80 FR 79687 - Partitions of Eligible Multiemployer Plans
PENSION BENEFIT GUARANTY CORPORATION Federal Register Volume 80, Issue 246 (December 23, 2015)
Federal Register Volume 80, Issue 246 (December 23, 2015)
| Page Range | 79687-79695 | |
| FR Document | 2015-32309 |
[Federal Register Volume 80, Number 246 (Wednesday, December 23, 2015)] [Rules and Regulations] [Pages 79687-79695] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-32309] ======================================================================= ----------------------------------------------------------------------- PENSION BENEFIT GUARANTY CORPORATION 29 CFR Part 4233 RIN 1212-AB29 Partitions of Eligible Multiemployer Plans AGENCY: Pension Benefit Guaranty Corporation. ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: On June 19, 2015, PBGC published an interim final rule to implement the application process and notice requirements for partitions of eligible multiemployer plans under title IV of the Employee Retirement Income Security Act of 1974 (ERISA), as amended by the Multiemployer Pension Reform Act of 2014 (MPRA). PBGC is making minor changes to the interim final regulation in response to public comments received on the interim final rule. DATES: Effective January 22, 2016. See Applicability in SUPPLEMENTARY INFORMATION. FOR FURTHER INFORMATION CONTACT: Joseph J. Shelton ([email protected]), Assistant General Counsel, Office of the General Counsel, Pension Benefit Guaranty Corporation, 1200 K Street NW., Washington, DC 20005-4026; 202-326-4400, ext. 6559. SUPPLEMENTARY INFORMATION: Executive Summary Purpose of the Regulatory Action This final rule makes minor changes to part 4233 of PBGC's regulations, which was added by PBGC's interim [[Page 79688]] final rule on Partitions of Eligible Multiemployer Plans (80 FR 35220, June 19, 2015). Many of the changes respond to public comments.\1\ --------------------------------------------------------------------------- \1\ The interim final rule and comments available at http://www.pbgc.gov/prac/pg/other/guidance/final-rules.html. --------------------------------------------------------------------------- PBGC's legal authority for this action comes from section 4002(b)(3) of ERISA, which authorizes PBGC to issue regulations to carry out the purposes of title IV of ERISA, and section 4233 of ERISA, as amended by MPRA, which requires that the partition process be conducted in accordance with regulations prescribed by PBGC. Major Provisions of the Regulatory Action Part 4233 prescribes the statutory conditions and the information and notice requirements that must be met before PBGC may partition an eligible multiemployer plan under section 4233 of ERISA. This final rule makes minor revisions to part 4233 with respect to information requirements, the time period for PBGC's initial review of an application for partition, and the coordinated application process for partition and benefit suspension. Background In December 2014, Congress enacted and the President signed the Consolidated and Further Continuing Appropriations Act, 2015, Public Law 113-235 (128 Stat. 2130 (2014)), of which MPRA is a part. MPRA contains a number of statutory reforms intended to help financially troubled multiemployer plans and to improve the financial condition of PBGC's multiemployer insurance program. In addition to increasing PBGC premiums, sections 121 and 122 of MPRA provide PBGC with new statutory authority to assist financially troubled multiemployer plans under certain conditions if doing so would reduce potential future costs to PBGC and PBGC can certify that its ability to meet existing financial assistance to other plans will not be impaired.\2\ --------------------------------------------------------------------------- \2\ This final rule implements section 122 of MPRA. PBGC expects to publish a proposed rule on facilitated mergers involving critical and declining status plans under section 121 of MPRA in a separate rulemaking. --------------------------------------------------------------------------- Section 122 of MPRA replaced the existing partition rules with a new framework of rules. As amended by MPRA, section 4233(a)(1) of ERISA provides that, upon application by the plan sponsor of an eligible multiemployer plan, PBGC may order a partition of the plan in accordance with that section. As under prior law, PBGC's decision to order a partition is discretionary.\3\ Unlike prior law, however, MPRA requires PBGC to make a determination on a partition application not later than 270 days after the date such application was filed (or, if later, the date such application was completed), in accordance with regulations promulgated by PBGC. --------------------------------------------------------------------------- \3\ For additional background on the statutory rules governing multiemployer plans under title IV of ERISA, including the statutory rule for partitions under section 4233 of ERISA before MPRA's changes, see the preamble to the interim final rule. --------------------------------------------------------------------------- In addition, section 4233(a)(2) states that not later than 30 days after submitting an application for partition, the plan sponsor shall notify the participants and beneficiaries of such application in the form and manner prescribed by regulations issued by PBGC. Eligibility Criteria for Partition Section 4233(b) of ERISA contains five statutory conditions that must be satisfied before PBGC may order a partition: Critical and declining status. In accordance with section 4233(b)(1), the plan must be in critical and declining status as defined in section 305(b)(6) of ERISA.\4\ --------------------------------------------------------------------------- \4\ Section 305(b)(6) provides that a plan is in critical and declining status if (1) it satisfies the criteria for critical status under section 305(b)(2), and (2) it is projected to become insolvent within the meaning of section 4245 during the current plan year or any of the 14 succeeding plan years (or 19 succeeding plan years if the plan has a ratio of inactive participants to active participants that exceeds two to one, or if the funded percentage of the plan is less than 80 percent). Treasury has interpretative jurisdiction over the subject matter in section 305 of ERISA. --------------------------------------------------------------------------- PBGC determination on reasonable measures. Under section 4233(b)(2) of ERISA, PBGC must determine, after consultation with the Participant and Plan Sponsor Advocate (Advocate), that the plan sponsor has taken (or is taking concurrently with an application for partition) all reasonable measures to avoid insolvency, including maximum benefit suspensions under section 305(e)(9) of ERISA, if applicable. Long-term loss and plan solvency. In accordance with section 4233(b)(3) of ERISA, PBGC must reasonably expect that--Partition will reduce PBGC's expected long-term loss with respect to the plan; and Partition is necessary for the plan to remain solvent. Certification to Congress. In accordance with section 4233(b)(4) of ERISA, PBGC must certify to Congress that its ability to meet existing financial assistance obligations to other plans (including any liabilities associated with multiemployer plans that are insolvent or that are projected to become insolvent within 10 years) will not be impaired by the partition. Source of funding. In accordance with section 4233(b)(5) of ERISA, the cost to PBGC arising from the partition must be paid exclusively from the PBGC fund for basic benefits guaranteed for multiemployer plans. PBGC Partition Order Upon PBGC's approval of an application for partition, section 4233(c) of ERISA provides that PBGC's partition order shall provide for a transfer to the plan created by the partition order (the successor plan) the minimum amount of the original plan's liabilities necessary for the original plan to remain solvent. Sections 4233(d)(1) and (2) of ERISA describe the nature of the successor plan, and assign responsibility for its management. Specifically, section 4233(d)(1) provides that the plan created by the partition order is a successor plan to which section 4022A applies. Section 4233(d)(2) provides that the plan sponsor of the original plan and the administrator of such plan shall be the plan sponsor and administrator, respectively, of the successor plan. Partition Withdrawal Liability Rule Section 4233(d)(3) of ERISA prescribes a new withdrawal liability rule that applies for 10 years following the date of the partition order. Under the new rule, if an employer withdraws from the original plan within 10 years following the date of the partition, withdrawal liability is computed under section 4201 with respect to the original plan and the successor plan. If, however, the withdrawal occurs more than 10 years after the date of the partition order, withdrawal liability is computed under section 4201 only with respect to the original plan (and not with respect to the successor plan). In either case, withdrawal liability is payable to the original plan (and not the successor plan). Continuing Payment Obligation Section 4233(e)(1) imposes an ongoing benefit payment obligation on the original plan with respect to each participant or beneficiary of the original plan whose guarantee amount was transferred to the successor plan pursuant to a partition order. With respect to these individuals, the original plan must pay a monthly benefit for each month in which such benefit is in pay status following the effective date of the partition in an amount equal to the excess of-- The monthly benefit that would be paid to such participant or beneficiary [[Page 79689]] for such month under the terms of the plan (taking into account benefit suspensions under section 305(e)(9) and any plan amendments following the effective date of such partition) if the partition had not occurred, over The monthly benefit for such participant or beneficiary that is guaranteed under section 4022A.\5\ --------------------------------------------------------------------------- \5\ Because the benefit payment obligation under section 4233(e)(1) is based, in part, on the monthly benefit that is guaranteed under section 4022A, the amount of this benefit payment obligation is subject to change under section 4022A(f)(2)(C). --------------------------------------------------------------------------- Benefit Improvement Premium Payments to PBGC Section 4233(e)(2) of ERISA provides that in any case in which a plan provides a benefit improvement, as defined in section 305(e)(9)(E)(vi), that takes effect after the effective date of the partition, the original plan shall pay to PBGC for each year during the 10-year period following the partition effective date, an annual amount equal to the lesser of-- The total value of the increase in benefit payments for such [plan] year that is attributable to the benefit improvement, or The total benefit payments from the successor plan for such [plan] year. This payment must be made at the time of, and in addition to, any other premium imposed by PBGC under title IV of ERISA.\6\ --------------------------------------------------------------------------- \6\ Section 305(e)(9)(E)(vi) defines the term ``benefit improvement'' as a resumption of suspended benefits, an increase in benefits, an increase at the rate at which benefits accrue, or an increase in the rate at which benefits become nonforfeitable under the plan. As previously noted, Treasury has interpretative jurisdiction over the subject matter in section 305 of ERISA. --------------------------------------------------------------------------- Special Premium Rule Section 4233(e)(3) of ERISA imposes a special premium rule on the original plan, which requires it to pay the premiums for participants whose guarantee amounts were transferred to the successor plan for each year during the 10-year period following the partition effective date. Notice of Partition Order In addition to the initial notice requirement under section 4233(a)(2) of ERISA, which applies to the plan sponsor, section 4233(f) imposes a notice requirement on PBGC. It states that not later than 14 days after the issuance of a partition order, PBGC must provide notice of the order to the Committee on Education and the Workforce of the House of Representatives; the Committee on Ways and Means of the House of Representatives; the Committee on Finance of the Senate; the Committee on Health, Education, Labor, and Pensions of the Senate; and any affected participants or beneficiaries. Interim Final Rule and Regulatory Changes As noted above, on June 19, 2015, PBGC published an interim final rule on Partitions of Eligible Multiemployer Plans. PBGC had earlier published a Request for Information (RFI) to solicit information on issues PBGC should consider in the rulemaking; PBGC received 20 comments in response to the RFI.\7\ --------------------------------------------------------------------------- \7\ 80 FR 8712, Feb. 18, 2015. The RFI and comments are available at http://www.pbgc.gov/prac/pg/other/guidance/multiemployer-notices.html. --------------------------------------------------------------------------- The regulatory provisions in the interim final rule were effective upon publication. PBGC provided a 60-day comment period and received nine comments, four from organizations (Pension Rights Center, U.S. Chamber of Commerce, National Coordinating Committee for Multiemployer Plans, and AARP), and five from individuals. The comments, PBGC's responses to the comments, and a summary of changes made to the interim final rule are discussed below. For a summary of the rules that remain unchanged, see the preamble to the interim final rule. Discussion of Public Comments Application Requirements Section 4233.4 of the interim final rule provides guidance on the information needed to determine whether an application for partition is complete, and states that an application will not be considered complete unless the application includes the information specified in Sec. Sec. 4233.5 (plan information), 4233.6 (partition information), 4233.7 (actuarial and financial information), 4233.8 (participant census data), 4233.9 (financial assistance information). One commenter stated that the rule on completeness in Sec. 4233.4 is ``inappropriately strict,'' and that ``[t]here may be instances where not every document listed is required for PBGC to make a determination.'' The commenter noted, as an example, the requirement under Sec. 4233.5(g) for the most recent IRS determination letter for the plan. The commenter expressed the view that determination letters may become increasingly difficult to obtain due to recently announced changes to the IRS determination letter program for qualified plans,\8\ and that ``the lack of a determination letter would undo the entire application even though it has little direct impact on the partition itself.'' The same commenter suggested that rather than stating that an application for partition will not be considered complete if the information required under Sec. Sec. 4233.5-4233.9 is not included with the application, Sec. 4233.4(a) should instead provide that an application with missing information may require additional time for PBGC to determine if the application is complete. --------------------------------------------------------------------------- \8\ See IRS Announcement 2015-19, available at https://www.irs.gov/pub/irs-drop/a-15-19.pdf. --------------------------------------------------------------------------- PBGC believes that the regulation's information requirements are reasonable, necessary, and, in most instances, based on information that plans are already required to prepare and retain under ERISA and the Internal Revenue Code (``Code''). Turning to the commenter's concern about IRS determination letters, PBGC notes that to be covered under title IV of ERISA, a plan must either have received a favorable determination letter from the IRS, or have otherwise met the tax- qualification requirements under the Code. Because the requirement in Sec. 4233.5(g) is limited to the plan's most recent IRS determination letter (regardless of the date), IRS Announcement 2015-19 should not impact this requirement. In the case of a multiemployer plan that had never in its history obtained a determination letter (which is rare in PBGC's experience) but, in practice, operated in accordance with the qualification rules under the Code, the failure to submit a determination letter under Sec. 4233.5(g) would not, as the commenter suggested, ``undo the entire partition application.'' Under that scenario, the inability to submit the plan's most recent determination letter is not due to an oversight or a refusal to provide the information. Rather, the document simply does not exist. In that case, nothing in the regulation would constrain PBGC from exercising its discretion to determine that the application was nevertheless complete. PBGC is amending Sec. 4233.4(a) to clarify this point by substituting the word ``may'' in place of ``will.'' Therefore, as revised, Sec. 4233.4(a) will provide that if any of the information required under part 4233 is not included with an application for partition, ``the application may not be considered complete.'' Plan Information Section 4233.5 of the regulation identifies plan-related information items that must be submitted for an application to be complete, including a requirement under Sec. 4233.5(i) to provide a current listing of contributing [[Page 79690]] employers to the plan and the approximate number of participants for whom each employer is required to contribute. One commenter suggested that in addition to the information required under Sec. 4233.5(i), plan sponsors should be required to submit information on the specific dollar amount contributed by each employer, whether the employer is current or delinquent in making its contributions to the plan, and if delinquent, the specific dollar amount of the delinquency. Finally, the commenter suggested that PBGC should ``look back at least ten years, especially given that the economic crisis from 2008 through 2013 may not be an accurate measure, and sufficient pre- and post-crisis data is needed to fairly evaluate a plan and its funding capabilities.'' For a number of reasons, PBGC did not adopt the commenter's suggestions. First, based on its partition experience under prior law, PBGC decided that Sec. 4233.5(i) already provides PBGC with all of the employer contribution information it needs to make a determination on an application for partition. Second, if, based on the facts of a particular case, PBGC determines that additional information relating to a plan's contribution base is needed to make a determination on partition, PBGC retains the discretion to request such information under Sec. 4233.4(b).\9\ --------------------------------------------------------------------------- \9\ Section 4233.4(b) of the regulation provides that PBGC may require a plan sponsor to submit additional information necessary to make a determination on an application under this part, and any information PBGC may need to calculate or verify the amount of financial assistance necessary for partition. --------------------------------------------------------------------------- Third, in addition to the employer contribution information already required under the interim final rule, Sec. 4233.5(h) requires a copy of the most recent Form 5500 and schedules for the plan. Schedule R of the Form 5500 requires, among other things, information on any employer that contributed more than five percent of the plan's total contributions for the plan year. In addition, Sec. 4233.7(a)(1) requires a plan sponsor to submit the most recent actuarial report for the plan and those for the two preceding plan years. These actuarial reports generally include information on actual contributions received for the plan year, and expected contributions for the following plan year. In sum, PBGC has determined that the existing information requirements under the regulation provide PBGC with the information it needs relating to employer contributions to make a determination on an application for partition. Furthermore, as previously stated, if additional information relating to employer contributions is needed to make a determination in a particular case, PBGC retains the discretion to request that information under Sec. 4233.4(b). Accordingly, for the reasons stated above, PBGC did not make any changes to Sec. 4233.5(i). PBGC Determination on Reasonable Measures Under section 4233(b)(2) of ERISA, PBGC must determine, after consultation with the Advocate, that the plan sponsor has taken (or is taking concurrently with an application for partition) all reasonable measures to avoid insolvency, including maximum benefit suspensions under section 305(e)(9) of ERISA, if applicable. Consistent with this requirement, Sec. 4233.6(e) requires a detailed description of all measures the plan sponsor has taken (or is taking) to avoid insolvency, as well as those measures the plan sponsor considered but did not take. The regulation also requires the plan sponsor to identify the factor(s) it considered in making those determinations, and to submit all relevant documentation relating to the determinations. One commenter expressed concern that the interim final rule did not require ``objective factual evidence'' and predicted that PBGC (and plan participants) would be ``treated to self-serving platitudes.'' The commenter suggested that plan sponsors should be required to ``document the efforts they have taken, and should likewise document why they have not taken other steps . . . to remedy the plan's financial situation.'' As a preliminary matter, PBGC agrees that unsupported assertions concerning the measures a plan sponsor has taken (or is taking) to avoid insolvency would not provide a sufficient basis for PBGC, in consultation with the Advocate, to make a determination under section 4233(b)(2) of ERISA. PBGC disagrees, however, that unsupported assertions would satisfy the requirements of Sec. 4233.6(e). In addition to requiring a detailed description of the measures taken to avoid insolvency, including the measures the plan sponsor considered but did not take, Sec. 4233.6(e) requires the plan sponsor to submit ``all relevant documentation'' relating to those determinations. Furthermore, to the extent the information and documentation provided under Sec. 4233.6(e) is not sufficient to reach a determination, PBGC has the authority under Sec. 4233.4(b) to require a plan sponsor to submit any additional information necessary to make a determination under section 4233 of ERISA. Finally, it is also important to note that Sec. 4233.3(b) requires that an application for partition must be signed and dated by an authorized trustee and must include a statement under penalties of perjury that the ``application contains all the relevant facts relating to the application, and such facts are true, correct, and complete.'' Based on the foregoing, PBGC believes that the existing information and certification requirements under the regulation address the concerns raised by the commenter relating to unsupported assertions, and that no additional changes are required. Actuarial and Financial Information Section 4233.7 of the interim final rule identifies the actuarial and financial information requirements for an application for partition. Although there were no comments from the public on Sec. 4233.7, PBGC is amending the regulation to clarify that the benefit payment information required under Sec. Sec. 4233.7(a)(3)(iii), (a)(5)(iii), and (a)(8) must be organized by participant status (e.g., active, retiree, terminated vested, beneficiary). PBGC determined that organizing benefit payment information in this manner is necessary to determine the aggregate amount of benefits subject to transfer under section 4233(c) of ERISA. PBGC is also amending the information requirements under Sec. 4233.7 to require long-term projections of pre-partition benefit disbursements at the PBGC-guarantee level and, if applicable, maximum benefit suspensions under section 305(e)(9) of ERISA. Participant Census Data Section 4233.8 of the interim final rule identifies the types of participant census data to include with an application for partition. PBGC has determined that information about gender is needed to accurately determine the present value of plan liabilities and is, therefore, amending the regulation to clarify that gender must be included in the census data elements under Sec. 4233.8. Initial Review Process Section 4233.10 of the interim final rule prescribes an initial review process for the purpose of determining whether an application is complete under [[Page 79691]] section 4233(a)(1) of ERISA.\10\ PBGC received two comments expressing concern that the interim final rule does not impose a time limit on PBGC for making an initial determination on whether an application is complete. One commenter stated that while it understood PBGC may need time to ensure it has the necessary information to make a determination, it was concerned that the 270-day review period could be unreasonably extended if there were no time limit for making a determination on completeness. Expressing a similar view, another commenter stated that the regulation ``provides no time frame for this initial determination which could go on indefinitely.'' Both commenters suggested that PBGC include a time limit on its completeness review, with one commenter suggesting that PBGC adopt the two business day limit that applies to Treasury for benefit suspensions under Treas. Temp. Reg. Sec. 1.432(e)(9)-1T(g)(1)(ii). --------------------------------------------------------------------------- \10\ Section 4233(a)(1) of ERISA provides, in relevant part, that PBGC shall make a determination regarding an application for partition not later than 270 days after the date such application was filed (or, if later, the date such application was completed) in accordance with regulations promulgated by PBGC. --------------------------------------------------------------------------- PBGC notes that although the partition rule under section 4233 of ERISA and the suspension of benefits rule under section 305(e)(9) work in tandem, there are important differences. One difference relates to the commencement of the review period. Unlike the suspension of benefit rule, which requires Treasury, in consultation with PBGC and the Department of Labor, to approve or deny an application for suspension of benefits within 225 days after the submission of such application, section 4233(a)(1) requires PBGC to issue a determination on partition not later than 270 days after the date such application was filed (or, if later, the date such application was completed). Thus, section 4233 provides that the 270-day review period does not begin on the date of submission, but rather on the date the application for partition was filed or, if later, the date such application was completed. Another important difference is that under section 305(e)(9), notice of the proposed suspension must be given concurrently with the submission of an application for suspension of benefits.\11\ In contrast, under section 4233(a)(2) of ERISA, the plan sponsor must provide notice not later than 30 days after submitting an application for partition.\12\ --------------------------------------------------------------------------- \11\ The temporary Treasury regulation provides that such notice must be given no earlier than four business days before the date on which an application is submitted, and no later than two business days after Treasury notifies the plan sponsor that it has submitted a complete application. Temp. Treas. Reg. Sec. 1.432(e)(9)- 1T(f)(3)(i)(A). \12\ The interim final rule states that the date of PBGC's written notice of completeness under Sec. 4233.10 will mark the beginning of PBGC's 270-day review period under section 4233(a)(1), and the plan sponsor's 30-day notice period under section 4233(a)(2) of ERISA. --------------------------------------------------------------------------- Given these differences, PBGC is not adopting the two-business-day review period under Treas. Temp. Reg. Sec. 1.432(e)(9)-1T(g)(1)(ii). However, having considered the concerns raised by commenters relating to the lack of a specified time limit on PBGC's initial review process, PBGC believes that a 14 calendar day review period provides sufficient time to complete the initial review of an application under Sec. 4233.10. Importantly, this addition will provide plan sponsors, participants, and beneficiaries with more certainty on when the 270-day statutory review period under section 4233(a)(1) of ERISA, and the 30- day notice period under section 4233(a)(2) will begin.\13\ --------------------------------------------------------------------------- \13\ As noted in the preamble to the interim final rule, PBGC's determination on whether an application is complete under Sec. 4233.10(c) will mark the beginning of the 270-day statutory review period under section 4233(a)(1) and the 30-day notice period under 4233(a)(2). --------------------------------------------------------------------------- Notice Requirements Section 4233.11 of the interim final rule describes the notice requirements for an application for partition, and provides optional model notices. Section 4233.11(d) of the regulation states that the purpose of the model notices is to assist plan sponsors in discharging their notice obligations under section 4233(a)(2) of ERISA. The regulation does not require use of the model notices, but states that a properly completed model notice will be deemed to satisfy the notice requirements under the regulation. One commenter expressed concern that plan sponsors would be free to alter, amend, or even discard the text in the model notices in favor of their own, which, in the commenter's view, would provide ``too much latitude to plan trustees and professionals who may well have steered the plan into `critical and declining' status in the first place.'' The commenter suggested that PBGC require a plan sponsor to ``highlight'' and explain any deviations from the model notice text. The same commenter also suggested that deviations from the model notices should require advance approval from PBGC and the Advocate. PBGC considered the commenter's suggestions but did not incorporate them into the final regulation. In PBGC's view, requiring plan sponsors to highlight and explain any deviations from the model notice (which is not required under section 4233(a)(2)) \14\ would be inconsistent with the purpose of the notice--to assist plan sponsors in meeting their notice obligations under section 4233(a)(2) of ERISA. Furthermore, PBGC believes that Sec. 4233.6(g) addresses the commenter's concern about incorrect or misleading notices by requiring the plan sponsor to include a copy of the draft notice at the same time it submits its application for partition to PBGC. Submission of a notice that fails to satisfy the content requirements set forth in Sec. 4233.11(c) may result in a determination that the application is incomplete under Sec. 4233.4(a). For these reasons, PBGC did not make any changes to Sec. 4233.11. --------------------------------------------------------------------------- \14\ In contrast, section 305(e)(9)(F)(v) requires that Treasury ``establish a model notice that a plan sponsor may use to meet the [form and notice] requirements.'' Importantly, even where Congress required a model notice, it did not require use of that notice by plan sponsors. --------------------------------------------------------------------------- Conditional Determination Process Section 4233.13 of the interim final rule describes a conditional approval process for plan sponsors who file applications for partition and suspension of benefits. Under the special rule, PBGC may, in its discretion, approve an application for partition conditioned on Treasury's final authorization to suspend benefits under section 305(e)(9) of ERISA. As noted in Sec. 4233.12(c), however, a partition will only become effective upon satisfaction of the required conditions and the issuance of a partition order. PBGC received one comment on the conditional approval process. The commenter stated that it was not clear if a conditional approval under Sec. 4233.12(c) would satisfy the requirement in Temp. Treas. Reg. Sec. 1.432(e)(9)-1T(d)(7), which states that in order to satisfy the requirement that a suspension of benefits not take effect prior to the effective date of a partition, the partition order must be provided to the Secretary of Treasury by the last day of the 225-day period described in Temp. Treas. Reg. Sec. 1.432(e)(9)-1T(g)(3)(i). The commenter suggested that PBGC and Treasury clarify this point in the agencies' respective regulations. Having consulted with Treasury on this comment, PBGC agrees that additional clarification relating to the effect of a conditional approval of partition under the agencies' regulations is needed. First, with respect to part 4233, PBGC is amending Sec. Sec. 4233.6 and 4233.13 to clarify that in any case in [[Page 79692]] which an application for partition is made in combination with a suspension of benefits, the effective date of the proposed partition must satisfy the requirements of ERISA section 305(e)(9)(D)(v).\15\ Second, with respect to the effect of a conditional approval of a partition under the Treasury rule, PBGC has been advised by Treasury that PBGC's issuance of a conditional approval within the 225-day period under section 305(e)(9)(G) will be deemed to satisfy the requirement set forth in Temp. Treas. Reg. Sec. 1.432(e)(9)-1T(d)(7). --------------------------------------------------------------------------- \15\ Section 305(e)(9)(D)(v) states, in relevant part, that ``[i]n any case in which a suspension of benefits with respect to a plan is made in combination with a partition of the plan under section 4233, the suspension of benefits may not take effect prior to the effective date of such partition.'' Treasury has interpretative jurisdiction over the subject matter in section 305 of ERISA. --------------------------------------------------------------------------- Nature and Operation of Successor Plan PBGC received one comment on Sec. 4233.15, which describes the nature and operation of the successor plan created by the partition order. The commenter asked whether certain legal requirements under title I and the Code would apply to a successor plan in a partition. While a discussion of the legal requirements under title I and the Code is not within PBGC's jurisdiction and, therefore, beyond the scope of this rulemaking, all title I and Code requirements that would otherwise apply to a terminated, insolvent multiemployer plan apply to a successor plan in a partition absent a statutory, regulatory, or administrative exemption. Continuing Jurisdiction Section 4233.17 of the interim final rule describes PBGC's continuing jurisdiction over the original plan and the successor plan. In the preamble to the interim final rule, PBGC explained that although commenters on the RFI expressed differing views on the need for additional post-partition oversight, PBGC determined that additional oversight is necessary to ensure compliance with the post-partition requirements under MPRA and proper stewardship of PBGC financial assistance. PBGC received one comment that did not specifically refer to Sec. 4233.17 but did relate to post-partition oversight. The commenter suggested that when a plan is insolvent, regulating and assessing administrative costs (including salaries and professional fees) should be the first priority, and that in some cases it may be appropriate to appoint an independent legal representative and trustee to administer the plan. Finally, the commenter suggested that the trustees, employees, and service providers of an insolvent plan should be required to disclose sources of income and conflicts of interest. The commenter did not suggest any changes to Sec. 4233.17, and PBGC determined that none are necessary. Nevertheless, in response to the comment, PBGC notes that it will retain continuing jurisdiction over the original plan and successor plan in a partition to ensure compliance with the post-partition requirements under MPRA and proper stewardship of PBGC financial assistance. In addition, although section 4233(d)(2) of ERISA assigns responsibility for the management of the successor plan to the plan sponsor and administrator of the original plan, PBGC continues to have authority under sections 4041A and 4281 to prescribe such rules and standards for the administration of terminated multiemployer plans (and authority under section 4042 to institute proceedings for the appointment of a new trustee to administer the plan) that PBGC considers appropriate to protect the interests of plan participants and beneficiaries, or to prevent unreasonable loss to PBGC. Finally, as noted above, absent a statutory, regulatory, or administrative exemption, all of the title I requirements that would otherwise apply to a terminated, insolvent multiemployer plan (e.g., the fiduciary rules under section 404 and the prohibited transaction rules under section 406) would also apply to the successor plan in a partition under section 4233 of ERISA. Other Comments In addition to comments on specific sections of the interim final rule, PBGC received two comments objecting to PBGC's interpretation of the term ``maximum benefit suspensions'' in section 4233(b)(2) of ERISA.\16\ As noted in the preamble to the interim final rule, the term ``maximum benefit suspensions'' is not defined in sections 305(e)(9) and 4233 of ERISA. The statute, however, limits the maximum amount of a suspension so that a post-suspension benefit can be no less than 110 percent of the PBGC guarantee under section 4022A, limits or exempts suspensions for certain categories of individuals based on their age, and exempts pension benefits based on disability from any reductions. Based on the structure and operation of these provisions, PBGC interprets the term ``maximum benefit suspensions'' in section 4233(b)(2) to mean the maximum benefit suspensions permissible under section 305(e)(9). --------------------------------------------------------------------------- \16\ Under section 4233(b)(2) of ERISA, PBGC must determine, after consultation with the Participant and Plan Sponsor Advocate, that the plan sponsor has taken (or is taking concurrently with an application for partition) all reasonable measures to avoid insolvency, including maximum benefit suspensions under section 305(e)(9) of ERISA, if applicable. --------------------------------------------------------------------------- One commenter stated that it ``does not believe plans should have to apply for maximum benefit suspensions to be eligible for partition'' and that ``[i]f PBGC believes it has no flexibility on the level of retiree cuts, it should ask Congress to modify this element of MPRA.'' Expressing a similar view, the other commenter stated that PBGC's interpretation is ``not consistent with the full text of section 4233'' and that ``the statute does not require trustees to impose unreasonable cutbacks, and absolutely disallows some categories of benefits (e.g., disability) even if the cutback would be otherwise reasonable.'' That same commenter asked a number of hypothetical questions relating to the maximum benefit suspension requirement, such as whether the requirement would apply to a plan that had only a few participants with suspendable benefits, or a plan in which maximum benefit suspensions were rejected by a vote of participants and beneficiaries under section 432(e)(9)(H). The commenter suggested that if maximum benefit cuts are required, ``partition would only be available in situations in which maximum benefit suspensions were sufficient to meet the plan's long-term solvency.'' As a preliminary matter, PBGC disagrees that a partition would only be available in situations in which maximum benefit suspensions were sufficient to meet the plan's long-term solvency. In fact, if maximum benefit suspensions were sufficient to meet a plan's long-term solvency, partition would not be available because it would not be necessary for the plan to remain solvent, which is a statutory requirement under section 4233(b)(3)(B). In other words, partition is only an option when maximum benefit suspensions are not sufficient to ensure long-term solvency. In those situations where partition would be needed, PBGC's interpretation of maximum benefit suspension reflects the statutory and regulatory limitations on suspensions under section 305(e)(9)(D). For example, as explained in the preamble to the interim final rule, the maximum benefit suspension [[Page 79693]] permissible for an individual with a plan benefit based on disability would be zero, because benefits based on disability may not be suspended under section 305(e)(9)(iii). The same would be true for a participant older than age 80. The commenter's hypothetical questions regarding a plan with a de minimis number of participants whose benefits would be subject to suspension under 305(e)(9)(D) and a plan in which participants and beneficiaries vote to reject benefit suspensions are beyond the scope of this rulemaking. However, PBGC notes that each application for partition will be decided on a case-by-case basis in accordance with the statutory criteria in section 4233(b). PBGC's interpretation of section 4233(b)(2) of ERISA is also consistent with the other conditions for partition under section 4233, which show Congress's intent to balance the need to protect multiemployer plans from insolvency with the need to improve the financial health of the title IV multiemployer insurance program. Section 4233(b)(3)(A) of ERISA, for example, provides that PBGC must reasonably expect that a partition of the plan will reduce PBGC's expected long-term loss with respect to the plan, and under section 4233(b)(4), PBGC must certify to Congress that its ability to meet existing financial assistance obligations to other plans (including any liabilities associated with multiemployer plans that are insolvent or that are projected to become insolvent within 10 years) will not be impaired by a partition. Finally, because a partition results in the creation of a newly insolvent successor plan that will require financial assistance under section 4261 of ERISA, the amount of liabilities that can be transferred to the successor plan is limited under section 4233(c) to the minimum amount of liabilities necessary for the original plan to remain solvent. Role of the Participant and Plan Sponsor Advocate As previously discussed, under section 4233(b)(2) of ERISA, PBGC must determine, after consultation with the Advocate, that the plan sponsor has taken (or is taking concurrently with an application for partition) all reasonable measures to avoid insolvency, including maximum benefit suspensions under section 305(e)(9) of ERISA, if applicable. In the preamble to the interim final rule, PBGC stated that it would not define by regulation the Advocate's consultative role under section 4233(b)(2); rather, the Advocate's role under the new law would be allowed to develop on a case-by-case basis. PBGC received one comment on the Advocate's role under section 4233(b)(2). The commenter asserted that plan sponsors and PBGC suffer from conflicts of interest--plan sponsors due to the composition of boards of trustees, and PBGC because it will only approve a partition if, among other things, it reduces PBGC's expected long-term loss--and that the Advocate ``is the only party who reaps no financial advantage from imposing benefit cuts on retirees.'' Based on this view, the commenter stated that the final rule should clarify that the Advocate is ``responsible solely for representing the plan's retirees and deferred vested participants,'' and that the Advocate should be ``offered the opportunity to participate in all meetings between the plan sponsor and PBGC.'' The commenter also suggested that the rule should require PBGC to provide the Advocate with adequate accounting, actuarial, and legal resources, and that the Advocate should have unfettered access to all plan records, actuarial worksheets, and databases. PBGC disagrees with the commenter's assertion relating to conflicts of interest. With respect to multiemployer plan sponsors, the Taft- Hartley Act, 29 U.S.C. 141 et seq., requires that employer and employees be equally represented in the administration of such plans. With respect to PBGC, MPRA requires, among other things, that PBGC analyze the impact of partition on PBGC's long term loss, and certify to Congress that its ability to meet existing financial assistance obligations to other plans will not be impaired by a partition. These requirements are imposed by statute. Although PBGC carefully considered the commenter's suggestions about defining the Advocate's consultative role, it decided not to make any changes in response. Given that the Advocate's consultative role in a partition is new, PBGC continues to believe that the better approach is to allow that role to evolve on a case-by-case basis. Finally, it is important to note that the role of the Advocate is defined by statute in section 4004(b) of ERISA, and while MPRA created additional duties, it did not change or modify the Advocate's existing duties under the statute. Applicability The amendments in this final rule will apply to applications for partition submitted to PBGC on or after January 22, 2016. Compliance With Rulemaking Guidelines Executive Orders 12866 ``Regulatory Planning and Review'' and 13563 ``Improving Regulation and Regulatory Review'' Having determined that this rulemaking is a ``significant regulatory action'' under Executive Order 12866, the Office of Management and Budget has reviewed this final rule under Executive Order 12866. Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. Executive Orders 12866 and 13563 require a comprehensive regulatory impact analysis be performed for any economically significant regulatory action, defined as an action that would result in an annual effect of $100 million or more on the national economy or which would have other substantial impacts. Pursuant to section 1(b)(1) of Executive Order 12866 (as amended by Executive Order 13422), PBGC has determined that regulatory action is required in this area. Principally, this regulatory action is necessary to implement the application and notice requirements under section 4233 of ERISA as amended and restated by MPRA. In accordance with OMB Circular A-4, PBGC also has examined the economic and policy implications of this final rule and has concluded that the action's benefits justify its costs. Under Section 3(f)(1) of Executive Order 12866, a regulatory action is economically significant if ``it is likely to result in a rule that may * * * [h]ave an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities.'' OMB has determined that this final rule does not cross the $100 million threshold for economic significance and is not otherwise economically significant. Most of the economic effect relating to partitions will be attributable to benefit suspensions. [[Page 79694]] Based on a review of financial resources available for partition, PBGC expects that fewer than 20 plans would be approved for partition over the next three years (about six plans per year), and that the total financial assistance PBGC will provide to those plans will be less than $60 million per year. Regulatory Flexibility Act Because PBGC did not publish a general notice of proposed rulemaking under 5 U.S.C. 553, the regulatory flexibility analysis requirements of the Regulatory Flexibility Act do not apply. Paperwork Reduction Act The information requirements under this final regulation-- information to be reported to PBGC and information to be disclosed to participants--are being submitted to OMB under the Paperwork Reduction Act (OMB control number 1212-0068, expires December 31, 2015). An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. PBGC estimates that over the next three years about six plans per year will apply for partition and that the total annual burden of this information collection will be about 78 hours and $58,800. List of Subjects in 29 CFR Part 4233 Employee benefit plans, Pension insurance, Reporting and recordkeeping requirements. For the reasons given above, the interim rule amending 29 CFR part 4233 published at 80 FR 35220 on June 19, 2015, is adopted as a final rule with the following changes: PART 4233--PARTITIONS OF ELIGIBLE MULTIEMPLOYER PLANS 0 1. The authority citation for part 4233 continues to read as follows: Authority: 29 U.S.C. 1302(b)(3), 1413. Sec. 4233.4 [Amended] 0 2. In Sec. 4233.4, the last sentence in paragraph (a) is amended by removing the word ``will'' and adding in its place the word ``may''. 0 3. In Sec. 4233.6, a sentence is added to the end of paragraph (a) to read as follows: Sec. 4233.6 Partition information. * * * * * (a) * * * With respect to coordinated applications for partition and suspension of benefits, proposed effective dates for both transactions must satisfy the requirements of section 305(e)(9)(D)(v) of ERISA. * * * * * 0 4. In Sec. 4233.7, paragraphs (a)(3)(iii), (a)(5)(iii), and (a)(8) are revised and paragraphs (a)(9) and (10) are added to read as follows: Sec. 4233.7 Actuarial and financial information. (a) * * * (3) * * * (iii) Benefit payments organized by participant status (e.g., active, retiree, terminated vested, beneficiary). * * * * * (5) * * * (iii) Benefit payments organized by participant status (e.g., active, retiree, terminated vested, beneficiary). * * * * * (8) A long-term projection reflecting benefit disbursements from the successor plan (organized by participant status (e.g., active, retiree, terminated vested, beneficiary)), and a statement of the present value of all future financial assistance to be paid as a result of a partition (using the interest and mortality assumptions applicable to the valuation of plans terminated by mass withdrawal as specified in Sec. 4281.13 of this chapter and other reasonable actuarial assumptions, including retirement age, form of benefit payment, and administrative expenses, certified by an enrolled actuary). (9) A long-term projection of pre-partition benefit disbursements from the original plan reflecting reduced benefit disbursements at the PBGC-guarantee level beginning on the proposed effective date of the partition (using a closed group valuation and no accruals after the proposed effective date of partition, and organized separately by participant status groupings (e.g., active, retiree, terminated vested, beneficiary)). (10) A long-term projection of pre-partition benefit disbursements from the original plan reflecting the maximum benefit suspensions permissible under section 305(e)(9) of ERISA beginning on the proposed effective date of the partition (using an open group valuation and organized separately by participant status groupings (e.g., active, retiree, terminated vested, beneficiary)). * * * * * 0 5. Section 4233.8 is revised to read as follows: Sec. 4233.8 Participant census data. An application for partition must include a copy of the census data used for the projections described in Sec. 4233.7(a)(3) and (5), including: (a) Participant type (retiree, beneficiary, disabled, terminated vested, active, alternate payee). (b) Date of birth. (c) Gender. (d) Credited service for guarantee calculation (i.e., number of years of participation). (e) Vested accrued monthly benefit before benefit suspension under section 305(e)(9) of ERISA. (f) Vested accrued monthly benefit after benefit suspension under section 305(e)(9) of ERISA. (g) Monthly benefit guaranteed by PBGC (determined under the terms of the original plan without respect to benefit suspensions). (h) Benefit commencement date (for participants in pay status and others for which the reported benefit is not payable at Normal Retirement Date). (i) For each participant in pay status-- (1) Form of payment, and (2) Data relevant to the form of payment, including: (i) For a joint and survivor benefit, the beneficiary's benefit amount (before and after suspension) and the beneficiary's date of birth; (ii) For a Social Security level income benefit, the date of any change in the benefit amount, and the benefit amount after such change; (iii) For a 5-year certain or 10-year certain benefit (or similar benefit), the relevant defined period. (iv) For a form of payment not otherwise described in this section, the data necessary for the valuation of the form of payment, including the benefit amount before and after suspension. (j) If an actuarial increase for postponed retirement applies or if the form of annuity is a Social Security level income option, the monthly vested benefit payable at normal retirement age in normal form of annuity. 0 6. In Sec. 4233.10, paragraphs (b) and (c) are revised to read as follows: Sec. 4233.10 Initial review. * * * * * (b) Incomplete application. If the application is incomplete, PBGC will issue a written notice to the plan sponsor describing the information missing from the application no later than 14 calendar days after the submission of such application. (c) Complete application. Upon making a determination that an application is complete (i.e., the application includes all the information specified in Sec. Sec. 4233.5 through 4233.9), PBGC will issue a written notice to the plan sponsor no later than 14 calendar days after the submission of such application. The date of the written [[Page 79695]] notice will mark the beginning of PBGC's 270-day review period under section 4233(a)(1) of ERISA, and the plan sponsor's 30-day notice period under 4233(a)(2) of ERISA. * * * * * 0 7. In Sec. 4233.12, paragraph (c) is revised to read as follows: Sec. 4233.12 PBGC action on application for partition. * * * * * (c) Conditional determination on application. At the request of a plan sponsor, PBGC may, in its discretion, issue an approval of an application conditioned on Treasury issuing a final authorization to suspend under section 305(e)(9)(H)(vi) of ERISA and any other terms and conditions set forth in the conditional approval. The conditional approval will include a written statement of preliminary findings, conclusions, and conditions. The conditional approval is not a final agency action. The proposed partition will only become effective upon satisfaction of the required conditions, and the issuance of an order of partition under section 4233(c) of ERISA. * * * * * 0 8. In Sec. 4233.13, paragraphs (a)(3) and (4) are revised to read as follows: Sec. 4233.13 Coordinated application process for partition and benefit suspension. (a) * * * (3) If Treasury does not issue the final authorization to suspend, PBGC's conditional approval under Sec. 4233.12(c) will be null and void. (4) If Treasury issues a final authorization to suspend, PBGC will issue a final partition order under Sec. 4233.14 and section 4233(c) of ERISA. The effective date of a final partition order must satisfy the requirements of section 305(e)(9)(D)(v) of ERISA. * * * * * Issued in Washington, DC, this 18th day of December 2015. W. Thomas Reeder, Director, Pension Benefit Guaranty Corporation. [FR Doc. 2015-32309 Filed 12-22-15; 8:45 am] BILLING CODE 7709-02-P
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4T(i)(8)(ii)’’ and adding ‘‘paragraph (3) Any amount set aside under section are applicable on December 21,
(i)(8)(ii) of this section’’ in its place. paragraph (i)(6)(v) of this section to the 2015. See paragraphs (i)(5)(ii)(B),
■ 11. Amending paragraph (i)(7)(ii) to extent it is determined during the (i)(5)(ii)(C), and (i)(8) of § 1.509(a)–4T
remove the language ‘‘§ 1.509(a)– immediately preceding taxable year that contained in 26 CFR part 1, revised as
4T(i)(5)(ii)(B)’’ and adding ‘‘paragraph such amount is not necessary for the of April 1, 2015, for certain rules
(i)(5)(ii)(B) of this section’’ in its place. purposes for which it was set aside and regarding non-functionally integrated
■ 12. Revising paragraph (i)(8). such amount was taken into account by Type III supporting organizations
■ 13. Revising paragraph (l). the organization to meet the distribution effective before December 21, 2015.
The revisions and additions read as requirement imposed in this paragraph * * * * *
follows: (i)(5)(ii) for any taxable year.
* * * * * § 1.509(a)–4T [Removed].
§ 1.509(a)–4 Supporting organizations.
(8) Valuation of non-exempt-use ■ Par. 3. Section 1.509(a)–4T is
* * * * * removed.
(i) * * * assets. For purposes of determining its
(5) * * * distributable amount for a taxable year, John Dalrymple,
(ii) * * * a supporting organization determines its Deputy Commissioner for Services and
(B) Distributable amount. Except as minimum asset amount, as defined in Enforcement.
provided in paragraphs (i)(5)(ii)(D) and paragraph (i)(5)(ii)(C) of this section, by Approved: December 14, 2015.
(E) of this section, the distributable determining the aggregate fair market
Mark J. Mazur,
amount for a taxable year is an amount value of all of its non-exempt-use assets
Assistant Secretary of the Treasury (Tax
equal to the greater of 85 percent of the in the immediately preceding taxable
Policy).
supporting organization’s adjusted net year. For these purposes, the
[FR Doc. 2015–32146 Filed 12–21–15; 4:15 pm]
income (as determined by applying the determination of the aggregate fair
BILLING CODE 4830–01–P
principles of section 4942(f) and market value of all non-exempt-use
§ 53.4942(a)–2(d) of this chapter) for the assets shall be made using the valuation
taxable year immediately preceding the methods described in § 53.4942(a)–2(c)
taxable year of the required distribution of this chapter. The aggregate fair PENSION BENEFIT GUARANTY
(immediately preceding taxable year) or market value of the supporting CORPORATION
its minimum asset amount (as defined organization’s non-exempt-use assets
shall not be reduced by any amount that 29 CFR Part 4233
in paragraph (i)(5)(ii)(C) of this section)
for the immediately preceding taxable is set aside under paragraph (i)(6)(v) of RIN 1212–AB29
year, reduced by the amount of taxes this section. For these purposes, the
imposed on the supporting organization non-exempt use assets of the supporting Partitions of Eligible Multiemployer
under subtitle A of the Internal Revenue organization are all assets of the Plans
Code during the immediately preceding supporting organization other than— AGENCY: Pension Benefit Guaranty
taxable year. (i) Assets described in § 53.4942(a)– Corporation.
(C) Minimum asset amount. For 2(c)(2)(i) through (iv) of this chapter
ACTION: Final rule.
purposes of this paragraph (i)(5), a (with the term ‘‘supporting
supporting organization’s minimum organization’’ being substituted for SUMMARY: On June 19, 2015, PBGC
asset amount for the immediately ‘‘foundation’’ or ‘‘private foundation’’ published an interim final rule to
preceding taxable year is 3.5 percent of and the date ‘‘August 17, 2006’’ being implement the application process and
the excess of the aggregate fair market substituted for ‘‘December 31, 1969’’); notice requirements for partitions of
value of all of the supporting and eligible multiemployer plans under title
organization’s non-exempt-use assets (ii) Exempt-use assets, which are IV of the Employee Retirement Income
(determined under paragraph (i)(8) of assets that are used (or held for use) Security Act of 1974 (ERISA), as
this section) in that immediately directly in carrying out the exempt amended by the Multiemployer Pension
preceding taxable year over the purposes of the supporting Reform Act of 2014 (MPRA). PBGC is
acquisition indebtedness with respect to organization’s supported organization(s) making minor changes to the interim
such non-exempt-use assets (determined (determined by applying the principles final regulation in response to public
under section 514(c)(1) without regard described in § 53.4942(a)–2(c)(3) of this comments received on the interim final
to the taxable year in which the chapter) by either— rule.
indebtedness was incurred), increased (A) The supporting organization; or DATES: Effective January 22, 2016. See
by— (B) One or more supported Applicability in SUPPLEMENTARY
(1) Amounts received or accrued organizations, but only if the supporting INFORMATION.
during the immediately preceding organization makes the asset available to
the supported organization(s) at no cost FOR FURTHER INFORMATION CONTACT:
taxable year as repayments of amounts
(or nominal rent) to the supported Joseph J. Shelton (shelton.joseph@
which were taken into account by the
organization(s). pbgc.gov), Assistant General Counsel,
organization to meet the distribution
Office of the General Counsel, Pension
requirement imposed in this paragraph * * * * *
Benefit Guaranty Corporation, 1200 K
(i)(5)(ii) for any taxable year; (l) Effective/applicability dates.
Street NW., Washington, DC 20005–
(2) Amounts received or accrued Paragraphs (a)(6), (f)(5), (i)(1) through
4026; 202–326–4400, ext. 6559.
asabaliauskas on DSK5VPTVN1PROD with RULES
during the immediately preceding (i)(4)(ii)(B), (i)(4)(ii)(D) through (i)(5)(i),
taxable year from the sale or other (i)(5)(ii)(E) through (i)(5)(iii)(C), (i)(6)(i) SUPPLEMENTARY INFORMATION:
disposition of property to the extent that through (iii), (i)(6)(v) through (i)(7)(i), Executive Summary
the acquisition of such property was and (i)(9) through (11) of this section are
taken into account by the organization applicable on December 28, 2012. Purpose of the Regulatory Action
to meet the distribution requirement Paragraphs (i)(4)(ii)(C), (i)(5)(ii)(A) This final rule makes minor changes
imposed in this paragraph (i)(5)(ii) for through (i)(5)(ii)(D), (i)(5)(iii)(D), to part 4233 of PBGC’s regulations,
any taxable year; and (i)(6)(iv), (i)(7)(ii) and (i)(8) of this which was added by PBGC’s interim
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![Federal Register / Vol. 80, No. 246 / Wednesday, December 23, 2015 / Rules and Regulations 79689
for such month under the terms of the Finance of the Senate; the Committee on determination letter would undo the
plan (taking into account benefit Health, Education, Labor, and Pensions entire application even though it has
suspensions under section 305(e)(9) and of the Senate; and any affected little direct impact on the partition
any plan amendments following the participants or beneficiaries. itself.’’ The same commenter suggested
effective date of such partition) if the that rather than stating that an
Interim Final Rule and Regulatory
partition had not occurred, over application for partition will not be
Changes
• The monthly benefit for such considered complete if the information
participant or beneficiary that is As noted above, on June 19, 2015, required under §§ 4233.5–4233.9 is not
guaranteed under section 4022A.5 PBGC published an interim final rule on included with the application,
Partitions of Eligible Multiemployer § 4233.4(a) should instead provide that
Benefit Improvement Premium Plans. PBGC had earlier published a an application with missing information
Payments to PBGC Request for Information (RFI) to solicit may require additional time for PBGC to
Section 4233(e)(2) of ERISA provides information on issues PBGC should determine if the application is complete.
that in any case in which a plan consider in the rulemaking; PBGC PBGC believes that the regulation’s
provides a benefit improvement, as received 20 comments in response to information requirements are
defined in section 305(e)(9)(E)(vi), that the RFI.7 reasonable, necessary, and, in most
takes effect after the effective date of the The regulatory provisions in the instances, based on information that
partition, the original plan shall pay to interim final rule were effective upon plans are already required to prepare
PBGC for each year during the 10-year publication. PBGC provided a 60-day and retain under ERISA and the Internal
period following the partition effective comment period and received nine Revenue Code (‘‘Code’’). Turning to the
date, an annual amount equal to the comments, four from organizations commenter’s concern about IRS
lesser of— (Pension Rights Center, U.S. Chamber of determination letters, PBGC notes that
• The total value of the increase in Commerce, National Coordinating to be covered under title IV of ERISA,
benefit payments for such [plan] year Committee for Multiemployer Plans, a plan must either have received a
that is attributable to the benefit and AARP), and five from individuals. favorable determination letter from the
improvement, or The comments, PBGC’s responses to the IRS, or have otherwise met the tax-
• The total benefit payments from the comments, and a summary of changes qualification requirements under the
successor plan for such [plan] year. made to the interim final rule are Code. Because the requirement in
This payment must be made at the time discussed below. For a summary of the § 4233.5(g) is limited to the plan’s most
of, and in addition to, any other rules that remain unchanged, see the recent IRS determination letter
premium imposed by PBGC under title preamble to the interim final rule. (regardless of the date), IRS
IV of ERISA.6 Announcement 2015–19 should not
Discussion of Public Comments impact this requirement.
Special Premium Rule In the case of a multiemployer plan
Application Requirements
Section 4233(e)(3) of ERISA imposes that had never in its history obtained a
Section 4233.4 of the interim final determination letter (which is rare in
a special premium rule on the original
rule provides guidance on the PBGC’s experience) but, in practice,
plan, which requires it to pay the
information needed to determine operated in accordance with the
premiums for participants whose
whether an application for partition is qualification rules under the Code, the
guarantee amounts were transferred to
complete, and states that an application failure to submit a determination letter
the successor plan for each year during
will not be considered complete unless under § 4233.5(g) would not, as the
the 10-year period following the
the application includes the information commenter suggested, ‘‘undo the entire
partition effective date.
specified in §§ 4233.5 (plan partition application.’’ Under that
Notice of Partition Order information), 4233.6 (partition scenario, the inability to submit the
In addition to the initial notice information), 4233.7 (actuarial and plan’s most recent determination letter
requirement under section 4233(a)(2) of financial information), 4233.8 is not due to an oversight or a refusal
ERISA, which applies to the plan (participant census data), 4233.9 to provide the information. Rather, the
sponsor, section 4233(f) imposes a (financial assistance information). document simply does not exist. In that
notice requirement on PBGC. It states One commenter stated that the rule on case, nothing in the regulation would
that not later than 14 days after the completeness in § 4233.4 is constrain PBGC from exercising its
issuance of a partition order, PBGC must ‘‘inappropriately strict,’’ and that discretion to determine that the
provide notice of the order to the ‘‘[t]here may be instances where not application was nevertheless complete.
Committee on Education and the every document listed is required for PBGC is amending § 4233.4(a) to
Workforce of the House of PBGC to make a determination.’’ The clarify this point by substituting the
Representatives; the Committee on commenter noted, as an example, the word ‘‘may’’ in place of ‘‘will.’’
Ways and Means of the House of requirement under § 4233.5(g) for the Therefore, as revised, § 4233.4(a) will
Representatives; the Committee on most recent IRS determination letter for provide that if any of the information
the plan. The commenter expressed the required under part 4233 is not
5 Because the benefit payment obligation under view that determination letters may included with an application for
section 4233(e)(1) is based, in part, on the monthly become increasingly difficult to obtain partition, ‘‘the application may not be
benefit that is guaranteed under section 4022A, the due to recently announced changes to considered complete.’’
asabaliauskas on DSK5VPTVN1PROD with RULES
amount of this benefit payment obligation is subject the IRS determination letter program for
to change under section 4022A(f)(2)(C). Plan Information
6 Section 305(e)(9)(E)(vi) defines the term ‘‘benefit
qualified plans,8 and that ‘‘the lack of a
improvement’’ as a resumption of suspended Section 4233.5 of the regulation
benefits, an increase in benefits, an increase at the 7 80 FR 8712, Feb. 18, 2015. The RFI and
identifies plan-related information items
rate at which benefits accrue, or an increase in the comments are available at http://www.pbgc.gov/ that must be submitted for an
rate at which benefits become nonforfeitable under prac/pg/other/guidance/multiemployer-
the plan. As previously noted, Treasury has notices.html. application to be complete, including a
interpretative jurisdiction over the subject matter in 8 See IRS Announcement 2015–19, available at requirement under § 4233.5(i) to provide
section 305 of ERISA. https://www.irs.gov/pub/irs-drop/a-15-19.pdf. a current listing of contributing
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![Federal Register / Vol. 80, No. 246 / Wednesday, December 23, 2015 / Rules and Regulations 79691
section 4233(a)(1) of ERISA.10 PBGC ERISA, the plan sponsor must provide highlight and explain any deviations
received two comments expressing notice not later than 30 days after from the model notice (which is not
concern that the interim final rule does submitting an application for required under section 4233(a)(2)) 14
not impose a time limit on PBGC for partition.12 would be inconsistent with the purpose
making an initial determination on Given these differences, PBGC is not of the notice—to assist plan sponsors in
whether an application is complete. One adopting the two-business-day review meeting their notice obligations under
commenter stated that while it period under Treas. Temp. Reg. section 4233(a)(2) of ERISA.
understood PBGC may need time to § 1.432(e)(9)–1T(g)(1)(ii). However, Furthermore, PBGC believes that
ensure it has the necessary information having considered the concerns raised § 4233.6(g) addresses the commenter’s
to make a determination, it was by commenters relating to the lack of a concern about incorrect or misleading
concerned that the 270-day review specified time limit on PBGC’s initial notices by requiring the plan sponsor to
period could be unreasonably extended review process, PBGC believes that a 14 include a copy of the draft notice at the
if there were no time limit for making calendar day review period provides same time it submits its application for
a determination on completeness. sufficient time to complete the initial partition to PBGC. Submission of a
Expressing a similar view, another review of an application under notice that fails to satisfy the content
commenter stated that the regulation § 4233.10. Importantly, this addition requirements set forth in § 4233.11(c)
‘‘provides no time frame for this initial will provide plan sponsors, participants, may result in a determination that the
determination which could go on and beneficiaries with more certainty on application is incomplete under
indefinitely.’’ Both commenters when the 270-day statutory review § 4233.4(a). For these reasons, PBGC did
suggested that PBGC include a time period under section 4233(a)(1) of not make any changes to § 4233.11.
limit on its completeness review, with ERISA, and the 30-day notice period
under section 4233(a)(2) will begin.13 Conditional Determination Process
one commenter suggesting that PBGC
adopt the two business day limit that Section 4233.13 of the interim final
Notice Requirements rule describes a conditional approval
applies to Treasury for benefit
suspensions under Treas. Temp. Reg. Section 4233.11 of the interim final process for plan sponsors who file
§ 1.432(e)(9)–1T(g)(1)(ii). rule describes the notice requirements applications for partition and
PBGC notes that although the for an application for partition, and suspension of benefits. Under the
partition rule under section 4233 of provides optional model notices. special rule, PBGC may, in its
ERISA and the suspension of benefits Section 4233.11(d) of the regulation discretion, approve an application for
rule under section 305(e)(9) work in states that the purpose of the model partition conditioned on Treasury’s
tandem, there are important differences. notices is to assist plan sponsors in final authorization to suspend benefits
One difference relates to the discharging their notice obligations under section 305(e)(9) of ERISA. As
commencement of the review period. under section 4233(a)(2) of ERISA. The noted in § 4233.12(c), however, a
Unlike the suspension of benefit rule, regulation does not require use of the partition will only become effective
which requires Treasury, in model notices, but states that a properly upon satisfaction of the required
consultation with PBGC and the completed model notice will be deemed conditions and the issuance of a
Department of Labor, to approve or deny to satisfy the notice requirements under partition order.
an application for suspension of benefits the regulation. PBGC received one comment on the
within 225 days after the submission of One commenter expressed concern conditional approval process. The
such application, section 4233(a)(1) that plan sponsors would be free to commenter stated that it was not clear
requires PBGC to issue a determination alter, amend, or even discard the text in if a conditional approval under
on partition not later than 270 days after the model notices in favor of their own, § 4233.12(c) would satisfy the
the date such application was filed (or, which, in the commenter’s view, would requirement in Temp. Treas. Reg.
if later, the date such application was provide ‘‘too much latitude to plan § 1.432(e)(9)–1T(d)(7), which states that
completed). Thus, section 4233 provides trustees and professionals who may well in order to satisfy the requirement that
that the 270-day review period does not have steered the plan into ‘critical and a suspension of benefits not take effect
begin on the date of submission, but declining’ status in the first place.’’ The prior to the effective date of a partition,
rather on the date the application for commenter suggested that PBGC require the partition order must be provided to
partition was filed or, if later, the date a plan sponsor to ‘‘highlight’’ and the Secretary of Treasury by the last day
such application was completed. explain any deviations from the model of the 225-day period described in
Another important difference is that notice text. The same commenter also Temp. Treas. Reg. § 1.432(e)(9)–
under section 305(e)(9), notice of the suggested that deviations from the 1T(g)(3)(i). The commenter suggested
proposed suspension must be given model notices should require advance that PBGC and Treasury clarify this
concurrently with the submission of an approval from PBGC and the Advocate. point in the agencies’ respective
application for suspension of benefits.11 PBGC considered the commenter’s regulations.
In contrast, under section 4233(a)(2) of suggestions but did not incorporate Having consulted with Treasury on
them into the final regulation. In PBGC’s this comment, PBGC agrees that
10 Section 4233(a)(1) of ERISA provides, in
view, requiring plan sponsors to additional clarification relating to the
relevant part, that PBGC shall make a determination effect of a conditional approval of
regarding an application for partition not later than
270 days after the date such application was filed
12 The interim final rule states that the date of partition under the agencies’ regulations
(or, if later, the date such application was PBGC’s written notice of completeness under is needed. First, with respect to part
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completed) in accordance with regulations § 4233.10 will mark the beginning of PBGC’s 270-
day review period under section 4233(a)(1), and the
4233, PBGC is amending §§ 4233.6 and
promulgated by PBGC.
11 The temporary Treasury regulation provides plan sponsor’s 30-day notice period under section 4233.13 to clarify that in any case in
that such notice must be given no earlier than four 4233(a)(2) of ERISA.
13 As noted in the preamble to the interim final 14 In contrast, section 305(e)(9)(F)(v) requires that
business days before the date on which an
application is submitted, and no later than two rule, PBGC’s determination on whether an Treasury ‘‘establish a model notice that a plan
business days after Treasury notifies the plan application is complete under § 4233.10(c) will sponsor may use to meet the [form and notice]
sponsor that it has submitted a complete mark the beginning of the 270-day statutory review requirements.’’ Importantly, even where Congress
application. Temp. Treas. Reg. § 1.432(e)(9)– period under section 4233(a)(1) and the 30-day required a model notice, it did not require use of
1T(f)(3)(i)(A). notice period under 4233(a)(2). that notice by plan sponsors.
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which an application for partition is representative and trustee to administer 110 percent of the PBGC guarantee
made in combination with a suspension the plan. Finally, the commenter under section 4022A, limits or exempts
of benefits, the effective date of the suggested that the trustees, employees, suspensions for certain categories of
proposed partition must satisfy the and service providers of an insolvent individuals based on their age, and
requirements of ERISA section plan should be required to disclose exempts pension benefits based on
305(e)(9)(D)(v).15 Second, with respect sources of income and conflicts of disability from any reductions. Based on
to the effect of a conditional approval of interest. the structure and operation of these
a partition under the Treasury rule, The commenter did not suggest any provisions, PBGC interprets the term
PBGC has been advised by Treasury that changes to § 4233.17, and PBGC ‘‘maximum benefit suspensions’’ in
PBGC’s issuance of a conditional determined that none are necessary. section 4233(b)(2) to mean the
approval within the 225-day period Nevertheless, in response to the maximum benefit suspensions
under section 305(e)(9)(G) will be comment, PBGC notes that it will retain permissible under section 305(e)(9).
deemed to satisfy the requirement set continuing jurisdiction over the original One commenter stated that it ‘‘does
forth in Temp. Treas. Reg. § 1.432(e)(9)– plan and successor plan in a partition to not believe plans should have to apply
1T(d)(7). ensure compliance with the post- for maximum benefit suspensions to be
partition requirements under MPRA and eligible for partition’’ and that ‘‘[i]f
Nature and Operation of Successor Plan proper stewardship of PBGC financial PBGC believes it has no flexibility on
PBGC received one comment on assistance. the level of retiree cuts, it should ask
§ 4233.15, which describes the nature In addition, although section Congress to modify this element of
and operation of the successor plan 4233(d)(2) of ERISA assigns MPRA.’’ Expressing a similar view, the
created by the partition order. The responsibility for the management of the other commenter stated that PBGC’s
commenter asked whether certain legal successor plan to the plan sponsor and interpretation is ‘‘not consistent with
requirements under title I and the Code administrator of the original plan, PBGC the full text of section 4233’’ and that
would apply to a successor plan in a continues to have authority under ‘‘the statute does not require trustees to
partition. sections 4041A and 4281 to prescribe impose unreasonable cutbacks, and
While a discussion of the legal such rules and standards for the absolutely disallows some categories of
requirements under title I and the Code administration of terminated benefits (e.g., disability) even if the
is not within PBGC’s jurisdiction and, multiemployer plans (and authority cutback would be otherwise
therefore, beyond the scope of this under section 4042 to institute reasonable.’’ That same commenter
rulemaking, all title I and Code proceedings for the appointment of a asked a number of hypothetical
requirements that would otherwise new trustee to administer the plan) that questions relating to the maximum
apply to a terminated, insolvent PBGC considers appropriate to protect benefit suspension requirement, such as
multiemployer plan apply to a successor the interests of plan participants and whether the requirement would apply to
plan in a partition absent a statutory, beneficiaries, or to prevent unreasonable a plan that had only a few participants
regulatory, or administrative exemption. loss to PBGC. with suspendable benefits, or a plan in
Finally, as noted above, absent a which maximum benefit suspensions
Continuing Jurisdiction were rejected by a vote of participants
statutory, regulatory, or administrative
Section 4233.17 of the interim final exemption, all of the title I requirements and beneficiaries under section
rule describes PBGC’s continuing that would otherwise apply to a 432(e)(9)(H). The commenter suggested
jurisdiction over the original plan and terminated, insolvent multiemployer that if maximum benefit cuts are
the successor plan. In the preamble to plan (e.g., the fiduciary rules under required, ‘‘partition would only be
the interim final rule, PBGC explained section 404 and the prohibited available in situations in which
that although commenters on the RFI transaction rules under section 406) maximum benefit suspensions were
expressed differing views on the need would also apply to the successor plan sufficient to meet the plan’s long-term
for additional post-partition oversight, in a partition under section 4233 of solvency.’’
PBGC determined that additional ERISA. As a preliminary matter, PBGC
oversight is necessary to ensure disagrees that a partition would only be
compliance with the post-partition Other Comments available in situations in which
requirements under MPRA and proper In addition to comments on specific maximum benefit suspensions were
stewardship of PBGC financial sections of the interim final rule, PBGC sufficient to meet the plan’s long-term
assistance. received two comments objecting to solvency. In fact, if maximum benefit
PBGC received one comment that did PBGC’s interpretation of the term suspensions were sufficient to meet a
not specifically refer to § 4233.17 but ‘‘maximum benefit suspensions’’ in plan’s long-term solvency, partition
did relate to post-partition oversight. section 4233(b)(2) of ERISA.16 As noted would not be available because it would
The commenter suggested that when a in the preamble to the interim final rule, not be necessary for the plan to remain
plan is insolvent, regulating and the term ‘‘maximum benefit solvent, which is a statutory
assessing administrative costs suspensions’’ is not defined in sections requirement under section
(including salaries and professional 305(e)(9) and 4233 of ERISA. The 4233(b)(3)(B). In other words, partition
fees) should be the first priority, and statute, however, limits the maximum is only an option when maximum
that in some cases it may be appropriate amount of a suspension so that a post- benefit suspensions are not sufficient to
to appoint an independent legal suspension benefit can be no less than ensure long-term solvency.
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In those situations where partition
15 Section 305(e)(9)(D)(v) states, in relevant part, 16 Under section 4233(b)(2) of ERISA, PBGC must would be needed, PBGC’s interpretation
that ‘‘[i]n any case in which a suspension of determine, after consultation with the Participant of maximum benefit suspension reflects
benefits with respect to a plan is made in and Plan Sponsor Advocate, that the plan sponsor the statutory and regulatory limitations
combination with a partition of the plan under has taken (or is taking concurrently with an on suspensions under section
section 4233, the suspension of benefits may not application for partition) all reasonable measures to
take effect prior to the effective date of such avoid insolvency, including maximum benefit
305(e)(9)(D). For example, as explained
partition.’’ Treasury has interpretative jurisdiction suspensions under section 305(e)(9) of ERISA, if in the preamble to the interim final rule,
over the subject matter in section 305 of ERISA. applicable. the maximum benefit suspension
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![Federal Register / Vol. 80, No. 246 / Wednesday, December 23, 2015 / Rules and Regulations 79693
permissible for an individual with a would be allowed to develop on a case- Compliance With Rulemaking
plan benefit based on disability would by-case basis. Guidelines
be zero, because benefits based on PBGC received one comment on the Executive Orders 12866 ‘‘Regulatory
disability may not be suspended under Advocate’s role under section Planning and Review’’ and 13563
section 305(e)(9)(iii). The same would 4233(b)(2). The commenter asserted that ‘‘Improving Regulation and Regulatory
be true for a participant older than age plan sponsors and PBGC suffer from Review’’
80. conflicts of interest—plan sponsors due
The commenter’s hypothetical Having determined that this
to the composition of boards of trustees,
questions regarding a plan with a de rulemaking is a ‘‘significant regulatory
and PBGC because it will only approve
minimis number of participants whose action’’ under Executive Order 12866,
a partition if, among other things, it
benefits would be subject to suspension the Office of Management and Budget
reduces PBGC’s expected long-term
under 305(e)(9)(D) and a plan in which has reviewed this final rule under
loss—and that the Advocate ‘‘is the only Executive Order 12866.
participants and beneficiaries vote to party who reaps no financial advantage
reject benefit suspensions are beyond Executive Orders 12866 and 13563
from imposing benefit cuts on retirees.’’
the scope of this rulemaking. However, direct agencies to assess all costs and
Based on this view, the commenter
PBGC notes that each application for benefits of available regulatory
stated that the final rule should clarify alternatives and, if regulation is
partition will be decided on a case-by-
that the Advocate is ‘‘responsible solely necessary, to select regulatory
case basis in accordance with the
for representing the plan’s retirees and approaches that maximize net benefits
statutory criteria in section 4233(b).
deferred vested participants,’’ and that (including potential economic,
PBGC’s interpretation of section
the Advocate should be ‘‘offered the environmental, public health and safety
4233(b)(2) of ERISA is also consistent
opportunity to participate in all effects, distributive impacts, and
with the other conditions for partition
meetings between the plan sponsor and equity). Executive Order 13563
under section 4233, which show
PBGC.’’ The commenter also suggested emphasizes the importance of
Congress’s intent to balance the need to
that the rule should require PBGC to quantifying both costs and benefits, of
protect multiemployer plans from
insolvency with the need to improve the provide the Advocate with adequate reducing costs, of harmonizing rules,
financial health of the title IV accounting, actuarial, and legal and of promoting flexibility. Executive
multiemployer insurance program. resources, and that the Advocate should Orders 12866 and 13563 require a
Section 4233(b)(3)(A) of ERISA, for have unfettered access to all plan comprehensive regulatory impact
example, provides that PBGC must records, actuarial worksheets, and analysis be performed for any
reasonably expect that a partition of the databases. economically significant regulatory
plan will reduce PBGC’s expected long- PBGC disagrees with the commenter’s action, defined as an action that would
term loss with respect to the plan, and assertion relating to conflicts of interest. result in an annual effect of $100
under section 4233(b)(4), PBGC must With respect to multiemployer plan million or more on the national
certify to Congress that its ability to sponsors, the Taft-Hartley Act, 29 U.S.C. economy or which would have other
meet existing financial assistance 141 et seq., requires that employer and substantial impacts.
obligations to other plans (including any employees be equally represented in the Pursuant to section 1(b)(1) of
liabilities associated with administration of such plans. With Executive Order 12866 (as amended by
multiemployer plans that are insolvent respect to PBGC, MPRA requires, among Executive Order 13422), PBGC has
or that are projected to become other things, that PBGC analyze the determined that regulatory action is
insolvent within 10 years) will not be impact of partition on PBGC’s long term required in this area. Principally, this
impaired by a partition. Finally, because loss, and certify to Congress that its regulatory action is necessary to
a partition results in the creation of a ability to meet existing financial implement the application and notice
newly insolvent successor plan that will assistance obligations to other plans will requirements under section 4233 of
require financial assistance under not be impaired by a partition. These ERISA as amended and restated by
section 4261 of ERISA, the amount of requirements are imposed by statute. MPRA. In accordance with OMB
liabilities that can be transferred to the Circular A–4, PBGC also has examined
Although PBGC carefully considered the economic and policy implications of
successor plan is limited under section
the commenter’s suggestions about this final rule and has concluded that
4233(c) to the minimum amount of
defining the Advocate’s consultative the action’s benefits justify its costs.
liabilities necessary for the original plan
role, it decided not to make any changes Under Section 3(f)(1) of Executive
to remain solvent.
in response. Given that the Advocate’s Order 12866, a regulatory action is
Role of the Participant and Plan consultative role in a partition is new, economically significant if ‘‘it is likely
Sponsor Advocate PBGC continues to believe that the to result in a rule that may * * * [h]ave
As previously discussed, under better approach is to allow that role to an annual effect on the economy of $100
section 4233(b)(2) of ERISA, PBGC must evolve on a case-by-case basis. Finally, million or more or adversely affect in a
determine, after consultation with the it is important to note that the role of material way the economy, a sector of
Advocate, that the plan sponsor has the Advocate is defined by statute in the economy, productivity, competition,
taken (or is taking concurrently with an section 4004(b) of ERISA, and while jobs, the environment, public health or
application for partition) all reasonable MPRA created additional duties, it did safety, or State, local, or tribal
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measures to avoid insolvency, including not change or modify the Advocate’s governments or communities.’’ OMB
maximum benefit suspensions under existing duties under the statute. has determined that this final rule does
section 305(e)(9) of ERISA, if applicable. Applicability not cross the $100 million threshold for
In the preamble to the interim final rule, economic significance and is not
PBGC stated that it would not define by The amendments in this final rule otherwise economically significant.
regulation the Advocate’s consultative will apply to applications for partition Most of the economic effect relating to
role under section 4233(b)(2); rather, the submitted to PBGC on or after January partitions will be attributable to benefit
Advocate’s role under the new law 22, 2016. suspensions.
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Based on a review of financial must satisfy the requirements of section (a) Participant type (retiree,
resources available for partition, PBGC 305(e)(9)(D)(v) of ERISA. beneficiary, disabled, terminated vested,
expects that fewer than 20 plans would * * * * * active, alternate payee).
be approved for partition over the next (b) Date of birth.
■ 4. In § 4233.7, paragraphs (a)(3)(iii),
three years (about six plans per year), (c) Gender.
(a)(5)(iii), and (a)(8) are revised and (d) Credited service for guarantee
and that the total financial assistance
paragraphs (a)(9) and (10) are added to calculation (i.e., number of years of
PBGC will provide to those plans will
read as follows: participation).
be less than $60 million per year.
§ 4233.7 Actuarial and financial (e) Vested accrued monthly benefit
Regulatory Flexibility Act before benefit suspension under section
information.
Because PBGC did not publish a (a) * * * 305(e)(9) of ERISA.
general notice of proposed rulemaking (f) Vested accrued monthly benefit
(3) * * *
under 5 U.S.C. 553, the regulatory after benefit suspension under section
(iii) Benefit payments organized by 305(e)(9) of ERISA.
flexibility analysis requirements of the participant status (e.g., active, retiree,
Regulatory Flexibility Act do not apply. (g) Monthly benefit guaranteed by
terminated vested, beneficiary). PBGC (determined under the terms of
Paperwork Reduction Act * * * * * the original plan without respect to
The information requirements under (5) * * * benefit suspensions).
this final regulation—information to be (iii) Benefit payments organized by (h) Benefit commencement date (for
reported to PBGC and information to be participant status (e.g., active, retiree, participants in pay status and others for
disclosed to participants—are being terminated vested, beneficiary). which the reported benefit is not
submitted to OMB under the Paperwork * * * * * payable at Normal Retirement Date).
Reduction Act (OMB control number (8) A long-term projection reflecting (i) For each participant in pay status—
1212–0068, expires December 31, 2015). benefit disbursements from the (1) Form of payment, and
An agency may not conduct or sponsor, successor plan (organized by participant (2) Data relevant to the form of
and a person is not required to respond status (e.g., active, retiree, terminated payment, including:
to, a collection of information unless it vested, beneficiary)), and a statement of (i) For a joint and survivor benefit, the
displays a currently valid OMB control the present value of all future financial beneficiary’s benefit amount (before and
number. assistance to be paid as a result of a after suspension) and the beneficiary’s
PBGC estimates that over the next partition (using the interest and date of birth;
three years about six plans per year will mortality assumptions applicable to the (ii) For a Social Security level income
apply for partition and that the total valuation of plans terminated by mass benefit, the date of any change in the
annual burden of this information withdrawal as specified in § 4281.13 of benefit amount, and the benefit amount
collection will be about 78 hours and this chapter and other reasonable after such change;
actuarial assumptions, including (iii) For a 5-year certain or 10-year
$58,800.
retirement age, form of benefit payment, certain benefit (or similar benefit), the
List of Subjects in 29 CFR Part 4233 relevant defined period.
and administrative expenses, certified
Employee benefit plans, Pension (iv) For a form of payment not
by an enrolled actuary).
insurance, Reporting and recordkeeping otherwise described in this section, the
(9) A long-term projection of pre-
requirements. data necessary for the valuation of the
partition benefit disbursements from the
form of payment, including the benefit
For the reasons given above, the original plan reflecting reduced benefit
amount before and after suspension.
interim rule amending 29 CFR part 4233 disbursements at the PBGC-guarantee (j) If an actuarial increase for
published at 80 FR 35220 on June 19, level beginning on the proposed postponed retirement applies or if the
2015, is adopted as a final rule with the effective date of the partition (using a form of annuity is a Social Security
following changes: closed group valuation and no accruals level income option, the monthly vested
after the proposed effective date of benefit payable at normal retirement age
PART 4233—PARTITIONS OF partition, and organized separately by in normal form of annuity.
ELIGIBLE MULTIEMPLOYER PLANS participant status groupings (e.g., active,
■ 6. In § 4233.10, paragraphs (b) and (c)
retiree, terminated vested, beneficiary)).
■ 1. The authority citation for part 4233 (10) A long-term projection of pre- are revised to read as follows:
continues to read as follows: partition benefit disbursements from the § 4233.10 Initial review.
Authority: 29 U.S.C. 1302(b)(3), 1413. original plan reflecting the maximum * * * * *
benefit suspensions permissible under (b) Incomplete application. If the
§ 4233.4 [Amended] section 305(e)(9) of ERISA beginning on application is incomplete, PBGC will
■ 2. In § 4233.4, the last sentence in the proposed effective date of the issue a written notice to the plan
paragraph (a) is amended by removing partition (using an open group valuation sponsor describing the information
the word ‘‘will’’ and adding in its place and organized separately by participant missing from the application no later
the word ‘‘may’’. status groupings (e.g., active, retiree, than 14 calendar days after the
terminated vested, beneficiary)). submission of such application.
■ 3. In § 4233.6, a sentence is added to
the end of paragraph (a) to read as * * * * * (c) Complete application. Upon
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follows: ■ 5. Section 4233.8 is revised to read as making a determination that an
follows: application is complete (i.e., the
§ 4233.6 Partition information. application includes all the information
* * * * * § 4233.8 Participant census data. specified in §§ 4233.5 through 4233.9),
(a) * * * With respect to coordinated An application for partition must PBGC will issue a written notice to the
applications for partition and include a copy of the census data used plan sponsor no later than 14 calendar
suspension of benefits, proposed for the projections described in days after the submission of such
effective dates for both transactions § 4233.7(a)(3) and (5), including: application. The date of the written
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notice will mark the beginning of DEPARTMENT OF HOMELAND Local and Broadcast Notices to Mariners
PBGC’s 270-day review period under SECURITY of the change in operating schedule for
section 4233(a)(1) of ERISA, and the the bridge so that vessels can arrange
plan sponsor’s 30-day notice period Coast Guard their transits to minimize any impact
under 4233(a)(2) of ERISA. caused by the temporary deviation.
33 CFR Part 117 In accordance with 33 CFR 117.35(e),
* * * * *
[Docket No. USCG–2015–1102] the drawbridge must return to its regular
■ 7. In § 4233.12, paragraph (c) is operating schedule immediately at the
revised to read as follows: Drawbridge Operation Regulation; Mill end of the effective period of this
Neck Creek, Oyster Bay, NY temporary deviation. This deviation
§ 4233.12 PBGC action on application for from the operating regulations is
partition. AGENCY: Coast Guard, DHS. authorized under 33 CFR 117.35.
* * * * * ACTION:Notice of deviation from
Dated: December 17, 2015.
drawbridge regulation.
(c) Conditional determination on C.J. Bisignano,
application. At the request of a plan SUMMARY: The Coast Guard has issued a Supervisory Bridge Management Specialist,
sponsor, PBGC may, in its discretion, temporary deviation from the operating First Coast Guard District.
issue an approval of an application schedule that governs the Bayville [FR Doc. 2015–32254 Filed 12–22–15; 8:45 am]
conditioned on Treasury issuing a final Bridge across the Mill Neck Creek, mile BILLING CODE 9110–04–P
authorization to suspend under section 0.1, at Oyster Bay, New York. The
305(e)(9)(H)(vi) of ERISA and any other deviation is necessary to perform
terms and conditions set forth in the electrical and mechanical upgrades. ENVIRONMENTAL PROTECTION
conditional approval. The conditional This deviation allows the bridge to AGENCY
approval will include a written remain in the closed position for
statement of preliminary findings, approximately 5 days. 40 CFR Part 52
conclusions, and conditions. The DATES: This deviation is effective from
[EPA–R08–OAR–2015–0429; FRL–9939–87–
conditional approval is not a final 7:00 a.m. on January 11, 2016 to 3:30 Region 8]
agency action. The proposed partition p.m. on January 15, 2016.
will only become effective upon ADDRESSES: The docket for this Air Plan Approval; SD; Update to
satisfaction of the required conditions, deviation, [USCG–2015–1102] is Materials Incorporated by Reference
and the issuance of an order of partition available at http://www.regulations.gov.
Type the docket number in the AGENCY: Environmental Protection
under section 4233(c) of ERISA. Agency (EPA).
‘‘SEARCH’’ box and click ‘‘SEARCH’’.
* * * * * Click on Open Docket Folder on the line ACTION: Final rule; administrative
associated with this deviation. change.
■ 8. In § 4233.13, paragraphs (a)(3) and
(4) are revised to read as follows: FOR FURTHER INFORMATION CONTACT: If
SUMMARY: The Environmental Protection
you have questions on this temporary Agency (EPA) is updating the materials
§ 4233.13 Coordinated application process deviation, call or email Ms. Judy K. that are incorporated by reference (IBR)
for partition and benefit suspension. Leung-Yee, Project Officer, First Coast into the South Dakota State
(a) * * * Guard District, telephone (212) 514– Implementation Plan (SIP). The
4330, email judy.k.leung-yee@uscg.mil. Regulations affected by this update have
(3) If Treasury does not issue the final SUPPLEMENTARY INFORMATION: Nassau
authorization to suspend, PBGC’s been previously submitted by the South
County Department of Public Works Dakota Department of Environment and
conditional approval under § 4233.12(c) requested this temporary deviation from
will be null and void. Natural Resources (SD DENR) and
the normal operating schedule to approved by the EPA. In this action, the
(4) If Treasury issues a final perform electrical and mechanical EPA is also notifying the public of
authorization to suspend, PBGC will upgrades. corrections to typographical errors and
issue a final partition order under The Bayville Bridge, mile 0.1, across minor formatting changes to the IBR
§ 4233.14 and section 4233(c) of ERISA. the Mill Neck Creek has a vertical tables. This update affects the SIP
The effective date of a final partition clearance in the closed position of 9 feet materials that are available for public
order must satisfy the requirements of at mean high water and 16 feet at mean inspection at the EPA Regional Office.
section 305(e)(9)(D)(v) of ERISA. low water. The existing bridge operating
DATES: This action is effective December
regulations are found at 33 CFR 117.800.
* * * * * The waterway is transited by one 23, 2015.
Issued in Washington, DC, this 18th day of commercial user and recreation vessel ADDRESSES: The EPA has established a
December 2015. traffic. docket for this action under Docket
Under this temporary deviation, the Identification Number EPA–R08–OAR–
W. Thomas Reeder,
Bayville Bridge may remain in the 2015–0429. All documents in the docket
Director, Pension Benefit Guaranty are listed on the http://
closed position from 7:00 a.m. on
Corporation. www.regulations.gov Web site. Although
January 11, 2016 to 3:30 p.m. on January
[FR Doc. 2015–32309 Filed 12–22–15; 8:45 am] listed in the index, some information
15, 2016.
asabaliauskas on DSK5VPTVN1PROD with RULES
BILLING CODE 7709–02–P Vessels able to pass through the may not be publicly available, i.e.,
bridge in the closed position may do so Confidential Business Information or
at any time. The bridge will not be able other information the disclosure of
to open for emergencies and there is no which is restricted by statute. Certain
immediate alternate route for vessels to other material, such as copyrighted
pass. material, is not placed on the Internet
The Coast Guard will also inform the and will be publicly available only in
users of the waterways through our the hard copy form. Publicly available
VerDate Sep<11>2014 16:43 Dec 22, 2015 Jkt 238001 PO 00000 Frm 00041 Fmt 4700 Sfmt 4700 E:\FR\FM\23DER1.SGM 23DER1](https://thefederalregister.org/doc/80_FR_79933/page/9.svg)
Document Created: 2018-03-02 09:20:54
Document Modified: 2018-03-02 09:20:54
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Rules and Regulations | |
| Action | Final rule. | |
| Dates | Effective January 22, 2016. See Applicability in SUPPLEMENTARY INFORMATION. | |
| Contact | Joseph J. Shelton ([email protected]), Assistant General Counsel, Office of the General Counsel, Pension Benefit Guaranty Corporation, 1200 K Street NW., Washington, DC 20005-4026; 202-326-4400, ext. 6559. | |
| FR Citation | 80 FR 79687 | |
| RIN Number | 1212-AB29 | |
| CFR Associated | Employee Benefit Plans; Pension Insurance and Reporting and Recordkeeping Requirements |
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