Premium Rates; Payment of Premiums; Flat Premium Rates, Variable-Rate Premium Cap, and Termination Premium; Deficit Reduction Act of 2005; Pension Protection Act of 2006, 7755-7762 [E7-2812]

Agencies

• Pension Benefit Guaranty Corporation

[Federal Register Volume 72, Number 33 (Tuesday, February 20, 2007)]
[Proposed Rules]
[Pages 7755-7762]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-2812]


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PENSION BENEFIT GUARANTY CORPORATION

29 CFR Parts 4006 and 4007

RIN 1212-AB10


Premium Rates; Payment of Premiums; Flat Premium Rates, Variable-
Rate Premium Cap, and Termination Premium; Deficit Reduction Act of 
2005; Pension Protection Act of 2006

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Proposed rule.

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SUMMARY: This is a proposed rule to amend PBGC's regulations on Premium 
Rates and Payment of Premiums to implement certain provisions of the 
Deficit Reduction Act of 2005 (Pub. L. 109-171) and the Pension 
Protection Act of 2006 (Pub. L. 109-280) that are effective beginning 
in 2006 or 2007. The provisions that would be implemented by this rule 
change the flat premium rate, cap the variable-rate premium in some 
cases, and create a new ``termination premium'' that is payable in 
connection with certain distress and involuntary plan terminations. 
This rule does not address other provisions of the Pension Protection 
Act of 2006 that deal with PBGC premiums.

DATES: Comments must be submitted on or before April 23, 2007.

ADDRESSES: Comments, identified by RIN number 1212-AB10, may be 
submitted by any of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the Web site instructions for submitting comments.
     E-mail: reg.comments@pbgc.gov.
     Fax: 202-326-4224.
     Mail or Hand Delivery: Legislative and Regulatory 
Department, Pension Benefit Guaranty Corporation, 1200 K Street, NW., 
Washington, DC 20005-4026.

All submissions must include the Regulatory Information Number for this 
rulemaking (RIN 1212-AB10). Comments received, including personal 
information provided, will be posted to www.pbgc.gov. Copies of 
comments may also be obtained by writing to Disclosure Division, Office 
of the General Counsel, Pension Benefit Guaranty Corporation, 1200 K 
Street, NW., Washington DC 20005-4026, or calling 202-326-4040 during 
normal business hours. (TTY and TDD users may call the Federal relay 
service toll-free at 1-800-877-8339 and ask to be connected to 202-326-
4040.)

FOR FURTHER INFORMATION CONTACT: John H. Hanley, Director, Legislative 
and Regulatory Department; or Catherine B. Klion, Manager, or Deborah 
C. Murphy, Attorney, Regulatory and Policy Division, Legislative and 
Regulatory Department, Pension Benefit Guaranty Corporation, 1200 K 
Street, NW., Washington DC 20005-4026; 202-326-4024. (TTY/TDD users may 
call the Federal relay service toll-free at 1-800-877-8339 and ask to 
be connected to 202-326-4024.)

SUPPLEMENTARY INFORMATION:

Background

    Pension Benefit Guaranty Corporation (PBGC) administers the pension 
plan termination insurance program under Title IV of the Employee 
Retirement Income Security Act of 1974 (ERISA). Pension plans covered 
by Title IV must pay premiums to PBGC. Section 4006 of ERISA deals with 
premium rates, and section 4007 of ERISA deals with the payment of 
premiums, including premium due dates, interest and penalties on 
premiums not timely paid, and persons liable for premiums.
    On February 8, 2006, the President signed into law the Deficit 
Reduction Act of 2005, Pub. L. 109-171 (DRA 2005). Section 8101 of DRA 
2005 amends section 4006 of ERISA. Section 8101(a) changes the per-
participant flat premium rate for plan years beginning in 2006 from $19 
to $30 for single-employer plans and from $2.60 to $8 for multiemployer 
plans and provides for inflation adjustments to the flat rates for 
future years. Section 8101(b) creates a new ``termination premium'' (in 
addition to the flat-rate and variable-rate premiums under section 
4006(a)(3)(A) and (E) of ERISA) that is payable for three years 
following certain distress and involuntary plan terminations that occur 
after 2005.
    On August 17, 2006, the President signed into law the Pension 
Protection Act of 2006, Pub. L. 109-280 (PPA 2006). Sections 401(b) and 
402(g)(2)(B) of PPA 2006 make changes to the termination premium rules 
of DRA 2005. Section 405 of PPA 2006 amends section 4006 of ERISA to 
cap the variable-rate premium for plans of certain small employers 
beginning in 2007. (PPA 2006 also makes other changes affecting PBGC 
premiums that are not addressed in this rule.)
    This rule would amend PBGC's regulations on Premium Rates (29 CFR 
Part 4006) and Payment of Premiums (29 CFR Part 4007) to conform to 
these requirements of DRA 2005 and PPA 2006 and to clarify how the 
requirements apply.

Flat-Rate Premium

    Until the enactment of DRA 2005, the flat-rate premium had remained 
unchanged for single-employer plans since 1991 and for multiemployer 
plans since 1989. Section 8101(a) of DRA 2005 amends section 
4006(a)(3)(A) of ERISA and adds new subparagraphs (F) and (G) to the 
end of section 4006(a)(3) of ERISA to raise the flat premium rates for 
2006 for both single- and multiemployer plans and to provide for 
inflation indexing for future years.

Applicability

    Before amendment by DRA 2005, section 4006(a)(3)(A) of ERISA 
provided (in part) that ``* * * the annual premium rate * * * is * * * 
in the case of a single-employer plan, for plan years beginning after 
December 31, 1990, an amount equal to the sum of $19 plus the [per-
participant variable-rate premium] under subparagraph (E) for each * * 
* participant * * *'' Section 8101(a)(1)(A) of DRA 2005 changes ``$19'' 
to read ``$30.'' Thus, the amended text of ERISA, read literally, makes 
it appear that the $30 single-employer flat-rate premium applies to 
plan years beginning after 1990. However, section 8101(d)(1) of DRA 
2005 (which does not amend ERISA) says that this change applies to plan 
years beginning after December 31, 2005. Accordingly, PBGC considers 
single-employer flat premium rates for plan years beginning before 2006 
to be unaffected by DRA 2005.

Participant Count

    Section 8101(a)(2)(A)(ii) of DRA 2005 adds a new clause (iv) to 
section 4006(a)(3)(A) of ERISA providing that the flat premium rate for 
a multiemployer plan for a post-2005 plan year is ``$8.00 for each 
individual who is a participant in such plan during the applicable plan 
year.'' PBGC interprets this to mean that the participant count is to 
be taken as of the premium snapshot date described in the premium rates 
regulation and PBGC's premium instructions (generally the last day of 
the plan year preceding the premium payment year). This is consistent 
with PBGC's interpretation of the nearly identical language in existing 
section 4006(a)(3)(A)(i) of ERISA.

[[Page 7756]]

Inflation Adjustments

    Section 8101(a)(1)(B) and (2)(B) of DRA 2005 add to section 
4006(a)(3) of ERISA substantially identical new subparagraphs (F) and 
(G) providing for inflation adjustments to the $30 and $8 flat rates 
for plan years beginning after 2006. The adjustments are based on 
changes in the national average wage index as defined in section 
209(k)(1) of the Social Security Act, with a two-year lag--for example, 
for 2007, it will be the 2005 index that will be compared to the 
baseline (the 2004 index). However, new subparagraphs (F) and (G) are 
written in such a way that the premium rate can never go down; if the 
change in the national average wage index is negative, the premium rate 
remains the same as in the preceding year. Also, under new 
subparagraphs (F) and (G), premium rates are rounded to the nearest 
whole dollar. PBGC interprets this to mean that if the adjustment 
formula would produce an unrounded premium rate of some number of 
dollars plus 50 cents, the premium rate will be rounded up.

Regulatory Provisions

    This rule would amend Sec.  4006.3 of the premium rates regulation 
to reflect the changes to the flat-rate premium made by section 8101(a) 
of DRA 2005. Existing paragraphs (a)(1) and (a)(2) of Sec.  4006.3 
(setting forth the $19 and $2.60 flat rates) would be removed, and a 
cross-reference to new Sec.  4006.3(c) would be provided instead. 
Paragraph (1) of new Sec.  4006.3(c) provides pre-2006 rates ($19 and 
$2.60); paragraph (2) provides 2006 rates ($30 and $8); and paragraph 
(3) provides post-2006 rates (the greater of the preceding year's rate 
or the inflation-adjusted rate). The inflation adjustment is described 
in new Sec.  4006.3(d).

Variable-Rate Premium

    Section 405 of PPA 2006 amends section 4006(a)(3)(E)(i) of ERISA 
and adds new subparagraph (H) to the end of section 4006(a)(3) to cap 
the variable-rate premium for certain plans, effective for plan years 
beginning after 2006.

Plans Covered

    Clause (i) of new section 4006(a)(3)(H) of ERISA says that the new 
variable-rate premium cap applies ``[i]n the case of an employer who 
has 25 or fewer employees on the first day of the plan year.'' But 
clause (ii) of new section 4006(a)(3)(H) of ERISA makes clear that the 
applicability of the new cap does not necessarily depend on the size of 
a single employer, but rather depends on the size of a plan's 
controlled group, that is, the aggregate size of ``all contributing 
sponsors and their controlled groups.'' (See the definition of 
``controlled group'' in Sec.  4001.2 of PBGC's regulation on 
Terminology (29 CFR Part 4001), which provides that ``[a]ny reference 
to a plan's controlled group means all contributing sponsors of the 
plan and all members of each contributing sponsor's controlled 
group''). Since a plan maintained by one contributing sponsor may or 
may not also be maintained by one or more other contributing sponsors 
that are not in the first sponsor's controlled group, the applicability 
of the cap must be determined plan by plan, not employer by employer.

Meaning of ``employee''

    New section 4006(a)(3)(H) of ERISA does not give guidance as to the 
meaning of the term ``employee.'' PBGC proposes to define ``employee'' 
for this purpose by reference to section 410(b)(1) of the Internal 
Revenue Code, which deals with minimum coverage requirements for 
qualified plans and requires that employees be counted to evaluate the 
breadth of coverage of a plan. For this purpose, certain individuals 
may be counted as ``employees'' although they might not be considered 
common law employees of the employer--for example, affiliated service 
group employees (under Code section 414(m)) and leased employees (under 
Code section 414(n)). PBGC considers this approach appropriate to 
prevent an employer from qualifying for the cap by artificially 
lowering its employee count through the use of sophisticated business 
structuring devices. In addition, in order to ensure that all employees 
are counted, PBGC proposes that the employee count be determined 
without regard to Code section 410(b)(3), (4), and (5), which might be 
considered to exclude from the count collective bargaining employees, 
employees not meeting a plan's age and service requirements, and 
employees in separate lines of business.

Cap Amount

    Under new section 4006(a)(3)(H)(i) of ERISA, the per-participant 
variable-rate premium is capped at ``$5 multiplied by the number of 
participants in the plan as of the close of the preceding plan year.'' 
PBGC interprets this to mean that the participant count is to be taken 
as of the premium snapshot date described in the premium rates 
regulation and PBGC's premium instructions (generally the last day of 
the plan year preceding the premium payment year). This is consistent 
with PBGC's interpretation of the nearly identical language in existing 
section 4006(a)(3)(E)(i) of ERISA. This participant count is the same 
as the count used as a multiplier under section 4006(a)(3)(A)(i) of 
ERISA for purposes of both the flat- and variable-rate premiums. Thus, 
an eligible plan's total variable-rate premium is capped at an amount 
equal to $5 multiplied by the square of the participant count.

Regulatory Provisions

    This rule would revise Sec.  4006.3(b) of the premium rates 
regulation to reflect the new cap on the variable-rate premium added by 
section 405 of PPA 2006. The existing variable-rate premium is 
described in new paragraph (b)(1) of Sec.  4006.3. The cap is described 
in new paragraph (b)(2); plans eligible for the cap in new paragraph 
(b)(3); and the meaning of the term ``employee'' in new paragraph 
(b)(4). Paragraph (b)(2) includes an example of the computation of the 
cap taken from page 95 of the Technical Explanation of H.R. 4, the 
``Pension Protection Act of 2006,'' as Passed by the House on July 28, 
2006, and as Considered by the Senate on August 3, 2006, Prepared by 
the Staff of the Joint Committee on Taxation (August 3, 2006) (https://
www.house.gov/jct/x-38-06.pdf).

Termination Premium

    Section 8101(b) of DRA 2005 adds a new paragraph (7) to the end of 
section 4006(a) of ERISA, creating a new ``termination premium'' that 
applies only where certain distress and involuntary terminations occur 
and then only for three years. However, although only section 4006 of 
ERISA is amended, subparagraph (D) of new paragraph (7) in effect 
modifies section 4007 of ERISA as well. Sections 401(b) and 
402(g)(2)(B) of PPA 2006 make changes to the termination premium rules 
of DRA 2005.

Termination Dates Covered

    Section 8101(d)(2)(A) of DRA 2005 (which does not amend ERISA) 
restricts the new termination premium to ``plans terminated after 
December 31, 2005.'' (Section 401(b)(1) of PPA 2006 repeals new section 
4006(a)(7)(E) of ERISA, added by DRA 2005, which provided that the 
termination premium would not apply ``with respect to any plan 
terminated after December 31, 2010.'')
    Section 8101(d)(2)(B) of DRA 2005 further restricts the application 
of the new termination premium in certain bankruptcy situations. If a 
plan ``is terminated during the pendency of any bankruptcy 
reorganization proceeding under chapter 11 of title 11, United States 
Code (or under any similar law of a State or political subdivision of a 
State),'' the new premium does not

[[Page 7757]]

apply ``if the proceeding is pursuant to a bankruptcy filing occurring 
before October 18, 2005.'' Under section 402(g)(2)(B)(ii) of PPA 2006, 
this limitation does not apply to an ``eligible plan'' under section 
402(c)(1) of PPA 2006 (generally a plan of a commercial passenger 
airline or airline catering service) while a funding election under 
section 402(a)(1) of PPA 2006 is in effect for the plan.
    These time restrictions on the applicability of the new premium 
turn on when a plan is ``terminated.'' PBGC believes that the most 
natural reading of these provisions is that the date to look to is the 
termination date under section 4048 of ERISA. Focusing on the section 
4048 termination date is also consistent with other provisions of DRA 
2005 and implementing regulations discussed below.

Types of Terminations Covered

    Under new section 4006(a)(7)(A) of ERISA, the termination premium 
applies where ``there is a termination of a single-employer plan under 
clause (ii) or (iii) of section 4041(c)(2)(B) [of ERISA] or section 
4042 [of ERISA].'' Section 4041(c) of ERISA provides for distress 
terminations; ERISA section 4042 provides for involuntary terminations.
    Under ERISA section 4041(c)(1), a distress termination of a plan 
may occur only if each contributing sponsor and each member of any 
contributing sponsor's controlled group meets one of the ``distress 
tests'' in clauses (i), (ii), and (iii) of section 4041(c)(2)(B). The 
tests are that the person is the subject of a bankruptcy liquidation 
proceeding (clause (i)), that the person is the subject of a bankruptcy 
reorganization proceeding (clause (ii)), or that the person is 
suffering business hardship (clause (iii)).
    Although typically all contributing sponsors and controlled group 
members meet the same distress test, that is not required for a 
distress termination under section 4041(c). Thus, while terminations 
where all contributing sponsors and controlled group members meet the 
test in clause (i) seem to be excluded from applicability of the 
termination premium, it is not clear from the statutory language 
whether the termination premium is to apply to terminations where one 
or more contributing sponsors and/or controlled group members meet the 
clause (i) test but others meet the tests in clauses (ii) and/or (iii). 
Examples of such situations would be where there are two contributing 
sponsors, one liquidating and one reorganizing; where the sole 
contributing sponsor is liquidating but there are controlled group 
members that are reorganizing; and where the sole contributing sponsor 
is reorganizing but the controlled group members are liquidating.
    The statutory language provides no basis for distinguishing among 
these examples or others that might be cited. All contributing sponsors 
and controlled group members are liable for plan underfunding under 
ERISA section 4062 and (as discussed below) for the termination premium 
(if it applies), and they must all satisfy one or another distress test 
under ERISA section 4041(c)(2)(B) for a distress termination to take 
place. This suggests that all these entities should be considered 
responsible as a group for the consequences of plan termination and 
that the fact that one entity among several is liquidating should not 
shield the others from liability. PBGC thus interprets new section 
4006(a)(7)(A) of ERISA as applying the termination premium in any 
distress termination case where at least one contributing sponsor or 
controlled group member meets the distress test in either clause (ii) 
or (iii) of section 4041(c)(2)(B) (i.e., is not liquidating).

Payers

    Section 4007(a) of ERISA places responsibility for paying PBGC 
premiums on the ``designated payor'' of a plan, and section 
4007(e)(1)(A) of ERISA identifies the designated payor of a single-
employer plan as the contributing sponsor or plan administrator. 
However, new section 4006(a)(7)(D)(i)(II) of ERISA, as added by section 
8101(b) of DRA 2005, provides that notwithstanding section 4007, the 
designated payor of the new termination premium is ``the person who is 
the contributing sponsor as of immediately before the termination 
date.'' It thus appears that the designated payor is to be identified 
as of the day before the termination date under section 4048 of ERISA. 
Similarly, this rule provides for identification of members of the 
contributing sponsor's controlled group (which are jointly and 
severally liable for premiums under section 4007(e)(2) of ERISA) as of 
the same day.

Participants

    Under new section 4006(a)(7)(A) of ERISA, the termination premium 
is based on the number of ``participants in the plan immediately before 
the termination date.'' It thus appears that participants are to be 
counted--for purposes of computing the termination premium--as of the 
day before the termination date under section 4048 of ERISA (the same 
day on which the contributing sponsor and controlled group members are 
determined). Section 4006.6 of the premium rates regulation already 
includes a definition of ``participant'' (which is used in computing 
the flat-rate premium), and DRA 2005 suggests no reason to depart from 
that definition for purposes of the termination premium.

Due Dates

    The termination premium is payable each year for three years. Under 
new section 4006(a)(7)(D)(i)(I) of ERISA, as added by section 8101(b) 
of DRA 2005, the new premium is due within 30 days after the beginning 
of each of three ``applicable 12-month periods,'' which are in turn 
described in new section 4006(a)(7)(C). New section 4006(a)(7)(C)(i)(I) 
provides that in general, the first applicable 12-month period starts 
with ``the first month following the month in which the termination 
date occurs.'' (From this it is evident that calendar months are 
meant.) Under new section 4006(a)(7)(C)(i)(II), the second and third 
applicable 12-month periods are simply the two 12-month periods that 
follow the first applicable 12-month period.
    But new section 4006(a)(7)(C)(ii) of ERISA defers the beginning of 
the first applicable 12-month period (and thus the due dates) in 
certain bankruptcy reorganization cases. This deferral rule comes into 
play where ``the requirements of subparagraph (B) [of new section 
4006(a)(7) of ERISA] are met in connection with the termination of the 
plan * * *.'' (Section 401(b)(2) of PPA 2006 corrected an erroneous 
reference to ``subparagraph (B)(i)(I)'' in new section 
4006(a)(7)(C)(ii) of ERISA.) Subparagraph (B) of new section 
4006(a)(7)(B) of ERISA defers the applicability of the termination 
premium for distress or involuntary plan terminations that occur when 
bankruptcy reorganization proceedings are pending for terminations 
``under section 4041(c)(2)(B)(ii) [of ERISA] or under section 4042 [of 
ERISA].'' Following the same reasoning discussed above regarding new 
section 4006(a)(7)(A) of ERISA (the general termination premium 
applicability provision), PBGC concludes that the bankruptcy 
reorganization deferral provision in new section 4006(a)(7)(B) of ERISA 
is meant to apply to a distress termination only when at least one 
contributing sponsor or controlled group member satisfies the 
bankruptcy reorganization test in section 4041(c)(2)(B)(ii).
    In order for the due date deferral rule in new section 
4006(a)(7)(C)(ii) of

[[Page 7758]]

ERISA to apply, the requirements of subparagraph (B) of section 
4006(a)(7) of ERISA must be met ``with respect to 1 or more persons 
described in such subparagraph'' (that is, one or more persons must be 
reorganizing in bankruptcy as described in subparagraph (B)). If so, 
then the first applicable 12-month period begins with ``the first month 
following the month which includes the earliest date as of which each 
such person is discharged or dismissed in the case described in such 
clause [sic] in connection with such person.'' (The only clause 
mentioned in section 4006(a)(7)(C)(ii) of ERISA is clause (i)(I) of 
section 4006(a)(7)(C), which describes the first applicable 12-month 
period that applies if the special bankruptcy rule does not. Thus the 
reference to ``such clause'' appears to be intended to refer to ``such 
subparagraph''--that is, subparagraph (B)--and PBGC so interprets the 
reference.)
    However, although subparagraph (B) of new section 4006(a)(7) of 
ERISA describes a case--a bankruptcy case--it does not describe a 
person. The only person mentioned in subparagraph (B) is ``such 
person,'' with no cross-reference to another place where the person is 
described. Nonetheless, it seems clear that the person referred to must 
be a person that has a relationship to both the plan and the bankruptcy 
proceeding mentioned in subparagraph (B). Subparagraph (B) contains 
parenthetical language that is essentially identical to parenthetical 
language that appears in section 4041(c)(2)(B)(ii) of ERISA (which 
describes the bankruptcy reorganization test for distress 
terminations). In section 4041(c)(2)(B)(ii), the words ``such person'' 
in the parenthetical language refer to a contributing sponsor or member 
of a contributing sponsor's controlled group. PBGC infers that ``such 
person'' in new section 4006(a)(7)(B) of ERISA is meant to refer 
likewise to a contributing sponsor of the terminated plan or member of 
a contributing sponsor's controlled group--determined (consistent with 
the designated payor provision in new section 4007(a)(7)(D)(i)(II)) as 
of the day before the termination date under section 4048 of ERISA.
    This inference is supported by the observation that these same 
persons--contributing sponsors and controlled group members--are the 
persons liable for the termination premium. It appears that Congress' 
intent was to defer the due date for the termination premium until the 
persons liable to pay it were not in bankruptcy proceedings. 
Accordingly, where the special bankruptcy rule for due dates applies, 
it is necessary to identify every contributing sponsor and controlled 
group member that was involved in bankruptcy reorganization proceedings 
on the termination date and determine the date when each one left 
bankruptcy--through dismissal of or discharge from the proceeding--or 
ceased to exist. (If an entity ceases to exist, its failure to emerge 
from bankruptcy should not postpone the termination premium due date.) 
Under new section 4006(a)(7)(C)(ii), the first applicable 12-month 
period for the termination will then begin with the calendar month that 
next begins following the last such date.
    One due date issue not addressed by the statute is that the 
agreement or court action establishing a plan's termination date under 
ERISA section 4048 may occur well after the termination date so 
established. Where a termination date is thus ``retroactively'' set, 
one or more statutory due dates for the termination premium may already 
have passed when the termination date becomes known. Thus, termination 
premium payments could be overdue before it was determined that they 
were owed.
    In cases of that kind, PBGC considers it appropriate to provide 
that where the termination date is set retroactively, the first 
applicable 12-month period does not begin immediately after the month 
in which the termination date falls, but rather begins immediately 
after the month in which the termination date is established. Where the 
special bankruptcy rule for due dates applies, this rule would come 
into play if the termination date was established after all 
contributing sponsors and controlled group members were out of 
bankruptcy reorganization proceedings, and would defer the beginning of 
the first applicable 12-month period until immediately after the month 
in which the termination date was established.

Other Bankruptcy Issues

    The parenthetical language in new section 4006(a)(7)(B) of ERISA--
``(or a case described in section 4041(c)(2)(B)(i) filed by or against 
such person has been converted, as of such date, to such a case in 
which reorganization is sought)''--shows that Congress focused on the 
fact that bankruptcy proceedings can be converted back and forth 
between liquidation and reorganization proceedings. But neither section 
4006(a)(7)(B) nor section 4006(a)(7)(C)(ii) (which describes the 
special first applicable 12-month period) mentions conversion of a 
reorganization case to a liquidation case as being sufficient to 
trigger the beginning of the first applicable 12-month period. It thus 
appears that even after such a conversion, the first applicable 12-
month period would be postponed until the (liquidation) bankruptcy 
proceeding were dismissed or the contributing sponsor or controlled 
group member discharged. This could be of significance where there were 
other persons liable for the termination premium that were not (or were 
no longer) in bankruptcy.
    Section 8101(d)(2)(B) of DRA 2005 (which, as discussed above, 
excludes from the termination premium terminations that occur during 
the pendency of bankruptcy reorganization proceedings pursuant to a 
filing before October 18, 2005) says nothing about the persons involved 
in such proceedings. Following the reasoning above, PBGC concludes that 
section 8101(d)(2)(B) is intended to apply only where the subject of a 
pending bankruptcy proceeding is a contributing sponsor of the 
terminated plan or a member of a contributing sponsor's controlled 
group (and that these persons are to be identified as of the day before 
the termination date under section 4048 of ERISA). Section 
8101(d)(2)(B) also does not mention conversion of a bankruptcy case 
from a liquidation proceeding to a reorganization, as new section 
4006(a)(7)(B) of ERISA does. But the language of section 8101(d)(2)(B) 
is consistent with the interpretation that--like section 
4006(a)(7)(B)--it covers bankruptcy proceedings begun as liquidation 
proceedings and converted to reorganization proceedings before the 
termination date under section 4048 of ERISA.

Termination Premium Rate

    Under new section 4006(a)(7) of ERISA as added by section 8101(b) 
of DRA 2005, the termination premium is $1,250 per participant per year 
for three years. But under section 402(g)(2)(B) of PPA 2006 (which does 
not amend ERISA), the rate is increased from $1,250 to $2,500 where a 
commercial passenger airline or airline catering service elects funding 
relief (an extended underfunding amortization period and lenient 
assumptions for valuing liabilities) for a frozen plan under section 
402(a)(1) of PPA 2006, if the plan terminates during the first five 
years of the funding relief period, unless the Secretary of Labor 
determines that the termination resulted from extraordinary 
circumstances such as a terrorist attack or other similar event.

Regulatory Provisions

    This rule would add a new Sec.  4006.7 to the premium rates 
regulation

[[Page 7759]]

providing that the amount of the termination premium with respect to 
each applicable 12-month period is the premium rate (generally $1,250) 
times the number of participants, determined as of the day before the 
termination date, with a cross-reference from Sec.  4006.3 (where the 
flat and variable premium rates are set forth). New Sec.  4006.7(b) 
also explains the circumstances in which the termination premium rate 
is $2,500 rather than $1,250. In addition, the rule would add a new 
Sec.  4007.13 to the premium payment regulation (with a cross-reference 
from Sec.  4006.7), where the rest of the provisions about the 
termination premium are found.
    New Sec.  4007.13 contains provisions specific to the termination 
premium, and it supplements provisions in existing sections of Part 
4007 that also apply to the termination premium. Section 4007.13(a) 
describes when the termination premium applies; Sec.  4007.13 (d), (e), 
and (f) deal with due dates; Sec.  4007.13(g) deals with what persons 
are liable for the termination premium. The provisions on these three 
topics reflect the discussions above.
    Section 4007.13(b) makes each contributing sponsor and controlled 
group member (determined as of the day before the termination date 
under section 4048 of ERISA) responsible for filing required 
termination premium information and payments, and (where there is more 
than one such person) provides that any one can file on behalf of all 
of them. This provision ensures that, so long as there is at least one 
person still in existence that is liable for the termination premium, 
there will be at least one identifiable entity with responsibility to 
file. This provision is similar to Sec.  4010.3 of PBGC's regulation on 
Annual Financial and Actuarial Information Reporting (Part 4010 of 
PBGC's regulations) and Sec.  4043.3(a) of PBGC's regulation on 
Reportable Events and Certain Other Notification Requirements (Part 
4043 of PBGC's regulations). Thus, only a single filing of the premium 
and required premium information is required, but if it is not timely 
made, PBGC could seek enforcement against any or all contributing 
sponsors and controlled group members.
    Section 4007.13(c) provides for a discretionary ``facts-and-
circumstances'' penalty for failure to pay the termination premium 
timely, instead of the automatic 1 percent or 5 percent penalty that 
applies to late payment of flat- and variable-rate premiums under Sec.  
4007.8(a). PBGC wants to preserve flexibility in penalizing failures to 
pay the new premium in full and on time while it gains experience with 
the new premium. The penalty is limited to 100 percent of the amount of 
termination premium not timely filed.
    In addition, this rule would amend several sections in the existing 
premium payment regulation to eliminate inconsistencies or potential 
inconsistencies between existing language in those sections and the 
termination premium provisions.

Technical Changes

    PBGC is taking this opportunity to make some technical changes 
(unrelated to DRA 2005 or PPA 2006) to its regulations on Premium Rates 
and Payment of Premiums.
    Section 4006.3 of the premium rates regulation refers to basic 
benefits guaranteed under section 4022(a) of ERISA (which relates only 
to single-employer plans) and omits mention of section 4022A(a) of 
ERISA (which relates to multi-employer plans). This rule would add a 
reference to section 4022A(a).
    Section 4007.11(d) of the premium payment regulation states that 
where proration of the flat- and variable-rate premiums is available 
under Sec.  4006.5(f) of the premium rates regulation, the un-prorated 
premium must be paid in full (even if the plan would be entitled to a 
refund). This provision is anachronistic: PBGC now permits payment of 
the prorated amount under Sec.  4006.5(f), rather than requiring that a 
filer pay the un-prorated amount and request a refund. This rule would 
remove the outdated provision.
    Section 4007.11(e) of the premium payment regulation permits PBGC 
to return improper filings and consider them not made. PBGC is not 
exercising this authority, and the provision is unnecessary; PBGC has 
authority to assess penalties under ERISA section 4071 for failure to 
submit material information under the premium payment regulation. This 
rule would remove Sec.  4007.11(e).

Applicability

    The regulatory changes made by this rule to implement the 
provisions of section 8101 of DRA 2005 would apply (as section 8101 of 
DRA 2005 does) to plan years beginning after 2005 and to terminations 
with termination dates after 2005 (subject to the special rule for 
bankruptcies filed before October 18, 2005). The regulatory changes 
made by this rule to implement the provisions of section 405 of PPA 
2006 would apply (as section 405 of PPA 2006 does) to plan years 
beginning after 2006.

Compliance With Rulemaking Guidelines

    The PBGC has determined, in consultation with the Office of 
Management and Budget, that this proposed rule is a ``significant 
regulatory action'' under Executive Order 12866. The Office of 
Management and Budget, therefore, has reviewed the rule under Executive 
Order 12866.
    PBGC certifies under section 605(b) of the Regulatory Flexibility 
Act that the amendments in this rule will not have a significant 
economic impact on a substantial number of small entities. This rule 
implements statutory changes made by Congress. It provides guidance on 
how to calculate, pay, and substantiate the premiums prescribed by 
statute and imposes no significant burden beyond the burden imposed by 
statute. Furthermore:
     The statutorily imposed increase in the flat-rate premium 
is at most $11 per participant per year, which does not constitute a 
significant economic impact where a plan has a small number of 
participants. Although the flat-rate premium will increase as the 
number of participants increases, the economic impact of the flat-rate 
premium relative to the size of the entity will remain fairly constant 
and will not be significant for a substantial number of entities of any 
size.
     The statutorily imposed cap on the variable-rate premium 
will save qualifying plans money. The rule simply interprets the 
statutory provisions.
     The statutorily imposed termination premium will not 
affect a substantial number of entities of any size.

Accordingly, as provided in section 605 of the Regulatory Flexibility 
Act (5 U.S.C. 601 et seq.), sections 603 and 604 do not apply.
    The information requirements relating to the flat-rate and 
variable-rate premiums have been approved by the Office of Management 
and Budget under the Paperwork Reduction Act (OMB control number 1212-
0009, expires April 30, 2008).
    PBGC is submitting the information requirements relating to the 
termination premium to the Office of Management and Budget for review 
and approval under the Paperwork Reduction Act. Copies of PBGC's 
request may be obtained free of charge by contacting the Disclosure 
Division of the Office of the General Counsel of PBGC, 1200 K Street, 
NW., Washington, DC 20005, 202-326-4040.
    PBGC needs this information to identify the plan for which a 
termination premium is paid to PBGC,

[[Page 7760]]

to verify the determination of the premium, and to identify the persons 
liable for the premium.
    PBGC expects that it will receive termination premium filings from 
about 30 contributing sponsors or controlled group members annually and 
that the total annual burden of the collection of information will be 
about 40 hours and $264,000.
    Comments on the paperwork provisions under this proposed rule 
should be mailed to the Office of Information and Regulatory Affairs, 
Office of Management and Budget, Attention: Desk Officer for Pension 
Benefit Guaranty Corporation, Washington, DC 20503. Although comments 
may be submitted through April 23, 2007, the Office of Management and 
Budget requests that comments be received on or before March 22, 2007 
to ensure their consideration. Comments may address (among other 
things)--
     Whether the proposed collection of information is needed 
for the proper performance of PBGC's functions and will have practical 
utility;
     The accuracy of PBGC's estimate of the burden of the 
proposed collection of information, including the validity of the 
methodology and assumptions used;
     Enhancement of the quality, utility, and clarity of the 
information to be collected; and
     Minimizing the burden of the collection of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology, e.g., permitting 
electronic submission of responses.

List of Subjects

29 CFR Part 4006

    Pension insurance, Pensions.

29 CFR Part 4007

    Penalties, Pension insurance, Pensions, Reporting and recordkeeping 
requirements.

    For the reasons given above, PBGC is amending 29 CFR parts 4006 and 
4007 as follows.

PART 4006--PREMIUM RATES

    1. The authority citation for part 4006 continues to read as 
follows:

    Authority: 29 U.S.C. 1302(b)(3), 1306, 1307.

    2. In Sec.  4006.3:
    a. The introductory text is amended by removing the words ``Sec.  
4006.5 (dealing with exemptions and special rules)'' and adding in 
their place the words ``Sec.  4006.5 (dealing with exemptions and 
special rules) and Sec.  4006.7 (dealing with premiums for certain 
terminated single-employer plans)''; and by removing the words 
``section 4022(a)'' and adding in their place the words ``section 
4022(a) or section 4022A(a)''.
    b. Paragraph (a) introductory text is amended by removing the words 
``multiplied by--'' and adding in their place the words ``multiplied by 
the applicable flat premium rate determined under paragraph (c) of this 
section.''.
    c. Paragraphs (a)(1) and (a)(2) are removed.
    d. Paragraph (b) is revised, and new paragraphs (c) and (d) are 
added, to read as follows:


Sec.  4006.3  Premium rate.

* * * * *
    (b) Variable-rate premium.
    (1) In general. Subject to the limitation in paragraph (b)(2) of 
this section, the variable-rate premium is $9 for each $1,000 of a 
single-employer plan's unfunded vested benefits, as determined under 
Sec.  4006.4.
    (2) Cap on variable-rate premium. If a plan is described in 
paragraph (b)(3) of this section for the premium payment year, the 
variable-rate premium does not exceed $5 multiplied by the square of 
the number of participants in the plan on the last day of the plan year 
preceding the premium payment year. For example, if the number of 
participants in the plan on the last day of the plan year preceding the 
premium payment year is 20, the variable-rate premium does not exceed 
$2,000 ($5 x 20\2\ = $5 x 400 = $2,000).
    (3) Plans eligible for cap. A plan is described in this paragraph 
(b)(3) for the premium payment year if the aggregate number of 
employees of all employers in the plan's controlled group on the first 
day of the premium payment year is 25 or fewer.
    (4) Meaning of ``employee.'' For purposes of paragraph (b)(3) of 
this section, the aggregate number of employees is determined in the 
same manner as under section 410(b)(1) of the Code, taking into account 
the provisions of section 414(m) and (n) of the Code, but without 
regard to section 410(b)(3), (4), and (5) of the Code.
    (c) Applicable flat premium rate. The applicable flat premium rate 
is:
    (1) For a premium payment year beginning before 2006--
    (i) For a single-employer plan, $19, and
    (ii) For a multiemployer plan, $2.60.
    (2) For a premium payment year beginning in 2006--
    (i) For a single-employer plan, $30, and
    (ii) For a multiemployer plan, $8.
    (3) For a premium payment year beginning after 2006, the greater 
of--
    (i) The applicable flat premium rate for plan years beginning in 
the calendar year preceding the calendar year in which the premium 
payment year begins, or
    (ii) The adjusted flat rate determined under paragraph (d) of this 
section for the premium payment year.
    (d) Adjusted flat rate. The adjusted flat rate for a premium 
payment year beginning after 2006 is determined by--
    (1) Multiplying the applicable flat premium rate for 2006 by the 
ratio of--
    (i) The national average wage index (as defined in section 
209(k)(1) of the Social Security Act) for the first of the two calendar 
years preceding the calendar year in which the premium payment year 
begins, to
    (ii) The national average wage index (as so defined) for 2004; and
    (2) Rounding the result to the nearest multiple of $1 (rounding up 
any unrounded result that equals some whole number of dollars plus 50 
cents).
    3. New Sec.  4006.7 is added to read as follows:


Sec.  4006.7  Premium rate for certain terminated single-employer 
plans.

    (a) The premium under this section (``termination premium'') 
applies to a DRA 2005 termination described in Sec.  4007.13 of this 
chapter.
    (b) The amount of the premium under this section that is payable 
with respect to each applicable 12-month period (as described in Sec.  
4007.13 of this chapter) is the number of participants in the plan, 
determined as of the day before the termination date under section 4048 
of ERISA, multiplied by the termination premium rate. In general, the 
termination premium rate is $1,250. However, the termination premium 
rate is $2,500 for an ``eligible plan'' under section 402(c)(1) of the 
Pension Protection Act of 2006 (dealing with certain plans of 
commercial passenger airlines and airline catering services) while an 
election under section 402(a)(1) of the Pension Protection Act of 2006 
(dealing with alternative funding schedules) is in effect for the plan 
if the plan terminates during the five-year period beginning on the 
first day of the first applicable plan year (as defined in section 
402(c)(2) of that Act) with respect to the plan, unless the Secretary 
of Labor determines that the plan terminated as a result of 
extraordinary circumstances such as a terrorist attack or other similar 
event.

[[Page 7761]]

    (c) The premium under this section is in addition to any other 
premium under this part.
    (d) See Sec.  4007.13 of this chapter for further rules about 
termination premiums.

PART 4007--PAYMENT OF PREMIUMS

    4. The authority citation for part 4007 continues to read as 
follows:

    Authority: 29 U.S.C. 1302(b)(3), 1303(a), 1306, 1307.

    5. Section 4007.3 is amended by removing the words ``The plan 
administrator'' and adding in their place the words ``Subject to the 
provisions of Sec.  4007.13, the plan administrator''; and by removing 
``Sec.  4007.11'' and adding in its place the words ``this part''.
    6. In Sec.  4007.7, paragraph (a) is amended by removing ``Sec.  
4007.11'' and adding in its place the words ``this part''.
    7. In Sec.  4007.8:
    a. Paragraph (a) introductory text is amended by removing the words 
``If any premium payment due'' and adding in their place the words 
``Subject to the provisions of Sec.  4007.13, if any premium payment 
due''; and by removing ``Sec.  4007.11'' and adding in its place the 
words ``this part''.
    b. Paragraph (a)(1)(i) is amended by removing the word ``plan's''.
    c. Paragraph (a)(1) introductory text is revised to read as 
follows:


Sec.  4007.8  Late payment penalty charges.

    (a) Penalty charge. * * *
    (1) Penalty rate; in general. Except as provided in paragraph 
(a)(2) of this section, the penalty rate is--
* * * * *
    8. In Sec.  4007.9, paragraph (a) is amended by removing the words 
``by a plan administrator''; and by removing the words ``that plan's'' 
and adding in their place the words ``a plan's''.
    9. In Sec.  4007.10:
    a. Paragraph (a)(1) is amended by removing the words ``plan 
administrator'' and adding in their place the words ``designated 
recordkeeper under paragraph (a)(3) of this section''.
    b. Paragraph (a)(2) is amended by removing the words ``The plan 
administrator'' and adding in their place the words ``A designated 
recordkeeper''.
    c. Paragraph (b) is amended by removing the words ``for any premium 
payment year''.
    d. Paragraph (c)(1) is amended by removing the words ``The plan 
administrator'' and adding in their place the words ``A designated 
recordkeeper''.
    e. Paragraph (c)(2) is amended by removing the words ``the plan 
administrator'' and adding in their place the words ``a designated 
recordkeeper''.
    f. Paragraph (c)(2)(ii) is amended by removing the words ``plan 
administrator'' and adding in their place the words ``designated 
recordkeeper''.
    g. New paragraph (a)(3) is added to read as follows:


Sec.  4007.10  Recordkeeping; audits; disclosure of information.

    (a) Retention of records to support premium payments.
* * * * *
    (3) Designated recordkeepers.
    (i) With respect to the flat-rate and variable-rate premiums 
described in Sec.  4006.3 of this chapter, the plan administrator is 
the designated recordkeeper.
    (ii) With respect to the premium for certain terminated single-
employer plans described in Sec.  4006.7 of this chapter, each person 
who was a contributing sponsor of such a plan, or was a member of a 
contributing sponsor's controlled group, as of the day before the 
plan's termination date is a designated recordkeeper.
* * * * *
    10. In Sec.  4007.11:
    a. Paragraph (a) introductory text is amended by removing the words 
``The premium filing due date for small plans'' and adding in their 
place the words ``For flat-rate and variable-rate premiums, the premium 
filing due date for small plans''.
    b. Paragraph (a)(3) introductory text is amended by removing the 
words ``the premium form or forms and payment or payments for the short 
plan year shall be filed by'' and adding in their place the words ``the 
due date or dates for the flat-rate premium and any variable-rate 
premium for the short plan year are''; and by removing the words ``for 
the premium forms and payments''.
    c. Paragraph (c) introductory text is amended by removing the words 
``the premium form and all premium payments due for the first plan year 
of coverage of any new plan or newly covered plan shall be filed on or 
before'' and adding in their place the words ``the due date for the 
flat-rate premium and any variable-rate premium for the first plan year 
of coverage of any new plan or newly covered plan shall be''.
    d. Paragraph (d) is amended by removing the words ``to file the 
forms or forms prescribed by this part and to pay any premiums due'' 
and adding in their place the words ``to make flat-rate and (as 
applicable) variable-rate premium filings and payments under this 
part''; and by removing the last sentence of the paragraph (beginning 
``The entire * * *'' and ending ``* * * Sec.  4006.5(f).'').
    e. Paragraph (e) is removed.
    11. In Sec.  4007.12, paragraph (a) is amended by removing the 
words ``to file the applicable forms and to submit the premium 
payment'' and adding in their place the words ``to make flat-rate and 
variable-rate premium filings and payments under this part''; and by 
removing the words ``liable for premium payments'' and adding in their 
place ``liable for flat-rate and variable-rate premium payments''.
    12. New Sec.  4007.13 is added to read as follows:


Sec.  4007.13  Premiums for certain terminated single-employer plans.

    (a) Applicability.
    (1) In general. This section applies where there is a ``DRA 2005 
termination'' of a plan. Subject to paragraph (a)(2) of this section, 
there is a DRA 2005 termination where a single-employer plan's 
termination date under section 4048 of ERISA is after 2005 and either--
    (i) The plan terminates under section 4042 of ERISA, or
    (ii) The plan terminates under section 4041(c) of ERISA and at 
least one contributing sponsor or member of a contributing sponsor's 
controlled group meets the requirements of section 4041(c)(2)(B)(ii) or 
(iii) of ERISA.
    (2) Plans terminated during reorganization proceedings. Except as 
provided in paragraph (a)(3) of this section, a DRA 2005 termination of 
a plan does not occur where as of the plan's termination date under 
section 4048 of ERISA--
    (i) A bankruptcy proceeding has been filed by or against any person 
that was a contributing sponsor of the plan on the day before the 
plan's termination date or that was on that day a member of any 
controlled group of which any such contributing sponsor was a member,
    (ii) The proceeding is pending as a reorganization proceeding under 
chapter 11 of title 11, United States Code (or under any similar law of 
a State or political subdivision of a State),
    (iii) The person has not been discharged from the proceeding, and
    (iv) The proceeding was filed before October 18, 2005.
    (3) Special rule for certain airline-related plans. Paragraph 
(a)(2) of this section does not apply to an ``eligible plan'' under 
section 402(c)(1) of the Pension Protection Act of 2006 (dealing with 
certain plans of commercial passenger airlines and airline catering 
services) while an election under section 402(a)(1) of the Pension 
Protection Act of 2006 (dealing with alternative funding schedules) is 
in effect for the plan.

[[Page 7762]]

    (4) Termination premium. A premium as described in Sec.  4006.7 of 
this chapter is payable to PBGC with respect to a DRA 2005 termination 
each year for three years after the termination (the ``termination 
premium'').
    (b) Filing requirements; method of filing. Notwithstanding Sec.  
4007.3, in the case of a DRA 2005 termination of a plan, each person 
that was a contributing sponsor of the plan on the day before the 
plan's termination date or that was on that day a member of any 
controlled group of which any such contributing sponsor was a member is 
responsible for filing prescribed termination premium information and 
payments. Any such person may file on behalf of all such persons.
    (c) Late payment penalty charges. Notwithstanding Sec.  4007.8(a), 
if any required termination premium payment is not filed by the due 
date under paragraph (d) of this section, PBGC may assess a late 
payment penalty charge based on the facts and circumstances, subject to 
waiver under Sec.  4007.8(b), (c), (d), or (e). The charge will not 
exceed the amount of termination premium not timely filed.
    (d) Due dates. Notwithstanding Sec.  4007.11, the due date for the 
termination premium is the 30th day of each of three applicable 12-
month periods. The three applicable 12-month periods with respect to a 
DRA 2005 termination of a plan are--
    (1) First applicable 12-month period. Except as provided in 
paragraph (e) or (f) of this section, the period of 12 calendar months 
beginning with the first calendar month following the calendar month in 
which occurs the plan's termination date under section 4048 of ERISA, 
and
    (2) Subsequent applicable 12-month periods. Each of the first two 
periods of 12 calendar months that immediately follow the first 
applicable 12-month period.
    (e) Certain reorganization cases.
    (1) This paragraph (e) applies with respect to a DRA 2005 
termination of a plan if the conditions in both paragraph (e)(2) and 
paragraph (e)(3) of this section are satisfied.
    (2) The condition of this paragraph (e)(2) is that either--
    (i) The plan terminates under section 4042 of ERISA, or
    (ii) The plan terminates under section 4041(c) of ERISA and at 
least one contributing sponsor or member of a contributing sponsor's 
controlled group meets the requirements of section 4041(c)(2)(B)(ii) of 
ERISA.
    (3) The condition of this paragraph (e)(3) is that as of the plan's 
termination date under section 4048 of ERISA--
    (i) A bankruptcy proceeding has been filed by or against any person 
that was a contributing sponsor of the plan on the day before the 
plan's termination date or that was on that day a member of any 
controlled group of which any such contributing sponsor was a member,
    (ii) The proceeding is pending as a reorganization proceeding under 
chapter 11 of title 11, United States Code (or under any similar law of 
a State or political subdivision of a State), and
    (iii) The person has not been discharged from the proceeding.
    (4) If this paragraph (e) applies with respect to a DRA 2005 
termination of a plan, then except as provided in paragraph (f) of this 
section, the first applicable 12-month period with respect to the plan 
is the period of 12 calendar months beginning with the first calendar 
month following the calendar month in which occurs the earliest date 
when, for every person that was a contributing sponsor of the plan on 
the day before the plan's termination date under section 4048 of ERISA, 
or that was on that day a member of any controlled group of which any 
such contributing sponsor was a member, either--
    (i) There is not pending any bankruptcy proceeding that was filed 
by or against such person and that was, as of the plan's termination 
date under section 4048 of ERISA, a reorganization proceeding under 
chapter 11 of title 11, United States Code (or under any similar law of 
a State or political subdivision of a State), or
    (ii) The person has been discharged from any such proceeding, or
    (iii) The person no longer exists.
    (f) Retroactive plan termination date. If a plan's termination date 
under section 4048 of ERISA is in the past when it is established by 
agreement or court action as described in section 4048 of ERISA, then 
the first applicable 12-month period for determining the due dates of 
the termination premium begins with the later of--
    (1) The first calendar month following the calendar month in which 
the termination date is established by agreement or court action as 
described in section 4048 of ERISA, or
    (2) The first calendar month specified in paragraph (d)(1) of this 
section or (if paragraph (e) of this section applies) paragraph (e)(4) 
of this section.
    (g) Liability for termination premiums. In the case of a DRA 2005 
termination of a plan, each person that was a contributing sponsor of 
the plan on the day before the plan's termination date, or that was on 
that day a member of any controlled group of which any such 
contributing sponsor was a member, is jointly and severally liable for 
termination premiums with respect to the plan.

    Issued in Washington, DC, this 13th day of February, 2007.
Vincent K. Snowbarger,
Interim Director, Pension Benefit Guaranty Corporation.
 [FR Doc. E7-2812 Filed 2-16-07; 8:45 am]
BILLING CODE 7709-01-P