29 U.S.C. § 1056 : US Code - Section 1056: Form and payment of benefits

Search 29 U.S.C. § 1056 : US Code - Section 1056: Form and payment of benefits

(a) Commencement date for payment of benefits
Each pension plan shall provide that unless the participant
otherwise elects, the payment of benefits under the plan to the
participant shall begin not later than the 60th day after the
latest of the close of the plan year in which -
(1) occurs the date on which the participant attains the
earlier of age 65 or the normal retirement age specified under
the plan,
(2) occurs the 10th anniversary of the year in which the
participant commenced participation in the plan, or
(3) the participant terminates his service with the employer.
In the case of a plan which provides for the payment of an early
retirement benefit, such plan shall provide that a participant who
satisfied the service requirements for such early retirement
benefit, but separated from the service (with any nonforfeitable
right to an accrued benefit) before satisfying the age requirement
for such early retirement benefit, is entitled upon satisfaction of
such age requirement to receive a benefit not less than the benefit
to which he would be entitled at the normal retirement age,
actuarially reduced under regulations prescribed by the Secretary
of the Treasury.
(b) Decrease in plan benefits by reason of increases in benefit
levels under Social Security Act or Railroad Retirement Act of
1937
If -
(1) a participant or beneficiary is receiving benefits under a
pension plan, or
(2) a participant is separated from the service and has non-
forfeitable rights to benefits,
a plan may not decrease benefits of such a participant by reason of
any increase in the benefit levels payable under title II of the
Social Security Act [42 U.S.C. 401 et seq.] or the Railroad
Retirement Act of 1937 [45 U.S.C. 231 et seq.] or any increase in
the wage base under such title II, if such increase takes place
after September 2, 1974, or (if later) the earlier of the date of
first entitlement of such benefits or the date of such separation.
(c) Forfeiture of accrued benefits derived from employer
contributions
No pension plan may provide that any part of a participant's
accrued benefit derived from employer contributions (whether or not
otherwise nonforfeitable) is forfeitable solely because of
withdrawal by such participant of any amount attributable to the
benefit derived from contributions made by such participant. The
preceding sentence shall not apply (1) to the accrued benefit of
any participant unless, at the time of such withdrawal, such
participant has a nonforfeitable right to at least 50 percent of
such accrued benefit, or (2) to the extent that an accrued benefit
is permitted to be forfeited in accordance with section
1053(a)(3)(D)(iii) of this title.
(d) Assignment or alienation of plan benefits
(1) Each pension plan shall provide that benefits provided under
the plan may not be assigned or alienated.
(2) For the purposes of paragraph (1) of this subsection, there
shall not be taken into account any voluntary and revocable
assignment of not to exceed 10 percent of any benefit payment, or
of any irrevocable assignment or alienation of benefits executed
before September 2, 1974. The preceding sentence shall not apply to
any assignment or alienation made for the purposes of defraying
plan administration costs. For purposes of this paragraph a loan
made to a participant or beneficiary shall not be treated as an
assignment or alienation if such loan is secured by the
participant's accrued non-forfeitable benefit and is exempt from
the tax imposed by section 4975 of title 26 (relating to tax on
prohibited transactions) by reason of section 4975(d)(1) of title
26.
(3)(A) Paragraph (1) shall apply to the creation, assignment, or
recognition of a right to any benefit payable with respect to a
participant pursuant to a domestic relations order, except that
paragraph (1) shall not apply if the order is determined to be a
qualified domestic relations order. Each pension plan shall provide
for the payment of benefits in accordance with the applicable
requirements of any qualified domestic relations order.
(B) For purposes of this paragraph -
(i) the term "qualified domestic relations order" means a
domestic relations order -
(I) which creates or recognizes the existence of an alternate
payee's right to, or assigns to an alternate payee the right
to, receive all or a portion of the benefits payable with
respect to a participant under a plan, and
(II) with respect to which the requirements of subparagraphs
(C) and (D) are met, and
(ii) the term "domestic relations order" means any judgment,
decree, or order (including approval of a property settlement
agreement) which -
(I) relates to the provision of child support, alimony
payments, or marital property rights to a spouse, former
spouse, child, or other dependent of a participant, and
(II) is made pursuant to a State domestic relations law
(including a community property law).
(C) A domestic relations order meets the requirements of this
subparagraph only if such order clearly specifies -
(i) the name and the last known mailing address (if any) of the
participant and the name and mailing address of each alternate
payee covered by the order,
(ii) the amount or percentage of the participant's benefits to
be paid by the plan to each such alternate payee, or the manner
in which such amount or percentage is to be determined,
(iii) the number of payments or period to which such order
applies, and
(iv) each plan to which such order applies.
(D) A domestic relations order meets the requirements of this
subparagraph only if such order -
(i) does not require a plan to provide any type or form of
benefit, or any option, not otherwise provided under the plan,
(ii) does not require the plan to provide increased benefits
(determined on the basis of actuarial value), and
(iii) does not require the payment of benefits to an alternate
payee which are required to be paid to another alternate payee
under another order previously determined to be a qualified
domestic relations order.
(E)(i) A domestic relations order shall not be treated as failing
to meet the requirements of clause (i) of subparagraph (D) solely
because such order requires that payment of benefits be made to an
alternate payee -
(I) in the case of any payment before a participant has
separated from service, on or after the date on which the
participant attains (or would have attained) the earliest
retirement age,
(II) as if the participant had retired on the date on which
such payment is to begin under such order (but taking into
account only the present value of benefits actually accrued and
not taking into account the present value of any employer subsidy
for early retirement), and
(III) in any form in which such benefits may be paid under the
plan to the participant (other than in the form of a joint and
survivor annuity with respect to the alternate payee and his or
her subsequent spouse).
For purposes of subclause (II), the interest rate assumption used
in determining the present value shall be the interest rate
specified in the plan or, if no rate is specified, 5 percent.
(ii) For purposes of this subparagraph, the term "earliest
retirement age" means the earlier of -
(I) the date on which the participant is entitled to a
distribution under the plan, or
(II) the later of the date of the participant attains age 50 or
the earliest date on which the participant could begin receiving
benefits under the plan if the participant separated from
service.
(F) To the extent provided in any qualified domestic relations
order -
(i) the former spouse of a participant shall be treated as a
surviving spouse of such participant for purposes of section 1055
of this title (and any spouse of the participant shall not be
treated as a spouse of the participant for such purposes), and
(ii) if married for at least 1 year, the surviving former
spouse shall be treated as meeting the requirements of section
1055(f) of this title.
(G)(i) In the case of any domestic relations order received by a
plan -
(I) the plan administrator shall promptly notify the
participant and each alternate payee of the receipt of such order
and the plan's procedures for determining the qualified status of
domestic relations orders, and
(II) within a reasonable period after receipt of such order,
the plan administrator shall determine whether such order is a
qualified domestic relations order and notify the participant and
each alternate payee of such determination.
(ii) Each plan shall establish reasonable procedures to determine
the qualified status of domestic relations orders and to administer
distributions under such qualified orders. Such procedures -
(I) shall be in writing,
(II) shall provide for the notification of each person
specified in a domestic relations order as entitled to payment of
benefits under the plan (at the address included in the domestic
relations order) of such procedures promptly upon receipt by the
plan of the domestic relations order, and
(III) shall permit an alternate payee to designate a
representative for receipt of copies of notices that are sent to
the alternate payee with respect to a domestic relations order.
(H)(i) During any period in which the issue of whether a domestic
relations order is a qualified domestic relations order is being
determined (by the plan administrator, by a court of competent
jurisdiction, or otherwise), the plan administrator shall
separately account for the amounts (hereinafter in this
subparagraph referred to as the "segregated amounts") which would
have been payable to the alternate payee during such period if the
order had been determined to be a qualified domestic relations
order.
(ii) If within the 18-month period described in clause (v) the
order (or modification thereof) is determined to be a qualified
domestic relations order, the plan administrator shall pay the
segregated amounts (including any interest thereon) to the person
or persons entitled thereto.
(iii) If within the 18-month period described in clause (v) -
(I) it is determined that the order is not a qualified domestic
relations order, or
(II) the issue as to whether such order is a qualified domestic
relations order is not resolved,
then the plan administrator shall pay the segregated amounts
(including any interest thereon) to the person or persons who would
have been entitled to such amounts if there had been no order.
(iv) Any determination that an order is a qualified domestic
relations order which is made after the close of the 18-month
period described in clause (v) shall be applied prospectively only.
(v) For purposes of this subparagraph, the 18-month period
described in this clause is the 18-month period beginning with the
date on which the first payment would be required to be made under
the domestic relations order.
(I) If a plan fiduciary acts in accordance with part 4 of this
subtitle in -
(i) treating a domestic relations order as being (or not being)
a qualified domestic relations order, or
(ii) taking action under subparagraph (H),
then the plan's obligation to the participant and each alternate
payee shall be discharged to the extent of any payment made
pursuant to such Act.
(J) A person who is an alternate payee under a qualified domestic
relations order shall be considered for purposes of any provision
of this chapter a beneficiary under the plan. Nothing in the
preceding sentence shall permit a requirement under section 1301 of
this title of the payment of more than 1 premium with respect to a
participant for any period.
(K) The term "alternate payee" means any spouse, former spouse,
child, or other dependent of a participant who is recognized by a
domestic relations order as having a right to receive all, or a
portion of, the benefits payable under a plan with respect to such
participant.
(L) This paragraph shall not apply to any plan to which paragraph
(1) does not apply.
(M) Payment of benefits by a pension plan in accordance with the
applicable requirements of a qualified domestic relations order
shall not be treated as garnishment for purposes of section 1673(a)
of title 15.
(N) In prescribing regulations under this paragraph, the
Secretary shall consult with the Secretary of the Treasury.
(4) Paragraph (1) shall not apply to any offset of a
participant's benefits provided under an employee pension benefit
plan against an amount that the participant is ordered or required
to pay to the plan if -
(A) the order or requirement to pay arises -
(i) under a judgment of conviction for a crime involving such
plan,
(ii) under a civil judgment (including a consent order or
decree) entered by a court in an action brought in connection
with a violation (or alleged violation) of part 4 of this
subtitle, or
(iii) pursuant to a settlement agreement between the
Secretary and the participant, or a settlement agreement
between the Pension Benefit Guaranty Corporation and the
participant, in connection with a violation (or alleged
violation) of part 4 of this subtitle by a fiduciary or any
other person,
(B) the judgment, order, decree, or settlement agreement
expressly provides for the offset of all or part of the amount
ordered or required to be paid to the plan against the
participant's benefits provided under the plan, and
(C) in a case in which the survivor annuity requirements of
section 1055 of this title apply with respect to distributions
from the plan to the participant, if the participant has a spouse
at the time at which the offset is to be made -
(i) either -
(I) such spouse has consented in writing to such offset and
such consent is witnessed by a notary public or
representative of the plan (or it is established to the
satisfaction of a plan representative that such consent may
not be obtained by reason of circumstances described in
section 1055(c)(2)(B) of this title), or
(II) an election to waive the right of the spouse to a
qualified joint and survivor annuity or a qualified
preretirement survivor annuity is in effect in accordance
with the requirements of section 1055(c) of this title,
(ii) such spouse is ordered or required in such judgment,
order, decree, or settlement to pay an amount to the plan in
connection with a violation of part 4 of this subtitle, or
(iii) in such judgment, order, decree, or settlement, such
spouse retains the right to receive the survivor annuity under
a qualified joint and survivor annuity provided pursuant to
section 1055(a)(1) of this title and under a qualified
preretirement survivor annuity provided pursuant to section
1055(a)(2) of this title, determined in accordance with
paragraph (5).
A plan shall not be treated as failing to meet the requirements of
section 1055 of this title solely by reason of an offset under this
paragraph.
(5)(A) The survivor annuity described in paragraph (4)(C)(iii)
shall be determined as if -
(i) the participant terminated employment on the date of the
offset,
(ii) there was no offset,
(iii) the plan permitted commencement of benefits only on or
after normal retirement age,
(iv) the plan provided only the minimum-required qualified
joint and survivor annuity, and
(v) the amount of the qualified preretirement survivor annuity
under the plan is equal to the amount of the survivor annuity
payable under the minimum-required qualified joint and survivor
annuity.
(B) For purposes of this paragraph, the term "minimum-required
qualified joint and survivor annuity" means the qualified joint and
survivor annuity which is the actuarial equivalent of the
participant's accrued benefit (within the meaning of section
1002(23) of this title) and under which the survivor annuity is 50
percent of the amount of the annuity which is payable during the
joint lives of the participant and the spouse.
(e) Limitation on distributions other than life annuities paid by
plan
(1) In general
Notwithstanding any other provision of this part, the fiduciary
of a pension plan that is subject to the additional funding
requirements of section 1082(d) of this title shall not permit a
prohibited payment to be made from a plan during a period in
which such plan has a liquidity shortfall (as defined in section
1082(e)(5) of this title).
(2) Prohibited payment
For purposes of paragraph (1), the term "prohibited payment"
means -
(A) any payment, in excess of the monthly amount paid under a
single life annuity (plus any social security supplements
described in the last sentence of section 1054(b)(1)(G) of this
title), to a participant or beneficiary whose annuity starting
date (as defined in section 1055(h)(2) of this title), that
occurs during the period referred to in paragraph (1),
(B) any payment for the purchase of an irrevocable commitment
from an insurer to pay benefits, and
(C) any other payment specified by the Secretary of the
Treasury by regulations.
(3) Period of shortfall
For purposes of this subsection, a plan has a liquidity
shortfall during the period that there is an underpayment of an
installment under section 1082(e) of this title by reason of
paragraph (5)(A) thereof.
(4) Coordination with other provisions
Compliance with this subsection shall not constitute a
violation of any other provision of this chapter.
(f) Missing participants in terminated plans
In the case of a plan covered by subchapter III of this chapter,
the plan shall provide that, upon termination of the plan, benefits
of missing participants shall be treated in accordance with section
1350 of this title.