Owner-Participant Changes to Guaranteed Benefits and Asset Allocation, 49799-49806 [2018-21551]

Agencies

• Pension Benefit Guaranty Corporation

[Federal Register Volume 83, Number 192 (Wednesday, October 3, 2018)]
[Rules and Regulations]
[Pages 49799-49806]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-21551]


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PENSION BENEFIT GUARANTY CORPORATION

29 CFR Parts 4001, 4022, 4043, and 4044

RIN 1212-AB24


Owner-Participant Changes to Guaranteed Benefits and Asset 
Allocation

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Final rule.

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SUMMARY: The Pension Benefit Guaranty Corporation (PBGC) is amending 
its regulations on guaranteed benefits and asset allocation. These 
amendments incorporate statutory changes to the rules for participants 
with certain ownership interests in a plan sponsor.

DATES: Effective Date: This rule is effective November 2, 2018.
    Applicability: Like the provisions of the Pension Protection Act of 
2006 (PPA 2006) that this rule incorporates, the amendments in this 
final rule are applicable to plan terminations--
    (A) under section 4041(c) of the Employee Retirement Income 
Security Act of 1974 (ERISA) with respect to which notices of intent to 
terminate are provided under section 4041(a)(2) of ERISA after December 
31, 2005, and
    (B) under section 4042 of ERISA with respect to which notices of 
determination are provided under that section after December 31, 2005.

FOR FURTHER INFORMATION CONTACT: Samantha M. Lowen 
([email protected]), Attorney, Regulatory Affairs Division, 
Office of the General Counsel, Pension Benefit Guaranty Corporation, 
1200 K Street NW, Washington, DC 20005-4026; 202-326-4400, extension 
3786. (TTY users may call the Federal relay service toll-free at 800-
877-8339 and ask to be connected to 202-326-4400, extension 3786.)

SUPPLEMENTARY INFORMATION:

Executive Summary

Purpose of the Regulatory Action

    This final rule is necessary to conform the regulations of PBGC to 
current law and practice. PBGC is incorporating statutory changes 
affecting guaranteed benefits and asset allocation when a plan has one 
or more participants with certain ownership interests in the plan 
sponsor. PBGC's legal authority for this action comes from sections 
4002(b)(3), 4022, and 4044 of ERISA. Section 4002(b)(3) authorizes PBGC 
to issue regulations to carry out the purposes of title IV of ERISA. 
Sections 4022 and 4044 authorize PBGC to prescribe regulations 
regarding the determination of guaranteed benefits and the allocation 
of assets within priority categories, respectively.

Major Provisions

    This final rule amends PBGC's benefit payment regulation by 
replacing the guarantee limitations applicable to substantial owners 
with a new limitation applicable to majority owners.\1\ Additionally, 
this final rule amends PBGC's asset allocation regulation by 
prioritizing funding of all other benefits in priority category 4 ahead 
of those benefits that would be guaranteed but for the new limitation. 
The rulemaking also clarifies that plan administrators may continue to 
use the simplified calculation in the existing rule to estimate 
benefits funded by plan assets. Finally, it provides new examples to 
aid in implementation.
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    \1\ In this preamble, substantial owners and majority owners are 
referred to interchangeably as ``owner-participants.''
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Background

    PBGC administers the pension insurance program under title IV of 
ERISA. ERISA sections 4022 and 4044 cover PBGC's guarantee of plan 
benefits and allocation of plan assets, respectively, under terminated 
single-employer plans. Special provisions within these sections apply 
to ``owner-participants,'' who have certain ownership interests in 
their plan sponsors. PPA 2006 made changes to these provisions. PBGC 
has been operating in accordance with the amended provisions since they 
became effective, but had not yet updated its regulations nor issued 
guidance on implementation. With this rulemaking, PBGC is increasing 
transparency into its operations and is clarifying for plan 
administrators the impact of the statutory changes.
    Before PPA 2006, the owner-participant provisions applied to any 
participant who was a ``substantial owner'' at any time within the 60 
months preceding the date on which the determination was made. Section 
4021(d) of ERISA defines a substantial owner as an individual who owns 
the entire interest in an unincorporated trade or business, or a 
partner or shareholder who owns more than 10 percent of the partnership 
or corporation. PPA 2006 revised the owner-participant provisions, in 
large part, by making them applicable to ``majority owners'' instead of 
substantial owners. Section 4022(b)(5)(A) of ERISA defines a majority 
owner as an individual who owns the entire interest in an 
unincorporated trade or business, or a partner or shareholder who owns 
50 percent or more of the entity.
    On March 7, 2018 (at 83 FR 9716), PBGC published a proposed rule to 
amend parts 4001, 4022, 4041, 4043, and 4044 to incorporate statutory 
changes to the rules for participants with certain ownership interests 
in a plan sponsor. PBGC received no comments on the proposed rule.
    The final regulation is the same as the proposed regulation with 
two exceptions discussed below: PBGC is adding clarifying language to 
Sec.  4022.26 of the benefit payment regulation, concerning PPA 2006 
bankruptcy terminations; and PBGC is not making the proposed amendment 
to its regulation on Termination of Single-Employer Plans (29 CFR part 
4041).

Guaranteed Benefits Before and After PPA 2006

    ERISA section 4022 imposes several limitations on PBGC's guarantee 
of plan benefits, including the ``phase-in limitation.'' As the name of 
this limitation suggests, PBGC's guarantee of a plan's benefits is 
phased in over a specified time period. Before PPA 2006, this time 
period was drastically different for owner-participants and for all 
other participants; the benefits of owner-participants were phased in 
over 30 years, whereas the benefits of non-owner-participants were 
phased in over five years. In addition, the extent to which an owner-
participant's benefit was phased in was unique to each owner-
participant and based on the number of years he or she was an active 
participant in the plan; whereas the extent to which all other 
participants' benefits were phased in was based on the number of years 
a plan provision--specifically, one that increased benefits--was in 
effect before the plan terminated.
    PPA 2006 greatly simplified the method for determining PBGC's 
guarantee of owner-participants'

[[Page 49800]]

benefits by eliminating the 30-year phase-in and making the five-year 
phase-in of benefit increases applicable to owner-participants and non-
owner-participants alike. PPA 2006 then applies a separate, additional 
limitation--the ``owner-participant limitation''--to an owner-
participant's otherwise guaranteed benefit. This owner-participant 
limitation is similar to the five-year phase-in limitation on benefit 
increases, as it is calculated based on a plan's age; however, it is 
based on the length of time the original plan was in existence, 
regardless of whether the plan increased benefits, and the phase-in 
period is 10 years. The owner-participant limitation bears little 
resemblance to the 30-year phase-in limitation, and the calculations 
are much simpler. This final rule incorporates these changes to PBGC's 
benefit payment regulation.

Phase-in Limitation

    Before this rulemaking, Sec. Sec.  4022.25 and 4022.26 of PBGC's 
benefit payment regulation provided the procedures for calculating the 
five-year phase-in of benefit increases for non-owner-participants and 
the 30-year phase-in of all benefits for owner-participants, 
respectively. Section 4022.25 provided, generally, that benefit 
increases (as defined in Sec.  4022.2) of non-owner-participants were 
phased in by the greater of $20 or 20 percent of the increase for each 
full year the increase was effective. Section 4022.26 provided the much 
more complicated procedures for calculating the guaranteed benefits of 
owner-participants--based on a 30-year phase-in--before PPA 2006; 
different procedures applied depending on whether or not there had been 
any benefit increases. As explained above, PPA 2006 eliminated the 30-
year phase-in limitation and made the five-year phase-in of benefit 
increases applicable to all participants, including owner-participants. 
Accordingly, PBGC is amending the benefit payment regulation by 
removing the distinction between owner-participants and all other 
participants under Sec.  4022.25, and PBGC is amending Sec.  4022.26 by 
replacing the 30-year phase-in limitation with a new ``owner-
participant limitation,'' as discussed next.

Owner-Participant Limitation

    PPA 2006 provided a new formula for determining PBGC's guarantee of 
an owner-participant's benefit. Under this owner-participant 
limitation, an owner-participant's guaranteed benefit is limited to the 
product of the owner-participant's otherwise-guaranteed benefit and a 
fraction, not to exceed one. The numerator of this fraction equals the 
number of years that the plan was in existence (from the later of its 
effective date or adoption date), and the denominator equals 10.
    Compared to the 30-year phase-in under the old statute, which had 
been implemented at Sec.  4022.26 of the benefit payment regulation, 
the owner-participant limitation is much simpler to calculate and 
generally provides a much more generous guarantee. Before PPA 2006, 
PBGC needed to make individualized determinations about the length of 
time each substantial owner was an active participant in a plan over a 
30-year period. Additionally, a substantial owner needed to have been 
an active participant for at least 30 years in order for his or her 
benefit to be fully guaranteed (to the extent that other limitations on 
PBGC's guarantee did not apply). Under PPA 2006, PBGC needs only to 
calculate a single fraction, based on the age of the plan, and then to 
multiply the benefit of each majority owner under the plan by that same 
fraction. In addition, all majority owners' benefits are now fully 
guaranteed (to the extent that other limitations on PBGC's guarantee do 
not apply) once a plan has been in existence for 10 years.
    Consistent with these statutory changes, PBGC is amending the 
benefit payment regulation by replacing references to ``substantial 
owner'' with ``majority owner'' and by revising Sec.  4022.26 to 
provide the formula for calculating the owner-participant limitation, 
in the place of the 30-year phase-in limitation. In addition to the 
revisions described in the proposed rule, PBGC is adding language to 
Sec.  4022.26 to clarify that in a PPA 2006 bankruptcy termination, the 
length of time that the plan was in existence is measured from the 
later of the effective date or the adoption date of the plan to the 
bankruptcy filing date.\2\
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    \2\ See ``Related Regulatory Amendments'' section below.
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Asset Allocation in Priority Category 4 Before and After PPA 2006

    ERISA section 4044 prescribes the method for allocating a 
terminated single-employer plan's assets to its benefit liabilities. 
Under section 4044, plan assets must be allocated to six priority 
categories (PC1 through PC6, with PC1 being the highest) into which all 
plan benefits are sorted. Benefits affected by the owner-participant 
limitation are assigned to priority category 4 (PC4). PPA 2006 changed 
the method for allocating assets within PC4 when there are benefits 
affected by the owner-participant limitation.
    PC4 includes three kinds of benefits: (1) Guaranteed benefits, 
other than employee contributions and benefits that could have been in 
pay status three or more years before a plan's termination (or before 
the plan sponsor's bankruptcy filing date, for plans subject to ERISA 
section 4022(g)); (2) benefits that would be guaranteed but for the 
aggregate limit of ERISA section 4022B; and (3) benefits that would be 
guaranteed but for the owner-participant limitation (based on 
substantial ownership before PPA 2006 and majority ownership after PPA 
2006).\3\ If a plan's assets are sufficient to cover all PC4 benefits 
or are insufficient to cover any PC4 benefits, the PPA 2006 changes for 
owner-participants have no bearing on the allocation; however, if 
assets are sufficient to cover some, but not all, PC4 benefits (i.e., 
if assets are ``exhausted in PC4''), the allocation rules differ before 
and after PPA 2006.
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    \3\ Strictly speaking, this description applies to benefits in 
``net PC4,'' given that ``PC4'' (or, more accurately, ``gross PC4'') 
technically includes the three kinds of benefits listed, as well as 
all benefits in higher priority categories. Without using the terms 
``gross'' or ``net,'' PBGC's asset allocation regulation makes this 
distinction at paragraph (c) of Sec.  4044.10 (``[t]he value of each 
participant's basic-type benefit or benefits in a priority category 
shall be reduced by the value of the participant's benefit of the 
same type that is assigned to a higher priority category''). 
Nevertheless, PBGC recognizes that colloquial descriptions of 
benefits in a given priority category usually refer to the net 
benefits in that category, and this preamble follows that common 
usage, unless otherwise indicated.
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    Before PPA 2006, if assets were exhausted in PC4, then assets were 
to be allocated pro rata among all three kinds of PC4 benefits. Under 
PPA 2006, if assets are exhausted in PC4, then assets must first be 
allocated to the first two PC4 groups; only if assets cover all 
benefits in these two groups will any assets be allocated to benefits 
that would be guaranteed but for the majority-owner limitation. In 
accordance with these statutory changes, PBGC is amending the asset 
allocation regulation by prioritizing other PC4 benefits to those 
affected by the majority-owner limitation.

Calculation of Estimated Benefits

    In a distress termination, Sec.  4022.61 of the benefit payment 
regulation--implementing section 4041(c)(3)(D) of ERISA--requires plan 
administrators to limit benefit payments to estimates of the amounts 
that PBGC is expected to pay, in order to minimize potential 
overpayments and exhaustion of plan assets before PBGC becomes trustee 
and is able to assume benefit payments. As trustee, PBGC pays each 
participant the

[[Page 49801]]

greater of his or her guaranteed benefit or asset-funded benefit.\4\ 
Accordingly, Sec.  4022.61 requires plan administrators to limit 
benefits in pay status to the greater of each participant's estimated 
guaranteed benefit or estimated asset-funded benefit, beginning on the 
proposed termination date.\5\
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    \4\ A participant's asset-funded benefit is essentially the 
portion of the participant's plan benefit that plan assets are 
sufficient to fund when assets are allocated according to the 
distribution rules of ERISA section 4044.
    \5\ PBGC's benefit payment regulation does not currently include 
the term ``estimated asset-funded benefit''; the term ``estimated 
title IV benefit'' is used instead. As discussed later in this 
preamble, PBGC is replacing the term ``estimated title IV benefit'' 
with ``estimated asset-funded benefit.'' Consistent with the 
terminology change, this preamble refers to estimated asset-funded 
benefits and not to estimated title IV benefits, except where 
otherwise indicated.
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Estimated Guaranteed Benefits

    A participant's estimated guaranteed benefit is determined as of 
the proposed termination date and is the portion of the participant's 
plan benefit (viz., the benefit to which the participant would be 
entitled under the terms of the plan if the plan did not terminate) 
that does not exceed the estimated legal limits of PBGC's guarantee. 
Section 4022.62 of the benefit payment regulation prescribes the method 
for estimating PBGC's guarantee limitations and for calculating a 
participant's estimated guaranteed benefit.
    As discussed above, the changes under PPA 2006 greatly affected the 
calculation of guaranteed benefits of owner-participants. Therefore, in 
order to ensure that administrators of plans with owner-participants 
understand how to accurately estimate these benefits in distress 
terminations, PBGC must update the calculation procedures.
    Section 4022.62 provides two methods for calculating estimated 
guaranteed benefits. One method--given at paragraph (c)--applies to 
non-owner-participants, while the other--given at paragraph (d)--
applies to owner-participants. Both methods' calculations use the 
amount calculated under paragraph (b) as a starting point. Paragraph 
(b) estimates a participant's benefit that would be guaranteed before 
application of any phase-in limitation. Paragraph (c) estimates the 
effect of the five-year phase-in limitation on the paragraph (b) 
amount. Paragraph (d) estimates the effect of the 30-year phase-in 
limitation applicable to owner-participants before PPA 2006 on the 
paragraph (b) amount.
    In order to reflect the changes to PBGC's guarantee limitations for 
owner-participants under PPA 2006, PBGC is revising paragraph (d) in 
its entirety. As revised, paragraph (d) no longer estimates the effect 
of the 30-year phase-in limitation on the paragraph (b) amount; rather, 
paragraph (d) estimates the effect of the owner-participant limitation 
(using the \n\/10 ratio that PPA 2006 introduced) on the 
paragraph (c) amount. The revised paragraph (d) uses the paragraph (c) 
amount instead of the paragraph (b) amount because the five-year phase-
in limitation is now applicable to all participants (including majority 
owners).

Estimated Asset-Funded Benefits

    A participant's estimated asset-funded benefit is the portion of 
the participant's plan benefit that plan assets are expected to be 
sufficient to fund through PC4, based on estimated plan assets and 
benefits in each priority category. Section 4022.63 of the benefit 
payment regulation prescribes two methods for calculating estimated 
asset-funded benefits; one applies to non-owner-participants and the 
other applies to owner-participants. Essentially, Sec.  4022.63 
provides that a non-owner-participant's estimated asset-funded benefit 
equals his or her estimated PC3 benefit and that an owner-participant's 
estimated asset-funded benefit equals the greater of his or her 
estimated PC3 benefit or estimated PC4 benefit. The PPA 2006 changes 
for owner-participants have no bearing on estimated PC3 benefits; 
however, the PPA 2006 change to asset allocation had the potential to 
affect the calculation of estimated PC4 benefits, which are payable 
only to owner-participants.
    An owner-participant's estimated PC4 benefit equals the product of 
what would be his or her estimated guaranteed benefit if the 
participant were not an owner-participant and the ``PC4 funding 
ratio.'' The PC4 funding ratio is calculated one of two ways, depending 
on whether a plan has any benefits in PC3 (viz., whether a plan has 
benefits that were or could have been in pay status three years before 
the proposed termination date). If a plan has no PC3 benefits, the PC4 
funding ratio essentially equals the estimated amount of plan assets 
divided by the estimated amount of vested benefits under the plan.\6\ 
If a plan has PC3 benefits, the PC4 funding ratio essentially equals 
the estimated amount of plan assets minus the present value of all 
benefits in pay status, all divided by the estimated amount of vested 
benefits not in pay status.\7\
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    \6\ The PC4 funding ratio excludes assets and benefits that are 
attributable to employee contributions. See 29 CFR 4022.63(d)(2).
    \7\ See note 5.
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    By calculating and then using a plan's PC4 funding ratio, an 
administrator is able to estimate the amount of assets available to 
fund all benefits in PC4. This ratio does not distinguish between 
owner-participants' benefits and all other benefits in PC4, as this 
distinction was not necessary before PPA 2006, when assets were to be 
allocated equally among the three kinds of PC4 benefits. As a result, 
while the PC4 funding ratio is a useful tool for estimating assets 
available to fund all benefits in PC4 (including those of substantial 
owners before PPA 2006), it does not account for the requirement under 
PPA 2006 to fund the benefits of majority owners only if assets remain 
after funding all other benefits in PC4.
    Under PPA 2006, continued use of the PC4 funding ratio is more 
likely to result in an inflated estimate of assets available to fund a 
majority owner's benefit. While this potential overestimation increases 
the likelihood that a majority owner's estimated benefit will exceed 
his or her actual benefit entitlement, it has no bearing on--in 
particular, it does not reduce--the estimated benefits of other 
participants. This is because the PC4 ratio is used only when 
calculating the estimated asset-funded benefit of an owner-participant. 
As stated above, the estimated asset-funded benefits of non-owner-
participants equal the participants' estimated PC3 benefits. Because 
PC3 benefits receive higher allocation priority than PC4 benefits, the 
estimated asset-funded benefit of any non-owner-participant will not be 
affected by the allocation of assets in PC4.
    Even without any potential harm to other participants, the concern 
remains for potentially overpaying majority owners who receive 
estimated benefits. Weighed against this concern is consideration of 
the potential burden on plan administrators that more robust estimation 
procedures would impose. Modifying the PC4 funding ratio to account for 
the funding prioritization of other PC4 benefits ahead of those of 
majority owners would require additional calculations that would 
undermine the requirement of administrators to ``estimate'' asset-
funded benefits, as opposed to performing more precise calculations 
outright. Moreover, far fewer participants are likely to be majority 
owners, compared to the number likely to have been substantial owners 
before PPA 2006. This is because majority

[[Page 49802]]

owners must have an ownership interest of at least 50 percent and 
because the majority-owner limitation does not apply to any plan that 
existed for at least 10 years before terminating.
    Having weighed the concerns and chiefly recognizing the limited 
number of cases where a plan will have one or more majority owners as 
well as assets sufficient to fund some, but not all, benefits in PC4, 
PBGC is leaving its estimated asset-funded benefit provisions at Sec.  
4022.63 substantively unchanged, with the sole exception of revising 
Example 2 under paragraph (e). Example 2 illustrates how to calculate 
the estimated asset-funded benefit of an owner-participant and 
describes the related calculation of the owner-participant's estimated 
guaranteed benefit under Sec.  4022.62. The revisions to Example 2 
reflect the changes to Sec.  4022.62 discussed above.

Related Regulatory Amendments

    PBGC is making conforming amendments to its regulations on 
Terminology and Reportable Events and Certain Other Notification 
Requirements.
    The final rule retains the long-standing definition of ``majority 
owner'' in Sec.  4041.2 of PBGC's regulation on Termination of Single-
Employer Plans for the limited purposes of that part. The changes in 
PPA 2006, including adding a definition of ``majority owner'' to 
section 4022(b)(5)(A) of ERISA, were aimed at other purposes. PBGC is 
retaining its definition of majority owner in Sec.  4041.2 so that the 
individuals who are permitted to elect an alternative treatment of 
their benefits are not changed.\8\
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    \8\ Section 4041.21(b)(2) of PBGC's regulation on Termination of 
Single-Employer Plans provides that a majority owner may forgo a 
portion of his or her benefit to the extent needed to allow an 
underfunded plan to terminate in a standard termination.
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    PBGC is correcting paragraph (e) of Sec.  4022.62, which currently 
provides that in a PPA 2006 bankruptcy termination, ``bankruptcy filing 
date'' is substituted for ``proposed termination date'' in paragraph 
(c) of Sec.  4022.62, by making the substitution applicable to both 
paragraph (c) (applicable to non-owner-participants) and paragraph (d) 
(applicable to owner-participants) of Sec.  4022.62. It is clear from 
the preamble to the final rule that added paragraph (e) that PBGC 
intended, consistent with PPA 2006, to have the applicable ``bankruptcy 
filing date'' substituted when calculating the estimated benefits of 
all participants, regardless of ownership status.\9\
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    \9\ See 76 FR 34590, 34596 (June 14, 2011) (``[t]he final 
regulation provides that for any PPA 2006 bankruptcy termination, 
those estimated benefits [calculated under 29 CFR 4022.62-4022.63] 
are based on the rules described above relating to the bankruptcy 
filing date'').
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    In addition, PBGC is adding language to the revised Sec.  4022.26 
to clarify that in a PPA 2006 bankruptcy termination, the length of 
time that the plan was in existence is measured from the later of the 
effective date or the adoption date of the plan to the bankruptcy 
filing date. This new language mirrors the application of ERISA section 
4022(g) elsewhere in the benefit payment regulation. Section 4022(g) 
provides that in a PPA 2006 bankruptcy termination, PBGC is to treat 
the bankruptcy filing date as the plan's termination date when applying 
ERISA section 4022.
    ERISA section 4022(b)(5)(B) specifies that the numerator of the 
\n\/10 fraction used in calculating an owner-participant's 
guaranteed benefit is the number of years from the later of the 
effective or adoption date of the plan to the plan's termination date. 
Therefore, as Section 4022(g) requires, this final rule provides that 
``bankruptcy filing date'' is substituted for ``termination date'' in 
the formula for calculating a majority owner's guaranteed benefit in a 
PPA 2006 bankruptcy termination.
    By contrast, ERISA section 4022(b)(5)(A) provides that the 60-month 
time period for determining majority-owner status ends on ``the date 
the determination is being made.'' The statute is unclear as to whether 
the Section 4022(g) substitution rule should apply if PBGC generally 
treats the date of determination as the plan's termination date. This 
rulemaking clarifies that the time period for determining whether a 
participant is a majority owner--viz., the time period prescribed in 
ERISA section 4022(b)(5)(A) as ``the 60-month period ending on the date 
the determination is being made''--ends on the plan's termination date, 
even in a PPA 2006 bankruptcy termination. This is consistent with 
PBGC's valuation of a plan's assets and liabilities as of the plan's 
termination date, and PBGC's determination of the liable controlled 
group as of that date. It is also consistent with PBGC's interpretation 
of Section 4022(g) in its final rule on PPA 2006 bankruptcy 
terminations.\10\ Section 4022(g) serves to limit PBGC's guarantee of 
benefits to a participant's accrued plan benefit at the bankruptcy 
filing date. Substituting the bankruptcy filing date for the 
termination date in applying the owner-participant guarantee limitation 
furthers this purpose; substituting the bankruptcy filing date for the 
termination date in determining majority-owner status does not.
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    \10\ See 76 FR 34590, 34595-96 (June 14, 2011) (noting that an 
overly broad interpretation of section 4022(g) or the similar 
section 4044(e) of ERISA would present some anomalies).
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Amendments Unrelated to PPA 2006

    PBGC is making minor, non-substantive changes to the examples not 
involving owner-participants at Sec. Sec.  4022.62 and 4022.63 of the 
benefit payment regulation, in order to improve readability. 
Additionally, PBGC is correcting two clerical errors that were made 
when PBGC previously amended the regulation; the first duplicated 
paragraph (f) of Sec.  4022.62, and the second duplicated the 
designation of paragraph (c)(1) of Sec.  4022.63. Lastly, PBGC is 
replacing the term ``estimated title IV benefit'' with ``estimated 
asset-funded benefit'' at Sec.  4022.63.
    The use of the term ``estimated title IV benefit'' at Sec.  4022.63 
of the benefit payment regulation is confusing, in light of the 
definition of ``title IV benefit'' at Sec.  4001.2 of the terminology 
regulation. Section 4001.2 provides, generally, that a participant's 
title IV benefit equals the greater of his or her guaranteed benefit or 
asset-funded benefit. Given this definition, one might assume that the 
estimated title IV benefit equals the greater of the estimate of a 
participant's guaranteed benefit or the estimate of a participant's 
asset-funded benefit; however, Sec.  4022.63 provides that the 
estimated title IV benefit is essentially an estimate of a 
participant's asset-funded benefit (through PC4) only. Accordingly, 
PBGC is renaming the ``estimated title IV benefit'' referred to in 
Sec.  4022.63 as the ``estimated asset-funded benefit.'' This term only 
appears in Sec.  4022.63; the change does not require any conforming 
amendments elsewhere in PBGC's regulations.

Compliance With Rulemaking Guidelines

Executive Orders 12866, 13563, and 13771

    PBGC has determined that this rulemaking is not a ``significant 
regulatory action'' under Executive Order 12866 and, accordingly, that 
the provisions of Executive Order 13771 do not apply. Because this 
rulemaking is not a significant regulatory action, OMB has not reviewed 
this final rule. Executive Orders 12866 and 13563 direct agencies to 
assess all costs and benefits of available regulatory alternatives and, 
if regulation is necessary, to select regulatory

[[Page 49803]]

approaches that maximize net benefits (including potential economic, 
environmental, public health and safety effects, distributive impacts, 
and equity). Executive Order 13563 emphasizes the importance of 
quantifying both costs and benefits, of reducing costs, of harmonizing 
rules, and of promoting flexibility. If a regulatory action is 
significant under Executive Order 12866, Executive Order 13771 imposes 
additional requirements on the agency.
    Although this is not a significant regulatory action under 
Executive Order 12866, PBGC has examined the economic implications of 
this final rule. PBGC has concluded that because the key aspects of 
this final rule merely incorporate statutory changes that have been 
effective since 2006, neither the public nor PBGC will assume any 
additional costs due to this regulatory action. Moreover, because PBGC 
has been following the statute as amended in 2006, and not the 
inconsistent provisions in its regulations, this rule improves the 
transparency of PBGC operations to the public and provides helpful 
guidance to plan administrators. By leaving unchanged the estimated 
asset-funded benefit calculation procedures under Sec.  4022.63, PBGC 
enables plan administrators to continue to rely confidently on these 
relatively simple procedures, rather than creating more complex 
procedures that could have been contemplated in light of the statutory 
changes. Finally, the revisions to the examples at Sec. Sec.  4022.62 
and 4022.63 will assist plan administrators in complying with the law. 
Accordingly, this final rule will result in a net benefit to the 
public.

Regulatory Flexibility Act

    Under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), 
federal agencies must comply with additional requirements when engaging 
in certain rulemaking activities that are subject to notice and public 
comment. An agency must satisfy these requirements if a final rule is 
likely to have a significant economic impact on a substantial number of 
small entities. Unless an agency determines that a final rule is not 
likely to have a significant economic impact on a substantial number of 
small entities, section 603 of the Regulatory Flexibility Act requires 
that the agency present an initial regulatory flexibility analysis at 
the time of the publication of the final rule. The agency's analysis 
must describe the impact of the rule on small entities, and the agency 
must seek public comment on the impact. Small entities include small 
businesses, organizations, and governmental jurisdictions.
    For purposes of the Regulatory Flexibility Act, with respect to 
this final rule, PBGC considers a small entity to be a plan with fewer 
than 100 participants. This criterion is consistent with certain 
requirements in title I of ERISA \11\ and the Internal Revenue 
Code,\12\ as well as the definition of a small entity that the 
Department of Labor (DOL) has used for purposes of the Regulatory 
Flexibility Act.\13\ While some large employers maintain both small and 
large plans, most small plans are maintained by small employers. In 
light of this, PBGC believes that assessing the impact of the final 
rule on small plans is an appropriate substitute for evaluating the 
effect on small entities. Notably, the definition of small entity 
considered appropriate for this purpose differs from the definition of 
small business--based on size standards--at 13 CFR 121.201, which the 
Small Business Administration promulgated pursuant to the Small 
Business Act. Therefore, PBGC requested public comment on the 
appropriateness of the size standard used in evaluating the impact of 
the proposed rule on small entities. PBGC did not receive any such 
comments.
---------------------------------------------------------------------------

    \11\ See, e.g., ERISA section 104(a)(2), which permits the 
Secretary of Labor to prescribe simplified annual reports for 
pension plans that cover fewer than 100 participants.
    \12\ See, e.g., Code section 430(g)(2)(B), which permits single-
employer plans with 100 or fewer participants to use valuation dates 
other than the first day of the plan year.
    \13\ See, e.g., DOL's final rule on Prohibited Transaction 
Exemption Procedures, 76 FR 66637, 66644 (Oct. 27, 2011).
---------------------------------------------------------------------------

    PBGC certifies under section 605(b) of the Regulatory Flexibility 
Act that this final rule will not have a significant economic impact on 
a substantial number of small entities. This certification is based on 
the fact that this final rule is not likely to have a significant 
economic impact on any entity, regardless of size. This is because 
nearly all aspects of this final rule will merely incorporate statutory 
changes that have been effective for more than a decade, while, as 
discussed in the context of Executive Order 12866 above, the remaining 
few will provide clarity on the accurate estimation of benefits 
required by law, at no additional cost to the public.

List of Subjects

29 CFR Part 4001

    Business and industry, Employee benefit plans, Pension insurance.

29 CFR Parts 4022 and 4043

    Employee benefit plans, Pension insurance, Reporting and 
recordkeeping requirements.

29 CFR Part 4044

    Employee benefit plans, Pension insurance.

    In consideration of the foregoing, PBGC is amending 29 CFR parts 
4001, 4022, 4043, and 4044 as follows:

PART 4001--TERMINOLOGY

0
1. The authority citation for part 4001 continues to read as follows:

    Authority:  29 U.S.C. 1301, 1302(b)(3).

0
2. In Sec.  4001.2:
0
a. Add in alphabetical order a definition for ``Majority owner''; and
0
b. Remove the definition of ``Substantial owner''.
    The addition reads as follows:


Sec.  4001.2   Definitions.

* * * * *
    Majority owner means, with respect to a contributing sponsor of a 
single-employer plan, an individual who owns, directly or indirectly 
(taking into account the constructive ownership rules of section 414(b) 
and (c) of the Code)--
    (1) The entire interest in an unincorporated trade or business;
    (2) 50 percent or more of the capital interest or the profits 
interest in a partnership; or
    (3) 50 percent or more of either the voting stock of a corporation 
or the value of all of the stock of a corporation.
* * * * *

PART 4022--BENEFITS PAYABLE IN TERMINATED SINGLE-EMPLOYER PLANS

0
3. The authority citation for part 4022 continues to read as follows:

    Authority:  29 U.S.C. 1302, 1322, 1322b, 1341(c)(3)(D), and 
1344.


Sec.  4022.2   [Amended]

0
4. In Sec.  4022.2 introductory text:
0
a. Remove the words ``guaranteed benefit'' and add in their place the 
words ``guaranteed benefit, majority owner''; and
0
b. Remove the words ``substantial owner,''.

0
5. Amend Sec.  4022.24 by revising paragraphs (a) and (b) to read as 
follows:


Sec.  4022.24   Benefit increases.

    (a) Scope. This section applies to all benefit increases, as 
defined in Sec.  4022.2, that have been in effect for less than five 
years preceding the termination date.

[[Page 49804]]

    (b) General rule. Benefit increases described in paragraph (a) of 
this section are guaranteeable only to the extent provided in Sec.  
4022.25.
* * * * *


Sec.  4022.25   [Amended]

0
6. In Sec.  4022.25:
0
a. Amend the section heading by removing the words ``for participants 
other than substantial owners''; and
0
b. Amend paragraph (a) by removing the words ``with respect to 
participants other than substantial owners''.

0
7. Revise Sec.  4022.26 to read as follows:


Sec.  4022.26   Benefit guarantee for participants who are majority 
owners.

    (a) Scope. This section applies to the guarantee of all benefits 
described in subpart A of this part (subject to the limitations in 
Sec.  4022.21) with respect to participants who are majority owners at 
the termination date or who were majority owners at any time within the 
five-year period preceding that date.
    (b) Formula. Benefits provided by a plan are guaranteed to the 
extent provided in the following formula: The amount of the 
participant's benefit that PBGC would otherwise guarantee under section 
4022 of ERISA and this part if the participant were not a majority 
owner, multiplied by a fraction not to exceed one, the numerator of 
which is the number of full years from the later of the effective date 
or the adoption date of the plan to the termination date, and the 
denominator of which is 10.
    (c) PPA 2006 bankruptcy termination. In a PPA 2006 bankruptcy 
termination, ``bankruptcy filing date'' is substituted for 
``termination date'' in paragraph (b) of this section.

0
8. In Sec.  4022.62:
0
a. Amend paragraphs (a) and (c) introductory text by removing the four 
instances of the word ``substantial'' and adding in their place the 
word ``majority'';
0
b. Revise paragraph (d);
0
c. Amend paragraph (e) by removing the words ``paragraph (c)'' and 
adding in their place the words ``paragraphs (c) and (d)'';
0
d. Remove the first paragraph (f); and
0
e. Revise remaining paragraph (f).
    The revisions read as follows:


Sec.  4022.62   Estimated guaranteed benefit.

* * * * *
    (d) Estimated guaranteed benefit payable with respect to a majority 
owner. For benefits payable with respect to each participant who is a 
majority owner, the estimated guaranteed benefit is the benefit to 
which he or she would be entitled under paragraph (c) of this section 
but for his or her status as a majority owner, multiplied by a 
fraction, not to exceed one, the numerator of which is the number of 
full years from the later of the effective date or the adoption date of 
the plan to the proposed termination date and the denominator of which 
is 10.
* * * * *
    (f) Examples. This section is illustrated by the following 
examples. (For an example addressing issues specific to a PPA 2006 
bankruptcy termination, see Sec.  4022.25(f).)
    (1) Example 1--(i) Facts. A participant who is not a majority owner 
retired on December 31, 2011, at age 60 and began receiving a benefit 
of $600 per month. On January 1, 2009, the plan had been amended to 
allow participants to retire with unreduced benefits at age 60. 
Previously, a participant who retired before age 65 was subject to a 
reduction of \1/15\ for each year by which his or her actual retirement 
age preceded age 65. On January 1, 2012, the plan's benefit formula was 
amended to increase benefits for participants who retired before 
January 1, 2012. As a result, the participant's benefit was increased 
to $750 per month. There have been no other pertinent amendments. The 
proposed termination date is December 15, 2012.
    (ii) Estimated guaranteed benefit. (A) No reduction is required 
under Sec.  4022.61(b) or (c) because the participant's benefit does 
not exceed either the participant's accrued benefit at normal 
retirement age or the maximum guaranteeable benefit. (Post-retirement 
benefit increases are not considered as increasing accrued benefits 
payable at normal retirement age.)
    (B) The amendment as of January 1, 2009, resulted in a ``new 
benefit'' because the reduction in the age at which the participant 
could receive unreduced benefits increased the participant's benefit 
entitlement at actual retirement age by \5\/15, which is 
more than the 20-percent increase threshold under paragraph (c)(2)(i) 
of this section. The amendment of January 1, 2012, which increased the 
participant's benefit to $750 per month, is a ``benefit improvement'' 
because it is an increase in the amount of benefit for persons in pay 
status. (No percentage test applies in determining whether an increase 
in a pay status benefit is a benefit improvement.)
    (C) The multiplier for computing the amount of the estimated 
guaranteed benefit is taken from the third row of Table I of this 
section (because the last new benefit had been in effect for three full 
years as of the proposed termination date) and column (c) (because 
there was a benefit improvement within the one-year period preceding 
the proposed termination date). This multiplier is 0.55. Therefore, the 
amount of the participant's estimated guaranteed benefit is $412.50 
(0.55 x $750) per month.
    (2) Example 2--(i) Facts. A participant who is not a majority owner 
terminated employment on December 31, 2010. On January 1, 2012, she 
reached age 65 and began receiving a benefit of $250 per month. She had 
completed three years of service at her termination of employment and 
was fully vested in her accrued benefit. The plan's vesting schedule 
had been amended on July 1, 2008. Under the schedule in effect before 
the amendment, a participant with five years of service was 100 percent 
vested. There have been no other pertinent amendments. The proposed 
termination date is December 31, 2012.
    (ii) Estimated guaranteed benefit. No reduction is required under 
Sec.  4022.61(b) or (c) because the participant's benefit does not 
exceed either her accrued benefit at normal retirement age or the 
maximum guaranteeable benefit. The plan's change of vesting schedule 
created a new benefit for the participant. Because the amendment was in 
effect for four full years before the proposed termination date, the 
second row of Table I of this section is used to determine the 
applicable multiplier for estimating the amount of the participant's 
guaranteed benefit. Because the participant did not receive any benefit 
improvement during the 12-month period ending on the proposed 
termination date, column (b) of the table is used. Therefore, the 
multiplier is 0.80, and the amount of the participant's estimated 
guaranteed benefit is $200 (0.80 x $250) per month.
    (3) Example 3--(i) Facts. A participant who is a majority owner 
retired before the proposed termination date of April 30, 2012. The 
plan was in effect for seven full years as of the proposed termination 
date. On the proposed termination date he was entitled to receive a 
benefit of $2,000 per month. No reduction of this benefit is required 
under Sec.  4022.61(b) or (c).
    (ii) Estimated guaranteed benefit. Paragraph (d) of this section is 
used to compute the amount of the estimated guaranteed benefit of 
majority owners. Consequently, the amount of this participant's 
estimated guaranteed benefit is $1,400 ($2,000 x \7/10\) per month.
    (4) Example 4--(i) Facts. A participant who is a majority owner 
retired before the proposed termination

[[Page 49805]]

date of April 30, 2012. The plan was in effect for 12 full years as of 
the proposed termination date. On the proposed termination date he was 
entitled to receive a benefit of $2,000 per month. No reduction of this 
benefit is required under Sec.  4022.61(b) or (c).
    (ii) Estimated guaranteed benefit. Paragraph (d) of this section is 
used to compute the amount of the estimated guaranteed benefit of 
majority owners. Since the plan was in effect for more than 10 years as 
of the proposed termination date, the amount of this participant's 
estimated guaranteed benefit is $2,000 per month.

0
9. In Sec.  4022.63:
0
a. Revise the section heading;
0
b. Amend paragraph (a) by removing the two instances of the word 
``substantial'' and adding in their place the word ``majority'' and by 
removing the three instances of the words ``estimated title IV 
benefit'' and adding in their place the words ``estimated asset-funded 
benefit'';
0
c. Amend paragraph (b) introductory text by removing the two instances 
of the word ``substantial'' and adding in their place the word 
``majority'' and by removing the words ``estimated title IV benefits'' 
and adding in their place the words ``estimated asset-funded 
benefits'';
0
d. Amend paragraph (c)(1) by removing the two instances of the word 
``substantial'' and adding in their place the word ``majority'' and by 
removing the two instances of the words ``estimated title IV benefit'' 
and adding in the place of each the words ``estimated asset-funded 
benefit'';
0
e. Amend paragraph (d) introductory text by removing the two instances 
of the word ``substantial'' and adding in their place the word 
``majority'' and by removing the two instances of the words ``estimated 
title IV benefit'' and adding in the place of each the words 
``estimated asset-funded benefit'';
0
f. Amend paragraph (d)(1) and by removing the two instances of the word 
``substantial'' and adding in their place the word ``majority''; and
0
g. Revise paragraph (e).
    The revisions read as follows:


Sec.  4022.63   Estimated asset-funded benefit.

* * * * *
    (e) Examples. This section is illustrated by the following 
examples:
    (1) Example 1--(i) Facts. (A) A participant who is not a majority 
owner was eligible to retire 3.5 years before the proposed termination 
date. The participant retired two years before the proposed termination 
date with 20 years of service. Her final five years' average salary was 
$45,000, and she was entitled to an unreduced early retirement benefit 
of $1,500 per month payable as a single life annuity. This retirement 
benefit does not exceed the limitation in Sec.  4022.61(b) or (c).
    (B) On the participant's benefit commencement date, the plan 
provided for a normal retirement benefit of 2 percent of the final five 
years' salary times the number of years of service. Five years before 
the proposed termination date, the percentage was 1.5 percent. The 
amendments improving benefits were put into effect 3.5 years before the 
proposed termination date. There were no other amendments during the 
five-year period.
    (C) The participant's estimated guaranteed benefit computed under 
Sec.  4022.62(c) is $1,500 per month times 0.90 (the factor from column 
(b) of Table I in Sec.  4022.62(c)(2)), or $1,350 per month. It is 
assumed that the plan meets the conditions set forth in paragraph (b) 
of this section, and the plan administrator is therefore required to 
estimate the asset-funded benefit.
    (ii) Estimated asset-funded benefit. (A) For a participant who is 
not a majority owner, the amount of the estimated asset-funded benefit 
is the estimated priority category 3 benefit computed under paragraph 
(c) of this section. This amount is computed by multiplying the 
participant's benefit under the plan as of the later of the proposed 
termination date or the benefit commencement date by the ratio of the 
normal retirement benefit under the provisions of the plan in effect 
five years before the proposed termination date and the normal 
retirement benefit under the plan provisions in effect on the proposed 
termination date.
    (B) Thus, the numerator of the ratio is the benefit that would be 
payable to the participant under the normal retirement provisions of 
the plan five years before the proposed termination date, based on her 
age, service, and compensation on her benefit commencement date. The 
denominator of the ratio is the benefit that would be payable to the 
participant under the normal retirement provisions of the plan in 
effect on the proposed termination date, based on her age, service, and 
compensation as of the earlier of her benefit commencement date or the 
proposed termination date. Since the only different factor in the 
numerator and denominator is the salary percentage, the amount of the 
estimated asset-funded benefit is $1,125 (0.015/0.020 x $1,500) per 
month. This amount is less than the estimated guaranteed benefit of 
$1,350 per month. Therefore, in accordance with Sec.  4022.61(d), the 
benefit payable to the participant is $1,350 per month.
    (iii) PPA 2006 bankruptcy termination. In a PPA 2006 bankruptcy 
termination, the methodology would be the same, but ``bankruptcy filing 
date'' would be substituted for ``proposed termination date'' each 
place that ``proposed termination date'' appears in the example, and 
the numbers would change accordingly.
    (2) Example 2--(i) Facts. (A) A participant who is a majority owner 
retired on the proposed termination date of October 31, 2012. The 
original plan had been in effect for seven full years as of the 
proposed termination date. Under the provisions of the plan in effect 
five years before the proposed termination date, the participant is 
entitled to a single life annuity of $500 per month. The plan was 
amended to increase benefits three full years before the proposed 
termination date. Under these plan amendments, the participant is 
entitled to a single life annuity of $1,000 per month.
    (B) The participant's estimated guaranteed benefit computed under 
Sec.  4022.62(d) is $455 per month ($1,000 x 0.65 x \7/10\).
    (C) It is assumed that all of the conditions in paragraph (b) of 
this section have been met. Plan assets equal $2 million. The present 
value of all benefits in pay status is $1.5 million based on applicable 
PBGC interest rates. There are no employee contributions and the 
present value of all vested benefits that are not in pay status is 
$0.75 million based on applicable PBGC interest rates.
    (ii) Estimated asset-funded benefit. (A) Paragraph (d) of this 
section provides that the amount of the estimated asset-funded benefit 
payable with respect to a participant who is a majority owner is the 
higher of the estimated priority category 3 benefit computed under 
paragraph (c) of this section or the estimated priority category 4 
benefit computed under paragraph (d) of this section.
    (B) Under paragraph (c) of this section, the participant's 
estimated priority category 3 benefit is $500 ($1,000 x $500/$1,000) 
per month.
    (C) Under paragraph (d) of this section, the participant's 
estimated priority category 4 benefit is the estimated guaranteed 
benefit computed under Sec.  4022.62(c) (i.e., as if the participant 
were not a majority owner) multiplied by the priority category 4 
funding ratio. Since the plan has priority category 3 benefits, the 
ratio is determined under paragraph (d)(2)(i) of this section. The 
numerator of the ratio is plan assets minus the present value of 
benefits in pay status. The denominator of the ratio is the present

[[Page 49806]]

value of all vested benefits that are not in pay status. The 
participant's estimated guaranteed benefit under Sec.  4022.62(c) is 
$1,000 per month times 0.65 (the factor from column (b) of Table I in 
Sec.  4022.62(c)(2)), or $650 per month. Multiplying $650 by the 
category 4 funding ratio of \2/3\ (($2 million-$1.5 million)/$0.75 
million) produces an estimated category 4 benefit of $433.33 per month.
    (D) Because the estimated category 4 benefit so computed is less 
than the estimated category 3 benefit so computed, the estimated 
category 3 benefit is the estimated asset-funded benefit. Because the 
estimated category 3 benefit so computed is greater than the estimated 
guaranteed benefit of $455 per month, in accordance with Sec.  
4022.61(d), the benefit payable to the participant is the estimated 
priority category 3 benefit of $500 per month.

PART 4043--REPORTABLE EVENTS AND CERTAIN OTHER NOTIFICATION 
REQUIREMENTS

0
10. The authority citation for part 4043 continues to read as follows:

    Authority:  29 U.S.C. 1083(k), 1302(b)(3), 1343.

0
11. In Sec.  4043.2:
0
a. Amend the introductory text by removing the words ``single-employer 
plan, and substantial owner'' and by adding in their place the words 
``and single-employer plan''.
0
b. Add in alphabetical order a definition for ``Substantial owner''.
    The addition reads as follows:


Sec.  4043.2   Definitions.

* * * * *
    Substantial owner means a substantial owner as defined in section 
4021(d) of ERISA.
* * * * *

PART 4044--ALLOCATION OF ASSETS IN SINGLE-EMPLOYER PLANS

0
12. The authority citation for part 4044 continues to read as follows:

    Authority:  29 U.S.C. 1301(a), 1302(b)(3), 1341, 1344, 1362.


Sec.  4044.2   [Amended]

0
13. In Sec.  4044.2(a):
0
a. Remove the words ``irrevocable commitment'' and add in their place 
the words ``irrevocable commitment, majority owner''; and
0
b. Remove the words ``substantial owner,''.

0
14. Amend Sec.  4044.10 by revising paragraph (e) to read as follows:


Sec.  4044.10   Manner of allocation.

* * * * *
    (e) Allocating assets within priority categories. Except for 
priority categories 4 and 5, if the plan assets available for 
allocation to any priority category are insufficient to pay for all 
benefits in that priority category, those assets shall be distributed 
among the participants according to the ratio that the value of each 
participant's benefit or benefits in that priority category bears to 
the total value of all benefits in that priority category. If the plan 
assets available for allocation to priority category 4 are insufficient 
to pay for all benefits in that category, the assets shall be 
allocated, first, to the value of all participants' nonforfeitable 
benefits that would be assigned to priority category 4 other than those 
impacted by the majority-owner limitation under Sec.  4022.26 of this 
chapter. If assets available for allocation to priority category 4 are 
sufficient to fully satisfy the value of those other benefits, the 
remaining assets shall then be allocated to the value of the benefits 
that would be guaranteed but for the majority-owner limitation. These 
remaining assets shall be distributed among the majority owners 
according to the ratio that the value of each majority owner's benefit 
that would be guaranteed but for the majority-owner limitation bears to 
the total value of all benefits that would be guaranteed but for the 
majority-owner limitation. If the plan assets available for allocation 
to priority category 5 are insufficient to pay for all benefits in that 
category, the assets shall be allocated, first, to the value of each 
participant's nonforfeitable benefits that would be assigned to 
priority category 5 under Sec.  4044.15 after reduction for the value 
of benefits assigned to higher priority categories, based only on the 
provisions of the plan in effect at the beginning of the five-year 
period immediately preceding the termination date. If assets available 
for allocation to priority category 5 are sufficient to fully satisfy 
the value of those benefits, assets shall then be allocated to the 
value of the benefit increase under the oldest amendment during the 
five-year period immediately preceding the termination date, reduced by 
the value of benefits assigned to higher priority categories (including 
higher subcategories in priority category 5). This allocation procedure 
shall be repeated for each succeeding plan amendment within the five-
year period until all plan assets available for allocation have been 
exhausted. If an amendment decreased benefits, amounts previously 
allocated with respect to each participant in excess of the value of 
the reduced benefit shall be reduced accordingly. In the subcategory in 
which assets are exhausted, the assets shall be distributed among the 
participants according to the ratio that the value of each 
participant's benefit or benefits in that subcategory bears to the 
total value of all benefits in that subcategory.
* * * * *


Sec.  4044.14   [Amended]

0
15. In Sec.  4044.14, remove the word ``phase-in'' and add the word 
``guarantee'' in its place and remove the word ``substantial'' and add 
the word ``majority'' in its place.

    Issued in Washington, DC.
William Reeder,
Director, Pension Benefit Guaranty Corporation.
[FR Doc. 2018-21551 Filed 10-2-18; 8:45 am]
 BILLING CODE 7709-02-P