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

Subpart B -- Standard Termination Process

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

Subpart C -- Distress Termination Process

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

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

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

This part sets forth the rules and procedures for terminating a single-employer pension plan in a standard termination or in a distress termination under ERISA. Subpart A contains various general rules that apply to both standard terminations and distress terminations. Subpart B sets forth the specific steps that a plan administrator must follow in order to terminate a plan in a standard termination. Subpart C sets forth the specific steps that a plan administrator must follow in order to terminate a plan in a distress termination. This part applies to the

termination of any single-employer plan covered under section 4021(a) of ERISA and not excluded by section 4021(b). This part does not reflect the amendments to sections 4041(b)(2)(C)(i) (relating to the PBGC's authority not to nullify a termination if nullification would be inconsistent with the interests of participants and beneficiaries) or 4041(c)(2)(B)(i)(I) (relating to the liquidation criteria for a distress termination) that were contained in the Retirement Protection Act of 1994 (Pub. L. 103-465, section 778(a) and (b)).

§ 4041.2 Definitions.

The following terms are defined in § 4001.2 of this chapter: affected party, annuity, benefit liabilities, Code, contributing sponsor, controlled group, distress termination, distribution date, employer, ERISA, guaranteed benefit, insurer, irrevocable commitment, IRS, mandatory employee contributions, normal retirement age, notice of intent to terminate, PBGC, person, plan, plan administrator, plan year, single-employer plan, standard termination, termination date, and title IV benefit.

In addition, for purposes of this part:

Distress termination notice means the notice filed with the PBGC pursuant to section 4041(c)(2)(A) of ERISA and § 4041.43. PBGC Form 601 (including Schedule EA-D) is the distress termination notice.

Distribution notice means the notice issued to the plan administrator by the PBGC pursuant to § 4041.45(c) of this part upon the PBGC's determination that the plan has sufficient assets to pay at least guaranteed benefits.

Existing collective bargaining agreement means a collective bargaining agreement that--

(1) By its terms, either has not expired or is extended beyond its stated expiration date because neither of the collective bargaining parties took the required action to terminate it, and

(2) Has not been made inoperative by a judicial ruling.

When a collective bargaining agreement no longer meets these conditions, it ceases to be an "existing collective bargaining agreement," whether or not any or all of its terms may continue to apply by operation of law.

Majority owner means, with respect to a contributing sponsor of a single-employer plan, an individual who owns, directly or indirectly, 50 percent or more of--

(1) An unincorporated trade or business,

(2) The capital interest or the profits interest in a partnership, or

(3) Either the voting stock of a corporation or the value of all of the stock of a corporation. For this purpose, the constructive ownership rules of section 414(b) and (c) of the Code shall apply.

Notice of benefit distribution means the notice to each participant and beneficiary required by § 4041.46 of this part describing the benefit to be distributed to him or her.

Notice of noncompliance means a notice issued to a plan administrator by the PBGC pursuant to section 4041(b)(2)(C) of ERISA and § 4041.26 of this part 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 section 4041(b)(2)(B) of ERISA and §§ 4041.22 and 4041.23 of this part describing his or her plan benefits.

Participant means--

(1) Any individual who is currently in employment covered by the plan and who is earning or retaining credited service under the plan, including any individual who is considered covered under the plan for purposes of meeting the minimum participation requirements but who, because of offset or similar provisions, does not have any accrued benefits;

(2) Any nonvested individual who is not currently in employment covered by the plan but who is earning or retaining credited service under the plan; and

(3) Any individual who is retired or separated from employment covered by the plan and who is receiving benefits under the plan or is entitled to begin receiving benefits under the plan in the future, excluding any such individual to whom an insurer has made an irrevocable commitment to pay all the benefits to which the individual is entitled under the plan.

Plan benefits means the benefits to which a participant is, or may become, entitled under the plan's provisions in effect as of the termination date, based on the participant's accrued benefit under the plan as of that date. Each participant's "plan benefits" equals that participant's "benefit liabilities," and the sum of all "plan benefits" equals the plan's "benefit liabilities."

Proposed distribution date means the date chosen by the plan administrator as the tentative date for the distribution of plan assets pursuant to a standard termination. A proposed distribution date may not be earlier than the 61st day, nor later than the 240th day, following the day on which the plan administrator files a standard termination notice with the PBGC.

Proposed termination date means the date specified as such by the plan administrator in the notice of intent to terminate or, if later, in the standard termination notice or the distress termination notice. A proposed termination date becomes the "termination date" if a plan terminates in a standard termination. A proposed termination date specified in the notice of intent to terminate or standard termination notice may not be earlier than the 60th day, nor later than the 90th day, after the issuance of the notice of intent to terminate. A proposed termination date specified in the distress termination notice may not be earlier than the proposed termination date specified in the notice of intent to terminate, or (except with PBGC approval) later than the 90th day after the issuance of the notice of intent to terminate.

Residual assets means the plan assets remaining after all benefit liabilities and other liabilities of the plan have been satisfied.

Standard termination notice means the notice filed with the PBGC pursuant to section 4041(b)(2)(A) of ERISA and § 4041.24 of this part advising the PBGC of a proposed standard termination. PBGC Form 500 (including Schedule EA-S) is the standard termination notice.

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

(a) Exclusive means of voluntary plan termination. A plan may be voluntarily terminated by the plan administrator only if all of the requirements for a standard termination set forth in paragraph (b) of this section are satisfied or all of the requirements for a distress termination set forth in paragraph (c) of this section are satisfied.

(b) Requirements for a standard termination. A plan may be terminated in a standard termination only if--

(1) The plan administrator issues a notice of intent to terminate to each affected party in accordance with § 4041.21 at least 60 days and not more than 90 days before the proposed termination date;

(2) The plan administrator files a standard termination notice with the PBGC in accordance with § 4041.24 no later than 120 days after the proposed termination date or, if applicable, no later than the due date established in an extension notice issued under § 4041.8;

(3) The plan administrator issues notices of plan benefits to plan participants and beneficiaries in accordance with §§ 4041.22 and 4041.23 no later than the date that the standard termination notice is filed with the PBGC;

(4) The PBGC does not issue a notice of noncompliance to the plan administrator pursuant to § 4041.26; and

(5) The plan administrator distributes plan assets in accordance with § 4041.27(c) within the 180-day (or extended) distribution period under § 4041.27(a), (e), and (f) (or, where applicable, within the time prescribed in part 4050 of this chapter), in satisfaction of all benefit liabilities under the plan.

(c) Requirements for a distress termination. A plan may be terminated in a distress termination only if--

(1) The plan administrator issues a notice of intent to terminate to each affected party in accordance with § 4041.41 at least 60 days and not more than 90 days before the proposed termination date;

(2) The plan administrator files a distress termination notice with the PBGC in accordance with § 4041.43 no later than 120 days after the proposed termination date or, if applicable, no later than the due date established in an extension notice issued under § 4041.8; and

(3) The PBGC determines that each contributing sponsor and each member of its controlled group satisfy one of the distress criteria set forth in paragraph (e) of this section.

(d) Effect of failure to satisfy requirements. (1) If the plan administrator does not satisfy all of the requirements of paragraph (b) of this section for a standard termination or, except as provided in paragraph (d)(2)(i) of this section, all of the requirements of paragraph (c) of this section for a distress termination, any action taken to effect the plan termination shall be null and void, and the plan shall be an ongoing plan. A plan administrator who still desires to terminate the plan shall initiate the termination process again, starting with the issuance of a new notice of intent to terminate.

(2)(i) The PBGC may, upon its own motion, waive any requirement with respect to notices to be filed with the PBGC under paragraph (c)(1) or (c)(2) of this section if the PBGC believes that it will be less costly or administratively burdensome to the PBGC to do so. The PBGC will not entertain requests for waivers under this paragraph.

(ii) Notwithstanding any other provision of this part, the PBGC retains the authority in any case to initiate a plan termination in accordance with the provisions of section 4042 of ERISA.

(e) Distress criteria. In a distress termination, each contributing sponsor and each member of its controlled group shall satisfy at least one (but not necessarily the same one) of the following criteria in order for a distress termination to occur:

(1) Liquidation. This criterion is met if, as of the proposed termination date--

(i) A person has filed or had filed against it a petition seeking liquidation in a case under title 11, United States Code, or under a similar federal law or law of a State or political subdivision of a State, or a case described in paragraph (e)(2) of this section has been converted to such a case; and

(ii) The case has not been dismissed.

(2) Reorganization. This criterion is met if--

(i) As of the proposed termination date, a person has filed or had filed against it a petition seeking reorganization in a case under title 11, United States Code, or under a similar law of a state or a political subdivision of a state, or a case described in paragraph (e)(1) of this section has been converted to such a case;

(ii) As of the proposed termination date, the case has not been dismissed;

(iii) The person notifies the PBGC of any request to the bankruptcy court (or other appropriate court in a case under such similar law of a state or a political subdivision of a state) for approval of the plan termination by concurrently filing with the PBGC a copy of the motion requesting court approval, including any documents submitted in support of the request; and

(iv) The bankruptcy court or other appropriate court determines that, unless the plan is terminated, such person will be unable to pay all its debts pursuant to a plan of reorganization and will be unable to continue in business outside the reorganization process and approves the plan termination.

(3) Inability to continue in business. This criterion is met if a person demonstrates to the satisfaction of the PBGC that, unless a distress termination occurs, the person will be unable to pay its debts when due and to continue in business.

(4) Unreasonably burdensome pension costs. This criterion is met if a person demonstrates to the satisfaction of the PBGC that the person's costs of providing pension coverage have become unreasonably burdensome solely as a result of declining covered employment under all single-employer plans for which that person is a contributing sponsor.

(f) Non-duplicative efforts. (1) If a person requests approval of the plan termination by a court, as described in paragraph (e)(2) of this section, the PBGC--

(i) Will normally enter an appearance to request that the court make specific findings as to whether the contributing sponsor or controlled group member meets the distress test in paragraph (e)(3) of this section, or state that it is unable to make such findings;

(ii) Will provide the court with any information it has that may be germane to the court's ruling;

(iii) Will, if the person has requested, or later requests, a determination by the PBGC under paragraph (e)(3) of this section, defer action on the request until the court makes its determination; and

(iv) Will be bound by a final and non-appealable order of the court.

(2) If a person requests a determination by the PBGC under paragraph (e)(3) of this section, the PBGC determines that the distress criterion is not met, and the person thereafter requests approval of the plan termination by a court, as described in paragraph (e)(2) of this section, the PBGC will advise the court of its determination and make its administrative record available to the court.

(g) Non-recognition of certain actions. If the PBGC finds that a person undertook any action or failed to act for the principal purpose of satisfying any of the distress criteria contained in paragraph (e) of this section, rather than for a reasonable business purpose, the PBGC shall disregard such act or failure to act in determining whether the person has satisfied any of those criteria.

§ 4041.4 Administration of plan during pendency of termination proceedings.

(a) General rule. Except to the extent specifically prohibited by this section, during the pendency of termination proceedings the plan administrator shall continue to carry out the normal operations of the plan, such as putting participants into pay status, collecting contributions due the plan, investing plan assets, and, during the pendency of a standard termination, making loans to participants, in accordance with plan provisions and applicable law and regulations.

(b) Prohibitions after issuance of notice of intent to terminate in a standard termination. Except as provided in paragraph (d) of this section, during the period beginning on the first day the plan administrator issues a notice of intent to terminate and ending on the last day of the PBGC's 60-day (or extended) review period, as described in § 4041.25(a), the plan administrator shall not--

(1) Distribute plan assets pursuant to or in furtherance of the termination of the plan;

(2) Pay benefits attributable to employer contributions, other than death benefits, in any form other than as an annuity; or

(3) Purchase irrevocable commitments to provide benefits from an insurer.

(c) Prohibitions after issuing notice of intent to terminate in a distress termination. The plan administrator shall not make loans to plan participants beginning on the first day he or she issues a notice of intent to terminate, and from that date until a distribution is permitted pursuant to § 4041.48, the plan administrator shall not--

(1) Distribute plan assets pursuant to, or (except as required by this part) take any other actions to implement, the termination of the plan;

(2) Pay benefits attributable to employer contributions, other than death benefits, in any form other than as an annuity; or

(3) Purchase irrevocable commitments to provide benefits from an insurer.

(d) Exceptions in a standard termination. During the period set forth in paragraph (b) of this section, the plan administrator may pay benefits attributable to employer contributions either through the purchase of irrevocable commitments from an insurer or in a form other than an annuity if--

(1) The participant has separated from active employment;

(2) The distribution is consistent with prior plan practice; and

(3) The distribution is not reasonably expected to jeopardize the plan's sufficiency for benefit liabilities.

(e) Effect of notice of noncompliance in a standard termination. If the PBGC issues a notice of noncompliance pursuant to § 4041.26, the prohibitions described in paragraphs (b)(2) and (b)(3) of this section shall cease to apply--

(1) Upon expiration of the period during which reconsideration may be requested under § 4041.26(c) or, if earlier, at the time the plan administrator decides not to request reconsideration; or

(2) If reconsideration is requested, upon PBGC issuance of its decision on reconsideration.

(f) Limitation on benefit payments on or after proposed termination date in a distress termination. Beginning on the proposed termination date, the plan administrator shall reduce benefits to the level determined under part 4022, subpart D, of this chapter.

(g) Failure to qualify for distress termination. In any case where the PBGC determines, pursuant to § 4041.42(c) or § 4041.44(c)(1), that the requirements for a distress termination are not satisfied--

(1) The prohibitions in paragraph (c) of this section, other than those in paragraph (c)(1), shall cease to apply-- (i) Upon expiration of the period during which reconsideration may be requested under §§ 4041.42(e) and 4041.44(d) or, if earlier, at the time the plan administrator decides not to request reconsideration; or

(ii) If reconsideration is requested, upon PBGC issuance of its decision on reconsideration.

(2) Any benefits that were not paid pursuant to paragraph (f) of this section shall be due and payable as of the effective date of the PBGC's determination, together with interest from the date (or dates) on which the unpaid amounts were originally due until the date on which they are paid in full at the rate or rates prescribed under § 4022.81(d) of this chapter.

(h) Effect of subsequent insufficiency. If the plan administrator makes a finding of subsequent insufficiency for guaranteed benefits pursuant to § 4041.47(b), or the PBGC notifies the plan administrator that it has made a finding of subsequent insufficiency for guaranteed benefits pursuant to § 4041.47(d), the prohibitions in paragraph (c) of this section shall apply in accordance with § 4041.47(e).

§ 4041.5 Challenges to plan termination under collective bargaining agreement.

(a) Suspension upon formal challenge to termination.

(1)(i) If the PBGC is advised, before the 60-day (or extended) period specified in § 4041.25 ends (in a standard termination) or before issuance of a notice of inability to determine sufficiency or a distribution notice pursuant to § 4041.45(b) or (c) (in a distress termination), that a formal challenge to the termination (as described in paragraph (b) of this section) has been initiated, the PBGC shall suspend the termination proceeding and shall so advise the plan administrator in writing.

(ii) If the PBGC is advised of a challenge described in paragraph (a)(1)(i) of this section after the 60-day (or extended) period specified in § 4041.25 ends (in a standard termination) or after issuance of a notice of inability to determine sufficiency or a distribution notice pursuant to § 4041.45(b) or (c) (in a distress termination) but before the termination procedure is concluded pursuant to this part, the PBGC may suspend the termination proceeding and, if it does, shall so advise the plan administrator in writing.

(2) The rules in paragraphs (a)(3) or (a)(4) (as appropriate) shall apply during a period of suspension beginning on the date of the PBGC's written notification to the plan administrator and ending with the final resolution of the challenge to the termination:

(3) In a standard termination--

(i) The running of all time periods specified in ERISA or this part relevant to the termination shall be suspended; and

(ii) The plan administrator shall comply with the prohibitions in § 4041.4.

(4) In a distress termination--

(i) The suspension shall stay the issuance by the PBGC of any notice of inability to determine sufficiency or distribution notice or, if any such notice was previously issued, shall stay its effectiveness;

(ii) The plan administrator shall comply with the prohibitions in § 4041.4; and

(iii) The plan administrator shall file a distress termination notice with the PBGC in the manner and within the time specified in § 4041.43.

(b) Formal challenge to termination. For purposes of this section, a formal challenge to a plan termination is initiated when any of the following actions is taken, asserting that the termination would violate the terms and conditions of an existing collective bargaining agreement:

(1) The commencement of any procedure specified in the collective bargaining agreement for resolving disputes under the agreement; or

(2) The commencement of any action before an arbitrator, administrative agency or board, or court under applicable labor-management relations law.

(c) Resolution of challenge. Immediately upon the final resolution (as described in paragraph (d) of this section) of the formal challenge to the termination, the plan administrator shall notify the PBGC in writing of the outcome of the challenge, and shall provide the PBGC with a copy of the award or order, if any. If the validity of the proposed termination has been upheld, the plan administrator also shall advise the PBGC whether the plan administrator wishes to continue the proposed termination.

(1) Challenge sustained. If the arbitrator, agency, board, or court has determined (or the parties have agreed) that the proposed termination violates an existing collective bargaining agreement, the PBGC shall dismiss the termination proceeding, all actions taken to effect the plan termination shall be null and void, and the plan shall be an ongoing plan. In this event, in a distress termination, § 4041.4(g) shall apply as of the date of the dismissal by the PBGC.

(2) Termination sustained. If the arbitrator, agency, board, or court has determined (or the parties have agreed) that the proposed termination does not violate an existing collective bargaining agreement and the plan administrator wishes to proceed with the termination, the PBGC shall reactivate the termination proceeding by sending a written notice thereof to the plan administrator, and the following rules shall apply:

(i) The termination proceeding shall continue from the point where it was suspended;

(ii) All actions taken to effect the termination before the suspension shall be effective;

(iii) Any time periods that were suspended shall resume running from the date of the PBGC's notice of the reactivation of the proceeding;

(iv) Any time periods that had fewer than 15 days remaining shall be extended to the 15th day after the date of the PBGC's notice, or such later date as the PBGC may specify, and

(v) In a distress termination, the PBGC shall proceed to issue a notice of inability to determine sufficiency or a distribution notice (or reactivate any such notice stayed under paragraph (a)(3) of this section), either with or without first requesting updated information from the plan administrator pursuant to § 4041.43(c).

(d) Final resolution of challenge. For purposes of this section, a formal challenge to a proposed termination is finally resolved when--

(1) The parties involved in the challenge enter into a settlement that resolves the challenge;

(2) A final award, administrative decision, or court order is issued that is not subject to review or appeal; or

(3) A final award, administrative decision, or court order is issued that is not appealed, or review or enforcement of which is not sought, within the time for filing an appeal or requesting review or enforcement.

(e) Involuntary termination by the PBGC. Notwithstanding any other provision of this section, the PBGC retains the authority in any case to initiate a plan termination in accordance with the provisions of section 4042 of ERISA.

§ 4041.6 Annuity requirements.

(a) General rule. Except as provided in paragraphs (b) and (d) of this section (or, where applicable, in part 4050 of this chapter), when a plan is closed out under § 4041.27 (in a standard termination) or § 4041.48 (in a distress termination), any benefit that is payable as an annuity under the provisions of the plan must be provided in annuity form through the purchase from an insurer of a single premium, nonparticipating, nonsurrenderable annuity contract that constitutes an irrevocable commitment by the insurer to provide the benefits purchased.

(b) Exceptions to annuity requirement. A benefit that is payable as an annuity under the provisions of a plan need not be provided in annuity form if the plan provides for an alternative form of distribution and either paragraph (b)(1) or (b)(2) of this section applies:

(1) The participant is not in pay status as of the distribution date, and the present value of the participant's total benefit under the plan, including amounts previously distributed to the participant, is $3,500 or less, determined in accordance with sections 411(a)(11) and 417(e)(3) of the Code and the regulations thereunder. The present value of such benefits shall be determined using the interest rate or rates as of--

(i) The date set forth in the plan for such purpose, provided that the plan provision is in accord with section 417(e)(3) of the Code and the regulations thereunder (substituting "distribution date" for "annuity starting date" wherever used in the plan); or

(ii) If the plan does not provide for such a date, the distribution date.

(2) The participant elected the alternative form of distribution in writing, with the written consent of his or her spouse, in accordance with the requirements of sections 401(a)(11), 411(a)(11), and 417 of the Code and the regulations thereunder.

(c) Optional benefit forms. Except as permitted by sections 401(a)(11), 411(d)(6), and 417 of the Code and the regulations thereunder, an annuity contract purchased to satisfy the annuity requirement shall preserve all applicable benefit options provided under the plan as of the termination date.

(d) Participating annuities. (1) General rule. Notwithstanding the requirement of paragraph (a) of this section that an annuity contract be nonparticipating, a participating annuity contract may be purchased to satisfy the annuity requirement if the plan can provide for all benefit liabilities and--

(i) All benefit liabilities will be guaranteed under the annuity contract as the unconditional, irrevocable, and noncancellable obligation of the insurer;

(ii) In no event, including unfavorable investment or actuarial experience, can the amounts payable to participants under the annuity contract decrease except to correct mistakes; and

(iii) As provided in paragraph (d)(2) of this section, no amount of residual assets to which participants are entitled will be used to pay for the participation feature.

(2) Plans with residual assets. If all or a portion of the residual assets of a plan will be distributed to participants--

(i) The additional premium for the participation feature must be paid from the contributing sponsor's share, if any, of the residual assets or from assets of the contributing sponsor; and

(ii) If the plan provided for mandatory employee contributions, the amount of residual assets must be determined using the price of the annuities for all benefit liabilities without the participation feature.

§ 4041.7 Facilitating plan sufficiency in a standard termination.

(a) Commitment to make plan sufficient. (1) General rule. At any time before a standard termination notice is filed with the PBGC, in order to enable the plan to terminate in that standard termination, a contributing sponsor or a member of a controlled group of a contributing sponsor may make a commitment to contribute any additional sums necessary to make the plan sufficient for all benefit liabilities. Any such commitment shall be treated as a plan asset for all purposes under this part. A sample commitment is included in the appendix to this part.

(2) Requirements for valid commitment. A commitment to make a plan sufficient for all benefit liabilities shall be valid for purposes of this part only if the commitment--

(i) Is made to the plan;

(ii) Is in writing, signed by the contributing sponsor and/or controlled group member(s); and

(iii) If the contributing sponsor or controlled group member is the subject of a bankruptcy liquidation or reorganization proceeding, as described in § 4041.3(e)(1) or (e)(2) of this part, is approved by the court before which the liquidation or reorganization proceeding is pending or is unconditionally guaranteed, by a person not in bankruptcy, to be met at or before the time distribution of assets is required in the standard termination.

(b) Alternative treatment of majority owner's benefit. (1) General rule. In order to facilitate the termination of the plan and distribution of assets in a standard termination, a majority owner may agree to forego receipt of all or part of his or her benefit until the benefit liabilities of all other plan participants have been satisfied.

(2) Requirements for valid agreement. Any agreement by a majority owner to an alternative treatment of his or her benefit is valid only if--

(i) The agreement is in writing;

(ii) In any case in which the total value of the benefit (determined in accordance with § 4041.6(b) of this part) is greater than $3,500, the spouse, if any, of the majority owner consents, in writing, to the alternative treatment of the benefit; and

(iii) The agreement is not inconsistent with a qualified domestic relations order (as defined in section 206(d)(3) of ERISA).

§ 4041.8 Disaster relief.

(a) Notwithstanding any other provision in this part, when the President of the United States declares that, under the Disaster Relief Act of 1974, as amended (42 U.S.C. 5121, 5122(2), 5141(b)), a major disaster exists, the Executive Director of the PBGC (or his or her designee) may, by issuing one or more notices of disaster relief, extend by up to 180 days the due date for --

(1) Filing the standard termination notice under § 4041.24;

(2) Completing the distribution of plan assets in a standard termination under § 4041.27;

(3) Filing the distress termination notice pursuant to § 4041.43;

(4) Issuing the notices of benefit distribution in a distress termination pursuant to § 4041.46(a)(1); or

(5) Completing the distribution of plan assets in a distress termination pursuant to § 4041.48.

(b) The due date extension or extensions described in paragraph (a) of this section shall apply only to plan terminations with respect to which the principal place of business of the contributing sponsor or the plan administrator, or the office of the service provider, bank, insurance company, or other person maintaining the information necessary to file the standard or distress termination notice, issue notices of plan benefits or benefit distribution, or complete the distribution of plan assets (as applicable), is within a designated disaster area.

(c) The standard or distress termination notice or the post-distribution certification shall identify the termination as being qualified for the due date extension.

§ 4041.9 Filing with the PBGC.

(a) Date of filing. Any document required or permitted to be filed with the PBGC under this part shall be deemed filed on the date that it is received at the PBGC, providing it is received no later than 4:00 p.m. on a day other than Saturday, Sunday, or a Federal holiday. Documents received after 4:00 p.m. or on Saturday, Sunday, or a Federal holiday shall be deemed filed on the next regular business day.

(b) How to file. Except as may otherwise be provided in applicable forms and instructions, any document to be filed under this part may be delivered by mail or by hand to: Reports Processing, Insurance Operations Department, Pension Benefit Guaranty Corporation, 1200 K Street NW., Washington, DC 20005-4026.

§ 4041.10 Computation of time.

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

§ 4041.11 Maintenance of plan records.

Either the contributing sponsor or the plan administrator of a plan terminating in a standard termination or a plan terminating in a distress termination that closes out in accordance with § 4041.48 pursuant to a distribution notice issued under § 4041.45(c) shall maintain and preserve all records used to compute benefits with respect to each individual who is a plan participant or a beneficiary of a deceased participant as of the termination date in accordance with the following rules:

(a) The records to be maintained and preserved are those used to compute the benefit for purposes of distribution to each individual in accordance with § 4041.27(c) (in a standard termination) or § 4041.48 (in a distress termination) and include, but are not limited to, the plan documents and all underlying data, including worksheets prepared by or at the direction of the enrolled actuary, used in determining the amount, form, and value of benefits.

(b) All records subject to this section shall be preserved for six years after the date the post-distribution certification required under § 4041.27(h) (in a standard termination) or § 4041.48(b) (in a distress termination) is filed with the PBGC.

(c) The contributing sponsor or plan administrator, as appropriate, shall make records subject to this section available to the PBGC upon request for inspection and photocopying, and shall submit such records to the PBGC within 30 days after receipt of the PBGC's written request therefor (or such other period as may be specified in such written request).

§ 4041.12 Information collection.

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

(a) General rule. At least 60 days and no more than 90 days before the proposed termination date, the plan administrator shall issue to each person who is (as of the proposed termination date) an affected party (other than the PBGC) a written notice of intent to terminate containing all of the information specified in paragraph (d) of this section. Failure to comply with the requirements of this section shall nullify the proposed termination.

(b) Discovery of other affected parties. Notwithstanding the provisions of paragraph (a) of this section, if the plan administrator discovers additional affected parties after the expiration of the time period specified in paragraph (a) of this section, the failure to issue the notice of intent to terminate to such parties within the specified time period will not cause the notice to be untimely under paragraph (a) of this section if the plan administrator could not reasonably have been expected to know of the additional affected parties and if he or she promptly issues the notice to each additional affected party.

(c) Issuance. (1) Method. The plan administrator shall issue the notice of intent to terminate to each affected party (other than the PBGC) individually either by hand delivery or by first-class mail or courier service directed to the affected party's last known address.

(2) When issued. The notice of intent to terminate is deemed issued to each affected party on the date on which it is handed to the affected party or deposited with a mail or courier service (as evidenced by a postmark or written receipt).

(d) Contents of notice. The plan administrator shall include in the notice of intent to terminate all of the following information:

(1) The name of the plan and of the contributing sponsor;

(2) The employer identification number ("EIN") of the contributing sponsor and the plan number ("PN"); if there is no EIN or PN, the notice shall so state;

(3) The name, address, and telephone number of the person who may be contacted by an affected party with questions concerning the plan's termination;

(4) A statement that the plan administrator expects to terminate the plan in a standard termination on a proposed termination date that is either--

(i) A specific date set forth in the notice, or

(ii) A date to be determined that is dependent on the occurrence of some future event;

(5) If the proposed termination date is dependent on the occurrence of a future event, the nature of the event (such as the merger of the contributing sponsor with another entity), generally when the event is expected to occur, and when the termination will occur in relation to the other event;

(6) A statement that benefit and service accruals will continue until the termination date or, if applicable, that benefit accruals were or will be frozen as of a specific date in accordance with section 204(h) of ERISA;

(7) A statement that, in order to terminate in a standard termination, plan assets must be sufficient to provide all benefit liabilities under the plan with respect to each participant and each beneficiary of a deceased participant;

(8) A statement that, after plan assets have been distributed to provide all benefit liabilities with respect to a participant or a beneficiary of a deceased participant, either by the purchase of an irrevocable commitment or commitments from an insurer to provide benefits or by an alternative form of distribution provided for under the plan, the PBGC's guarantee with respect to that participant's or beneficiary's benefit ends;

(9) If distribution of benefits under the plan may be wholly or partially by the purchase of irrevocable commitments from an insurer--

(i) The name and address of the insurer or insurers from whom, or (if not then known) the insurers from among whom, the plan administrator intends to purchase the irrevocable commitments; or

(ii) If the plan administrator has not identified an insurer or insurers at the time the notice of intent to terminate is issued, a statement that--

(A) Irrevocable commitments may be purchased from an insurer to provide some or all of the benefits under the plan,

(B) The insurer or insurers have not yet been identified, and

(C) Affected parties (other than the PBGC) will be notified at a later date (but no later than 45 days before the distribution date) of the name and address of the insurer or insurers from whom, or (if not then known) the insurers from among whom, the plan administrator intends to purchase the irrevocable commitments;

(10) A statement that if the termination does not occur, the plan administrator will notify the affected parties (other than the PBGC) in writing of that fact;

(11) A statement that each affected party, other than the PBGC or any employee organization, will receive a written notification of the benefits that the person will receive; and

(12) For retirees only, a statement that their monthly (or other periodic) benefit amounts will not be affected by the plan's termination.

(e) Supplemental notice requirements.

(1) The plan administrator shall issue a supplemental notice (or notices) of intent to terminate to each affected party (other than the PBGC) in accordance with the rules in paragraph (e)(2) of this section if--

(i) The plan administrator has not yet identified an insurer or insurers at the time the notice of intent to terminate is issued; or

(ii) The plan administrator notifies affected parties (other than the PBGC) of the insurer or insurers from whom (or from among whom) he or she intends to purchase the irrevocable commitments, either in the notice of intent to terminate or in a later notice, but subsequently decides to select a different insurer.

(2) The plan administrator shall issue each supplemental notice in the manner provided in paragraph (c) of this section no later than 45 days before the distribution date and shall include the name and address of the insurer or insurers from whom, or (if not then known) the insurers from among whom, the plan administrator intends to purchase the irrevocable commitments.

(3) Any supplemental notice or notices meeting the requirements of paragraph (e)(2) of this section shall be deemed a part of the notice of intent to terminate.

(f) Spin-off/termination transactions. In the case of a spin-off/termination transaction, the plan administrator shall provide all participants in the original plan who are covered by the ongoing plan (as of the proposed termination date) with a notice describing the transaction no later than the date on which the plan administrator completes the issuance of notices of intent to terminate under this section. A spin-off/termination is a transaction in which a single defined benefit plan is split into two or more plans, in conjunction with the termination of one or more of the plans, resulting in a reversion of residual assets to the employer.

§ 4041.22 Issuance of notices of plan benefits.

(a) General rule. No later than the date on which the plan administrator files the standard termination notice with the PBGC, as required by § 4041.24, the plan administrator shall issue to each person described in paragraph (b) of this section a notice of that individual's plan benefits. The notice shall be in the form and contain the information specified in § 4041.23. Failure to comply with the requirements of this section shall nullify the proposed termination.

(b) Persons entitled to notice. The plan administrator shall issue a notice of plan benefits to each person (other than the PBGC or any employee organization) who is an affected party as of the proposed termination date (and, in the case of a spin-off/termination transaction as described in § 4043.21(f), each person who is, as of the proposed termination date, a participant in the original plan who is covered by the ongoing plan).

(c) Discovery of other affected parties. Notwithstanding the provisions of paragraph (a) of this section, if the plan administrator discovers additional persons entitled to a notice of plan benefits after the expiration of the time period specified in paragraph (a) of this section, the failure to issue a notice of plan benefits to such persons within the specified time period will not cause such notices to be untimely under paragraph (a) of this section if the plan administrator could not reasonably have been expected to know of the additional persons and if he or she promptly issues, to each such additional person, a notice of plan benefits in the form and containing the information specified in § 4041.23.

(d) Issuance. (1) Method. The plan administrator shall issue a notice of plan benefits individually to each person described in paragraph (b) of this section, either by hand-delivery or by first-class mail or courier service directed to the person's last known address.

(2) When issued. A notice of plan benefits is deemed issued to each person on the date it is handed to the person or deposited with a mail or courier service (as evidenced by a postmark or written receipt).

§ 4041.23 Form and contents of notices of plan benefits.

(a) Form of notices. The plan administrator shall provide notices of plan benefits written in plain, non-technical English that is likely to be understood by the average participant or beneficiary. If technical terms must be used, their meaning shall be explained in non-technical language.

(b) Foreign languages. The plan administrator of a plan described in this paragraph shall comply with paragraph (a) of this section and also shall include in the notices a statement, prominently displayed, in the foreign language (or languages) common to the non-English speaking plan participants advising them of how they may obtain assistance in understanding the notice. The assistance need not involve written materials, but shall be adequate to reasonably ensure that the participants and beneficiaries understand the information contained in their notices and shall be provided through media and at times and places that are reasonably accessible to the participants and beneficiaries. A plan is described in this paragraph if, as of the proposed termination date, the plan either--

(1) Covers fewer than 100 participants and at least 25 percent of those participants speak only the same non-English language or

(2) Covers 100 or more participants and at least the lesser of 500 or 10 percent of those participants speak the same non-English language.

(c) Contents of notice. In addition to the information described in paragraph (d), (e), or (f) of this section, as applicable, the plan administrator shall include in each notice of plan benefits the following information:

(1) The name of the plan, the employer identification number ("EIN") of the contributing sponsor, and the plan number ("PN"); if there is no EIN or PN, the notice shall so state;

(2) The name, address, and telephone number of the person who may be contacted to answer questions concerning a participant's or beneficiary's benefit;

(3) The proposed termination date and, if applicable, a statement that this date is later than the proposed termination date given in the notice of intent to terminate; and

(4) If the amount of the plan benefits set forth in a notice is an estimate, a statement that the amount is an estimate and that benefits paid may be greater than or less than the estimate.

(d) Benefits of persons in pay status. The plan administrator shall include in the notice of plan benefits for a participant or beneficiary in pay status as of the proposed termination date the following information:

(1) The amount and form of the participant's plan benefits payable as of the proposed termination date;

(2) The amount and form of benefit, if any, payable to a beneficiary upon the participant's death and the name of the beneficiary;

(3) The amount and date of any increase or decrease in the benefit scheduled to occur after the proposed termination date (or that has already occurred) and an explanation of the increase or decrease, including, where applicable, a reference to the pertinent plan provision; and (4) For benefits of participants or beneficiaries in pay status for one year or less as of the proposed termination date, the specific personal data used to calculate the plan benefits described in paragraphs (d)(1) and (d)(2) of this section, e.g., participant's age at retirement, spouse's age, participant's length of service, and including, for Social Security offset benefits, the participant's actual or, if unknown, estimated Social Security benefit and, for an estimated benefit, the assumptions used for the participant's earnings history.

(e) Benefits of participants not in pay status but form and starting date known. The plan administrator shall include in the notice of plan benefits for a participant who is not in pay status as of the proposed termination date, but who has, as of that date, elected to retire and has elected a form and starting date, or with respect to whom the plan administrator has determined a lump sum distribution will be made, the following information:

(1) The amount and form of the participant's plan benefits payable as of the projected benefit starting date, and what that date is;

(2) The amount and form of benefit, if any, payable to a beneficiary upon the participant's death and the name of the beneficiary;

(3) The amount and date of any increase or decrease in the benefit scheduled to occur after the proposed termination date (or that has already occurred) and an explanation of the increase or decrease, including, where applicable, a reference to the pertinent plan provision; and (4) If the age at which, or form in which, the plan benefits will be paid differs from the age or form in which the participant's accrued benefit at normal retirement age is stated in the plan, the age or form stated in the plan and the age or form adjustment factors, including, in the case of a lump sum benefit, the interest rate used to convert to the lump sum benefit described in paragraph (e)(1) of this section and a reference to the pertinent plan provision;

(5) The specific personal data, as described in paragraph (d)(4) of this section, used to calculate the plan benefits (other than a lump sum benefit) described in paragraphs (e)(1) and (e)(2) of this section and, with respect to a benefit payable as a lump sum, the personal data used to calculate the underlying annuity; and

(6) If the plan benefits will be paid in a lump sum, an explanation of how the interest rate is used to calculate the lump sum; a statement that the higher the interest rate used, the smaller the lump sum amount; and, if applicable, a statement that the lump sum amount given is an estimate because the applicable interest rate may change before the distribution date.

(f) Benefits of all other participants not in pay status. The plan administrator shall include in the notice of plan benefits for any participant not described in paragraph (d) or (e) of this section, the following information:

(1) The amount and form of the participant's plan benefits payable at normal retirement age in any form permitted under the plan;

(2) The availability of any alternative benefit forms, including those payable to a beneficiary upon the participant's death either before or after retirement, and, for any benefits to which the participant is or may become entitled that would be payable before normal retirement age, the earliest benefit commencement date, the amount payable on and after such date, and whether the benefit would be subject to future reduction;

(3) The specific personal data, as described in paragraph (d)(4) of this section, used to calculate the plan benefits described in paragraph (f)(1) of this section and, with respect to a benefit that may be paid in a lump sum, the personal data used to calculate the underlying annuity; and

(4) If the plan benefits may be paid in a lump sum, an explanation of when a lump sum may be paid without a participant's consent; an explanation of how the interest rate is used to calculate the lump sum; and a statement that the higher the interest rate used, the smaller the lump sum amount.

§ 4041.24 Standard termination notice.

(a) Form. The plan administrator shall file with the PBGC a PBGC Form 500, Standard Termination Notice, Single-Employer Plan Termination, with Schedule EA-S, Standard Termination Certification of Sufficiency, that has been completed in accordance with the instructions thereto. Except as provided in § 4041.8, the plan administrator shall file the standard termination notice on or before the 120th day after the proposed termination date.

(b) Supplemental notice requirement. If any of the benefits of the terminating plan may be provided in annuity form through the purchase of irrevocable commitments from an insurer and either of the conditions in paragraph (b)(1) of this section is met, the plan administrator shall file a supplemental notice (or notices) with the PBGC in accordance with the provisions in paragraph (b)(2) of this section.

(1) The plan administrator shall file with the PBGC a supplemental notice (or notices) if--

(i) The insurer or insurers from whom the plan administrator intends to purchase irrevocable commitments is not identified in the standard termination notice filed with the PBGC, or

(ii) The plan administrator has notified the PBGC of the insurer or insurers from whom he or she intends to purchase irrevocable commitments, either in the standard termination notice or in a later notice pursuant to paragraph (b)(2) of this section, and subsequently decides to select a different insurer.

(2) The supplemental notice (or notices) may be filed at any time after the filing of the standard termination notice, but no later than 45 days before the distribution date, and shall--

(i) Be in writing addressed to: Reports Processing, Insurance Operations Department, Pension Benefit Guaranty Corporation, 1200 K Street NW., Washington, DC 20005-4026.

(ii) Give information identifying the contributing sponsor and the plan by name, address, employer identification and plan numbers ("EIN/PN"), and PBGC case number (if applicable); and

(iii) Give the name and address of the insurer or insurers from whom, or (if not then known) the insurers from among whom, the plan administrator intends to purchase the irrevocable commitments.

§ 4041.25 PBGC action upon filing of standard termination notice.

(a) Review period upon filing of standard termination notice. (1) General rule. After a complete standard termination notice has been filed in accordance with § 4041.9, the PBGC has 60 days to review the notice, determine whether to issue a notice of noncompliance pursuant to § 4041.26, and issue any such notice. The 60-day review period begins on the day following the filing of a complete standard termination notice and includes the 60th day. If the PBGC does not issue a notice of noncompliance by the last day of this 60-day period, the plan administrator shall proceed to close out the plan in accordance with § 4041.27.

(2) Extension of review period. The 60-day review period may be extended according to the following rules:

(i) The PBGC and the plan administrator may agree in writing, before the expiration of the 60-day review period, to extend the period for up to an additional 60 days;

(ii) More than one such extension may be made; and

(iii) Any extension may be made upon whatever terms and conditions are agreed to by the PBGC and the plan administrator.

(3) Suspension of review period. The 60-day review period shall be suspended in accordance with paragraph (d) of this section if the PBGC requests supplemental information.

(b) Acknowledgment of complete standard termination notice. The PBGC shall notify the plan administrator in writing of the date on which a complete standard termination notice was filed, so that the plan administrator may determine when the 60-day review period will expire.

(c) Return of incomplete standard termination notice. The PBGC shall return an incomplete standard termination notice and advise the plan administrator in writing of the missing item(s) of information and that the complete standard termination notice must be filed no later than the 120th day after the proposed termination date or the 20th day after the date of the PBGC notice, whichever is later.

(d) Authority to request supplemental information. Whenever the PBGC has reason to believe that any of the requirements of §§ 4041.21 through 4041.24 of this part were not complied with, or in any proposed termination that will result in a reversion of residual assets to the contributing sponsor, the PBGC may require the submission of information supplementing that furnished pursuant to § 4041.24. A request for additional information under this paragraph shall be in writing and shall suspend the running of the 60-day (or extended) review period described in paragraph (a) of this section. That period shall begin running again on the day following the filing of the required information. If a plan administrator or contributing sponsor fails to submit information required under this paragraph within the period specified in the PBGC's request, the PBGC may issue a notice of noncompliance in accordance with § 4041.26 or take other appropriate action to enforce the requirements of Title IV of ERISA.

(e) Authority to suspend or nullify proposed termination. Notwithstanding any other provision of this part, the PBGC may, by written notice to the plan administrator, suspend or nullify a proposed termination after expiration of the 60-day (or extended) review period in any case in which it determines that such action is necessary to carry out the purposes of Title IV of ERISA.

§ 4041.26 Notice of noncompliance.

(a) General. (1) The PBGC shall issue to the plan administrator a written notice of noncompliance, within the period prescribed by § 4041.25, whenever it makes one of the following determinations:

(i) A determination that the plan administrator failed to issue the notice of intent to terminate in accordance with § 4041.21.

(ii) A determination that the plan administrator failed to issue notices of plan benefits in accordance with §§ 4041.22 and 4041.23.

(iii) A determination that the standard termination notice, or any supplemental notice, was not filed in accordance with § 4041.24.

(iv) A determination that, as of the proposed distribution date, plan assets will not be sufficient to satisfy all benefit liabilities under the plan.

(2) The PBGC shall base any determination described in paragraph (a)(1) of this section on the information contained in the standard termination notice, including any supplemental submission under § 4041.25(d) and any supplemental notice under § 4041.24(b), or on information provided by any affected party or otherwise obtained by the PBGC.

(b) Effect of notice of noncompliance. A notice of noncompliance ends the standard termination proceeding, nullifies all actions taken to terminate the plan, and renders the plan an ongoing plan. The notice of noncompliance is effective upon the expiration of the period within which the plan administrator may request reconsideration pursuant to paragraph (c) of this section but, once a notice is issued, the plan administrator shall take no further action to terminate the plan (except by initiation of a new termination) unless and until the notice is revoked pursuant to a decision by the PBGC on reconsideration.

(c) Reconsideration of notice of noncompliance. A plan administrator may request reconsideration of a notice of noncompliance in accordance with the rules prescribed in part 4003, subpart C, of this chapter. Any request for reconsideration automatically stays the effectiveness of the notice of noncompliance until the PBGC issues its decision on reconsideration.

(d) Notice to affected parties. (1) General rule. Upon a decision by the PBGC on reconsideration affirming the issuance of a notice of noncompliance (or, if earlier, upon the plan administrator's decision not to request reconsideration), the plan administrator shall notify the affected parties (other than the PBGC), and any persons who were provided notice under § 4041.21(f)), in writing that the plan is not going to terminate or, if applicable, that the termination was invalid but that a new notice of intent to terminate is being issued.

(2) Method of issuance. The notices shall be delivered by first-class mail or by hand to each person described in paragraph (d)(1) who is an employee organization or a participant or beneficiary who is then in pay status. The notices to other participants and beneficiaries shall be provided in any manner reasonably calculated to reach those participants and beneficiaries. Reasonable methods of notification include, but are not limited to, posting the notice at participants' worksites or publishing the notice in an employee organization newsletter or newspaper of general circulation in the area or areas where participants and beneficiaries reside.

§ 4041.27 Closeout of plan.

(a) General rules. (1) Distribution. Except as provided in paragraphs (b), (e), and (f) of this section and § 4041.8 of this part, if the PBGC does not issue a notice of noncompliance within the period specified in § 4041.25 or, if a notice of noncompliance is issued and later revoked after reconsideration under § 4041.26(c), the plan administrator shall complete the distribution of plan assets in accordance with paragraph (c) of this section within 180 days after the expiration of the review period specified in § 4041.25 (or, if applicable, the date on which the PBGC revokes the notice of noncompliance) or, if applicable, within the time prescribed in part 4050 of this chapter.

(2) Post-distribution requirements. The plan administrator shall file with the PBGC a post-distribution certification in accordance with paragraph (h) of this section and, if any of the plan's benefit liabilities payable to a participant or beneficiary have been distributed through the purchase of irrevocable commitments, the plan administrator also shall provide such participant or beneficiary with a notice, contract, or certificate in accordance with paragraph (g) of this section.

(b) Assets insufficient to satisfy benefit liabilities. Before distributing plan assets to close out the plan, the plan administrator shall determine that plan assets are, in fact, sufficient to satisfy all benefit liabilities. In determining if plan assets are sufficient, the plan administrator shall subtract all liabilities (other than the future benefit liabilities that will be provided when assets are distributed), e.g., benefit payments due before the distribution date; PBGC premiums for all plan years through and including the plan year in which assets are distributed; expenses, fees, and other administrative costs. If plan assets are not sufficient to satisfy all benefit liabilities, the plan administrator shall not make any distribution of assets to effect the plan's termination. In the event of an insufficiency, the plan administrator shall promptly notify the PBGC.

(c) Method of distribution. The plan administrator shall distribute plan assets in accordance with § 4041.6 by purchasing irrevocable commitments from an insurer in satisfaction of all benefit liabilities that must be provided in annuity form, and by otherwise providing all benefit liabilities that need not be provided in annuity form. The plan administrator shall comply with part 4050 of this chapter (dealing with missing participants), if applicable.

(d) Failure to distribute within 180-day period. Except as provided in paragraphs (e) and (f) of this section, failure to distribute assets in accordance with paragraph (c) of this section within the 180-day distribution period set forth in paragraph (a)(1) of this section, because of an insufficiency of plan assets as described in paragraph (b) of this section or for any other reason, shall nullify the termination. All actions taken to effect the plan's termination shall be null and void, and the plan shall be an ongoing plan. In this event, the plan administrator shall notify affected parties (other than the PBGC) in writing, in accordance with § 4041.26(d), that the plan is not going to terminate or, if applicable, that the termination was invalid but that a new notice of intent to terminate is being issued.

(e) Automatic extension of time for distribution. (1) Requirements for automatic extension. The plan administrator shall be entitled to an automatic extension of the 180-day period in which to complete the distribution of plan assets if the plan administrator--

(i) Submits to the IRS a complete request for a determination with respect to the plan's tax-qualification status upon termination ("determination letter") on or before the date that the plan administrator files the standard termination notice with the PBGC;

(ii) Does not receive a determination letter at least 60 days before the expiration of the 180-day period; and

(iii) On or before the expiration of the 180-day period, notifies the PBGC in writing that an extension of the distribution deadline is required and certifies that the conditions in this paragraph have been met.

(2) Extension period. If the requirements in paragraph (e)(1) of this section are met, the time within which the plan administrator shall complete the distribution of plan assets is automatically extended until the 60th day after receipt of a favorable determination letter from the IRS.

(f) Discretionary extension of time for distribution. If the plan administrator will be unable to complete the distribution of plan assets within the 180-day (or extended) period for any reason other than an insufficiency described in paragraph (b) of this section, the plan administrator may request, and the PBGC shall grant or deny, in its discretion, an extension of time within which to complete the distribution according to the following rules:

(1) The plan administrator shall file a written request for a discretionary extension with the PBGC at least 30 days before the expiration of the 180-day (or extended) distribution period, explain the reason(s) for the request, and provide a date certain by which the distribution will be made if the extension is granted.

(2) The PBGC will not grant a discretionary extension based on failure to meet the requirements for an automatic extension under paragraph (e) of this section or failure to locate all participants or beneficiaries.

(3) The PBGC will grant a discretionary extension, in whole or in part, only if it is satisfied that the delay in making the distribution is not due to the action or inaction of the plan administrator or the contributing sponsor and that the distribution can in fact be completed by the date requested.

(g) Notice of annuity contract. In the case of the distribution of benefit liabilities through the purchase of irrevocable commitments--

(1) Either the plan administrator or the insurer shall, as soon as practicable, provide each participant and beneficiary with a copy of the annuity contract or certificate showing the insurer's name and address and clearly reflecting the insurer's obligation to provide the participant's or beneficiary's benefit; (2) If such a contract or certificate is not available on or before the date on which the post-distribution certificate is required to be filed pursuant to paragraph (h) of this section, the plan administrator shall, no later than such date, provide each participant and beneficiary with a written notice stating--

(i) That the obligation for providing the participant's or beneficiary's plan benefits has transferred to the insurer;

(ii) The name and address of the insurer;

(iii) The name, address, and telephone number of the person designated by the insurer to answer questions concerning the annuity; and

(iv) That the participant or beneficiary will receive from the plan administrator or insurer a copy of the annuity contract or a certificate showing the insurer's name and address and clearly reflecting the insurer's obligation to provide the participant's or beneficiary's benefit; and

(3) The plan administrator shall certify to the PBGC, as part of the post-distribution certification required under paragraph (h) of this section, that the requirements in paragraph (g)(1) or (g)(2) of this section have been satisfied.

(h) Post-distribution certification. Within 30 days after the last distribution date, the plan administrator shall file with the PBGC a PBGC Form 501, Post-Distribution Certification for Standard Termination, that has been completed in accordance with the instructions thereto. This requirement shall be considered satisfied if, in accordance with § 4050.6(a)(2) and (a)(3) of this chapter, the plan administrator files a preliminary post-distribution certification within 30 days after the last distribution date and, in addition, timely files an amended post-distribution certification that otherwise satisfies all applicable requirements.

(a) General rules. (1) At least 60 days and no more than 90 days before the proposed termination date, the plan administrator shall issue to each person who is (as of the proposed termination date) an affected party a written notice of intent to terminate.

(2) The plan administrator shall issue the notice of intent to terminate to all affected parties other than the PBGC at or before the time he or she files the notice with the PBGC.

(3) The notice to affected parties other than the PBGC shall contain all of the information specified in paragraph (d) of this section.

(4) The notice to the PBGC shall be filed on PBGC Form 600, Distress Termination, Notice of Intent to Terminate, completed in accordance with the instructions thereto.

(b) Discovery of other affected parties. Notwithstanding the provisions of paragraphs (a)(1) and (a)(2) of this section, if the plan administrator discovers additional affected parties after the expiration of the time period specified in paragraphs (a)(1) or (a)(2) of this section, the failure to issue the notice of intent to terminate to such parties within the specified time periods will not cause the notice to be untimely under paragraph (a) of this section if the plan administrator could not reasonably have been expected to know of the additional affected parties and if he or she promptly issues the notice to each additional affected party.

(c) Issuance.

(1) Method. The plan administrator shall issue the notice of intent to terminate individually to each affected party. The notice to the PBGC shall be filed in accordance with § 4041.9. The notice to each of the other affected parties shall be either hand delivered or delivered by first-class mail or courier service directed to the affected party's last known address.

(2) When issued. The notice of intent to terminate is deemed issued to the PBGC on the date on which it is filed and to any other affected party on the date on which it is handed to the affected party or deposited with a mail or courier service (as evidenced by a postmark or written receipt).

(d) Contents of notice to affected parties other than the PBGC. The plan administrator shall include in the notice of intent to terminate to each affected party other than the PBGC all of the following information:

(1) The name of the plan and of the contributing sponsor;

(2) The employer identification number ("EIN") of the contributing sponsor and the plan number ("PN"); if there is no EIN or PN, the notice shall so state;

(3) The name, address, and telephone number of the person who may be contacted by an affected party with questions concerning the plan's termination;

(4) A statement that the plan administrator expects to terminate the plan in a distress termination on a specified proposed termination date.

(5) A statement that benefit and service accruals will continue until the termination date or, if applicable, that benefit accruals were or will be frozen as of a specific date in accordance with section 204(h) of ERISA;

(6) A statement of whether plan assets are sufficient to pay all guaranteed benefits or all benefit liabilities;

(7) A brief description of what benefits are guaranteed by the PBGC (e.g., if only a portion of the benefits are guaranteed because of the phase-in rule, this should be explained), and a statement that participants and beneficiaries also may receive a portion of the benefits to which each is entitled under the terms of the plan in excess of guaranteed benefits; and

(8) A statement, if applicable, that benefits may be subject to reduction because of the limitations on the amounts guaranteed by the PBGC or because plan assets are insufficient to pay for full benefits (pursuant to part 4022, subparts B and D, of this chapter) and that payments in excess of the amount guaranteed by the PBGC may be recouped by the PBGC (pursuant to part 4022, subpart E, of this chapter).

(e) Spin-off/termination transactions. In the case of a spin-off/termination transaction (as described in § 4041.21(f)), the plan administrator shall provide all participants and beneficiaries in the original plan who are also participants or beneficiaries in the ongoing plan (as of the proposed termination date) with a notice describing the transaction no later than the date on which the plan administrator completes the issuance of notices of intent to terminate under this section.

§ 4041.42 PBGC review of notice of intent to terminate.

(a) General. When a notice of intent to terminate is filed with it, the PBGC--

(1) Shall determine whether the notice was issued in compliance with § 4041.41; and

(2) Shall advise the plan administrator of its determination, in accordance with paragraph (b) or (c) of this section, no later than the proposed termination date specified in the notice.

(b) Tentative finding of compliance. If the PBGC determines that the issuance of the notice of intent to terminate appears to be in compliance with § 4041.41, it shall notify the plan administrator in writing that--

(1) The PBGC has made a tentative determination of compliance;

(2) The distress termination proceeding may continue; and

(3) After reviewing the distress termination notice filed pursuant to § 4041.43, the PBGC will make final, or reverse, this tentative determination.

(c) Finding of noncompliance. If the PBGC determines that the issuance of the notice of intent to terminate was not in compliance with § 4041.41 (except for requirements that the PBGC elects to waive under § 4041.3(d)(2)(i) with respect to the notice filed with the PBGC), the PBGC shall notify the plan administrator in writing--

(1) That the PBGC has determined that the notice of intent to terminate was not properly issued; and

(2) That the proposed distress termination is null and void and the plan is an ongoing plan.

(d) Information on need to institute section 4042 proceedings. The PBGC may require the plan administrator to submit, within 20 days after the plan administrator's receipt of the PBGC's written request (or such other period as may be specified in such written request), any information that the PBGC determines it needs in order to decide whether to institute termination or trusteeship proceedings pursuant to section 4042 of ERISA, whenever--

(1) A notice of intent to terminate indicates that benefits currently in pay status (or that should be in pay status) are not being paid or that this is likely to occur within the 180-day period following the issuance of the notice of intent to terminate;

(2) The PBGC issues a determination under paragraph (c) of this section; or

(3) The PBGC has any reason to believe that it may be necessary or appropriate to institute proceedings under section 4042 of ERISA.

(e) Reconsideration of finding of noncompliance. A plan administrator may request reconsideration of the PBGC's determination of noncompliance under paragraph (c) of this section in accordance with the rules prescribed in part 4003, subpart C, of this chapter. Any request for reconsideration automatically stays the effectiveness of the determination until the PBGC issues its decision on reconsideration, but does not stay the time period within which information must be submitted to the PBGC in response to a request under paragraph (d) of this section.

(f) Notice to affected parties. Upon a decision by the PBGC affirming a finding of noncompliance or upon the expiration of the period within which the plan administrator may request reconsideration of a finding of noncompliance (or, if earlier, upon the plan administrator's decision not to request reconsideration), the plan administrator shall notify the affected parties (and any persons who were provided notice under § 4041.41(e)) in writing that the plan is not going to terminate or, if applicable, that the termination is invalid but that a new notice of intent to terminate is being issued. The notice required by this paragraph shall be provided in the manner described in § 4041.26(d)(2).

§ 4041.43 Distress termination notice.

(a) General rule. The plan administrator shall file with the PBGC a PBGC Form 601, Distress Termination Notice, Single-Employer Plan Termination, with Schedule EA-D, Distress Termination Enrolled Actuary Certification, that has been completed in accordance with the instructions thereto, on or before the 120th day after the proposed termination date or, if applicable, no later than the due date established in an extension notice issued under § 4041.8.

(b) Participant and benefit information. (1) Plan insufficient for guaranteed benefits. Unless the enrolled actuary certifies, in the Schedule EA-D filed in accordance with paragraph (a) of this section, that the plan is sufficient either for guaranteed benefits or for benefit liabilities, the plan administrator shall file with the PBGC the participant and benefit information described in PBGC Form 601 and the instructions thereto by the later of--

(i) 120 days after the proposed termination date, or

(ii) 30 days after receipt of the PBGC's determination, pursuant to § 4041.44(b), that the requirements for a distress termination have been satisfied.

(2) Plan sufficient for guaranteed benefits or benefit liabilities. If the enrolled actuary certifies that the plan is sufficient either for guaranteed benefits or for benefit liabilities, the plan administrator need not submit the participant and benefit information described in PBGC Form 601 and the instructions thereto unless requested to do so pursuant to paragraph (c) of this section.

(3) Effect of failure to provide information. The PBGC may void the distress termination if the plan administrator fails to provide complete participant and benefit information in accordance with this section.

(c) Additional information. The PBGC may in any case require the submission of any additional information that it needs to make the determinations that it is required to make under this part or to pay benefits pursuant to section 4061 or 4022(c) of ERISA. The plan administrator shall submit any information requested under this paragraph within 30 days after receiving the PBGC's written request (or such other period as may be specified in such written request).

(d) Due date extension. Notwithstanding the provisions of paragraphs (a), (b), and (c) of this section, the due date for filing PBGC Form 601 or other information required under this section may be extended by a notice issued under § 4041.8.

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

(a) General. Based on the information contained in and submitted with the PBGC Form 600 and the PBGC Form 601, with Schedule EA-D, and on any information submitted by an affected party or otherwise obtained by the PBGC, the PBGC shall determine whether the requirements for a distress termination set forth in § 4041.3(c) have been met and shall notify the plan administrator in writing of its determination, in accordance with paragraph (b) or (c) of this section.

(b) Qualifying termination. If the PBGC determines that all of the requirements of § 4041.3(c) have been satisfied, it shall so advise the plan administrator and shall also advise the plan administrator of whether participant and benefit information must be submitted in accordance with § 4041.43(b).

(c) Non-qualifying termination. (1) Except as provided in paragraph (c)(2) of this section, if the PBGC determines that any of the requirements of § 4041.3(c) has not been met, it shall notify the plan administrator of its determination, the basis therefor, and the effect thereof (as provided in § 4041.3(d)).

(2) If the only basis for the PBGC's determination described in paragraph (c)(1) of this section is that the distress termination notice is incomplete, the PBGC shall advise the plan administrator of the missing item(s) of information and that the information must be filed with the PBGC no later than the 120th day after the proposed termination date or the 30th day after the date of the PBGC's notice of its determination, whichever is later, or, if applicable, no later than the due date established in an extension notice issued under § 4041.8.

(d) Reconsideration of determination of non-qualification. A plan administrator may request reconsideration of the PBGC's determination under paragraph (c)(1) of this section in accordance with the rules prescribed in part 4003, subpart C, of this chapter. The filing of a request for reconsideration automatically stays the effectiveness of the determination until the PBGC issues its decision on reconsideration.

(e) Notice to affected parties. Upon a decision by the PBGC affirming a determination of non-qualification or upon the expiration of the period within which the plan administrator may request reconsideration of a determination of non-qualification (or, if earlier, upon the plan administrator's decision not to request reconsideration), the plan administrator shall notify the affected parties (and any persons who were provided notice under § 4041.41(e)) in writing that the plan is not going to terminate or, if applicable, that the termination is invalid but that a new notice of intent to terminate is being issued. The notice required by this paragraph shall be provided in the manner described in § 4041.26(d)(2).

§ 4041.45 PBGC determination of plan sufficiency/insufficiency.

(a) General. Upon receipt of participant and benefit information filed pursuant to § 4041.43 (b)(1) or (c), the PBGC shall determine the degree to which the plan is sufficient and notify the plan administrator in writing of its determination in accordance with paragraph (b) or (c) of this section.

(b) Insufficiency for guaranteed benefits. If the PBGC finds that it is unable to determine that a plan is sufficient for guaranteed benefits, it shall issue a "notice of inability to determine sufficiency" notifying the plan administrator of this finding and advising the plan administrator that--

(1) The plan administrator shall continue to administer the plan under the restrictions imposed by § 4041.4; and

(2) The termination shall be completed under section 4042 of ERISA.

(c) Sufficiency for guaranteed benefits or benefit liabilities. If the PBGC determines that a plan is sufficient for guaranteed benefits but not for benefit liabilities or is sufficient for benefit liabilities, the PBGC shall issue to the plan administrator a distribution notice advising the plan administrator--

(1) To issue notices of benefit distribution in accordance with § 4041.46;

(2) To close out the plan in accordance with § 4041.48;

(3) To file a timely post-distribution certification with the PBGC in accordance with § 4041.48(b); and

(4) That either the plan administrator or the contributing sponsor must preserve and maintain plan records in accordance with § 4041.11.

§ 4041.46 Notices of benefit distribution.

(a) General rules. When a distribution notice is issued by the PBGC pursuant to § 4041.45(c), the plan administrator shall--

(1) No later than 60 days after receiving the distribution notice or, if applicable, no later than the due date established in an extension notice issued under § 4041.8, issue a notice of benefit distribution in accordance with the rules described in paragraphs (c) and (d) of this section to each person (other than any employee organization or the PBGC) who is an affected party as of the termination date (and, in the case of a spin-off/termination transaction as described in § 4041.21(f), each person who is, as of the termination date, a participant in the original plan and covered by the ongoing plan); and

(2) No later than 15 days after the date on which the plan administrator completes the issuance of the notices of benefit distribution, file with the PBGC a certification that the notices were so issued in accordance with the requirements of this section.

(b) Discovery of other affected parties. Notwithstanding the provisions of paragraph (a) of this section, if the plan administrator discovers additional persons entitled to a notice of benefit distribution after the expiration of the time period specified in paragraph (a)(1) of this section, the failure to issue the notices of benefit distribution to such persons within the specified time period will not cause such notices to be untimely under paragraph (a) of this section if the plan administrator could not reasonably have been expected to know of the additional persons and if he or she promptly issues, to each such additional person, a notice of benefit distribution in the form and containing the information specified in paragraph (d) of this section.

(c) Issuance. (1) Method. The plan administrator shall issue a notice of benefit distribution individually to each person, either by hand-delivery or by first-class mail or courier service directed to the person's last known address.

(2) When issued. A notice of benefit distribution is deemed issued to each person on the date it is handed to the person or deposited with a mail or courier service (as evidenced by a postmark or written receipt).

(d) Form and content of notices. The plan administrator shall provide notices of benefit distribution in the form described in § 4041.23(a) and (b) of this part and shall include in each--

(1) The information described in § 4041.23(c) of this part;

(2) The information described in § 4041.23(d), (e), or (f) of this part, as applicable (replacing the term "plan benefits" with "Title IV benefits" and "proposed termination date" with "termination date".

(3) A statement that, after plan assets have been distributed to provide all of the Title IV benefits payable with respect to a participant or a beneficiary of a deceased participant, either by the purchase of an irrevocable commitment or commitments from an insurer to provide benefits or by an alternative form of distribution provided for under the plan, the PBGC's guarantee with respect to that participant's or beneficiary's benefit ends; and

(4) If distribution of benefits under the plan may be wholly or partially by the purchase of irrevocable commitments from an insurer--

(i) The name and address of the insurer or insurers from whom, or (if not then known) the insurers from among whom, the plan administrator intends to purchase the irrevocable commitments; or

(ii) If the plan administrator has not identified an insurer or insurers at the time the notice of distribution is issued, a statement that the affected party to whom the notice is directed will be notified at a later date (but no later than 45 days before the distribution date) of the name and address of the insurer or insurers from whom, or (if not then known) the insurers from among whom, irrevocable commitments may be purchased.

(e) Supplemental notice requirements. (1) The plan administrator shall issue a supplemental notice (or notices) of distribution to each person in accordance with the rules in paragraph (e)(2) of this section if--

(i) The plan administrator has not yet identified an insurer or insurers at the time the notice of distribution is issued; or

(ii) The plan administrator included in the notice of distribution the name or names of the insurer or insurers from whom (or from among whom) he or she intends to purchase the irrevocable commitments, but subsequently decides to select a different insurer.

(2) The plan administrator shall issue each supplemental notice in the manner provided in paragraph (c) of this section no later than 45 days before the distribution date and shall include the name and address of the insurer or insurers from whom, or (if not then known) the insurers from among whom, the plan administrator intends to purchase the irrevocable commitments.

§ 4041.47 Verification of plan sufficiency prior to closeout.

(a) General rule. Before distributing plan assets pursuant to a closeout under § 4041.48, the plan administrator shall verify whether the plan's assets are still sufficient to provide for benefits at the level determined by the PBGC, i.e., guaranteed benefits or benefit liabilities. If the plan administrator finds that the plan is no longer able to provide for benefits at the level determined by the PBGC, then paragraph (b) or (c) of this section, as appropriate, shall apply.

(b) Subsequent insufficiency for guaranteed benefits. When a plan administrator finds that a plan is no longer sufficient for guaranteed benefits, the plan administrator shall promptly notify the PBGC in writing of that fact and shall take no further action to implement the plan termination, pending the PBGC's determination and notice pursuant to paragraph (b)(1) or (b)(2) of this section.

(1) PBGC concurrence with finding. If the PBGC concurs with the plan administrator's finding, the distribution notice shall be void, and the PBGC shall--

(i) Issue the plan administrator a notice of inability to determine sufficiency in accordance with § 4041.45(b); and

(ii) Require the plan administrator to submit a new valuation, certified to by an enrolled actuary, of the benefit liabilities and guaranteed benefits under the plan, valued in accordance with §§ 4044.41 through 4044.57 of this chapter as of the date of the plan administrator's notice to the PBGC.

(2) PBGC non-concurrence with finding. If the PBGC does not concur with the plan administrator's finding, it shall so notify the plan administrator in writing, and the distribution notice shall remain in effect.

(c) Subsequent insufficiency for benefit liabilities. When a plan administrator finds that a plan is sufficient for guaranteed benefits but is no longer sufficient for benefit liabilities, the plan administrator shall immediately notify the PBGC in writing of this fact, but shall continue with the distribution of assets in accordance with § 4041.48.

(d) Finding by PBGC of subsequent insufficiency. In any case in which the PBGC finds on its own initiative that a subsequent insufficiency for guaranteed benefits has occurred, paragraph (b)(1) of this section shall apply, except that the guaranteed benefits shall be revalued as of the date of the PBGC's finding.

(e) Restrictions upon finding of subsequent insufficiency. When the plan administrator makes the finding described in paragraph (b) of this section or receives notice that the PBGC has made the finding described in paragraph (d) of this section, the plan administrator shall (except to the extent the PBGC otherwise directs) be subject to the prohibitions in § 4041.4(c).

§ 4041.48 Closeout of plan.

(a) General rules. (1) Distribution. If a plan administrator receives a distribution notice from the PBGC pursuant to § 4041.45(c) and neither the plan administrator nor the PBGC makes the finding described in § 4041.47(b) or (d), the plan administrator shall distribute plan assets in accordance with §§ 4041.6 and 4041.27(c) of this part no earlier than the 61st day and (except as provided in § 4041.8 or 4041.27(e) or (f)) no later than the 180th day following the day on which the plan administrator completes the issuance of the notices of benefit distribution pursuant to § 4041.46(a), or, where applicable, within the time prescribed in part 4050 of this chapter. For purposes of applying § 4041.27(e)(1)(i), the phrase "the date that the plan administrator files the standard termination notice with the PBGC" shall be replaced by "the date that the plan administrator completes issuance of the notices of benefit distribution."

(2) Notice of annuity contract. If any of the plan's benefit liabilities payable to a participant or beneficiary have been distributed through the purchase of irrevocable commitments, the plan administrator shall provide such participant or beneficiary with a notice, contract, or certificate in accordance with § 4041.27(g).

(b) Post-distribution certification. Within 30 days after the last distribution date, the plan administrator shall file with the PBGC a PBGC Form 602, Post-Distribution Certification for Distress Termination, that has been completed in accordance with the instructions thereto. This requirement shall be considered satisfied if, in accordance with § 4050.6(a)(2) and (a)(3) of this chapter, the plan administrator files a preliminary post-distribution certification within 30 days after the last distribution date and, in addition, timely files an amended post-distribution certification that otherwise satisfies all applicable requirements.

Whereas, the Plan is an employee pension benefit plan as described in section 3(2)(A) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. 1001-1461; and

Whereas the Company is [describe entity, e.g., corporation, partnership] XXXXXXXXXX; and

Whereas, the Company is a contributing sponsor of the Plan, or a member of the contributing sponsor's controlled group, as described in section 4001(a) (13) and (14) of ERISA, 29 U.S.C. 1301(2) (13) and (14); and

Whereas, the Plan is covered by the termination insurance provisions of Title IV of ERISA, 29 U.S.C. 1301-1461; and

Whereas, the Plan administrator has issued or intends to issue to each affected party a notice of intent to terminate the Plan, pursuant to section 4041(a)(2) of ERISA, 29 U.S.C. 1341(a)(2); and

Whereas, the Company wishes the Plan to be sufficient for benefit liabilities, as described in section 4001(a)(16) of ERISA, 29 U.S.C. 1301(a)(16); and

Whereas, the parties understand that if the Plan is not able to satisfy all its obligations for benefit liabilities, it will not be able to terminate in a standard termination under section 4041(b) of ERISA, 29 U.S.C. 1341(b); and

Whereas, the Company is not a debtor in a bankruptcy or other insolvency proceeding.

[Alternative Paragraph]

Whereas, the Company is a debtor in a bankruptcy or other insolvency proceeding and the court before which the proceeding is pending approves this commitment.

Whereas, the Company is a debtor in a bankruptcy or other insolvency proceeding and this commitment is unconditionally guaranteed, by an entity or person not in bankruptcy, to be met at or before the time distribution is required in this standard termination.

Now Therefore, the parties hereto agree as follows:

1. The Company promises to pay to the Plan, on or before the date prescribed for distribution of Plan assets by the plan administrator, the amount necessary, if any, to ensure that, on the date the plan administrator distributes the assets of the Plan, the Plan is able to provide all benefit liabilities.

2. For the sole purpose of determining whether the Plan is sufficient to provide all benefit liabilities, an amount equal to the amount described in paragraph 1 shall be deemed a Plan asset available for allocation among the participants and beneficiaries of the Plan, in accordance with section 4044 of ERISA, 29 U.S.C. 1344.

3. This Agreement shall in no way relieve the Company of its obligations to pay contributions under the Plan.

Date:
By:
Company:
By:
Plan: