Miscellaneous Corrections, Clarifications, and Improvements

PENSION BENEFIT GUARANTY CORPORATION <CFR>29 CFR Parts 4000, 4006, 4007, 4010, 4041, 4041A, 4043, 4065, 4203, 4204, 4207, 4211, 4219, 4220, 4233, 4262, 4281, and 4909</CFR> <RIN>RIN 1212-AB51</RIN> <SUBJECT>Miscellaneous Corrections, Clarifications, and Improvements</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Pension Benefit Guaranty Corporation. <HD SOURCE="HED">ACTION:</HD> Proposed rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Pension Benefit Guaranty Corporation (PBGC) proposes miscellaneous technical corrections, clarifications, and improvements to its regulations, including its regulations on premium rates, premium due dates, and termination of single-employer plans. These changes are a result of PBGC's ongoing retrospective review of the effectiveness and clarity of its rules and of statutory changes. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Comments must be submitted on or before March 24, 2025 to be assured of consideration. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> Comments may be submitted by any of the following methods: • <E T="03">Federal eRulemaking Portal: https://www.regulations.gov.</E> Follow the online instructions for submitting comments. • <E T="03">Email: reg.comments@pbgc.gov.</E> Refer to 1212-AB51 in the subject line. • <E T="03">Mail or Hand Delivery:</E> Regulatory Affairs Division, Office of the General Counsel, Pension Benefit Guaranty Corporation, 445 12th Street SW, Washington, DC 20024-2101. Commenters are strongly encouraged to submit comments electronically. Commenters who submit comments on paper by mail should allow sufficient time for mailed comments to be received before the close of the comment period. All submissions must include the agency's name (Pension Benefit Guaranty Corporation, or PBGC) and the Regulation Identifier Number (RIN) for this rulemaking (RIN 1212-AB51). Comments received will be posted without change to PBGC's website, <E T="03">www.pbgc.gov,</E> including any personal information provided. Do not submit comments that include any personally identifiable information or confidential business information. Copies of comments may also be obtained by writing to Disclosure Division ( <E T="03">disclosure@pbgc.gov</E> ), Office of the General Counsel, Pension Benefit Guaranty Corporation, 445 12th Street SW, Washington, DC 20024-2101, or calling 202-326-4040 during normal business hours. If you are deaf or hard of hearing, or have a speech disability, please dial 7-1-1 to access telecommunications relay services. <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Monica O'Donnell ( <E T="03">odonnell.monica@pbgc.gov</E> ), Attorney, Regulatory Affairs Division, Office of the General Counsel, Pension Benefit Guaranty Corporation, 445 12th Street SW, Washington, DC 20024-2101; 202-229-8706. If you are deaf or hard of hearing, or have a speech disability, please dial 7-1-1 to access telecommunications relay services. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">Executive Summary</HD> <HD SOURCE="HD2">Purpose and Authority</HD> The purpose of this regulatory action is to make miscellaneous technical corrections, clarifications, updates, and improvements to several of the Pension Benefit Guaranty Corporation's (PBGC's) regulations. These changes are based on PBGC's ongoing retrospective review of the effectiveness and clarity of its rules and on statutory changes to the Employee Retirement Income Security Act of 1974 (ERISA). 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. It also comes from section 4006 of ERISA (Premium Rates), section 4007 of ERISA (Payment of Premiums), section 4010 of ERISA (Authority to Require Certain Information), section 4041 of ERISA (Termination of Single-Employer Plans), section 4041A of ERISA (Termination of Multiemployer Plans), section 4043 of ERISA (Reportable Events), section 4065 of ERISA (Annual Report of Plan Administrator), section 4203 of ERISA (Complete Withdrawal), section 4204 of ERISA (Sale of Assets), section 4207 of ERISA (Reduction or Waiver of Complete Withdrawal Liability), section 4211 of ERISA (Methods for Computing Withdrawal Liability), section 4219 of ERISA (Notice, Collection, Etc., of Withdrawal Liability), section 4220 of ERISA (Approval of Amendments), section 4233 of ERISA (Partitions of Eligible Multiemployer Plans), section 4262 of ERISA (Special Financial Assistance by the Corporation), and section 4281 of ERISA (Benefits Under Certain Terminated Plans). <HD SOURCE="HD2">Major Provisions</HD> The major provisions of this proposed rulemaking would amend PBGC's regulations on: • Premium Rates, by codifying the changes of the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) (Pub. L. 116-94, Division O) applicable to cooperative and small employer charity (CSEC) plans  <SU>1</SU> <FTREF/> and certain community newspaper plans;   A CSEC plan is a plan maintained by multiple employers, most of which are rural cooperatives, charities, or agricultural cooperatives or maintained by a rural telephone cooperative association. <E T="03">See</E> section 104 of the Pension Protection Act, Public Law 109-280. </FTNT> <FTNT> <SU>2</SU>  A community newspaper plan means a plan as defined in section 303(m)(5) of ERISA and section 430(m)(5) of the Code. </FTNT> • Payment of Premiums, by revising the due date for the final premium for terminating plans to be the earlier of the normal premium due date or 45 days after the date the post-distribution certification is filed; and • Termination of Single-Employer Plans, by setting due dates for the standard termination notice and notice of intent to terminate where the plan administrator has not provided a proposed termination date, and by adding additional criteria majority owners must meet to waive their benefits if they are owners through constructive ownership. <HD SOURCE="HD1">Background</HD> PBGC administers two insurance programs for private-sector defined benefit pension plans under title IV of ERISA: a single-employer plan termination insurance program and a multiemployer plan insolvency insurance program. In addition, PBGC administers a special financial assistance program for certain financially distressed multiemployer plans. The amendments proposed in this rulemaking apply primarily to the single-employer plan termination insurance program. <HD SOURCE="HD1">Proposed Amendments</HD> The proposed technical and clarifying amendments and improvements to PBGC's regulations are discussed below. PBGC invites comment on these proposals. <HD SOURCE="HD1">Premium Rates—29 CFR Part 4006</HD> Sponsors of plans covered under PBGC's single-employer program are subject to rules requiring the calculation and payment of annual premiums to PBGC under section 4006 of ERISA and PBGC's regulation on Premium Rates (29 CFR part 4006), “premium rates regulation.” The SECURE Act modified the calculation of premiums under section 4006 of ERISA for a CSEC plan and the funding requirements for a community newspaper plan under section 303(m) of ERISA and section 430(m) of the Internal Revenue Code (the Code). The SECURE Act also modified section 401 of the Code to allow an employer to adopt a new pension plan and elect to treat the plan as if it had been adopted during the prior taxable year. PBGC proposes to amend its premium rates regulation to account for these SECURE Act modifications. <HD SOURCE="HD2">CSEC Plans—Variable Rate Premiums</HD> The SECURE Act modified flat and variable rate premiums and changed the way the variable rate premium is calculated for CSEC plans first effective for 2019. <SU>3</SU> <FTREF/> Under section 4006(a)(3)(A) of ERISA, as amended by the SECURE Act, CSEC plans calculate the variable rate premiums that they owe to PBGC based on alternative minimum funding standards. CSEC plans now apply an alternate definition of unfunded vested benefits (UVBs). This definition refers to the funding liability of the CSEC plan as determined under section 306(j)(5)(C) of ERISA and section 433(j)(5)(C) of the Code. PBGC issued guidance  <SU>4</SU> <FTREF/> on these changes and incorporated the special premium rules for CSEC plans into the premium filing instructions starting with the 2021 filing instructions. <FTNT> <SU>3</SU>  The SECURE Act's reduced premium rates applicable to CSEC plans are reflected in § 4006.3(a) and (b) of PBGC's premium rates regulation. </FTNT> <FTNT> <SU>4</SU>  PBGC Technical Update 20-1 (2020). </FTNT> Although the rules have been in place for several years, PBGC is now proposing to amend its premium rates regulation to codify the SECURE Act changes regarding how CSEC plans determine UVBs for the purpose of calculating variable rate premiums. First, proposed new § 4006.5(h) would provide the rules to calculate a CSEC plan's “premium funding target” using the alternate definition of UVBs as provided in section 306(j)(5)(C) of ERISA and section 433(j)(5)(C) of the Code. In addition, PBGC would make conforming amendments to §§ 4006.2, 4006.4(b)(1) and 4006.4(f)(2) to further conform to changes under the SECURE Act for CSEC plans. <HD SOURCE="HD2">Community Newspaper Plans</HD> The SECURE Act amended section 430 of the Code and section 303 of ERISA, providing that community newspaper plans may elect to use alternative minimum funding standards. <SU>5</SU> <FTREF/> However, section 4006 of ERISA was not similarly amended, so community newspaper plans are not permitted to use these alternative standards to calculate the premiums that they owe to PBGC. PBGC proposes to add a reference to community newspaper plans in § 4006.4(f) to denote them as plans subject to special funding rules, wh ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 60k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━