Allocation of Assets in Single-Employer Plans; Benefits Payable in Terminated Single-Employer Plans; Interest Assumptions for Valuing and Paying Benefits, 68043-68044 [2019-26935]

Download as PDF Federal Register / Vol. 84, No. 240 / Friday, December 13, 2019 / Rules and Regulations PART 1—INCOME TAXES PENSION BENEFIT GUARANTY CORPORATION Paragraph 1. The authority citation for part 1 continues to read in part as follows: ■ 29 CFR Parts 4022 and 4044 Authority: 26 U.S.C. 7805 * * * Par. 2. Section 1.101–1 is amended by: ■ a. Revising paragraph (d)(2)(ii)(A)(1). ■ b. In paragraph (f)(4)(ii), removing the word ‘‘consist’’ and adding in its place ‘‘consists.’’ The revision reads as follows: ■ § 1.101–1 Exclusion from gross income of proceeds of life insurance contracts payable by reason of death. * * * * * (d) * * * (2) * * * (ii) * * * (A) * * * (1) Is an employee within the meaning of section 101(j)(5)(A) of the acquired trade or business immediately preceding the acquisition (for purposes of this paragraph (d)(2)(ii)(A)(1), however, the reference in section 101(j)(5)(A) to highly compensated employee within the meaning of section 414(q) does not include a former employee); or * * * * * Par. 3. Section 1.6050Y–1(b) introductory text is amended by adding a sentence after the second sentence and revising the last sentence to read as follows: ■ § 1.6050Y–1 Information reporting for reportable policy sales, transfers of life insurance contracts to foreign persons, and reportable death benefits. * * * * (b) * * * This section and § 1.6050Y– 3 apply to any notice of a transfer to a foreign person received after December 31, 2018. However, for reportable policy sales and payments of reportable death benefits occurring after December 31, 2018, and on or before December 31, 2019, and any notice of a transfer to a foreign person received after December 31, 2018, and on or before December 31, 2019, transition relief is provided as follows: * * * * * jbell on DSKJLSW7X2PROD with RULES * Martin V. Franks, Chief, Publications and Regulations Branch, Legal Processing Division, Associate Chief Counsel, (Procedure and Administration). [FR Doc. 2019–26866 Filed 12–12–19; 8:45 am] BILLING CODE 4830–01–P VerDate Sep<11>2014 15:53 Dec 12, 2019 Jkt 250001 Allocation of Assets in SingleEmployer Plans; Benefits Payable in Terminated Single-Employer Plans; Interest Assumptions for Valuing and Paying Benefits Pension Benefit Guaranty Corporation. ACTION: Final rule. AGENCY: This final rule amends the Pension Benefit Guaranty Corporation’s regulations on Benefits Payable in Terminated Single-Employer Plans and Allocation of Assets in Single-Employer Plans to prescribe certain interest assumptions under the benefit payments regulation for plans with valuation dates in January 2020 and interest assumptions under the asset allocation regulation for plans with valuation dates in the first quarter of 2020. These interest assumptions are used for valuing benefits and paying certain benefits under terminating singleemployer plans covered by the pension insurance system administered by PBGC. DATES: Effective January 1, 2020. FOR FURTHER INFORMATION CONTACT: Gregory Katz (katz.gregory@pbgc.gov), Attorney, Regulatory Affairs Division, Pension Benefit Guaranty Corporation, 1200 K Street NW, Washington, DC 20005, 202–326–4400, ext. 3829. (TTY users may call the Federal relay service toll free at 1–800–877–8339 and ask to be connected to 202–326–4400, ext. 3829.) SUPPLEMENTARY INFORMATION: PBGC’s regulations on Allocation of Assets in Single-Employer Plans (29 CFR part 4044) and Benefits Payable in Terminated Single-Employer Plans (29 CFR part 4022) prescribe actuarial assumptions—including interest assumptions—for valuing and paying plan benefits under terminating singleemployer plans covered by title IV of the Employee Retirement Income Security Act of 1974 (ERISA). The interest assumptions in the regulations are also published on PBGC’s website (https://www.pbgc.gov). SUMMARY: Lump Sum Interest Assumption PBGC uses the interest assumptions in appendix B to part 4022 (‘‘Lump Sum Interest Rates for PBGC Payments’’) to determine whether a benefit is payable as a lump sum and to determine the amount to pay as a lump sum. Because some private-sector pension plans use these interest rates to determine lump PO 00000 Frm 00025 Fmt 4700 Sfmt 4700 68043 sum amounts payable to plan participants (if the resulting lump sum is larger than the amount required under section 417(e)(3) of the Internal Revenue Code and section 205(g)(3) of ERISA), these rates are also provided in appendix C to part 4022 (‘‘Lump Sum Interest Rates for Private-Sector Payments’’). This final rule updates appendices B and C of the benefit payments regulation to provide the rates for January 2020 measurement dates. The January 2020 lump sum interest assumptions will be 0.25 percent for the period during which a benefit is (or is assumed to be) in pay status and 4.00 percent during any years preceding the benefit’s placement in pay status. In comparison with the interest assumptions in effect for December 2019, these assumptions represent no change in the immediate rate and are otherwise unchanged. Valuation/Asset Allocation Interest Assumptions PBGC uses the interest assumptions in appendix B to part 4044 (‘‘Interest Rates Used to Value Benefits’’) to value benefits for allocation purposes under section 4044 of ERISA, and some private-sector pension plans use them to determine benefit liabilities reportable under section 4044 of ERISA and for other purposes. The first quarter 2020 interest assumptions will be 2.12 percent for the first 25 years following the valuation date and 2.26 percent thereafter. In comparison with the interest assumptions in effect for the fourth quarter of 2019, these interest assumptions represent no change in the select period (the period during which the select rate (the initial rate) applies), a decrease of 0.41 percent in the select rate, and a decrease of 0.27 percent in the ultimate rate (the final rate). Need for Immediate Guidance PBGC updates appendix B of the asset allocation regulation each quarter and appendices B and C of the benefit payments regulation each month. PBGC has determined that notice and public comment on this amendment are impracticable and contrary to the public interest. This finding is based on the need to issue new interest assumptions promptly so that they are available to value benefits and, for plans that rely on our publication of them each month or each quarter, to calculate lump sum benefit amounts. Because of the need to provide immediate guidance for the valuation and payment of benefits under plans with valuation dates during January 2020, PBGC finds that good cause exists E:\FR\FM\13DER1.SGM 13DER1 68044 Federal Register / Vol. 84, No. 240 / Friday, December 13, 2019 / Rules and Regulations for making the assumptions set forth in this amendment effective less than 30 days after publication. PBGC has determined that this action is not a ‘‘significant regulatory action’’ under the criteria set forth in Executive Order 12866. Because no general notice of proposed rulemaking is required for this amendment, the Regulatory Flexibility Act of 1980 does not apply. See 5 U.S.C. 601(2). List of Subjects PART 4022—BENEFITS PAYABLE IN TERMINATED SINGLE-EMPLOYER PLANS 29 CFR Part 4022 Employee benefit plans, Pension insurance, Pensions, Reporting and recordkeeping requirements. 1. 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. 29 CFR Part 4044 2. In appendix B to part 4022, Rate Set 315 is added at the end of the table to read as follows: ■ Employee benefit plans, Pension insurance, Pensions. In consideration of the foregoing, 29 CFR parts 4022 and 4044 are amended as follows: Appendix B to Part 4022—Lump Sum Interest Rates for PBGC Payments * For plans with a valuation date Rate set On or after * 315 * 1–1–20 * 2–1–20 0.25 3. In appendix C to part 4022, Rate Set 315 is added at the end of the table to read as follows: ■ For plans with a valuation date On or after * 315 * 1–1–20 * * 0.25 i2 * 4.00 4.00 i3 n1 * n2 * * 4.00 7 8 n1 n2 * i1 i2 * 4.00 4.00 i3 * * * 4.00 7 8 Authority: 29 U.S.C. 1301(a), 1302(b)(3), 1341, 1344, 1362. Appendix B to Part 4044—Interest Rates Used To Value Benefits 5. In appendix B to part 4044, an entry for ‘‘January–March 2020’’ is added at the end of the table to read as follows: * ■ 4. The authority citation for part 4044 continues to read as follows: ■ * Deferred annuities (percent) * 2–1–20 PART 4044—ALLOCATION OF ASSETS IN SINGLE-EMPLOYER PLANS i1 * Immediate annuity rate (percent) Before * Appendix C to Part 4022—Lump Sum Interest Rates for Private-Sector Payments * Rate set * Deferred annuities (percent) Immediate annuity rate (percent) Before * * * * * The values of it are: For valuation dates occurring in the month— it * * * January–March 2020 ........................................................ Issued in Washington, DC, by Hilary Duke, Assistant General Counsel, Pension Benefit Guaranty Corporation. [FR Doc. 2019–26935 Filed 12–12–19; 8:45 am] jbell on DSKJLSW7X2PROD with RULES BILLING CODE 7709–02–P for t = it for t = 1–25 * 0.0226 >25 * 0.0212 Coast Guard SUMMARY: Special Local Regulations; Charleston Harbor Christmas Parade of Boats, Charleston, SC AGENCY: 15:53 Dec 12, 2019 Jkt 250001 PO 00000 Coast Guard, DHS. Frm 00026 Fmt 4700 Sfmt 4700 for t = * N/A N/A Notice of enforcement of regulation. ACTION: [Docket No. USCG–2019–0950] VerDate Sep<11>2014 * DEPARTMENT OF HOMELAND SECURITY 33 CFR Part 100 it The Coast Guard will enforce the special local regulation for the Charleston Harbor Christmas Parade of Boats on December 14, 2019. This action is necessary to ensure safety of life on navigable waters of the United States during the Charleston Harbor Christmas Parade of Boats. During the enforcement period, no person or vessel may enter, transit through, anchor in, or remain E:\FR\FM\13DER1.SGM 13DER1

Agencies

[Federal Register Volume 84, Number 240 (Friday, December 13, 2019)]
[Rules and Regulations]
[Pages 68043-68044]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-26935]


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PENSION BENEFIT GUARANTY CORPORATION

29 CFR Parts 4022 and 4044


Allocation of Assets in Single-Employer Plans; Benefits Payable 
in Terminated Single-Employer Plans; Interest Assumptions for Valuing 
and Paying Benefits

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This final rule amends the Pension Benefit Guaranty 
Corporation's regulations on Benefits Payable in Terminated Single-
Employer Plans and Allocation of Assets in Single-Employer Plans to 
prescribe certain interest assumptions under the benefit payments 
regulation for plans with valuation dates in January 2020 and interest 
assumptions under the asset allocation regulation for plans with 
valuation dates in the first quarter of 2020. These interest 
assumptions are used for valuing benefits and paying certain benefits 
under terminating single-employer plans covered by the pension 
insurance system administered by PBGC.

DATES: Effective January 1, 2020.

FOR FURTHER INFORMATION CONTACT: Gregory Katz ([email protected]), 
Attorney, Regulatory Affairs Division, Pension Benefit Guaranty 
Corporation, 1200 K Street NW, Washington, DC 20005, 202-326-4400, ext. 
3829. (TTY users may call the Federal relay service toll free at 1-800-
877-8339 and ask to be connected to 202-326-4400, ext. 3829.)

SUPPLEMENTARY INFORMATION: PBGC's regulations on Allocation of Assets 
in Single-Employer Plans (29 CFR part 4044) and Benefits Payable in 
Terminated Single-Employer Plans (29 CFR part 4022) prescribe actuarial 
assumptions--including interest assumptions--for valuing and paying 
plan benefits under terminating single-employer plans covered by title 
IV of the Employee Retirement Income Security Act of 1974 (ERISA). The 
interest assumptions in the regulations are also published on PBGC's 
website (https://www.pbgc.gov).

Lump Sum Interest Assumption

    PBGC uses the interest assumptions in appendix B to part 4022 
(``Lump Sum Interest Rates for PBGC Payments'') to determine whether a 
benefit is payable as a lump sum and to determine the amount to pay as 
a lump sum. Because some private-sector pension plans use these 
interest rates to determine lump sum amounts payable to plan 
participants (if the resulting lump sum is larger than the amount 
required under section 417(e)(3) of the Internal Revenue Code and 
section 205(g)(3) of ERISA), these rates are also provided in appendix 
C to part 4022 (``Lump Sum Interest Rates for Private-Sector 
Payments'').
    This final rule updates appendices B and C of the benefit payments 
regulation to provide the rates for January 2020 measurement dates.
    The January 2020 lump sum interest assumptions will be 0.25 percent 
for the period during which a benefit is (or is assumed to be) in pay 
status and 4.00 percent during any years preceding the benefit's 
placement in pay status. In comparison with the interest assumptions in 
effect for December 2019, these assumptions represent no change in the 
immediate rate and are otherwise unchanged.

Valuation/Asset Allocation Interest Assumptions

    PBGC uses the interest assumptions in appendix B to part 4044 
(``Interest Rates Used to Value Benefits'') to value benefits for 
allocation purposes under section 4044 of ERISA, and some private-
sector pension plans use them to determine benefit liabilities 
reportable under section 4044 of ERISA and for other purposes. The 
first quarter 2020 interest assumptions will be 2.12 percent for the 
first 25 years following the valuation date and 2.26 percent 
thereafter. In comparison with the interest assumptions in effect for 
the fourth quarter of 2019, these interest assumptions represent no 
change in the select period (the period during which the select rate 
(the initial rate) applies), a decrease of 0.41 percent in the select 
rate, and a decrease of 0.27 percent in the ultimate rate (the final 
rate).

Need for Immediate Guidance

    PBGC updates appendix B of the asset allocation regulation each 
quarter and appendices B and C of the benefit payments regulation each 
month. PBGC has determined that notice and public comment on this 
amendment are impracticable and contrary to the public interest. This 
finding is based on the need to issue new interest assumptions promptly 
so that they are available to value benefits and, for plans that rely 
on our publication of them each month or each quarter, to calculate 
lump sum benefit amounts.
    Because of the need to provide immediate guidance for the valuation 
and payment of benefits under plans with valuation dates during January 
2020, PBGC finds that good cause exists

[[Page 68044]]

for making the assumptions set forth in this amendment effective less 
than 30 days after publication.
    PBGC has determined that this action is not a ``significant 
regulatory action'' under the criteria set forth in Executive Order 
12866.
    Because no general notice of proposed rulemaking is required for 
this amendment, the Regulatory Flexibility Act of 1980 does not apply. 
See 5 U.S.C. 601(2).

List of Subjects

29 CFR Part 4022

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

29 CFR Part 4044

    Employee benefit plans, Pension insurance, Pensions.

    In consideration of the foregoing, 29 CFR parts 4022 and 4044 are 
amended as follows:

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

0
1. 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.


0
2. In appendix B to part 4022, Rate Set 315 is added at the end of the 
table to read as follows:

Appendix B to Part 4022--Lump Sum Interest Rates for PBGC Payments

* * * * *

--------------------------------------------------------------------------------------------------------------------------------------------------------
                   For plans with a valuation date     Immediate                                 Deferred annuities (percent)
    Rate set     ----------------------------------   annuity rate  ------------------------------------------------------------------------------------
                    On or after         Before         (percent)            i                i                i                n                n
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
                                                                      * * * * * * *
          315            1-1-20           2-1-20             0.25             4.00             4.00             4.00                7                8
--------------------------------------------------------------------------------------------------------------------------------------------------------


0
3. In appendix C to part 4022, Rate Set 315 is added at the end of the 
table to read as follows:

Appendix C to Part 4022--Lump Sum Interest Rates for Private-Sector 
Payments

* * * * *

--------------------------------------------------------------------------------------------------------------------------------------------------------
                   For plans with a valuation date     Immediate                                 Deferred annuities (percent)
    Rate set     ----------------------------------   annuity rate  ------------------------------------------------------------------------------------
                    On or after         Before         (percent)            i                i                i                n                n
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
                                                                      * * * * * * *
          315            1-1-20           2-1-20             0.25             4.00             4.00             4.00                7                8
--------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

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


0
5. In appendix B to part 4044, an entry for ``January-March 2020'' is 
added at the end of the table to read as follows:

Appendix B to Part 4044--Interest Rates Used To Value Benefits

* * * * *

----------------------------------------------------------------------------------------------------------------
                                                             The values of i are:
     For valuation dates     -----------------------------------------------------------------------------------
  occurring in the month--          i          for t =          i          for t =          i          for t =
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
January-March 2020..........       0.0212          1-25        0.0226           >25           N/A           N/A
----------------------------------------------------------------------------------------------------------------


    Issued in Washington, DC, by
Hilary Duke,
Assistant General Counsel, Pension Benefit Guaranty Corporation.
[FR Doc. 2019-26935 Filed 12-12-19; 8:45 am]
 BILLING CODE 7709-02-P