29 U.S.C. § 1322 : US Code - Section 1322: Single-employer plan benefits guaranteed

Search 29 U.S.C. § 1322 : US Code - Section 1322: Single-employer plan benefits guaranteed

(a) Nonforfeitable benefits
Subject to the limitations contained in subsection (b) of this
section, the corporation shall guarantee, in accordance with this
section, the payment of all nonforfeitable benefits (other than
benefits becoming nonforfeitable solely on account of the
termination of a plan) under a single-employer plan which
terminates at a time when this subchapter applies to it.
(b) Exceptions
(1) Except to the extent provided in paragraph (7) -
(A) no benefits provided by a plan which has been in effect for
less than 60 months at the time the plan terminates shall be
guaranteed under this section, and
(B) any increase in the amount of benefits under a plan
resulting from a plan amendment which was made, or became
effective, whichever is later, within 60 months before the date
on which the plan terminates shall be disregarded.
(2) For purposes of this subsection, the time a successor plan
(within the meaning of section 1321(a) of this title) has been in
effect includes the time a previously established plan (within the
meaning of section 1321(a) of this title) was in effect. For
purposes of determining what benefits are guaranteed under this
section in the case of a plan to which section 1321 of this title
does not apply on September 3, 1974, the 60-month period referred
to in paragraph (1) shall be computed beginning on the first date
on which such section does apply to the plan.
(3) The amount of monthly benefits described in subsection (a) of
this section provided by a plan, which are guaranteed under this
section with respect to a participant, shall not have an actuarial
value which exceeds the actuarial value of a monthly benefit in the
form of a life annuity commencing at age 65 equal to the lesser of -

(A) his average monthly gross income from his employer during
the 5 consecutive calendar year period (or, if less, during the
number of calendar years in such period in which he actively
participates in the plan) during which his gross income from that
employer was greater than during any other such period with that
employer determined by dividing 1/12 of the sum of all such
gross income by the number of such calendar years in which he had
such gross income, or
(B) $750 multiplied by a fraction, the numerator of which is
the contribution and benefit base (determined under section 230
of the Social Security Act [42 U.S.C. 430]) in effect at the time
the plan terminates and the denominator of which is such
contribution and benefit base in effect in calendar year 1974.
The provisions of this paragraph do not apply to non-basic
benefits. The maximum guaranteed monthly benefit shall not be
reduced solely on account of the age of a participant in the case
of a benefit payable by reason of disability that occurred on or
before the termination date, if the participant demonstrates to the
satisfaction of the corporation that the Social Security
Administration has determined that the participant satisfies the
definition of disability under title II or XVI of the Social
Security Act [42 U.S.C. 401 et seq.; 1381 et seq.], and the
regulations thereunder. If a benefit payable by reason of
disability is converted to an early or normal retirement benefit
for reasons other than a change in the health of the participant,
such early or normal retirement benefit shall be treated as a
continuation of the benefit payable by reason of disability and
this subparagraph shall continue to apply.
(4)(A) The actuarial value of a benefit, for purposes of this
subsection, shall be determined in accordance with regulations
prescribed by the corporation.
(B) For purposes of paragraph (3) -
(i) the term "gross income" means "earned income" within the
meaning of section 911(b) of title 26 (determined without regard
to any community property laws),
(ii) in the case of a participant in a plan under which
contributions are made by more than one employer, amounts
received as gross income from any employer under that plan shall
be aggregated with amounts received from any other employer under
that plan during the same period, and
(iii) any non-basic benefit shall be disregarded.
(5)(A) For purposes of this subchapter, the term "substantial
owner" means an individual who -
(i) owns the entire interest in an unincorporated trade or
business,
(ii) in the case of a partnership, is a partner who owns,
directly or indirectly, more than 10 percent of either the
capital interest or the profits interest in such partnership, or
(iii) in the case of a corporation, owns, directly or
indirectly, more than 10 percent in value of either the voting
stock of that corporation or all the stock of that corporation.
For purposes of clause (iii) the constructive ownership rules of
section 1563(e) of title 26 shall apply (determined without regard
to section 1563(e)(3)(C)). For purposes of this subchapter an
individual is also treated as a substantial owner with respect to a
plan if, at any time within the 60 months preceding the date on
which the determination is made, he was a substantial owner under
the plan.
(B) In the case of a participant in a plan under which benefits
have not been increased by reason of any plan amendments and who is
covered by the plan as a substantial owner, the amount of benefits
guaranteed under this section shall not exceed the product of -
(i) a fraction (not to exceed 1) the numerator of which is the
number of years the substantial owner was an active participant
in the plan, and the denominator of which is 30, and
(ii) the amount of the substantial owner's monthly benefits
guaranteed under subsection (a) of this section (as limited under
paragraph (3) of this subsection).
(C) In the case of a participant in a plan, other than a plan
described in subparagraph (B), who is covered by the plan as a
substantial owner, the amount of the benefit guaranteed under this
section shall, under regulations prescribed by the corporation,
treat each benefit increase attributable to a plan amendment as if
it were provided under a new plan. The benefits guaranteed under
this section with respect to all such amendments shall not exceed
the amount which would be determined under subparagraph (B) if
subparagraph (B) applied.
(6)(A) No benefits accrued under a plan after the date on which
the Secretary of the Treasury issues notice that he has determined
that any trust which is a part of a plan does not meet the
requirements of section 401(a) of title 26, or that the plan does
not meet the requirements of section 404(a)(2) of title 26, are
guaranteed under this section unless such determination is
erroneous. This subparagraph does not apply if the Secretary
subsequently issues a notice that such trust meets the requirements
of section 401(a) of title 26 or that the plan meets the
requirements of section 404(a)(2) of title 26 and if the Secretary
determines that the trust or plan has taken action necessary to
meet such requirements during the period between the issuance of
the notice referred to in the preceding sentence and the issuance
of the notice referred to in this sentence.
(B) No benefits accrued under a plan after the date on which an
amendment of the plan is adopted which causes the Secretary of the
Treasury to determine that any trust under the plan has ceased to
meet the requirements of section 401(a) of title 26 or that the
plan has ceased to meet the requirements of section 404(a)(2) of
title 26, are guaranteed under this section unless such
determination is erroneous. This subparagraph shall not apply if
the amendment is revoked as of the date it was first effective or
amended to comply with such requirements.
(7) Benefits described in paragraph (1) are guaranteed only to
the extent of the greater of -
(A) 20 percent of the amount which, but for the fact that the
plan or amendment has not been in effect for 60 months or more,
would be guaranteed under this section, or
(B) $20 per month,
multiplied by the number of years (but not more than 5) the plan or
amendment, as the case may be, has been in effect. In determining
how many years a plan or amendment has been in effect for purposes
of this paragraph, the first 12 months beginning with the date on
which the plan or amendment is made or first becomes effective
(whichever is later) constitutes one year, and each consecutive
period of 12 months thereafter constitutes an additional year. This
paragraph does not apply to benefits payable under a plan unless
the corporation finds substantial evidence that the plan was
terminated for a reasonable business purpose and not for the
purpose of obtaining the payment of benefits by the corporation
under this subchapter.
(c) Payment by corporation to participants and beneficiaries of
recovery percentage of outstanding amount of benefit liabilities
(1) In addition to benefits paid under the preceding provisions
of this section with respect to a terminated plan, the corporation
shall pay the portion of the amount determined under paragraph (2)
which is allocated with respect to each participant under section
1344(a) of this title. Such payment shall be made to such
participant or to such participant's beneficiaries (including
alternate payees, within the meaning of section 1056(d)(3)(K) of
this title).
(2) The amount determined under this paragraph is an amount equal
to the product derived by multiplying -
(A) the outstanding amount of benefit liabilities under the
plan (including interest calculated from the termination date),
by
(B) the applicable recovery ratio.
(3)(A) Except as provided in subparagraph (C), for purposes of
this subsection, the term "recovery ratio" means the average ratio,
with respect to prior plan terminations described in subparagraph
(B), of -
(i) the value of the recovery of the corporation under section
1362, 1363, or 1364 of this title in connection with such prior
terminations, to
(ii) the amount of unfunded benefit liabilities under such
plans as of the termination date in connection with such prior
terminations.
(B) A plan termination described in this subparagraph is a
termination with respect to which -
(i) the corporation has determined the value of recoveries
under section 1362, 1363, or 1364 of this title, and
(ii) notices of intent to terminate were provided after
December 17, 1987, and during the 5-Federal fiscal year period
ending with the fiscal year preceding the fiscal year in which
occurs the date of the notice of intent to terminate with respect
to the plan termination for which the recovery ratio is being
determined.
(C) In the case of a terminated plan with respect to which the
outstanding amount of benefit liabilities exceeds $20,000,000, for
purposes of this section, the term "recovery ratio" means, with
respect to the termination of such plan, the ratio of -
(i) the value of the recoveries of the corporation under
section 1362, 1363, or 1364 of this title in connection with such
plan, to
(ii) the amount of unfunded benefit liabilities under such plan
as of the termination date.
(4) Determinations under this subsection shall be made by the
corporation. Such determinations shall be binding unless shown by
clear and convincing evidence to be unreasonable.
(d) Authorization to guarantee other classes of benefits
The corporation is authorized to guarantee the payment of such
other classes of benefits and to establish the terms and conditions
under which such other classes of benefits are guaranteed as it
determines to be appropriate.
(e) Nonforfeitability of preretirement survivor annuity
For purposes of subsection (a) of this section, a qualified
preretirement survivor annuity (as defined in section 1055(e)(1) of
this title) with respect to a participant under a terminated single-
employer plan shall not be treated as forfeitable solely because
the participant has not died as of the termination date.
(f) Effective date of plan amendments
For purposes of this section, the effective date of a plan
amendment described in section 1054(i)(1) of this title shall be
the effective date of the plan of reorganization of the employer
described in section 1054(i)(1) of this title or, if later, the
effective date stated in such amendment.