals. A statement (as applicable) informing 
    affected parties that--
        (i) Benefit accruals will cease as of the termination date, but 
    will continue if the plan does not terminate;
        (ii) A plan amendment has been adopted under which benefit accruals 
    will cease, in accordance with section 204(h) of ERISA, as of the 
    proposed termination date or a specified date before the proposed 
    termination date, whether or not the plan is terminated; or
        (iii) Benefit accruals ceased, in accordance with section 204(h) of 
    ERISA, as of a specified date before the notice of intent to terminate 
    was issued;
        (5) Annuity information. If required under Sec. 4041.27, the 
    annuity information described therein;
        (6) Benefit information. A statement that each affected party 
    entitled to plan benefits will receive a written notification regarding 
    his or her benefits;
        (7) Continuation of monthly benefits. For those persons who are (as 
    of the proposed termination date) in pay status, a statement that their 
    monthly (or other periodic) benefit amounts will not be affected by the 
    plan's termination; and
        (8) Extinguishment of guarantee. A statement that after plan assets 
    have been distributed in full satisfaction of all pension benefits 
    under the plan with respect to a participant or a beneficiary of a 
    deceased participant, either by the purchase of irrevocable commitments 
    (annuity contracts) or by an alternative form of distribution provided 
    for under the plan, the PBGC no longer guarantees that participant's or 
    beneficiary's plan benefits.
        (c) Spin-off/termination transactions. In the case of a transaction 
    in which a single defined benefit plan is split into two or more plans 
    and there is a reversion of residual assets to an employer upon the 
    termination of one or more but fewer than all of the resulting plans (a 
    ``spin-off/termination transaction''), the plan administrator shall, 
    within the time period specified in paragraph (a), provide all 
    participants, beneficiaries of deceased participants, and alternate 
    payees in the original plan who are (as of the proposed termination 
    date) covered by an ongoing plan with a notice describing the 
    transaction.
    
    
    Sec. 4041.24  Notices of plan benefits.
    
        (a) Notice requirement. The plan administrator shall, no later than 
    the time the plan administrator files the standard termination notice 
    with the PBGC, issue a notice of plan benefits to each person (other 
    than the PBGC and any employee organization) who is, as of the proposed 
    termination date, an affected party.
        (b) Contents of notice. The plan administrator shall include in 
    each notice of plan benefits--
        (1) The name and PN of the plan, the name and EIN of each 
    contributing sponsor, and the name, address, and telephone number of an 
    individual who may be contacted to answer questions concerning a 
    benefit;
        (2) The proposed termination date given in the notice of intent to 
    terminate and any extended proposed termination date under 
    Sec. 4041.25(b);
        (3) If the amount of the plan benefits set forth in the 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;
        (4) Except in the case of an affected party in pay status for more 
    than one year as of the proposed termination date--
        (i) The personal data used to calculate the affected party's plan 
    benefits; and
        (ii) A statement requesting that the affected party review the 
    personal data and notify the plan administrator of any incorrect data; 
    and
        (5) The information in paragraph (c), (d), or (e), as applicable.
        (c) Benefits of persons in pay status. For an affected party in pay 
    status as of the proposed termination date, the plan administrator 
    shall include in the notice of plan benefits--
        (1) The amount and form of the participant's or beneficiary'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 participant's death and the name of the 
    beneficiary; and
        (3) The amount and date of any increase or decrease in the benefit 
    scheduled to occur (or that has already occurred) after the proposed 
    termination date and an explanation of the increase or decrease, 
    including, where applicable, a reference to the pertinent plan 
    provision.
    
    [[Page 12514]]
    
        (d) Benefits of persons with valid elections or de minimis 
    benefits. For an affected party who is not in pay status as of the 
    proposed termination date, but who has, as of that date, validly 
    elected a form and starting date, or with respect to whom the plan 
    administrator has determined that a nonconsensual lump sum distribution 
    will be made, the plan administrator shall include in the notice of 
    plan benefits--
        (1) The amount and form of the person's plan benefits payable as of 
    the projected benefit starting date, and what that date is;
        (2) The information in paragraphs (c)(2) and (c)(3);
        (3) If the plan benefits will be paid in any form other than a lump 
    sum and the age at which, or form in which, the plan benefits will be 
    paid differs from the normal retirement benefit--
        (i) The age or form stated in the plan; and
        (ii) The age or form adjustment factors; and
        (4) If the plan benefits will be paid in a lump sum--
        (i) An explanation of when a lump sum may be paid without the 
    consent of the participant or the participant's spouse;
        (ii) The interest rate used to convert to the lump sum benefit and 
    a reference to the pertinent plan provisions;
        (iii) An explanation of how the interest rate is used to calculate 
    the lump sum;
        (iv) A statement that the use of a higher interest rate results in 
    a smaller lump sum amount; and
        (v) A statement that the applicable interest rate may change before 
    the distribution date.
        (e) Benefits of all other persons not in pay status. For any other 
    affected party not described in paragraph (c) or (d), the plan 
    administrator shall include in the notice of plan benefits--
        (1) The amount and form of the person's plan benefits payable at 
    normal retirement age in any form permitted under the plan;
        (2) Any alternative benefit forms, including those payable to a 
    beneficiary upon the person's death either before or after benefits 
    commence;
        (3) If the person is or may become entitled to a benefit that would 
    be payable before normal retirement age, the amount and form of benefit 
    that would be payable at the earliest benefit commencement date (or, if 
    more than one such form is payable at the earliest benefit commencement 
    date, any one of those forms) and whether the benefit commencing on 
    such date would be subject to future reduction; and
        (4) If the plan benefits may be paid in a lump sum, the information 
    in paragraph (d)(4).
        (f) Spin-off/termination transactions. In the case of a spin-off/
    termination transaction (as defined in Sec. 4041.23(c)), the plan 
    administrator shall, no later than the time the plan administrator 
    files the standard termination notice for any terminating plan, provide 
    all participants, beneficiaries of deceased participants, and alternate 
    payees in the original plan who are (as of the proposed termination 
    date) covered by an ongoing plan with a notice of plan benefits 
    containing the information in paragraphs (b) through (e).
    
    
    Sec. 4041.25  Standard termination notice.
    
        (a) Notice requirement. The plan administrator shall file with the 
    PBGC a standard termination notice, consisting of the PBGC Form 500, 
    completed in accordance with the instructions thereto, on or before the 
    180th day after the proposed termination date.
        (b) Change of proposed termination date. The plan administrator 
    may, in the standard termination notice, select a proposed termination 
    date that is later than the date specified in the notice of intent to 
    terminate, provided it is not later than 90 days after the earliest 
    date on which a notice of intent to terminate was issued to any 
    affected party.
        (c) Request for IRS determination letter. To qualify for the 
    distribution deadline in Sec. 4041.28(a)(1)(ii), the plan administrator 
    shall submit to the IRS a valid request for a determination of the 
    plan's qualification status upon termination (``determination letter'') 
    by the time the standard termination notice is filed.
    
    
    Sec. 4041.26  PBGC review of standard termination notice.
    
        (a) Review period.
        (1) In general. The PBGC shall notify the plan administrator in 
    writing of the date on which it received a complete standard 
    termination notice at the address provided in the PBGC's standard 
    termination forms and instructions package. If the PBGC does not issue 
    a notice of noncompliance during its 60-day review period following 
    such date, the plan administrator shall proceed to close out the plan 
    in accordance with Sec. 4041.28.
        (2) Extension of review period. The PBGC and the plan administrator 
    may, before the expiration of the PBGC review period in paragraph 
    (a)(1), agree in writing to extend that period.
        (b) If standard termination notice is incomplete.
        (1) For purposes of timely filing. If the standard termination 
    notice is incomplete, the PBGC may, based on the nature and extent of 
    the omission, provide the plan administrator an opportunity to complete 
    the notice. In such a case, the standard termination notice shall be 
    deemed to have been complete as of the date when originally filed for 
    purposes of Sec. 4041.25(a), provided the plan administrator provides 
    the missing information by the later of--
        (i) The 180th day after the proposed termination date; or
        (ii) The 30th day after the date of the PBGC notice that the filing 
    was incomplete.
        (2) For purposes of PBGC review period. If the standard termination 
    notice is completed under paragraph (b)(1), the PBGC shall determine 
    whether the notice shall be deemed to have been complete as of the date 
    when originally filed for purposes of determining when the PBGC's 
    review period begins under Sec. 4041.26(a)(1).
        (c) Additional information.
        (1) Deadline for providing additional information. The PBGC may in 
    any case require the submission of additional information relevant to 
    the termination proceeding. Any such additional information becomes 
    part of the standard termination notice and shall be submitted within 
    30 days after the date of a written request by the PBGC, or within a 
    different time period specified therein. The PBGC may in its discretion 
    shorten the time period where it determines that the interests of the 
    PBGC or participants may be prejudiced by a delay in receipt of the 
    information.
        (2) Effect on termination proceeding. A request for additional 
    information shall suspend the running of the PBGC's 60-day review 
    period. The review period shall begin running again on the day the 
    required information is received and continue for the greater of--
        (i) The number of days remaining in the review period; or
        (ii) Five regular business days.
    
    
    Sec. 4041.27  Notice of annuity information.
    
        (a) Notice requirement.
        (1) In general. The plan administrator shall provide notices in 
    accordance with this section to each affected party other than--
        (i) An affected party whose plan benefits will be distributed in 
    the form of a nonconsensual lump sum; and
        (ii) The PBGC.
        (2) Spin-off/termination transactions. The plan administrator shall 
    provide the information in paragraph (d) to a person entitled to notice 
    under Secs. 4041.23(c) or 4041.24(f), at the same time and in the same 
    manner as required for an affected party other than the PBGC.
    
    [[Page 12515]]
    
        (b) Content of notice. The plan administrator shall include, as 
    part of the notice of intent to terminate--
        (1) Identity of insurers. The name and address of the insurer or 
    insurers from whom (if known), or (if not) from among whom, the plan 
    administrator intends to purchase irrevocable commitments (annuity 
    contracts);
        (2) Change in identity of insurers. A statement that if the plan 
    administrator later decides to select a different insurer, affected 
    parties will receive a supplemental notice no later than 45 days before 
    the distribution date; and
        (3) State guaranty association coverage information. The 
    information on state guaranty association coverage of annuities 
    described in paragraphs (a)(3) (i) and (ii) of this section:
        (i) The following notice:
    
        Under your pension plan, your benefits may be paid in the form 
    of an annuity purchased from a licensed insurance company. If we 
    purchase an annuity for you to provide all your pension benefits 
    under the plan, the insurance company will be responsible for paying 
    your benefits.
        All states, the District of Columbia, and the Commonwealth of 
    Puerto Rico have established ``guaranty associations'' to protect 
    policyholders in the event of an insurance company's financial 
    failure. All insurance companies licensed to sell insurance in a 
    state are required to be members of that state's guaranty 
    association. If a member insurance company fails, the association 
    collects money from the other member insurance companies to continue 
    coverage up to statutory limits, as specified by law, for its 
    policyholders.
        State guaranty association coverage of your annuity means that 
    the guaranty association may pay part or all of your annuity if the 
    insurance company responsible for the annuity cannot pay. How much 
    of your annuity the fund would pay, if any, may depend on factors 
    such as the amount of your annuity, the state in which you reside at 
    the time the insurance company fails to pay, and the state in which 
    the insurance company is located. Since state laws vary, you will 
    need to see what the law in your state says at the relevant time.
        State guaranty association coverage is limited by statute in 
    total dollar amount. In most states, the maximum amount of annuity 
    coverage is stated in terms of the present value of the annuity. The 
    maximum amount and how it is stated varies from state to state and 
    may change over time.
        This notice is intended to help you understand the general 
    nature of state guaranty association protection of the annuity you 
    may receive. It is only a summary. Listings of state guaranty 
    associations and their addresses and telephone numbers, and of their 
    general coverage limits are attached.
    
        (ii) Listings of the addresses and telephone numbers of the state 
    guaranty association offices in all 50 states, the District of 
    Columbia, and the Commonwealth of Puerto Rico, and of the dollar 
    coverage limitations applicable to each state, along with the date as 
    of which the listings were prepared. The plan administrator shall use 
    listings that are at least as current as those included as sample 
    listings in the standard termination forms and instructions package 
    applicable to the plan termination proceeding.
        (c) Where insurer(s) not known.
        (1) Extension of deadline for notice. If the identity-of-insurer 
    information in paragraph (b)(1) is not known at the time the plan 
    administrator is required to provide it to an affected party as part of 
    a notice of intent to terminate, the plan administrator shall instead 
    provide it in a supplemental notice under paragraph (d).
        (2) Alternative NOIT information. A plan administrator that 
    qualifies for the extension in paragraph (c)(1) with respect to a 
    notice of intent to terminate shall include therein (in lieu of the 
    information in paragraph (b)) a statement that--
        (i) Irrevocable commitments (annuity contracts) may be purchased 
    from an insurer to provide some or all of the benefits under the plan;
        (ii) The insurer or insurers have not yet been identified; and
        (iii) Affected parties 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 (if known), or (if not) 
    from among whom, the plan administrator intends to purchase irrevocable 
    commitments (annuity contracts).
        (d) Supplemental notice. The plan administrator shall provide a 
    supplemental notice to an affected party in accordance with this 
    paragraph (d) if the plan administrator did not previously notify the 
    affected party of the identity of insurer(s) or, after having 
    previously notified the affected party of the identity of insurer(s), 
    decides to select a different insurer. A failure to provide a required 
    supplemental notice to an affected party shall be deemed to be a 
    failure to comply with the notice of intent to terminate requirements.
        (1) Deadline for supplemental notice. The deadline for issuing the 
    supplemental notice is 45 days before the affected party's distribution 
    date (or, in the case of an employee organization, 45 days before the 
    earliest distribution date for any affected party that it represents).
        (2) Content of supplemental notice. The supplemental notice shall 
    include--
        (i) The identity-of-insurer information in paragraph (b)(1);
        (ii) The information regarding change of identity of insurer(s) in 
    paragraph (b)(2); and
        (iii) Unless the state guaranty association coverage information in 
    paragraph (b)(3) was previously provided to the affected party, such 
    information and the extinguishment-of-guarantee information in 
    Sec. 4041.23(b)(8).
    
    
    Sec. 4041.28  Closeout of plan.
    
        (a) Distribution deadline.
        (1) In general. Unless a notice of noncompliance is issued under 
    Sec. 4041.31(a), the plan administrator shall complete the distribution 
    of plan assets in accordance with paragraph (c) by the later of--
        (i) 180 days after the expiration of the PBGC's 60-day (or 
    extended) review period under Sec. 4041.26(a); or
        (ii) If the plan administrator meets the requirements of 
    Sec. 4041.25(c), 120 days after receipt of a favorable determination 
    from the IRS.
        (2) Revocation of notice of noncompliance. If the PBGC revokes a 
    notice of noncompliance issued under Sec. 4041.31(a), the distribution 
    deadline is extended until the 180th day after the date of the 
    revocation.
        (b) Assets insufficient to satisfy benefit liabilities. If the plan 
    administrator determines that plan assets are not sufficient to satisfy 
    all benefit liabilities at the time of any distribution (with assets 
    determined net of other liabilities, including PBGC premiums), the plan 
    administrator shall not make any further distribution of assets to 
    effect the plan's termination and shall promptly notify the PBGC.
        (c) Method of distribution.
        (1) In general. The plan administrator shall, in accordance with 
    all applicable requirements under the Code and ERISA, distribute plan 
    assets in satisfaction of all benefit liabilities (determined as of the 
    termination date). In the case of benefit liabilities that must be 
    provided in annuity form, the distribution shall be made by purchasing 
    irrevocable commitments from an insurer selected in accordance with the 
    fiduciary standards of Title I of ERISA.
        (2) Participating annuity contracts. In the case of a plan in which 
    any residual assets are to be distributed to participants, a 
    participating annuity contract may be purchased to satisfy the 
    requirement that annuities be provided by the purchase of irrevocable 
    commitments only if the portion of the price of the contract that is 
    attributable to the participation feature--
    
    [[Page 12516]]
    
        (i) Is not taken into account in determining the amount of residual 
    assets; and
        (ii) Is not paid from residual assets allocable to participants.
        (3) Missing participants. The plan administrator shall distribute 
    benefits to missing participants in accordance with part 4050.
        (d) Notice of annuity contract. If benefit liabilities are provided 
    through the purchase of irrevocable commitments--
        (1) Either the plan administrator or the insurer shall, within 30 
    days after it is available, 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; and
        (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 in order to avoid the assessment of penalties under 
    Sec. 4041.29(b), 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.
    
    
    Sec. 4041.29  Post-distribution certification.
    
        (a) Deadline. Within 30 days after the last distribution date for 
    any affected party, the plan administrator shall file with the PBGC a 
    post-distribution certification consisting of the PBGC Form 501, 
    completed in accordance with the instructions thereto.
        (b) Assessment of penalties. The PBGC will assess a penalty for 
    late filing of a post-distribution certification only to the extent the 
    certification is filed more than 90 days after the distribution 
    deadline (including extensions) under Sec. 4041.28(a).
    
    
    Sec. 4041.30  Requests for deadline extensions.
    
        (a) In general. In narrow circumstances, the PBGC may in its 
    discretion extend a deadline for taking action under this subpart to a 
    later date. The PBGC will grant such an extension where it finds 
    compelling reasons why it is not administratively feasible for the plan 
    administrator (or other persons acting on behalf of the plan 
    administrator) to take the action until the later date and the delay is 
    brief. The PBGC shall consider--
        (1) The length of the delay; and
        (2) Whether ordinary business care and prudence in attempting to 
    meet the deadline is exercised.
        (b) Time of extension request. Any request for an extension under 
    paragraph (a) that is filed later than the 15th day before the 
    applicable deadline shall include a justification for not filing the 
    request earlier.
        (c) IRS determination letter requests. Any request for an extension 
    under paragraph (a) of the deadline in Sec. 4041.25(c) for submitting a 
    determination letter request to the IRS (in order to qualify for the 
    distribution deadline in Sec. 4041.28(a)(1)(ii)) shall be deemed to be 
    granted unless the PBGC notifies the plan administrator otherwise 
    within 60 days after receipt of the request (or, if later, by the end 
    of the PBGC's review period under Sec. 4041.26(a)). The PBGC shall 
    notify the plan administrator in writing of the date on which it 
    receives such request.
        (d) Statutory deadlines not extendable. The PBGC may not--
        (1) Extend the 60-day time limit under Sec. 4041.23(a) for issuing 
    the notice of intent to terminate;
        (2) Waive the requirement in Sec. 4041.24(a) that the notice of 
    plan benefits be issued by the time the plan administrator files the 
    standard termination notice with the PBGC; or
        (3) Extend the deadline under Sec. 4041.29(a) for filing the post-
    distribution certification. However, the PBGC will assess a penalty for 
    late filing of a post-distribution certification only under the 
    circumstances described in Sec. 4041.29(b).
    
    
    Sec. 4041.31  Notice of noncompliance.
    
        (a) Failure to meet pre-distribution requirements.
        (1) In general. Except as provided in paragraphs (a)(2) and (c), 
    the PBGC shall issue a notice of noncompliance within the 60-day (or 
    extended) time period prescribed by Sec. 4041.26(a) whenever it 
    determines that--
        (i) The plan administrator failed to issue the notice of intent to 
    terminate to all affected parties (other than the PBGC) in accordance 
    with Secs. 4041.23;
        (ii) The plan administrator failed to issue notices of plan 
    benefits to all affected parties entitled to plan benefits in 
    accordance with Sec. 4041.24;
        (iii) The plan administrator failed to file the standard 
    termination notice in accordance with Sec. 4041.25;
        (iv) As of the distribution date proposed in the standard 
    termination notice, plan assets will not be sufficient to satisfy all 
    benefit liabilities under the plan; or
        (v) In the case of a spin-off/termination transaction (as described 
    in Sec. 4041.23(c)), the plan administrator failed to issue the notices 
    required by Sec. 4041.23(c), Sec. 4041.24(f), and Sec. 4041.27(a)(2).
        (2) Interests of participants. The PBGC may decide not to issue a 
    notice of noncompliance based on a failure to meet a requirement under 
    paragraphs (a)(1)(i) through (a)(1)(iii) or (a)(1)(v) of this section 
    if it determines that issuance of the notice would be inconsistent with 
    the interests of participants and beneficiaries.
        (3) Continuing authority. The PBGC may issue a notice of 
    noncompliance or suspend the termination proceeding based on a failure 
    to meet a requirement under paragraphs (a)(1)(i) through (a)(1)(v) of 
    this section after expiration of the 60-day (or extended) time period 
    prescribed by Sec. 4041.26(a) (including upon audit) if the PBGC 
    determines such action is necessary to carry out the purposes of Title 
    IV.
        (b) Failure to meet distribution requirements.
        (1) In general. If the PBGC determines, as part of an audit or 
    otherwise, that the plan administrator has not satisfied any 
    distribution requirement of Sec. 4041.28(a), it may issue a notice of 
    noncompliance.
        (2) Criteria. In deciding whether to issue a notice of 
    noncompliance under paragraph (b)(1) of this section, the PBGC may 
    consider--
        (i) The nature and extent of the failure to satisfy a requirement 
    of Sec. 4041.28(a);
        (ii) Any corrective action taken by the plan administrator; and
        (iii) The interests of participants and beneficiaries.
        (3) Late distributions. The PBGC shall not issue a notice of 
    noncompliance for failure to distribute timely based on any facts 
    disclosed in the post-distribution certification if 60 or more days 
    have passed from the PBGC's receipt of the post-distribution 
    certification.
        (c) Correction of errors. The PBGC shall not issue a notice of 
    noncompliance based solely on the plan administrator's inclusion of 
    erroneous information (or omission of correct information) in a notice 
    required to be provided to any person under this part if--
        (1) The PBGC determines that the plan administrator acted in good 
    faith in connection with the error;
    
    [[Page 12517]]
    
        (2) The plan administrator corrects the error no later than--
        (i) In the case of an error in the notice of plan benefits under 
    Sec. 4041.24, the latest date an election notice may be provided to the 
    person; or
        (ii) In any other case, as soon as practicable after the plan 
    administrator knows or should know of the error, or by any later date 
    specified by the PBGC; and
        (3) The PBGC determines that the delay in providing the correct 
    information will not substantially harm any person.
        (d) Reconsideration. A plan administrator may request 
    reconsideration of a notice of noncompliance in accordance with the 
    rules prescribed in part 4003, subpart C.
        (e) Consequences of notice of noncompliance.
        (1) Effect on termination. A notice of noncompliance ends the 
    standard termination proceeding, nullifies all actions taken to 
    terminate the plan, and renders the plan an ongoing plan. A notice of 
    noncompliance is effective upon the expiration of the period within 
    which the plan administrator may request reconsideration under 
    paragraph (d) of this section or, if reconsideration is requested, a 
    decision by the PBGC upholding the notice. However, 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. A plan administrator that still desires to terminate a 
    plan shall initiate the termination process again, starting with the 
    issuance of a new notice of intent to terminate.
        (2) Effect on plan administration. If the PBGC issues a notice of 
    noncompliance, the prohibitions in Sec. 4041.22(a) shall cease to 
    apply--
        (i) Upon expiration of the period during which reconsideration may 
    be requested or, if earlier, at the time the plan administrator decides 
    not to request reconsideration; or
        (ii) If reconsideration is requested, upon PBGC issuance of 
    decision on reconsideration upholding the notice of noncompliance.
        (f) If no notice of noncompliance is issued. A standard termination 
    is deemed to be valid if--
        (1) The plan administrator files a standard termination notice 
    under Sec. 4041.25 and the PBGC does not issue a notice of 
    noncompliance pursuant to Sec. 4041.31(a); and
        (2) The plan administrator files a post-distribution certification 
    under Sec. 4041.29 and the PBGC does not issue a notice of 
    noncompliance pursuant to Sec. 4041.31(b).
        (g) Notice to affected parties. 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. 4041.23(c), 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.
    
    
    Sec. 4041.41  [Amended]
    
        7. Paragraph (a) of redesignated Sec. 4041.41 is amended by 
    removing the words ``Requirements for a distress termination'' and 
    adding in their place, ``Distress requirements'' in the title.
        8. Paragraph (a)(1) of redesignated Sec. 4041.41 is amended by 
    removing ``4041.41'' and adding in its place ``4041.43'' and by adding 
    the words ``(except with PBGC approval)'' after ``and'' and before 
    ``not''.
        9. Paragraph (a)(2) of redesignated Sec. 4041.41 is amended by 
    removing ``4041.43'' and adding in its place ``4041.45'' and by 
    removing the words ``or, if applicable, no later than the due date 
    established in an extension notice issued under Sec. 4041.8''.
        10. Paragraphs (a)(3) and (e) of redesignated Sec. 4041.41 are 
    amended by removing ``paragraph (e)'' and adding in its place 
    ``paragraph (c)''.
        11. Paragraph (b)(1) of redesignated Sec. 4041.41 is amended by 
    removing the word ``If'' and adding in its place ``Except as provided 
    in paragraph (b)(2)(i) of this section, if''; and by removing the words 
    ``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''
        12. Paragraph (b)(2)(i) of redesignated Sec. 4041.41 is amended by 
    removing ``(c)(1)'' and adding in its place ``(a)(1)''; and by removing 
    ``(c)(2)'' and adding in its place ``(a)(2)''.
        13. Paragraphs (d)(1) and (d)(2) of redesignated Sec. 4041.41 are 
    amended by removing ``(e)(2)'' and adding in its place ``(c)(2)''.
        14. Paragraphs(d)(1)(i), (d)(1)(iii), and (d)(2) of redesignated 
    Sec. 4041.41 are amended by removing ``(e)(3)'' and adding in its place 
    ``(c)(3)''.
    
    
    Sec. 4041.42  [Amended]
    
        15. Redesignated Sec. 4041.42 is amended by removing the words 
    ``pendency of termination proceedings'' and adding in their place 
    ``termination process'' in the title.
        16. Paragraph (a) of redesignated Sec. 4041.42 is amended by adding 
    the word ``and'' after ``due the plan,''; and by removing the words 
    ``and, during the pendency of a standard termination, making loans to 
    participants,''.
        17. Paragraph (b) of redesignated Sec. 4041.42 is amended by 
    removing the words ``in a distress termination'' in the title; and by 
    removing ``4041.48'' and adding in its place ``4041.50''.
        18. Paragraph (c) of redesignated Sec. 4041.42 is amended by 
    removing the words ``in a distress termination'' in the title.
        19. Paragraph (d) of redesignated Sec. 4041.42 is amended by 
    removing ``4041.42(c)'' and adding in its place ``4041.44(c)''; and by 
    removing ``4041.44(c)(1)'' and adding in its place ``4041.46(c)(1)''.
        20. Paragraph (d)(1) of redesignated Sec. 4041.42 is amended by 
    removing ``(c)'' and adding in its place ``(b)''; and by removing 
    ``(c)(1)'' and adding in its place ``(b)(1)''.
        21. Paragraph (d)(1)(i) of redesignated Sec. 4041.42 is amended by 
    removing ``4041.42(e) and 4041.44(d)'' and adding in its place 
    ``4041.44(e) and 4041.46(e)''.
        22. Paragraph (d)(2) of redesignated Sec. 4041.42 is amended by 
    removing ``(f)'' and adding in its place ``(c)''.
        23. Paragraph (e) of redesignated Sec. 4041.42 is amended by 
    removing ``4041.47(b)'' and adding in its place ``4041.49(b)''; by 
    removing ``4041.47(d)'' and adding in its place ``4041.49(d)''; by 
    removing ``(c)'' and adding in its place ``(b)''; and by removing 
    ``4041.47(e)'' and adding in its place ``4041.49(e)''.
    
    
    Sec. 4041.43  [Amended]
    
        24. Paragraph (a)(3) of redesignated Sec. 4041.43 is amended by 
    removing ``(d)'' and adding in its place ``(b)''.
        25. Paragraphs (b) and (c) of redesignated Sec. 4041.43 are 
    removed.
        26. Paragraph (d) of redesignated Sec. 4041.43 is redesignated as 
    paragraph (b), and as so redesignated is amended by removing the words 
    ``employer identification number (``EIN')'' and adding in their place 
    ``EIN''; and by removing the words ``plan number (`PN')'' and adding in 
    their place ``PN'' in paragraph (d)(2); by removing ``.'' and adding in 
    its place ``;'' in paragraph (d)(4); and by removing the words ``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'' and by adding in their place ``The cessation of accruals
    
    [[Page 12518]]
    
    information in Sec. 4041.23(b)(4)'' in paragraph (d)(5).
        27. Paragraph (e) of redesignated Sec. 4041.43 is redesignated as 
    paragraph (c) and as so redesignated is amended by removing 
    ``4041.21(f)'' and adding in its place ``4041.23(c)''.
    
    
    Sec. 4041.44  [Amended]
    
        28. In redesignated Sec. 4041.44, paragraphs (a)(1), (b), and (c) 
    are amended by removing ``4041.41'' and adding in its place 
    ``4041.43''.
        29. Paragraph (b)(3) of redesignated Sec. 4041.44 is amended by 
    removing ``4041.43'' and adding in its place ``4041.45''.
        30. Paragraph (c) of redesignated Sec. 4041.44 is amended by 
    removing ``4041.3(d)(2)(i)'' and adding in its place 
    ``4041.41(b)(2)(i)''.
        31. Paragraph (f) of redesignated Sec. 4041.44 is amended by 
    removing ``4041.41(e))'' and adding in its place ``4041.43(e))''; and 
    by removing the sentence ``The notice required by this paragraph shall 
    be provided in the manner described in Sec. 4041.26(d)(2).''.
    
    
    Sec. 4041.45  [Amended]
    
        32. Paragraph (b)(1)(ii) of redesignated Sec. 4041.45 is amended by 
    removing ``4041.44(b)'' and adding in its place ``4041.46(b)''.
        33. Redesignated Sec. 4041.45(d) is removed.
    
    
    Sec. 4041.46  [Amended]
    
        34. Paragraphs (a) and (b) of redesignated Sec. 4041.46 are amended 
    by removing ``4041.3(c)'' and adding in its place ``4041.41(c)''.
        35. Paragraph (b) of redesignated Sec. 4041.46 is amended by 
    removing ``4041.43(b)'' and adding in its place ``4041.45(b)''.
        36. Paragraph (c)(1) of redesignated Sec. 4041.46 is amended by 
    removing ``4041.3(c)'' and adding in its place ``4041.41''; and by 
    removing ``4041.3(d)'' and adding in its place ``4041.41(b)''.
        37. Paragraph (c)(2) of redesignated Sec. 4041.46 is amended by 
    removing the words ``, or, if applicable, no later than the due date 
    established in an extension notice issued under Sec. 4041.8''.
        38. Paragraph (e) of redesignated Sec. 4041.46 is amended by 
    removing ``4041.41(e)'' and adding in its place ``4041.43(e)''; and by 
    removing the sentence ``The notice required by this paragraph shall be 
    provided in the manner described in Sec. 4041.26(d)(2).''
    
    
    Sec. 4041.47  [Amended]
    
        39. Paragraph (a) of redesignated Sec. 4041.47 is amended by 
    removing ``4041.43(b)(1)'' and adding in its place ``4041.45(b)(1)''.
        40. Paragraph (b)(1) of redesignated Sec. 4041.47 is amended by 
    removing ``4041.4'' and adding in its place ``4041.42''.
        41. Paragraph (c)(1) of redesignated Sec. 4041.47 is amended by 
    removing ``4041.46'' and adding in its place ``4041.48''.
        42. Paragraph (c)(2) of redesignated Sec. 4041.47 is amended by 
    removing ``4041.48'' and adding in its place ``4041.50''.
        43. Paragraph (c)(3) of redesignated Sec. 4041.47 is amended by 
    removing ``4041.48(b)'' and adding in its place ``4041.50(b)''.
        44. Paragraph (c)(4) of redesignated Sec. 4041.47 is amended by 
    removing ``4041.11'' and adding in its place ``4041.5''.
        45. Redesignated Sec. 4041.47 is amended by adding a new paragraph 
    (d) to read as follows:
    
    
    Sec. 4041.47  PBGC determination of plan sufficiency/insufficiency.
    
    * * * * *
        (d) Alternative treatment of majority owner's benefit. A majority 
    owner may elect to forego receipt of all or part of his or her benefit 
    in connection with a distress termination. Any such alternative 
    treatment--
        (1) Is valid only if the conditions in Sec. 4041.21(b)(2)(i) 
    through (iii) are met; and--
        (2) Is subject to the PBGC's approval if the election--
        (i) Is made after the termination date; and
        (ii) Would result in the PBGC determining that the plan is 
    sufficient for guaranteed benefits under paragraph (c).
        46. Sec. 4041.48 is revised to read as follows:
    
    
    Sec. 4041.48  Sufficient plans; notice requirements.
    
        (a) Notices of benefit distribution. When a distribution notice is 
    issued by the PBGC pursuant to Sec. 4041.47, the plan administrator 
    shall issue notices of benefit distribution in accordance with the 
    rules regarding notice of plan benefits in Sec. 4041.24, except that--
        (1) The deadline for issuing the notices of benefit distribution is 
    the 60th day after receipt of the distribution notice; and
        (2) With respect to the information described in Sec. 4041.24(b), 
    the terms ``plan benefits'' and ``pension benefits'' are replaced with 
    ``Title IV benefits'' and the term ``proposed termination date'' is 
    replaced with ``termination date''.
        (b) Certification to PBGC. No later than 15 days after the date on 
    which the plan administrator completes the issuance of the notices of 
    benefit distribution, the plan administrator shall file with the PBGC a 
    certification that the notices were so issued in accordance with the 
    requirements of this section.
        (c) Notice of annuity information. (1) In general. Unless all plan 
    benefits will be distributed in the form of nonconsensual lump sums, 
    the plan administrator shall provide a notice of annuity information to 
    each affected party other than--
        (i) An affected party whose plan benefits will be distributed in 
    the form of a nonconsensual lump sum; and
        (ii) The PBGC.
        (2) Spin-off/termination transactions. The plan administrator shall 
    provide the information in paragraph (c)(4) of this section to a person 
    entitled to notice under Sec. 4041.43(c), at the same time and in the 
    same manner as required for an affected party described in paragraph 
    (c)(1) of this section.
        (3) Selection of different insurer. A plan administrator that 
    decides to select a different insurer after having previously notified 
    the affected party of the identity of insurer(s) under this paragraph 
    shall provide another notice of annuity information.
        (4) Content of notice. The notice shall include--
        (i) The identity-of-insurer information in Sec. 4041.27(b)(1);
        (ii) The information regarding change in identity of insurer(s) in 
    Sec. 4041.27(b)(2); and
        (iii) Unless the state guaranty coverage information in 
    Sec. 4041.27(b)(3) was previously provided to the affected party, such 
    information and the extinguishment-of-guaranty information in 
    Sec. 4041.23(b)(8) (replacing the term ``pension benefits'' with 
    ``Title IV benefits'').
        (5) Deadline for notice. The plan administrator shall issue the 
    notice of annuity information to each affected party by the deadline in 
    Sec. 4041.27(d)(1).
        (d) Request for IRS determination letter. To qualify for the 
    distribution deadline in Sec. 4041.28(a)(1)(ii) (as modified and made 
    applicable by Sec. 4041.50(c)), the plan administrator shall submit to 
    the IRS a valid request for a determination of the plan's qualification 
    status upon termination (``determination letter'') by the day on which 
    the plan administrator completes the issuance of the notices of benefit 
    distribution.
    
    
    Sec. 4041.49  [Amended]
    
        47. Paragraphs (a) and (c) of redesignated Sec. 4041.49 are amended 
    by
    
    [[Page 12519]]
    
    removing ``4041.48'' and adding in its place ``4041.50''.
        48. Paragraph (b)(1)(i) of redesignated Sec. 4041.49 is amended by 
    removing ``4041.45(b)'' and adding in its place ``4041.47(b)''.
        49. Paragraph (e) of redesignated Sec. 4041.49 is amended by 
    removing ``4041.4(c)'' and adding in its place ``4041.42''.
        50. Sec. 4041.50 is added to read as follows:
    
    
    Sec. 4041.50  Closeout of plan.
    
        If a plan administrator receives a distribution notice from the 
    PBGC pursuant to Sec. 4041.47 and neither the plan administrator nor 
    the PBGC makes the finding described in Sec. 4041.49(b) or (d), the 
    plan administrator shall distribute plan assets in accordance with 
    Sec. 4041.28 and file a post-distribution certification in accordance 
    with Sec. 4041.29, except that--
        (a) The term ``benefit liabilities'' is replaced with ``Title IV 
    benefits'';
        (b) For purposes of applying the distribution deadline in 
    Sec. 4041.28(a)(1)(i), the phrase ``after the expiration of the PBGC's 
    60-day (or extended) review period under Sec. 4041.26(a)'' is replaced 
    with ``the day on which the plan administrator completes the issuance 
    of the notices of benefit distribution pursuant to Sec. 4041.48(a)''; 
    and
        (c) For purposes of applying the distribution deadline in 
    Sec. 4041.28(a)(1)(ii), the phrase ``the requirements of 
    Sec. 4041.25(c)'' is replaced with ``the requirements of 
    Sec. 4041.48(d)''.
    
    PART 4001--TERMINOLOGY
    
        51. The authority citation for Part 4001 continues to read as 
    follow:
    
        Authority: 29 U.S.C. 1301, 1302(b)(3).
    
    
    Sec. 4001.2  [Amended]
    
        52. In Sec. 4001.2, paragraph (2) of the definition of Distribution 
    date is amended by removing the words ``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'' and adding in their place ``The''; and by removing the words 
    ``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'' and adding in their place the word ``PBGC''.
    
    PART 4006--PREMIUM RATES
    
        53. The authority citation for Part 4006 continues to read as 
    follow:
    
        Authority: 29 U.S.C. 1302(b)(3), 1306, 1307.
    
    
    Sec. 4006.5  [Amended]
    
        54. In Sec. 4006.5, paragraph (f)(3) is amended by removing the 
    words ``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''.
    
    PART 4050--MISSING PARTICIPANTS
    
        55. The authority citation for Part 4050 is added to read as 
    follow:
    
        Authority: 29 U.S.C. 1302(b)(3), 1350.
    
    
    Sec. 4050.1  [Amended]
    
        56. In Sec. 4050.1, the reference ``Sec. 4041.27(c)'' is removed 
    and the reference ``Sec. 4041.28(c)'' is added in its place.
        57. In Sec. 4050.2, the definition of Late-discovered participant 
    is removed; the definition of Recently-missing participant is removed; 
    the definition of Post-distribution certification is amended by 
    removing the words ``Sec. 4041.27(h) or Sec. 4041.48(b)'' and adding in 
    their place the words ``Sec. 4041.29 or Sec. 4041.50''; and the 
    definition of Deemed distribution date is revised to read as follows:
    
    
    Sec. 4050.2  Definitions.
    
    * * * * *
        Deemed distribution date ordinarily means the last day of the 
    period in which distribution may be made (determined without regard to 
    the provisions of this part) under part 4041 of this chapter. The plan 
    administrator may select an earlier date, provided that the selected 
    date is no earlier than the date when all benefit distributions have 
    been made under the plan except for distributions to missing 
    participants whose designated benefits are paid to the PBGC.
    * * * * *
    
    
    Sec. 4050.3  [Amended]
    
        58. In Sec. 4050.3, paragraph (a) is amended by removing the words 
    ``Sec. 4041.27(c) or Sec. 4041.48(a)(1)'' and adding in their place the 
    words ``Sec. 4041.28(c) or Sec. 4041.50''.
        59. In Sec. 4050.4, paragraph (b)(1) is amended by removing the 
    words ``(or, in the case of a recently-missing participant, on or 
    before the 90th day after the deemed distribution date)''; and 
    paragraph (a) is revised to read as follows:
    
    
    Sec. 4050.4  Diligent search.
    
        (a) Search required. A diligent search shall be made for each 
    missing participant before information about the missing participant or 
    payment is submitted to the PBGC pursuant to Sec. 4050.6.
    * * * * *
        60. In Sec. 4050.6, paragraphs (a)(2) and (a)(3) are removed; 
    paragraph (a)(1) is redesignated as paragraph (a), the heading is 
    revised as set forth below, and the reference ``Sec. 4041.9'' is 
    revised to read ``Sec. 4041.3(b)'; paragraph (b) is amended by removing 
    the words ``If the plan administrator'' and adding in their place the 
    words ``Except as provided in paragraph (b)(2) of this section, if the 
    plan administrator'; the heading and text of paragraph (b) (as so 
    amended) are redesignated as paragraph (b)(1); a new heading is added 
    to paragraph (b), and new paragraph (b)(2) is added, to read as 
    follows:
    
    
    Sec. 4050.6  Payment and required documentation.
    
        (a) Time of payment and filing.
    * * * * *
        (b) Late charges.
        (1) Interest on late payments. * * *
        (2) Assessment of interest and penalties. The PBGC will assess 
    interest for late payment of a designated benefit or a penalty for late 
    filing of information only to the extent paid or filed beyond the time 
    provided in Sec. 4041.29(b).
    * * * * *
    
    
    Sec. 4050.7  [Amended]
    
        61. In Sec. 4050.7, paragraph (a) is amended by removing the words 
    ``the insurer and the relevant policy number'' and adding in their 
    place the words ``the insurer, the relevant policy number, and (to the 
    extent known) the amount or value of the benefit''.
    
    
    Sec. 4050.12  [Amended]
    
        62. In Sec. 4050.12, paragraphs (a) and (h) are removed and 
    paragraphs (b), (c), (d), (e), (f), (g), and (i) are redesignated as 
    paragraphs (a), (b), (c), (d), (e), (f), and (g) respectively; 
    redesignated paragraph (a) is amended by removing the words ``treat the 
    missing participant like a late-discovered participant'' and adding in 
    their place the words ``make distribution to the individual in such 
    manner as the PBGC shall direct''; redesignated paragraph (c) is 
    amended by removing the references ``paragraph (d)(2)'', ``paragraph 
    (d)(2)(i)'', and ``paragraph (d)(2)(ii)'' and adding in their place the 
    references ``paragraph (c)(2)'', ``paragraph (c)(2)(i)'', and 
    ``paragraph (c)(2)(ii)'' respectively; and redesignated paragraph (g) 
    is amended by removing the reference ``paragraph
    
    [[Page 12520]]
    
    (i)'' in both places where it appears and adding in each place the 
    reference ``paragraph (g)''.
    
    
    Sec. 4050.13  [Removed]
    
        63. Section 4050.13 is removed.
    
        Issued in Washington, DC, this 11th day of March, 1997.
    John Seal,
    Acting Executive Director, Pension Benefit Guaranty Corporation.
    [FR Doc. 97-6500 Filed 3-13-97; 8:45 am]
    BILLING CODE 7708-01-P
    
    
    

Document Information

Published:
03/14/1997
Department:
Pension Benefit Guaranty Corporation
Entry Type:
Proposed Rule
Action:
Proposed rule.
Document Number:
97-6500
Dates:
Comments must be received on or before May 13, 1997.
Pages:
12508-12520 (13 pages)
RINs:
1212-AA82: Termination of Single Employer Plans
RIN Links:
https://www.federalregister.gov/regulations/1212-AA82/termination-of-single-employer-plans
PDF File:
97-6500.pdf
CFR: (54)
29 CFR 4041.26(a)
29 CFR 4041.31(a)
29 CFR 4041.28(a)(1)(i)
29 CFR 4041.28(a)(1)(ii)
29 CFR 4041.27(b)(2)
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