Technical Amendments: Special Financial Assistance Withdrawal Liability Condition; SECURE 2.0 Act; and Other Updates, 76660-76665 [2023-24268]
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confidential information inadvertently
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confines of the alternative dispute
resolution session.
(g) The parties agree not to subpoena
or compel the neutral to testify or
produce any documents provided by a
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proceeding. The neutral will not
voluntarily testify or produce
documents on behalf of a party in any
administrative or judicial proceeding
unless otherwise required by law.
§ 1406.3 Virtual services—additional terms
of service.
The following Terms of Service
additionally apply when the FMCS
service is provided virtually.
(a) Parties may not provide meeting
access information to non-parties
without permission from the neutral
unless the session is open to the public.
(b) The neutral and all parties must be
provided notice of all attendees before
or at the time of attendance unless the
session is open to the public.
(c) Parties must ensure the integrity of
technology used in virtual meetings. If
an attendee is aware of any security
breach, that attendee will inform the
neutral immediately.
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§ 1406.4 Grievance mediation and Federal
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—additional terms of service.
The following Terms of Service
additionally apply when the FMCS
service is a grievance mediation or
Federal sector inter-agency agreement
mediation.
(a) The grievant or complainant is
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(b) The parties agree not to disclose to
any non-party oral or written
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statements, whether made privately to
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(c) Evidence that is otherwise
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mediation proceedings.
(d) The neutral has no authority to
compel agreement or other resolution of
the dispute and will issue no written
recommendations or conclusions. At the
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initiative of the neutral, the neutral may
provide an oral recommendation or
opinion to resolve the dispute. In that
circumstance, the parties may jointly
decide to implement that
recommendation or opinion but neither
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(e) (For Federal sector inter-agency
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§ 1406.5 Training and outreach
presentations.
The following Terms of Service
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service is a training or outreach
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(a) The parties agree that they will not
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presentation (whether delivered inperson or virtually) without the
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(b) [Reserved]
Dated: November 1, 2023.
Alisa Zimmerman,
Deputy General Counsel.
[FR Doc. 2023–24526 Filed 11–6–23; 8:45 am]
BILLING CODE 6732–01–P
PENSION BENEFIT GUARANTY
CORPORATION
29 CFR Parts 4000, 4003, 4006, 4010,
4022, 4041A, 4043, 4211, and 4262
RIN 1212–AB56
Technical Amendments: Special
Financial Assistance Withdrawal
Liability Condition; SECURE 2.0 Act;
and Other Updates
Pension Benefit Guaranty
Corporation.
ACTION: Final rule.
AGENCY:
The Pension Benefit Guaranty
Corporation (PBGC) is making
miscellaneous technical updates,
clarifications, and corrections to PBGC’s
regulations, including to clarify a
special financial assistance withdrawal
liability condition and to update the
reference to the dollar limit for lumpsum distributions in the closeout of
sufficient multiemployer plans to reflect
changes implemented under the
SECURE 2.0 Act of 2022.
DATES: This rule is effective on
December 7, 2023.
FOR FURTHER INFORMATION CONTACT:
Hilary Duke (duke.hilary@pbgc.gov;
202–229–3839), Assistant General
Counsel for Regulatory Affairs, or
Melissa Rifkin (rifkin.melissa@pbgc.gov;
202–229–6563), Attorney, Regulatory
Affairs Division; Office of the General
Counsel, Pension Benefit Guaranty
SUMMARY:
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Corporation, 445 12th Street SW,
Washington, DC 20024–2101. If you are
deaf or hard of hearing or have a speech
disability, please dial 7–1–1 to access
telecommunications relay services.
SUPPLEMENTARY INFORMATION:
Executive Summary
Purpose and Authority
This final rule makes technical
corrections, updates, and clarifications
to several Pension Benefit Guaranty
Corporation (PBGC) regulations.
PBGC’s legal authority for this
rulemaking comes from section
4002(b)(3) of the Employee Retirement
Income Security Act of 1974 (ERISA),
which authorizes PBGC to issue
regulations to carry out the purposes of
title IV of ERISA, and section 4262 of
ERISA (Special Financial Assistance by
the Corporation), which permits PBGC,
in consultation with the Secretary of the
Treasury, to impose reasonable
conditions by regulation or other
guidance on an eligible multiemployer
plan that receives special financial
assistance (SFA). It also comes from
section 4003 of ERISA (Operation of
Corporation); section 4006 of ERISA
(Premium Rates); section 4010 of ERISA
(Authority to Require Certain
Information); section 4022 of ERISA
(Single-Employer Plan Benefits
Guaranteed); section 4041A of ERISA
(Termination of Multiemployer Plans);
section 4043 of ERISA (Reportable
Events); and section 4211 of ERISA
(Methods for Computing Withdrawal
Liability).
Major Provisions
The major provisions of this
regulatory action amend PBGC’s
regulations on: (1) Special Financial
Assistance by PBGC (29 CFR part 4262)
to clarify the calculation methodology
for the condition requiring a phased
recognition of SFA in a plan’s
determination of withdrawal liability for
plans that receive SFA; and (2)
Termination of Multiemployer Plans (29
CFR part 4041A) to update the reference
to the dollar limit for lump-sum
distributions in the closeout of
sufficient multiemployer plans
(reflecting updated dollar limits for
pension plans under section 304 of the
SECURE 2.0 Act of 2022 (SECURE
2.0)).1 In addition, this regulatory action
makes other clarifications, corrections,
and updates.
1 SECURE 2.0 Act of 2022, Division T of the
Consolidated Appropriations Act, 2023, Public Law
117–328 (Dec. 29, 2022).
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Background
PBGC administers two insurance
programs for private-sector defined
benefit pension plans under title IV of
ERISA: a single-employer plan
termination insurance program and a
multiemployer plan insolvency
insurance program. In addition, PBGC
administers an SFA program for eligible
financially distressed multiemployer
plans. The primary amendments in this
rulemaking apply to the SFA program.
This rulemaking responds to
questions from stakeholders requesting
clarification of the calculation
methodology for the condition imposed
on plans that receive SFA requiring a
phased recognition of SFA in the
determination of withdrawal liability. It
also arises from statutory changes and
from PBGC’s ongoing retrospective
regulatory review program to identify
and correct inaccuracies,
inconsistencies, and requirements made
irrelevant over time.
Clarifications to SFA Program
Withdrawal Liability Condition
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Background
Under section 4262 of ERISA and
PBGC’s SFA regulation, PBGC provides
SFA to certain financially troubled
multiemployer plans upon application
for assistance. To ensure that SFA is
used to pay benefits and the expenses
related to those benefit payments,
section 4262(m)(1) of ERISA expressly
authorizes PBGC, in consultation with
the Secretary of the Treasury, to impose
reasonable conditions on an eligible
multiemployer plan that receives SFA
relating to certain aspects of plan terms
or operations. These conditions are
described in § 4262.16 of PBGC’s SFA
regulation and include conditions that
relate to withdrawal liability.2
On July 8, 2022, PBGC published a
final rule 3 (July 2022 final rule) adding
a condition requiring a phased
recognition of SFA in a plan’s
determination of withdrawal liability.
PBGC provided for a 30-day comment
period solely on this condition. In
2 Withdrawal liability represents a withdrawing
employer’s proportionate share of the plan’s
unfunded benefit obligations and is an important
source of income for the plan. To assess withdrawal
liability, the plan sponsor must determine the
withdrawing employer’s: (1) allocable share of the
plan’s unfunded vested benefits (UVBs) (the value
of nonforfeitable benefits that exceeds the value of
plan assets) as of the end of the plan year before
the employer’s withdrawal, or as otherwise
provided under section 4211 of ERISA, and (2)
annual withdrawal liability payment and
amortization period under section 4219.
3 See 87 FR 40968. PBGC published the July 2022
final rule in response to comments received on an
interim final rule, which was published in the
Federal Register on July 12, 2021, at 86 FR 36598.
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response to comments received, PBGC
published, on January 26, 2023, a final
rule 4 (January 2023 final rule) which
provided a process for a plan sponsor to
request approval from PBGC for an
exception from the withdrawal liability
conditions in § 4262.16(g)(1) and (2)
under specific circumstances.
Following publication of the January
2023 final rule, PBGC received
practitioner questions at public forums
related to the withdrawal liability
phase-in condition and make-up
payments of previously suspended
benefits. To address these questions, on
July 19, 2023, PBGC posted guidance on
its website at www.pbgc.gov, in the form
of questions and answers, on the
withdrawal liability phase-in condition.
That guidance clarifies the calculation
methodology for the phased recognition
of SFA assets for plans that paid makeup payments of previously suspended
benefits.
Clarification of Calculation
Methodology for Withdrawal Liability
Phase-In Condition
The withdrawal liability condition in
§ 4262.16(g)(2) requires a phased
recognition of SFA assets, i.e., SFA and
earnings thereon, for the purpose of
determining the plan’s unfunded vested
benefits (UVBs) for calculating
withdrawal liability, and provides the
calculation methodology for
determining the amount of SFA that is
phased in for withdrawal liability
purposes each year over the projected
life of the SFA assets (determined as if
SFA assets are exhausted before other
plan assets are used to pay benefits and
expenses). The applicable phase-in
period runs from the first plan year in
which the plan receives payment of SFA
through the end of the plan year by
which, according to the plan’s
projections, it will exhaust any SFA
assets.5
To calculate the amount of SFA assets
excluded for each plan year during the
phase-in period, the plan must take the
total amount of SFA paid to the plan
(not including the amount paid to PBGC
for repayment of traditional financial
assistance) and multiply that by a
fraction, the numerator of which is the
number of years remaining in the phasein period as of the date (the end of the
4 See
88 FR 4900.
a plan that receives payment of SFA under
the terms of the interim final rule and then files a
supplemented application, the first plan year of
payment is the year in which it received SFA under
the terms of the interim final rule. Where a plan’s
first plan year of payment is not the plan year that
includes the plan’s SFA measurement date, the
exhaustion year is deferred by the number of years
the first plan year of payment is after the plan year
that includes the SFA measurement date.
5 For
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determination year) that the UVBs are
being determined, and the denominator
is the total number of years in the
phase-in period.6
Examples are included in
§ 4262.16(g)(2) to illustrate the
calculation methodology for the phased
recognition of SFA assets.
Section 4262(k) of ERISA and
§ 4262.15 require that benefits
suspended under sections 305(e)(9) or
4245(a) of ERISA must be reinstated and
make-up payments of previously
suspended benefits must be paid to
certain participants and beneficiaries.
Plans must pay these make-up payments
either as a lump sum within 3 months
of the date SFA is paid, or in equal
monthly installments over 5 years,
starting within 3 months of the SFA
payment date.
As stated in PBGC’s guidance posted
July 19, 2023, the phased recognition of
SFA assets for purposes of calculating
employer withdrawal liability was
intended to approximate the pattern of
how the SFA assets are likely to be
spent down by a plan. Therefore, in the
calculation under § 4262.16(g)(2)(ix), the
amount of the SFA attributable to the
make-up payments that have already
been paid to participants and
beneficiaries should be excluded from
the ‘‘total amount of SFA paid to the
plan under § 4262.12’’ before
multiplication by the phase-in fraction.
The result is the amount under
§ 4262.16(g)(2)(ix) by which the value of
plan assets used to determine UVBs for
the determination year is reduced under
§ 4262.16(g)(2)(viii). This calculation
methodology applies regardless of
whether the make-up payments are
made in a lump sum or in equal
monthly installments over 5 years, and
regardless of whether such payments are
made from SFA assets or non-SFA
assets, or some combination thereof.
Accordingly, this final rule
incorporates the guidance posted on
July 19, 2023, and amends
§ 4262.16(g)(2)(ix) to reorganize the
existing provisions as paragraph
(g)(2)(ix)(A) and to add new paragraph
(g)(2)(ix)(B) to clarify how plan assets
expended on make-up payments of
6 For a plan that receives payment of SFA under
the interim final rule and receives a supplemental
payment, the total amount (payment under the
interim final rule and supplemental payment) will
be included in the phased recognition of SFA assets
in determining UVBs for withdrawals occurring in
plan years after the plan year the supplemental
payment is received by the plan. For withdrawals
that occur after the date the supplemented
application is filed and before the plan year after
the plan year in which the supplemental payment
is made, only the payment of SFA under the interim
final rule is included in the phased recognition of
SFA assets.
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previously suspended benefits are
considered in the calculation
methodology. The amendment also
clarifies how the repayment of
traditional financial assistance is
considered in the calculation
methodology. In addition, this final rule
adds the example from the July 19,
2023, guidance to
§ 4262.16(g)(2)(xvi)(D).
PBGC also received practitioner
questions asking whether the
calculation of SFA excluded under
§ 4262.16(g)(2)(viii) could reduce the
value of plan assets for determining
UVBs to less than zero. In response,
PBGC included in the July 19, 2023,
guidance, a provision, applicable to all
plans that receive SFA (regardless of
whether they are required to pay makeup payments), stating that the value of
the plan assets taken into account as of
the end of a determination year under
§ 4262.16(g)(2)(viii) used for purposes of
determining UVBs may not be less than
zero. This clarification is added in
§ 4262.16(g)(2)(viii) of the SFA
regulation.
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Clarifications and Corrections to
Multiemployer Plan Regulations
Termination of Multiemployer Plans—
29 CFR part 4041A
PBGC’s regulation on Termination of
Multiemployer Plans (29 CFR part
4041A) contains rules for the
administration of multiemployer plans
that have terminated by mass
withdrawal. Subpart D contains
procedures for closing out a plan where
a plan’s assets, excluding any claim of
the plan for unpaid withdrawal liability,
are sufficient to satisfy all obligations
for nonforfeitable benefits provided
under the plan. In the case of such a
plan, the plan sponsor may close out the
plan by distributing plan assets in full
satisfaction of all nonforfeitable benefits
under the plan. Section 4041A.43
provides rules for the payment of
nonforfeitable benefits to participants
and beneficiaries, including for lumpsum distributions.
Section 203(e)(1) of ERISA and
section 411(a)(11)(A) of the Internal
Revenue Code provide a threshold (i.e.,
maximum present value of a benefit)
that a pension plan may pay in a
mandatory lump-sum distribution. From
1997 through 2023, that maximum was
$5,000.7 After 2023, it will be $7,000, as
changed by section 304 of SECURE 2.0.
Before the amendment provided by
this final rule, § 4041A.43(b)(1)
7 The Taxpayer Relief Act of 1997, Public Law
105–34 (Aug. 5, 1997), increased the maximum
from $3,500 to $5,000 effective for plan years
beginning after August 5, 1997.
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provided the dollar figure of $5,000 as
the dollar threshold up to which the
plan sponsor of a terminated
multiemployer plan that is closing out
may make as a lump-sum payment of
nonforfeitable benefits. To avoid
amending the regulation each time
Congress changes the threshold for
mandatory lump-sum distributions, the
final rule amends § 4041A.43(b)(1) to
refer not to a set monetary figure, but to
the dollar amount specified in section
203(e)(1) of ERISA. As a result, for
purposes of part 4041A, the new $7,000
maximum automatically will apply to
the lump-sum payment of nonforfeitable
benefits after December 31, 2023.
Allocating Unfunded Vested Benefits to
Withdrawing Employers—29 CFR Part
4211
Under the Allocating Unfunded
Vested Benefits to Withdrawing
Employers regulation (29 CFR part
4211), PBGC is amending § 4211.31(b)
by adding the words ‘‘set forth in’’ that
were inadvertently omitted in a prior
rule.8 The final sentence of paragraph
(b) is corrected to read, ‘‘the statutory
presumptive method set forth in subpart
B of this part.’’
Other Clarifications, Corrections, and
Updates
Filing Rules—29 CFR Part 4000
Under PBGC’s Filing, Issuance,
Computation of Time, and Record
Retention regulation (29 CFR part 4000),
PBGC is modifying § 4000.4—Where do
I file my submission? to update the
reference to the telecommunications
system for individuals who are deaf or
hard of hearing or have a speech
disability. PBGC is changing the
reference from the ‘‘Federal relay
service’’ to the ‘‘7–1–1’’ number, which
is the system currently used by PBGC
for access to telecommunications relay
services.
PBGC is removing and reserving
§ 4000.28—What if I send a computer
disk? which gives instructions for
providing filings on a computer disk.
Technological advancements have made
this section obsolete.
Rules for Administrative Review of
Agency Decisions—29 CFR Part 4003
Under PBGC’s Rules for
Administrative Review of Agency
Decisions regulation (29 CFR part 4003),
PBGC is changing § 4003.35—Decision
on request for reconsideration, by
removing the word ‘‘final’’ from the
phrase ‘‘final decision’’ in paragraph (a).
In a prior rule,9 the word ‘‘final’’ was
8 See
9 See
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85 FR 10279.
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removed from other usages of the phrase
‘‘final decision’’ in § 4003.35. In
addition, PBGC is changing the wording
‘‘request for reconsideration’’ to ‘‘a
request for reconsideration’’ in
paragraph (a)(1) to be consistent with
the wording in paragraph (a)(2).
Premium Rates—29 CFR Part 4006
PBGC is modifying the Premium Rates
regulation (29 CFR part 4006) in
§ 4006.3—Premium rate, and § 4006.5—
Exemptions and special rules. Section
4006.3(a) contains references to sections
4006(a)(3)(F) and 4006(a)(3)(H) of
ERISA. Both statutory provisions
affected the calculation of flat rate
premiums and sunset in 2013.10 As
these provisions are no longer relevant
for calculating premiums, PBGC is
removing them from the premium rates
regulation.
Also, PBGC is correcting a citation in
§ 4006.5(b), which covers the variablerate premium cap. This paragraph
references section ‘‘4006(a)(3)(H) of
ERISA,’’ which was added to § 4006.5(b)
in 2008 to reference the small employer
cap. 11 Section 4006(a)(3)(H) was
renumbered as 4006(a)(3)(I) in 2013.12
PBGC is changing this citation in
§ 4006.5(b) to ‘‘section 4006(a)(3)(I) of
ERISA for certain small employers.’’
Annual Financial and Actuarial
Information Reporting—29 CFR Part
4010 and Reportable Events—29 CFR
Part 4043
Under PBGC’s regulation on Annual
Financial and Actuarial Information
Reporting (29 CFR part 4010, ‘‘4010
regulation’’), PBGC is correcting a
reference in § 4010.10(b). The reference
to ‘‘§ 4010.8(b)(1)’’ is changed to
‘‘§ 4010.8(b)(2)(i)’’ to account for a prior
reorganization of § 4010.8.13
PBGC is modifying § 4010.13 under
PBGC’s 4010 regulation and § 4043.8
under PBGC’s Reportable Events and
Certain Other Notification Requirements
regulation (29 CFR part 4043) to replace
references to ‘‘§ 4901.21(a)(3)’’ with
references to ‘‘§ 4901.21(a).’’ These
corrections are to account for changes in
a prior reorganization of § 4901.21,
under PBGC’s regulation on Disclosure
and Public Inspection of Pension
10 Section 4006(a)(3)(F) of ERISA reads, ‘‘For each
plan year beginning in a calendar year after 2006
and before 2013. . .’’ and section 4006(a)(3)(H) of
ERISA refers to 4006(a)(3)(A)(iv), which says, ‘‘in
the case of a multiemployer plan, for plan years
beginning after December 31, 2005, and before
January 1, 2013.’’
11 See 73 FR 15065.
12 See section 703 of the Bipartisan Budget Act of
2013, Public Law 113–67 (Dec. 26, 2013).
13 See 81 FR 15432.
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Benefit Guaranty Corporation Records
(29 CFR part 4901).14
Benefits Payable in Terminated SingleEmployer Plans—29 CFR Part 4022
Under the Benefits Payable in
Terminated Single-Employer Plans
regulation (29 CFR part 4022), for
consistency, PBGC is amending the
heading for § 4022.7 by changing the
words ‘‘single installment’’ to ‘‘lump
sum.’’ In a prior rule,15 other usages of
‘‘single installment’’ were changed to
‘‘lump sum’’ throughout § 4022.7.
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Compliance With Rulemaking
Guidelines
Executive Orders 12866 and 13563
The Office of Management and Budget
(OMB) has determined that this rule is
not a ‘‘significant regulatory action’’
under Executive Order 12866.
Accordingly, OMB has not reviewed the
final rule under Executive Order 12866.
Executive Order 12866 directs
agencies to assess all costs and benefits
of available regulatory alternatives and,
if regulation is necessary, to select
regulatory approaches that maximize
net benefits (including potential
economic, environmental, public health
and safety effects, distributive impacts,
and equity).
Although this is not a significant
regulatory action under Executive Order
12866, PBGC has examined the
economic and policy implications of
this final rule and has concluded that
there will be no significant economic
impact as a result of these amendments
to PBGC’s regulations. The regulatory
amendments concerning SFA primarily
codify clarifications already issued by
PBGC in sub-regulatory guidance.
Making these clarifications more
transparent will decrease uncertainty
among plan sponsors in applying the
withdrawal liability phase-in condition.
Without the clarifications, some plan
sponsors may not accurately account for
make-up payments or repaid traditional
financial assistance when calculating
the amount of SFA excluded from plan
assets for purposes of the condition in
the determination of withdrawal
liability. The amendments concerning
lump-sum distributions reflecting
SECURE 2.0 changes, and the
miscellaneous amendments, conform
PBGC’s existing regulations to statutory
changes or prior regulatory changes or
update and clarify outdated regulatory
provisions. These amendments are cost
neutral in their impact.
Section 6 of Executive Order 13563
requires agencies to rethink existing
14 See
15 See
87 FR 43991.
88 FR 44045.
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regulations by periodically reviewing
their regulatory program for rules that
‘‘may be outmoded, ineffective,
insufficient, or excessively
burdensome.’’ These rules should be
modified, streamlined, expanded, or
repealed as appropriate. PBGC has
identified the amendments in this final
rule as consistent with the principles for
review under Executive Order 13563.
PBGC believes codifying its previously
issued guidance provides further clarity
to the public, and believes that the other
amendments will improve and clarify
its existing regulations.
Administrative Procedure Act
The Administrative Procedure Act
provides at 5 U.S.C. 553(b) that notice
and comment requirements do not
apply when an agency, for good cause,
finds that they are impracticable,
unnecessary, or contrary to the public
interest.
With respect to the clarifications to
the SFA withdrawal liability condition
in § 4262.16(g)(2), as described in
PBGC’s July 2022 final rule, Congress
expressed a clear urgency for PBGC to
implement an SFA program to get
appropriate assistance to eligible plans
as quickly as possible. Congress
authorized PBGC to prioritize the filing
of applications for eligible plans with
the greatest need, during the first 2 years
after March 11, 2021, and PBGC
provided for such a process. Plans that
suspended benefits under section
4245(a) of ERISA have been eligible to
apply for SFA since July 12, 2021, and
plans that suspended benefits under
section 305(e)(9) have been eligible to
apply since December 27, 2021. In 2022,
plans began to receive payment of SFA
and pay required make-up payments.
This final rule provides clarifications
needed by plan sponsors that pay makeup payments that will enable them to
accurately calculate the amount of SFA
excluded from plan assets for purposes
of the withdrawal liability phase-in
condition. Recognizing the importance
of announcing these clarifications
promptly, the changes to
§§ 4262.16(g)(2)(viii), (ix), and (xvi)(D)
were stated in sub-regulatory guidance.
In addition, the amendment provides
clarification for plans that repaid
traditional financial assistance to PBGC.
Thus, the amendments have the effect of
increasing clarity of the calculation
methodology for plan sponsors and
employers.
With respect to the amendment to
§ 4041A.43(b)(1) in PBGC’s Termination
of Multiemployer Plans regulation, the
change conforms the regulation to the
SECURE 2.0 change to enable certain
plans to make lump-sum distributions
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up to the permissible threshold amount
of $7,000 beginning January 1, 2024
(from $5,000). PBGC is authorized under
section 4041A(f)(1) of ERISA to permit
the payment in a lump sum of benefits
that exceed $1,750. In order to approve
these higher distributions, PBGC must
find that they are not adverse to the
interests of the plan’s participants and
beneficiaries generally and do not
unreasonably increase PBGC’s risk of
loss with respect to the plan. When a
plan is being closed out under subpart
D of part 4041A, a higher distribution
threshold would not be adverse to the
interests of the plan’s participants and
beneficiaries, since their nonforfeitable
benefits must be fully satisfied as part
of the closeout. This fact also ensures
that the higher threshold will not
unreasonably increase PBGC’s risk of
loss with respect to the plan. In
addition, because the SECURE 2.0
change applies to distributions after
December 31, 2023, conforming the
regulation without delay will simplify
plan administration and be in the best
interests of participants and
beneficiaries who may request lumpsum distributions. The other
amendments in this final rule are minor
technical amendments to update and
correct PBGC’s regulations; notice and
comment are unnecessary because the
amendments effect no substantive
changes to any regulation.
Accordingly, PBGC has determined
that the amendments in this final rule
fall under the ‘‘good cause’’ exemption
of the Administrative Procedure Act at
5 U.S.C. 553(b)(3)(B) and that the public
interest is best served by issuing this
final rule expeditiously, without further
opportunity for notice and comment.
Regulatory Flexibility Act
Because PBGC is not publishing a
general notice of proposed rulemaking
under 5 U.S.C. 553(b), the regulatory
flexibility analysis requirements of the
Regulatory Flexibility Act do not apply.
See 5 U.S.C. 601(2).
List of Subjects
29 CFR Part 4000
Administrative practice and
procedure, Employee benefit plans,
Pension insurance, Pensions, Reporting
and recordkeeping requirements.
29 CFR Part 4003
Administrative practice and
procedure, Organization and functions
(Government agencies), Pension
insurance.
29 CFR Part 4006
Employee benefit plans, Pension
insurance.
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Federal Register / Vol. 88, No. 214 / Tuesday, November 7, 2023 / Rules and Regulations
29 CFR Part 4010
Employee benefit plans, Penalties,
Pension insurance, Pensions, Reporting
and recordkeeping requirements.
request’’ and adding in their place the
words ‘‘decision on a request’’.
29 CFR Part 4022
Employee benefit plans, Pension
insurance, Pensions, Reporting and
recordkeeping requirements.
■
29 CFR Part 4041A
Employee benefit plans, Pension
insurance, Reporting and recordkeeping
requirements.
§ 4006.3
6. The authority citation for part 4006
continues to read as follows:
Authority: 29 U.S.C. 1302(b)(3), 1306,
1307.
29 CFR Part 4043
Employee benefit plans, Pension
insurance, Reporting and recordkeeping
requirements.
29 CFR Part 4211
Employee benefit plans, Pension
insurance, Pensions, Reporting and
recordkeeping requirements.
8. Amend § 4006.5 in paragraph (b) by
removing the phrase ‘‘ERISA section
4006(a)(3)(H)’’ and adding in its place
the phrase ‘‘section 4006(a)(3)(I) of
ERISA for certain small employers’’.
PART 4010—ANNUAL FINANCIAL AND
ACTUARIAL INFORMATION
REPORTING
9. The authority citation for part 4010
continues to read as follows:
■
1. The authority citation for part 4000
continues to read as follows:
§ 4010.10
Authority: 29 U.S.C. 1302(b)(3), 1310.
■
Authority: 29 U.S.C. 1083(k), 1302(b)(3).
[Amended]
2. Amend § 4000.4 by removing the
words ‘‘TTY/TDD users may call the
Federal relay service toll-free at 1–800–
877–8339 and ask to be connected to the
appropriate number’’ and adding in
their place the words ‘‘If you are deaf or
hard of hearing or have a speech
disability, please dial 7–1–1 to access
telecommunications relay services’’.
■
§ 4000.28
■
[Removed and Reserved]
3. Remove and reserve § 4000.28.
[Amended]
5. Amend § 4003.35 in paragraph (a)
introductory text by removing the word
‘‘final’’ and in paragraph (a)(1) by
removing the words ‘‘decision on
Jkt 262001
PART 4043—REPORTABLE EVENTS
AND CERTAIN OTHER NOTIFICATION
REQUIREMENTS
16. The authority citation for part
4043 continues to read as follows:
■
Authority: 29 U.S.C. 1083(k), 1302(b)(3),
1343.
§ 4043.8
[Amended]
17. Amend § 4043.8 by removing
‘‘§ 4901.21(a)(3)’’ and adding in its place
‘‘§ 4901.21(a)’’.
■
PART 4211—ALLOCATING UNFUNDED
VESTED BENEFITS TO WITHDRAWING
EMPLOYERS
12. The authority citation for part
4022 continues to read as follows:
■
*
*
Benefits payable in a lump sum.
*
*
*
14. The authority citation for part
4041A continues to read as follows:
■
Authority: 29 U.S.C. 1302(b)(3), 1341a,
1431, 1441.
PO 00000
Authority: 29 U.S.C. 1302(b)(3);
1391(c)(1), (c)(2)(D), (c)(5)(A), (c)(5)(B),
(c)(5)(D), and (f).
§ 4211.31
Frm 00040
Fmt 4700
[Amended]
19. Amend § 4211.31 in paragraph (b)
by removing the words ‘‘subpart B of
this part’’ and adding in its place the
words ‘‘set forth in subpart B of this
part’’.
■
PART 4262—SPECIAL FINANCIAL
ASSISTANCE BY PBGC
20. The authority citation for part
4262 continues to read as follows:
■
Authority: 29 U.S.C. 1302(b)(3), 1432.
PART 4022—BENEFITS PAYABLE IN
TERMINATED SINGLE-EMPLOYER
PLANS
§ 4022.7
18. The authority citation for part
4211 continues to read as follows:
■
[Amended]
11. Amend § 4010.13 by removing the
phrase ‘‘§ 4901.21(a)(3)’’ and adding in
its place the phrase ‘‘§ 4901.21(a)’’.
■
PART 4041A—TERMINATION OF
MULTIEMPLOYER PLANS
Authority: 29 U.S.C. 1302(b)(3).
15:47 Nov 06, 2023
§ 4010.13
13. Revise the section heading for
§ 4022.7 to read as follows:
4. The authority citation for part 4003
continues to read as follows:
VerDate Sep<11>2014
10. Amend § 4010.10 in paragraph (b)
by removing ‘‘§ 4010.8(b)(1)’’ and
adding in its place ‘‘§ 4010.8(b)(2)(i)’’.
■
■
■
■
[Amended]
Authority: 29 U.S.C. 1302, 1322, 1322b,
1341(c)(3)(D), and 1344.
PART 4003—RULES FOR
ADMINISTRATIVE REVIEW OF
AGENCY DECISIONS
§ 4003.35
[Amended]
[Amended]
15. Amend § 4041A.43 in paragraph
(b)(1) by removing ‘‘$5,000’’ and adding
in its place the words ‘‘the dollar
amount specified in section 203(e)(1) of
ERISA’’.
■
■
PART 4000—FILING, ISSUANCE,
COMPUTATION OF TIME, AND
RECORD RETENTION
§ 4000.4
[Amended]
7. Amend § 4006.3 by:
a. Removing the phrase ‘‘ERISA
section 4006(a)(3)(A), (F), and (G)’’ and
adding in its place the phrase ‘‘section
4006(a)(3)(A) and (G) of ERISA’’ in
paragraph (a)(1).
■ b. Removing the phrase ‘‘ERISA
section 4006(a)(3)(A), (H), and (J)’’ and
adding in its place the phrase ‘‘section
4006(a)(3)(A) and (J) of ERISA’’ in
paragraph (a)(2).
■
■
§ 4006.5
29 CFR Part 4262
Employee benefit plans, Pension
insurance, Pensions, Reporting and
recordkeeping requirements.
For the reasons set forth in the
preamble, PBGC is amending 29 CFR
parts 4000, 4003, 4006, 4010, 4022,
4041A, 4043, 4211, and 4262 as follows.
khammond on DSKJM1Z7X2PROD with RULES
PART 4006—PREMIUM RATES
§ 4041A.43
Sfmt 4700
§ 4262.16
[Amended]
21. Amend § 4262.16 by revising
paragraphs (g)(2)(viii) and (ix) and
adding paragraph (g)(2)(xvi)(D) to read
as follows:
■
§ 4262.16 Conditions for special financial
assistance.
*
*
*
*
*
(g) * * *
(2) * * *
(viii) SFA assets excluded. The value
of the plan assets taken into account as
of the end of each determination year is
the value of the assets that would
otherwise be taken into account in the
absence of this provision reduced by the
amount described in paragraph (g)(2)(ix)
of this section. The value of plan assets
determined under this paragraph
(g)(2)(viii) may not be less than zero.
(ix) Calculation of SFA assets
excluded—(A) In general. Except for
plans required to pay make-up
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Federal Register / Vol. 88, No. 214 / Tuesday, November 7, 2023 / Rules and Regulations
payments described in § 4262.15(b), the
amount described in this paragraph
(g)(2)(ix)(A) is, as of the end of the
determination year—
(1) The total amount of special
financial assistance paid to the plan
under § 4262.12 (as determined under
§ 4262.12(a) or (b), or under § 4262.12(b)
and (c) for plans paid under a
supplemented application, as
applicable), minus the amount paid to
PBGC under § 4262.12(e), as of the end
of the determination year;
(2) Multiplied by a fraction, the
numerator of which is the number of
years determined under paragraph
(g)(2)(x) of this section as of the end of
the determination year and the
denominator of which is the number of
years determined under paragraph
(g)(2)(xi) of this section as of the end of
the determination year.
(B) Plans required to pay make-up
payments. For plans required to pay
make-up payments described in
§ 4262.15(b), the amount described in
this paragraph (g)(2)(ix)(B) is, as of the
end of the determination year—
(1) The total amount of special
financial assistance paid to the plan
under § 4262.12 (as determined under
§ 4262.12(a) or (b), or under § 4262.12(b)
and (c) for plans paid under a
supplemented application, as
applicable), minus the amount paid to
PBGC under § 4262.12(e), and minus the
amount of make-up payments paid by
the plan to participants and
beneficiaries under § 4262.15(b)
whether the payments are made from
SFA assets or non-SFA assets, as of the
end of the determination year;
(2) Multiplied by a fraction, the
numerator of which is the number of
years determined under paragraph
(g)(2)(x) of this section as of the end of
the determination year and the
denominator of which is the number of
years determined under paragraph
(g)(2)(xi) of this section as of the end of
the determination year.
*
*
*
*
*
(xvi) * * *
(D) Example 4. In plan year 2022, Plan
D received an SFA payment amount of
$50,000,000 (not including the amount
paid to PBGC for repayment of
traditional financial assistance) and a
supplemented SFA payment amount of
$30,000,000. A total of $20,000,000 in
lump-sum make-up payments were paid
by Plan D in plan year 2022. An
employer withdraws in 2023. At the end
of the determination year (2022), the
amount of SFA required to be excluded
from assets equals $60,000,000
($50,000,000 + $30,000,000—
$20,000,000). If, instead, the make-up
VerDate Sep<11>2014
15:47 Nov 06, 2023
Jkt 262001
payments were paid by Plan D in plan
year 2023, the amount of SFA required
to be excluded from assets at the end of
the determination year (2022) would
equal $80,000,000. Under this scenario,
Plan D’s unfunded vested benefit
liability would be the same at the end
of the determination year because the
additional $20,000,000 of SFA required
to be excluded from assets offsets the
$20,000,000 in SFA that the plan still
holds for make-up payments but has not
yet distributed as of the end of the
determination year. Similarly, if the
employer withdraws in 2024, the makeup payments were paid in 2023, and the
phase-in fraction was 9/10th for 2023,
the amount of SFA excluded from the
assets at the end of the determination
year (2023) would be $54,000,000 (9/
10th × $60,000,000), where the
$60,000,000 is calculated as the total
$80,000,000 in SFA paid to the plan
minus the $20,000,000 in make-up
payments that were disbursed prior to
the end of the determination year.
Issued in Washington, DC.
Gordon Hartogensis,
Director, Pension Benefit Guaranty
Corporation.
[FR Doc. 2023–24268 Filed 11–6–23; 8:45 am]
BILLING CODE 7709–02–P
DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control
31 CFR Part 587
Publication of Russian Harmful
Foreign Activities Sanctions
Regulations Web General License 73
Office of Foreign Assets
Control, Treasury.
ACTION: Publication of a Web General
License.
AGENCY:
The Department of the
Treasury’s Office of Foreign Assets
Control (OFAC) is publishing one
general license (GL) issued pursuant to
the Russian Harmful Foreign Activities
Sanctions Regulations: GL 73, which
was previously made available on
OFAC’s website.
DATES: GL 73 was issued on October 12,
2023. See SUPPLEMENTARY INFORMATION
for additional relevant dates.
FOR FURTHER INFORMATION CONTACT:
OFAC: Assistant Director for Licensing,
202–622–2480; Assistant Director for
Regulatory Affairs, 202–622–4855; or
Assistant Director for Compliance, 202–
622–2490.
SUPPLEMENTARY INFORMATION:
SUMMARY:
PO 00000
Frm 00041
Fmt 4700
Sfmt 4700
76665
Electronic Availability
This document and additional
information concerning OFAC are
available on OFAC’s website: https://
ofac.treasury.gov.
Background
On October 12, 2023, OFAC issued GL
73 to authorize certain transactions
otherwise prohibited by the Russian
Harmful Foreign Activities Sanctions
Regulations, 31 CFR part 587. GL 73 was
made available on OFAC’s website
(https://ofac.treasury.gov) when it was
issued. The text of this GL is provided
below.
OFFICE OF FOREIGN ASSETS
CONTROL
Russian Harmful Foreign Activities
Sanctions Regulations
31 CFR Part 587
GENERAL LICENSE NO. 73
Authorizing Limited Safety and
Environmental Transactions Involving
Certain Persons or Vessels
(a) Except as provided in paragraph
(c) of this general license, all
transactions prohibited by Executive
Order (E.O.) 14024 that are ordinarily
incident and necessary to one of the
following activities involving the
blocked persons or vessels described in
paragraph (b) are authorized through
12:01 a.m. eastern standard time,
January 8, 2024, provided that any
payment to a blocked person must be
made into a blocked account in
accordance with the Russian Harmful
Foreign Activities Sanctions Regulations
(RuHSR):
(1) The safe docking and anchoring of
any of the blocked vessels listed in
paragraph (b) of this general license
(‘‘blocked vessels’’) in port;
(2) The preservation of the health or
safety of the crew of any of the blocked
vessels; or
(3) Emergency repairs of any of the
blocked vessels or environmental
mitigation or protection activities
relating to any of the blocked vessels.
(b) The authorization in paragraph (a)
of this general license applies to the
following blocked persons and vessels
listed on the Office of Foreign Assets
Control’s Specially Designated
Nationals and Blocked Persons List and
any entity in which any of the following
persons own, directly or indirectly,
individually or in the aggregate, a 50
percent or greater interest:
(1) Ice Pearl Navigation Corp
(registered owner of YASA GOLDEN
BOSPHORUS, IMO 9334038); or
E:\FR\FM\07NOR1.SGM
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]]>Agencies
[Federal Register Volume 88, Number 214 (Tuesday, November 7, 2023)]
[Rules and Regulations]
[Pages 76660-76665]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-24268]
=======================================================================
-----------------------------------------------------------------------
PENSION BENEFIT GUARANTY CORPORATION
29 CFR Parts 4000, 4003, 4006, 4010, 4022, 4041A, 4043, 4211, and
4262
RIN 1212-AB56
Technical Amendments: Special Financial Assistance Withdrawal
Liability Condition; SECURE 2.0 Act; and Other Updates
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Pension Benefit Guaranty Corporation (PBGC) is making
miscellaneous technical updates, clarifications, and corrections to
PBGC's regulations, including to clarify a special financial assistance
withdrawal liability condition and to update the reference to the
dollar limit for lump-sum distributions in the closeout of sufficient
multiemployer plans to reflect changes implemented under the SECURE 2.0
Act of 2022.
DATES: This rule is effective on December 7, 2023.
FOR FURTHER INFORMATION CONTACT: Hilary Duke ([email protected];
202-229-3839), Assistant General Counsel for Regulatory Affairs, or
Melissa Rifkin ([email protected]; 202-229-6563), Attorney,
Regulatory Affairs Division; Office of the General Counsel, Pension
Benefit Guaranty Corporation, 445 12th Street SW, Washington, DC 20024-
2101. If you are deaf or hard of hearing or have a speech disability,
please dial 7-1-1 to access telecommunications relay services.
SUPPLEMENTARY INFORMATION:
Executive Summary
Purpose and Authority
This final rule makes technical corrections, updates, and
clarifications to several Pension Benefit Guaranty Corporation (PBGC)
regulations.
PBGC's legal authority for this rulemaking comes from section
4002(b)(3) of the Employee Retirement Income Security Act of 1974
(ERISA), which authorizes PBGC to issue regulations to carry out the
purposes of title IV of ERISA, and section 4262 of ERISA (Special
Financial Assistance by the Corporation), which permits PBGC, in
consultation with the Secretary of the Treasury, to impose reasonable
conditions by regulation or other guidance on an eligible multiemployer
plan that receives special financial assistance (SFA). It also comes
from section 4003 of ERISA (Operation of Corporation); section 4006 of
ERISA (Premium Rates); section 4010 of ERISA (Authority to Require
Certain Information); section 4022 of ERISA (Single-Employer Plan
Benefits Guaranteed); section 4041A of ERISA (Termination of
Multiemployer Plans); section 4043 of ERISA (Reportable Events); and
section 4211 of ERISA (Methods for Computing Withdrawal Liability).
Major Provisions
The major provisions of this regulatory action amend PBGC's
regulations on: (1) Special Financial Assistance by PBGC (29 CFR part
4262) to clarify the calculation methodology for the condition
requiring a phased recognition of SFA in a plan's determination of
withdrawal liability for plans that receive SFA; and (2) Termination of
Multiemployer Plans (29 CFR part 4041A) to update the reference to the
dollar limit for lump-sum distributions in the closeout of sufficient
multiemployer plans (reflecting updated dollar limits for pension plans
under section 304 of the SECURE 2.0 Act of 2022 (SECURE 2.0)).\1\ In
addition, this regulatory action makes other clarifications,
corrections, and updates.
---------------------------------------------------------------------------
\1\ SECURE 2.0 Act of 2022, Division T of the Consolidated
Appropriations Act, 2023, Public Law 117-328 (Dec. 29, 2022).
---------------------------------------------------------------------------
[[Page 76661]]
Background
PBGC administers two insurance programs for private-sector defined
benefit pension plans under title IV of ERISA: a single-employer plan
termination insurance program and a multiemployer plan insolvency
insurance program. In addition, PBGC administers an SFA program for
eligible financially distressed multiemployer plans. The primary
amendments in this rulemaking apply to the SFA program.
This rulemaking responds to questions from stakeholders requesting
clarification of the calculation methodology for the condition imposed
on plans that receive SFA requiring a phased recognition of SFA in the
determination of withdrawal liability. It also arises from statutory
changes and from PBGC's ongoing retrospective regulatory review program
to identify and correct inaccuracies, inconsistencies, and requirements
made irrelevant over time.
Clarifications to SFA Program Withdrawal Liability Condition
Background
Under section 4262 of ERISA and PBGC's SFA regulation, PBGC
provides SFA to certain financially troubled multiemployer plans upon
application for assistance. To ensure that SFA is used to pay benefits
and the expenses related to those benefit payments, section 4262(m)(1)
of ERISA expressly authorizes PBGC, in consultation with the Secretary
of the Treasury, to impose reasonable conditions on an eligible
multiemployer plan that receives SFA relating to certain aspects of
plan terms or operations. These conditions are described in Sec.
4262.16 of PBGC's SFA regulation and include conditions that relate to
withdrawal liability.\2\
---------------------------------------------------------------------------
\2\ Withdrawal liability represents a withdrawing employer's
proportionate share of the plan's unfunded benefit obligations and
is an important source of income for the plan. To assess withdrawal
liability, the plan sponsor must determine the withdrawing
employer's: (1) allocable share of the plan's unfunded vested
benefits (UVBs) (the value of nonforfeitable benefits that exceeds
the value of plan assets) as of the end of the plan year before the
employer's withdrawal, or as otherwise provided under section 4211
of ERISA, and (2) annual withdrawal liability payment and
amortization period under section 4219.
---------------------------------------------------------------------------
On July 8, 2022, PBGC published a final rule \3\ (July 2022 final
rule) adding a condition requiring a phased recognition of SFA in a
plan's determination of withdrawal liability. PBGC provided for a 30-
day comment period solely on this condition. In response to comments
received, PBGC published, on January 26, 2023, a final rule \4\
(January 2023 final rule) which provided a process for a plan sponsor
to request approval from PBGC for an exception from the withdrawal
liability conditions in Sec. 4262.16(g)(1) and (2) under specific
circumstances.
---------------------------------------------------------------------------
\3\ See 87 FR 40968. PBGC published the July 2022 final rule in
response to comments received on an interim final rule, which was
published in the Federal Register on July 12, 2021, at 86 FR 36598.
\4\ See 88 FR 4900.
---------------------------------------------------------------------------
Following publication of the January 2023 final rule, PBGC received
practitioner questions at public forums related to the withdrawal
liability phase-in condition and make-up payments of previously
suspended benefits. To address these questions, on July 19, 2023, PBGC
posted guidance on its website at www.pbgc.gov, in the form of
questions and answers, on the withdrawal liability phase-in condition.
That guidance clarifies the calculation methodology for the phased
recognition of SFA assets for plans that paid make-up payments of
previously suspended benefits.
Clarification of Calculation Methodology for Withdrawal Liability
Phase-In Condition
The withdrawal liability condition in Sec. 4262.16(g)(2) requires
a phased recognition of SFA assets, i.e., SFA and earnings thereon, for
the purpose of determining the plan's unfunded vested benefits (UVBs)
for calculating withdrawal liability, and provides the calculation
methodology for determining the amount of SFA that is phased in for
withdrawal liability purposes each year over the projected life of the
SFA assets (determined as if SFA assets are exhausted before other plan
assets are used to pay benefits and expenses). The applicable phase-in
period runs from the first plan year in which the plan receives payment
of SFA through the end of the plan year by which, according to the
plan's projections, it will exhaust any SFA assets.\5\
---------------------------------------------------------------------------
\5\ For a plan that receives payment of SFA under the terms of
the interim final rule and then files a supplemented application,
the first plan year of payment is the year in which it received SFA
under the terms of the interim final rule. Where a plan's first plan
year of payment is not the plan year that includes the plan's SFA
measurement date, the exhaustion year is deferred by the number of
years the first plan year of payment is after the plan year that
includes the SFA measurement date.
---------------------------------------------------------------------------
To calculate the amount of SFA assets excluded for each plan year
during the phase-in period, the plan must take the total amount of SFA
paid to the plan (not including the amount paid to PBGC for repayment
of traditional financial assistance) and multiply that by a fraction,
the numerator of which is the number of years remaining in the phase-in
period as of the date (the end of the determination year) that the UVBs
are being determined, and the denominator is the total number of years
in the phase-in period.\6\
---------------------------------------------------------------------------
\6\ For a plan that receives payment of SFA under the interim
final rule and receives a supplemental payment, the total amount
(payment under the interim final rule and supplemental payment) will
be included in the phased recognition of SFA assets in determining
UVBs for withdrawals occurring in plan years after the plan year the
supplemental payment is received by the plan. For withdrawals that
occur after the date the supplemented application is filed and
before the plan year after the plan year in which the supplemental
payment is made, only the payment of SFA under the interim final
rule is included in the phased recognition of SFA assets.
---------------------------------------------------------------------------
Examples are included in Sec. 4262.16(g)(2) to illustrate the
calculation methodology for the phased recognition of SFA assets.
Section 4262(k) of ERISA and Sec. 4262.15 require that benefits
suspended under sections 305(e)(9) or 4245(a) of ERISA must be
reinstated and make-up payments of previously suspended benefits must
be paid to certain participants and beneficiaries. Plans must pay these
make-up payments either as a lump sum within 3 months of the date SFA
is paid, or in equal monthly installments over 5 years, starting within
3 months of the SFA payment date.
As stated in PBGC's guidance posted July 19, 2023, the phased
recognition of SFA assets for purposes of calculating employer
withdrawal liability was intended to approximate the pattern of how the
SFA assets are likely to be spent down by a plan. Therefore, in the
calculation under Sec. 4262.16(g)(2)(ix), the amount of the SFA
attributable to the make-up payments that have already been paid to
participants and beneficiaries should be excluded from the ``total
amount of SFA paid to the plan under Sec. 4262.12'' before
multiplication by the phase-in fraction. The result is the amount under
Sec. 4262.16(g)(2)(ix) by which the value of plan assets used to
determine UVBs for the determination year is reduced under Sec.
4262.16(g)(2)(viii). This calculation methodology applies regardless of
whether the make-up payments are made in a lump sum or in equal monthly
installments over 5 years, and regardless of whether such payments are
made from SFA assets or non-SFA assets, or some combination thereof.
Accordingly, this final rule incorporates the guidance posted on
July 19, 2023, and amends Sec. 4262.16(g)(2)(ix) to reorganize the
existing provisions as paragraph (g)(2)(ix)(A) and to add new paragraph
(g)(2)(ix)(B) to clarify how plan assets expended on make-up payments
of
[[Page 76662]]
previously suspended benefits are considered in the calculation
methodology. The amendment also clarifies how the repayment of
traditional financial assistance is considered in the calculation
methodology. In addition, this final rule adds the example from the
July 19, 2023, guidance to Sec. 4262.16(g)(2)(xvi)(D).
PBGC also received practitioner questions asking whether the
calculation of SFA excluded under Sec. 4262.16(g)(2)(viii) could
reduce the value of plan assets for determining UVBs to less than zero.
In response, PBGC included in the July 19, 2023, guidance, a provision,
applicable to all plans that receive SFA (regardless of whether they
are required to pay make-up payments), stating that the value of the
plan assets taken into account as of the end of a determination year
under Sec. 4262.16(g)(2)(viii) used for purposes of determining UVBs
may not be less than zero. This clarification is added in Sec.
4262.16(g)(2)(viii) of the SFA regulation.
Clarifications and Corrections to Multiemployer Plan Regulations
Termination of Multiemployer Plans--29 CFR part 4041A
PBGC's regulation on Termination of Multiemployer Plans (29 CFR
part 4041A) contains rules for the administration of multiemployer
plans that have terminated by mass withdrawal. Subpart D contains
procedures for closing out a plan where a plan's assets, excluding any
claim of the plan for unpaid withdrawal liability, are sufficient to
satisfy all obligations for nonforfeitable benefits provided under the
plan. In the case of such a plan, the plan sponsor may close out the
plan by distributing plan assets in full satisfaction of all
nonforfeitable benefits under the plan. Section 4041A.43 provides rules
for the payment of nonforfeitable benefits to participants and
beneficiaries, including for lump-sum distributions.
Section 203(e)(1) of ERISA and section 411(a)(11)(A) of the
Internal Revenue Code provide a threshold (i.e., maximum present value
of a benefit) that a pension plan may pay in a mandatory lump-sum
distribution. From 1997 through 2023, that maximum was $5,000.\7\ After
2023, it will be $7,000, as changed by section 304 of SECURE 2.0.
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\7\ The Taxpayer Relief Act of 1997, Public Law 105-34 (Aug. 5,
1997), increased the maximum from $3,500 to $5,000 effective for
plan years beginning after August 5, 1997.
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Before the amendment provided by this final rule, Sec.
4041A.43(b)(1) provided the dollar figure of $5,000 as the dollar
threshold up to which the plan sponsor of a terminated multiemployer
plan that is closing out may make as a lump-sum payment of
nonforfeitable benefits. To avoid amending the regulation each time
Congress changes the threshold for mandatory lump-sum distributions,
the final rule amends Sec. 4041A.43(b)(1) to refer not to a set
monetary figure, but to the dollar amount specified in section
203(e)(1) of ERISA. As a result, for purposes of part 4041A, the new
$7,000 maximum automatically will apply to the lump-sum payment of
nonforfeitable benefits after December 31, 2023.
Allocating Unfunded Vested Benefits to Withdrawing Employers--29 CFR
Part 4211
Under the Allocating Unfunded Vested Benefits to Withdrawing
Employers regulation (29 CFR part 4211), PBGC is amending Sec.
4211.31(b) by adding the words ``set forth in'' that were inadvertently
omitted in a prior rule.\8\ The final sentence of paragraph (b) is
corrected to read, ``the statutory presumptive method set forth in
subpart B of this part.''
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\8\ See 86 FR 1256.
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Other Clarifications, Corrections, and Updates
Filing Rules--29 CFR Part 4000
Under PBGC's Filing, Issuance, Computation of Time, and Record
Retention regulation (29 CFR part 4000), PBGC is modifying Sec.
4000.4--Where do I file my submission? to update the reference to the
telecommunications system for individuals who are deaf or hard of
hearing or have a speech disability. PBGC is changing the reference
from the ``Federal relay service'' to the ``7-1-1'' number, which is
the system currently used by PBGC for access to telecommunications
relay services.
PBGC is removing and reserving Sec. 4000.28--What if I send a
computer disk? which gives instructions for providing filings on a
computer disk. Technological advancements have made this section
obsolete.
Rules for Administrative Review of Agency Decisions--29 CFR Part 4003
Under PBGC's Rules for Administrative Review of Agency Decisions
regulation (29 CFR part 4003), PBGC is changing Sec. 4003.35--Decision
on request for reconsideration, by removing the word ``final'' from the
phrase ``final decision'' in paragraph (a). In a prior rule,\9\ the
word ``final'' was removed from other usages of the phrase ``final
decision'' in Sec. 4003.35. In addition, PBGC is changing the wording
``request for reconsideration'' to ``a request for reconsideration'' in
paragraph (a)(1) to be consistent with the wording in paragraph (a)(2).
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\9\ See 85 FR 10279.
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Premium Rates--29 CFR Part 4006
PBGC is modifying the Premium Rates regulation (29 CFR part 4006)
in Sec. 4006.3--Premium rate, and Sec. 4006.5--Exemptions and special
rules. Section 4006.3(a) contains references to sections 4006(a)(3)(F)
and 4006(a)(3)(H) of ERISA. Both statutory provisions affected the
calculation of flat rate premiums and sunset in 2013.\10\ As these
provisions are no longer relevant for calculating premiums, PBGC is
removing them from the premium rates regulation.
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\10\ Section 4006(a)(3)(F) of ERISA reads, ``For each plan year
beginning in a calendar year after 2006 and before 2013. . .'' and
section 4006(a)(3)(H) of ERISA refers to 4006(a)(3)(A)(iv), which
says, ``in the case of a multiemployer plan, for plan years
beginning after December 31, 2005, and before January 1, 2013.''
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Also, PBGC is correcting a citation in Sec. 4006.5(b), which
covers the variable-rate premium cap. This paragraph references section
``4006(a)(3)(H) of ERISA,'' which was added to Sec. 4006.5(b) in 2008
to reference the small employer cap. \11\ Section 4006(a)(3)(H) was
renumbered as 4006(a)(3)(I) in 2013.\12\ PBGC is changing this citation
in Sec. 4006.5(b) to ``section 4006(a)(3)(I) of ERISA for certain
small employers.''
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\11\ See 73 FR 15065.
\12\ See section 703 of the Bipartisan Budget Act of 2013,
Public Law 113-67 (Dec. 26, 2013).
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Annual Financial and Actuarial Information Reporting--29 CFR Part 4010
and Reportable Events--29 CFR Part 4043
Under PBGC's regulation on Annual Financial and Actuarial
Information Reporting (29 CFR part 4010, ``4010 regulation''), PBGC is
correcting a reference in Sec. 4010.10(b). The reference to ``Sec.
4010.8(b)(1)'' is changed to ``Sec. 4010.8(b)(2)(i)'' to account for a
prior reorganization of Sec. 4010.8.\13\
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\13\ See 81 FR 15432.
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PBGC is modifying Sec. 4010.13 under PBGC's 4010 regulation and
Sec. 4043.8 under PBGC's Reportable Events and Certain Other
Notification Requirements regulation (29 CFR part 4043) to replace
references to ``Sec. 4901.21(a)(3)'' with references to ``Sec.
4901.21(a).'' These corrections are to account for changes in a prior
reorganization of Sec. 4901.21, under PBGC's regulation on Disclosure
and Public Inspection of Pension
[[Page 76663]]
Benefit Guaranty Corporation Records (29 CFR part 4901).\14\
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\14\ See 87 FR 43991.
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Benefits Payable in Terminated Single-Employer Plans--29 CFR Part 4022
Under the Benefits Payable in Terminated Single-Employer Plans
regulation (29 CFR part 4022), for consistency, PBGC is amending the
heading for Sec. 4022.7 by changing the words ``single installment''
to ``lump sum.'' In a prior rule,\15\ other usages of ``single
installment'' were changed to ``lump sum'' throughout Sec. 4022.7.
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\15\ See 88 FR 44045.
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Compliance With Rulemaking Guidelines
Executive Orders 12866 and 13563
The Office of Management and Budget (OMB) has determined that this
rule is not a ``significant regulatory action'' under Executive Order
12866. Accordingly, OMB has not reviewed the final rule under Executive
Order 12866.
Executive Order 12866 directs agencies to assess all costs and
benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributive impacts, and equity).
Although this is not a significant regulatory action under
Executive Order 12866, PBGC has examined the economic and policy
implications of this final rule and has concluded that there will be no
significant economic impact as a result of these amendments to PBGC's
regulations. The regulatory amendments concerning SFA primarily codify
clarifications already issued by PBGC in sub-regulatory guidance.
Making these clarifications more transparent will decrease uncertainty
among plan sponsors in applying the withdrawal liability phase-in
condition. Without the clarifications, some plan sponsors may not
accurately account for make-up payments or repaid traditional financial
assistance when calculating the amount of SFA excluded from plan assets
for purposes of the condition in the determination of withdrawal
liability. The amendments concerning lump-sum distributions reflecting
SECURE 2.0 changes, and the miscellaneous amendments, conform PBGC's
existing regulations to statutory changes or prior regulatory changes
or update and clarify outdated regulatory provisions. These amendments
are cost neutral in their impact.
Section 6 of Executive Order 13563 requires agencies to rethink
existing regulations by periodically reviewing their regulatory program
for rules that ``may be outmoded, ineffective, insufficient, or
excessively burdensome.'' These rules should be modified, streamlined,
expanded, or repealed as appropriate. PBGC has identified the
amendments in this final rule as consistent with the principles for
review under Executive Order 13563. PBGC believes codifying its
previously issued guidance provides further clarity to the public, and
believes that the other amendments will improve and clarify its
existing regulations.
Administrative Procedure Act
The Administrative Procedure Act provides at 5 U.S.C. 553(b) that
notice and comment requirements do not apply when an agency, for good
cause, finds that they are impracticable, unnecessary, or contrary to
the public interest.
With respect to the clarifications to the SFA withdrawal liability
condition in Sec. 4262.16(g)(2), as described in PBGC's July 2022
final rule, Congress expressed a clear urgency for PBGC to implement an
SFA program to get appropriate assistance to eligible plans as quickly
as possible. Congress authorized PBGC to prioritize the filing of
applications for eligible plans with the greatest need, during the
first 2 years after March 11, 2021, and PBGC provided for such a
process. Plans that suspended benefits under section 4245(a) of ERISA
have been eligible to apply for SFA since July 12, 2021, and plans that
suspended benefits under section 305(e)(9) have been eligible to apply
since December 27, 2021. In 2022, plans began to receive payment of SFA
and pay required make-up payments. This final rule provides
clarifications needed by plan sponsors that pay make-up payments that
will enable them to accurately calculate the amount of SFA excluded
from plan assets for purposes of the withdrawal liability phase-in
condition. Recognizing the importance of announcing these
clarifications promptly, the changes to Sec. Sec. 4262.16(g)(2)(viii),
(ix), and (xvi)(D) were stated in sub-regulatory guidance. In addition,
the amendment provides clarification for plans that repaid traditional
financial assistance to PBGC. Thus, the amendments have the effect of
increasing clarity of the calculation methodology for plan sponsors and
employers.
With respect to the amendment to Sec. 4041A.43(b)(1) in PBGC's
Termination of Multiemployer Plans regulation, the change conforms the
regulation to the SECURE 2.0 change to enable certain plans to make
lump-sum distributions up to the permissible threshold amount of $7,000
beginning January 1, 2024 (from $5,000). PBGC is authorized under
section 4041A(f)(1) of ERISA to permit the payment in a lump sum of
benefits that exceed $1,750. In order to approve these higher
distributions, PBGC must find that they are not adverse to the
interests of the plan's participants and beneficiaries generally and do
not unreasonably increase PBGC's risk of loss with respect to the plan.
When a plan is being closed out under subpart D of part 4041A, a higher
distribution threshold would not be adverse to the interests of the
plan's participants and beneficiaries, since their nonforfeitable
benefits must be fully satisfied as part of the closeout. This fact
also ensures that the higher threshold will not unreasonably increase
PBGC's risk of loss with respect to the plan. In addition, because the
SECURE 2.0 change applies to distributions after December 31, 2023,
conforming the regulation without delay will simplify plan
administration and be in the best interests of participants and
beneficiaries who may request lump-sum distributions. The other
amendments in this final rule are minor technical amendments to update
and correct PBGC's regulations; notice and comment are unnecessary
because the amendments effect no substantive changes to any regulation.
Accordingly, PBGC has determined that the amendments in this final
rule fall under the ``good cause'' exemption of the Administrative
Procedure Act at 5 U.S.C. 553(b)(3)(B) and that the public interest is
best served by issuing this final rule expeditiously, without further
opportunity for notice and comment.
Regulatory Flexibility Act
Because PBGC is not publishing a general notice of proposed
rulemaking under 5 U.S.C. 553(b), the regulatory flexibility analysis
requirements of the Regulatory Flexibility Act do not apply. See 5
U.S.C. 601(2).
List of Subjects
29 CFR Part 4000
Administrative practice and procedure, Employee benefit plans,
Pension insurance, Pensions, Reporting and recordkeeping requirements.
29 CFR Part 4003
Administrative practice and procedure, Organization and functions
(Government agencies), Pension insurance.
29 CFR Part 4006
Employee benefit plans, Pension insurance.
[[Page 76664]]
29 CFR Part 4010
Employee benefit plans, Penalties, Pension insurance, Pensions,
Reporting and recordkeeping requirements.
29 CFR Part 4022
Employee benefit plans, Pension insurance, Pensions, Reporting and
recordkeeping requirements.
29 CFR Part 4041A
Employee benefit plans, Pension insurance, Reporting and
recordkeeping requirements.
29 CFR Part 4043
Employee benefit plans, Pension insurance, Reporting and
recordkeeping requirements.
29 CFR Part 4211
Employee benefit plans, Pension insurance, Pensions, Reporting and
recordkeeping requirements.
29 CFR Part 4262
Employee benefit plans, Pension insurance, Pensions, Reporting and
recordkeeping requirements.
For the reasons set forth in the preamble, PBGC is amending 29 CFR
parts 4000, 4003, 4006, 4010, 4022, 4041A, 4043, 4211, and 4262 as
follows.
PART 4000--FILING, ISSUANCE, COMPUTATION OF TIME, AND RECORD
RETENTION
0
1. The authority citation for part 4000 continues to read as follows:
Authority: 29 U.S.C. 1083(k), 1302(b)(3).
Sec. 4000.4 [Amended]
0
2. Amend Sec. 4000.4 by removing the words ``TTY/TDD users may call
the Federal relay service toll-free at 1-800-877-8339 and ask to be
connected to the appropriate number'' and adding in their place the
words ``If you are deaf or hard of hearing or have a speech disability,
please dial 7-1-1 to access telecommunications relay services''.
Sec. 4000.28 [Removed and Reserved]
0
3. Remove and reserve Sec. 4000.28.
PART 4003--RULES FOR ADMINISTRATIVE REVIEW OF AGENCY DECISIONS
0
4. The authority citation for part 4003 continues to read as follows:
Authority: 29 U.S.C. 1302(b)(3).
Sec. 4003.35 [Amended]
0
5. Amend Sec. 4003.35 in paragraph (a) introductory text by removing
the word ``final'' and in paragraph (a)(1) by removing the words
``decision on request'' and adding in their place the words ``decision
on a request''.
PART 4006--PREMIUM RATES
0
6. The authority citation for part 4006 continues to read as follows:
Authority: 29 U.S.C. 1302(b)(3), 1306, 1307.
Sec. 4006.3 [Amended]
0
7. Amend Sec. 4006.3 by:
0
a. Removing the phrase ``ERISA section 4006(a)(3)(A), (F), and (G)''
and adding in its place the phrase ``section 4006(a)(3)(A) and (G) of
ERISA'' in paragraph (a)(1).
0
b. Removing the phrase ``ERISA section 4006(a)(3)(A), (H), and (J)''
and adding in its place the phrase ``section 4006(a)(3)(A) and (J) of
ERISA'' in paragraph (a)(2).
Sec. 4006.5 [Amended]
0
8. Amend Sec. 4006.5 in paragraph (b) by removing the phrase ``ERISA
section 4006(a)(3)(H)'' and adding in its place the phrase ``section
4006(a)(3)(I) of ERISA for certain small employers''.
PART 4010--ANNUAL FINANCIAL AND ACTUARIAL INFORMATION REPORTING
0
9. The authority citation for part 4010 continues to read as follows:
Authority: 29 U.S.C. 1302(b)(3), 1310.
Sec. 4010.10 [Amended]
0
10. Amend Sec. 4010.10 in paragraph (b) by removing ``Sec.
4010.8(b)(1)'' and adding in its place ``Sec. 4010.8(b)(2)(i)''.
Sec. 4010.13 [Amended]
0
11. Amend Sec. 4010.13 by removing the phrase ``Sec. 4901.21(a)(3)''
and adding in its place the phrase ``Sec. 4901.21(a)''.
PART 4022--BENEFITS PAYABLE IN TERMINATED SINGLE-EMPLOYER PLANS
0
12. 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
13. Revise the section heading for Sec. 4022.7 to read as follows:
Sec. 4022.7 Benefits payable in a lump sum.
* * * * *
PART 4041A--TERMINATION OF MULTIEMPLOYER PLANS
0
14. The authority citation for part 4041A continues to read as follows:
Authority: 29 U.S.C. 1302(b)(3), 1341a, 1431, 1441.
Sec. 4041A.43 [Amended]
0
15. Amend Sec. 4041A.43 in paragraph (b)(1) by removing ``$5,000'' and
adding in its place the words ``the dollar amount specified in section
203(e)(1) of ERISA''.
PART 4043--REPORTABLE EVENTS AND CERTAIN OTHER NOTIFICATION
REQUIREMENTS
0
16. The authority citation for part 4043 continues to read as follows:
Authority: 29 U.S.C. 1083(k), 1302(b)(3), 1343.
Sec. 4043.8 [Amended]
0
17. Amend Sec. 4043.8 by removing ``Sec. 4901.21(a)(3)'' and adding
in its place ``Sec. 4901.21(a)''.
PART 4211--ALLOCATING UNFUNDED VESTED BENEFITS TO WITHDRAWING
EMPLOYERS
0
18. The authority citation for part 4211 continues to read as follows:
Authority: 29 U.S.C. 1302(b)(3); 1391(c)(1), (c)(2)(D),
(c)(5)(A), (c)(5)(B), (c)(5)(D), and (f).
Sec. 4211.31 [Amended]
0
19. Amend Sec. 4211.31 in paragraph (b) by removing the words
``subpart B of this part'' and adding in its place the words ``set
forth in subpart B of this part''.
PART 4262--SPECIAL FINANCIAL ASSISTANCE BY PBGC
0
20. The authority citation for part 4262 continues to read as follows:
Authority: 29 U.S.C. 1302(b)(3), 1432.
Sec. 4262.16 [Amended]
0
21. Amend Sec. 4262.16 by revising paragraphs (g)(2)(viii) and (ix)
and adding paragraph (g)(2)(xvi)(D) to read as follows:
Sec. 4262.16 Conditions for special financial assistance.
* * * * *
(g) * * *
(2) * * *
(viii) SFA assets excluded. The value of the plan assets taken into
account as of the end of each determination year is the value of the
assets that would otherwise be taken into account in the absence of
this provision reduced by the amount described in paragraph (g)(2)(ix)
of this section. The value of plan assets determined under this
paragraph (g)(2)(viii) may not be less than zero.
(ix) Calculation of SFA assets excluded--(A) In general. Except for
plans required to pay make-up
[[Page 76665]]
payments described in Sec. 4262.15(b), the amount described in this
paragraph (g)(2)(ix)(A) is, as of the end of the determination year--
(1) The total amount of special financial assistance paid to the
plan under Sec. 4262.12 (as determined under Sec. 4262.12(a) or (b),
or under Sec. 4262.12(b) and (c) for plans paid under a supplemented
application, as applicable), minus the amount paid to PBGC under Sec.
4262.12(e), as of the end of the determination year;
(2) Multiplied by a fraction, the numerator of which is the number
of years determined under paragraph (g)(2)(x) of this section as of the
end of the determination year and the denominator of which is the
number of years determined under paragraph (g)(2)(xi) of this section
as of the end of the determination year.
(B) Plans required to pay make-up payments. For plans required to
pay make-up payments described in Sec. 4262.15(b), the amount
described in this paragraph (g)(2)(ix)(B) is, as of the end of the
determination year--
(1) The total amount of special financial assistance paid to the
plan under Sec. 4262.12 (as determined under Sec. 4262.12(a) or (b),
or under Sec. 4262.12(b) and (c) for plans paid under a supplemented
application, as applicable), minus the amount paid to PBGC under Sec.
4262.12(e), and minus the amount of make-up payments paid by the plan
to participants and beneficiaries under Sec. 4262.15(b) whether the
payments are made from SFA assets or non-SFA assets, as of the end of
the determination year;
(2) Multiplied by a fraction, the numerator of which is the number
of years determined under paragraph (g)(2)(x) of this section as of the
end of the determination year and the denominator of which is the
number of years determined under paragraph (g)(2)(xi) of this section
as of the end of the determination year.
* * * * *
(xvi) * * *
(D) Example 4. In plan year 2022, Plan D received an SFA payment
amount of $50,000,000 (not including the amount paid to PBGC for
repayment of traditional financial assistance) and a supplemented SFA
payment amount of $30,000,000. A total of $20,000,000 in lump-sum make-
up payments were paid by Plan D in plan year 2022. An employer
withdraws in 2023. At the end of the determination year (2022), the
amount of SFA required to be excluded from assets equals $60,000,000
($50,000,000 + $30,000,000--$20,000,000). If, instead, the make-up
payments were paid by Plan D in plan year 2023, the amount of SFA
required to be excluded from assets at the end of the determination
year (2022) would equal $80,000,000. Under this scenario, Plan D's
unfunded vested benefit liability would be the same at the end of the
determination year because the additional $20,000,000 of SFA required
to be excluded from assets offsets the $20,000,000 in SFA that the plan
still holds for make-up payments but has not yet distributed as of the
end of the determination year. Similarly, if the employer withdraws in
2024, the make-up payments were paid in 2023, and the phase-in fraction
was 9/10th for 2023, the amount of SFA excluded from the assets at the
end of the determination year (2023) would be $54,000,000 (9/10th x
$60,000,000), where the $60,000,000 is calculated as the total
$80,000,000 in SFA paid to the plan minus the $20,000,000 in make-up
payments that were disbursed prior to the end of the determination
year.
Issued in Washington, DC.
Gordon Hartogensis,
Director, Pension Benefit Guaranty Corporation.
[FR Doc. 2023-24268 Filed 11-6-23; 8:45 am]
BILLING CODE 7709-02-P
