29 U.S.C. § 1341 : US Code - Section 1341: Termination of single-employer plans

Search 29 U.S.C. § 1341 : US Code - Section 1341: Termination of single-employer plans

(a) General rules governing single-employer plan terminations
(1) Exclusive means of plan termination
Except in the case of a termination for which proceedings are
otherwise instituted by the corporation as provided in section
1342 of this title, a single-employer plan may be terminated only
in a standard termination under subsection (b) of this section or
a distress termination under subsection (c) of this section.
(2) 60-day notice of intent to terminate
Not less than 60 days before the proposed termination date of a
standard termination under subsection (b) of this section or a
distress termination under subsection (c) of this section, the
plan administrator shall provide to each affected party (other
than the corporation in the case of a standard termination) a
written notice of intent to terminate stating that such
termination is intended and the proposed termination date. The
written notice shall include any related additional information
required in regulations of the corporation.
(3) Adherence to collective bargaining agreements
The corporation shall not proceed with a termination of a plan
under this section if the termination would violate the terms and
conditions of an existing collective bargaining agreement.
Nothing in the preceding sentence shall be construed as limiting
the authority of the corporation to institute proceedings to
involuntarily terminate a plan under section 1342 of this title.
(b) Standard termination of single-employer plans
(1) General requirements
A single-employer plan may terminate under a standard
termination only if -
(A) the plan administrator provides the 60-day advance notice
of intent to terminate to affected parties required under
subsection (a)(2) of this section,
(B) the requirements of subparagraphs (A) and (B) of
paragraph (2) are met,
(C) the corporation does not issue a notice of noncompliance
under subparagraph (C) of paragraph (2), and
(D) when the final distribution of assets occurs, the plan is
sufficient for benefit liabilities (determined as of the
termination date).
(2) Termination procedure
(A) Notice to the corporation
As soon as practicable after the date on which the notice of
intent to terminate is provided pursuant to subsection (a)(2)
of this section, the plan administrator shall send a notice to
the corporation setting forth -
(i) certification by an enrolled actuary -
(I) of the projected amount of the assets of the plan (as
of a proposed date of final distribution of assets),
(II) of the actuarial present value (as of such date) of
the benefit liabilities (determined as of the proposed
termination date) under the plan, and
(III) that the plan is projected to be sufficient (as of
such proposed date of final distribution) for such benefit
liabilities,
(ii) such information as the corporation may prescribe in
regulations as necessary to enable the corporation to make
determinations under subparagraph (C), and
(iii) certification by the plan administrator that -
(I) the information on which the enrolled actuary based
the certification under clause (i) is accurate and
complete, and
(II) the information provided to the corporation under
clause (ii) is accurate and complete.
Clause (i) and clause (iii)(I) shall not apply to a plan
described in section 412(i) of title 26.
(B) Notice to participants and beneficiaries of benefit
commitments (!1)
No later than the date on which a notice is sent by the plan
administrator under subparagraph (A), the plan administrator
shall send a notice to each person who is a participant or
beneficiary under the plan -
(i) specifying the amount of the benefit liabilities (if
any) attributable to such person as of the proposed
termination date and the benefit form on the basis of which
such amount is determined, and
(ii) including the following information used in
determining such benefit liabilities:
(I) the length of service,
(II) the age of the participant or beneficiary,
(III) wages,
(IV) the assumptions, including the interest rate, and
(V) such other information as the corporation may
require.
Such notice shall be written in such manner as is likely to be
understood by the participant or beneficiary and as may be
prescribed in regulations of the corporation.
(C) Notice from the corporation of noncompliance
(i) In general
Within 60 days after receipt of the notice under
subparagraph (A), the corporation shall issue a notice of
noncompliance to the plan administrator if -
(I) it determines, based on the notice sent under
paragraph (2)(A) of subsection (b) of this section, that
there is reason to believe that the plan is not sufficient
for benefit liabilities,
(II) it otherwise determines, on the basis of information
provided by affected parties or otherwise obtained by the
corporation, that there is reason to believe that the plan
is not sufficient for benefit liabilities, or
(III) it determines that any other requirement of
subparagraph (A) or (B) of this paragraph or of subsection
(a)(2) of this section has not been met, unless it further
determines that the issuance of such notice would be
inconsistent with the interests of participants and
beneficiaries.
(ii) Extension
The corporation and the plan administrator may agree to
extend the 60-day period referred to in clause (i) by a
written agreement signed by the corporation and the plan
administrator before the expiration of the 60-day period. The
60-day period shall be extended as provided in the agreement
and may be further extended by subsequent written agreements
signed by the corporation and the plan administrator made
before the expiration of a previously agreed upon extension
of the 60-day period. Any extension may be made upon such
terms and conditions (including the payment of benefits) as
are agreed upon by the corporation and the plan
administrator.
(D) Final distribution of assets in absence of notice of
noncompliance
The plan administrator shall commence the final distribution
of assets pursuant to the standard termination of the plan as
soon as practicable after the expiration of the 60-day (or
extended) period referred to in subparagraph (C), but such
final distribution may occur only if -
(i) the plan administrator has not received during such
period a notice of noncompliance from the corporation under
subparagraph (C), and
(ii) when such final distribution occurs, the plan is
sufficient for benefit liabilities (determined as of the
termination date).
(3) Methods of final distribution of assets
(A) In general
In connection with any final distribution of assets pursuant
to the standard termination of the plan under this subsection,
the plan administrator shall distribute the assets in
accordance with section 1344 of this title. In distributing
such assets, the plan administrator shall -
(i) purchase irrevocable commitments from an insurer to
provide all benefit liabilities under the plan, or
(ii) in accordance with the provisions of the plan and any
applicable regulations, otherwise fully provide all benefit
liabilities under the plan. A transfer of assets to the
corporation in accordance with section 1350 of this title on
behalf of a missing participant shall satisfy this
subparagraph with respect to such participant.
(B) Certification to the corporation of final distribution of
assets
Within 30 days after the final distribution of assets is
completed pursuant to the standard termination of the plan
under this subsection, the plan administrator shall send a
notice to the corporation certifying that the assets of the
plan have been distributed in accordance with the provisions of
subparagraph (A) so as to pay all benefit liabilities under the
plan.
(4) Continuing authority
Nothing in this section shall be construed to preclude the
continued exercise by the corporation, after the termination date
of a plan terminated in a standard termination under this
subsection, of its authority under section 1303 of this title
with respect to matters relating to the termination. A
certification under paragraph (3)(B) shall not affect the
corporation's obligations under section 1322 of this title.
(c) Distress termination of single-employer plans
(1) In general
A single-employer plan may terminate under a distress
termination only if -
(A) the plan administrator provides the 60-day advance notice
of intent to terminate to affected parties required under
subsection (a)(2) of this section,
(B) the requirements of subparagraph (A) of paragraph (2) are
met, and
(C) the corporation determines that the requirements of
subparagraph (B) of paragraph (2) are met.
(2) Termination requirements
(A) Information submitted to the corporation
As soon as practicable after the date on which the notice of
intent to terminate is provided pursuant to subsection (a)(2)
of this section, the plan administrator shall provide the
corporation, in such form as may be prescribed by the
corporation in regulations, the following information:
(i) such information as the corporation may prescribe by
regulation as necessary to make determinations under
subparagraph (B) and paragraph (3);
(ii) unless the corporation determines the information is
not necessary for purposes of paragraph (3)(A) or section
1362 of this title, certification by an enrolled actuary of -

(I) the amount (as of the proposed termination date and,
if applicable, the proposed distribution date) of the
current value of the assets of the plan,
(II) the actuarial present value (as of such dates) of
the benefit liabilities under the plan,
(III) whether the plan is sufficient for benefit
liabilities as of such dates,
(IV) the actuarial present value (as of such dates) of
benefits under the plan guaranteed under section 1322 of
this title, and
(V) whether the plan is sufficient for guaranteed
benefits as of such dates;
(iii) in any case in which the plan is not sufficient for
benefit liabilities as of such date -
(I) the name and address of each participant and
beneficiary under the plan as of such date, and
(II) such other information as shall be prescribed by the
corporation by regulation as necessary to enable the
corporation to be able to make payments to participants and
beneficiaries as required under section 1322(c) of this
title; and
(iv) certification by the plan administrator that -
(I) the information on which the enrolled actuary based
the certifications under clause (ii) is accurate and
complete, and
(II) the information provided to the corporation under
clauses (i) and (iii) is accurate and complete.
Clause (ii) and clause (iv)(I) shall not apply to a plan
described in section 412(i) of title 26.
(B) Determination by the corporation of necessary distress
criteria
Upon receipt of the notice of intent to terminate required
under subsection (a)(2) of this section and the information
required under subparagraph (A), the corporation shall
determine whether the requirements of this subparagraph are met
as provided in clause (i), (ii), or (iii). The requirements of
this subparagraph are met if each person who is (as of the
proposed termination date) a contributing sponsor of such plan
or a member of such sponsor's controlled group meets the
requirements of any of the following clauses:
(i) Liquidation in bankruptcy or insolvency proceedings
The requirements of this clause are met by a person if -
(I) such person has filed or has had filed against such
person, as of the proposed termination date, a petition
seeking liquidation in a case under title 11 or under any
similar Federal law or law of a State or political
subdivision of a State (or a case described in clause (ii)
filed by or against such person has been converted, as of
such date, to a case in which liquidation is sought), and
(II) such case has not, as of the proposed termination
date, been dismissed.
(ii) Reorganization in bankruptcy or insolvency proceedings
The requirements of this clause are met by a person if -
(I) such person has filed, or has had filed against such
person, as of the proposed termination date, a petition
seeking reorganization in a case under title 11 or under
any similar law of a State or political subdivision of a
State (or a case described in clause (i) filed by or
against such person has been converted, as of such date, to
such a case in which reorganization is sought),
(II) such case has not, as of the proposed termination
date, been dismissed,
(III) such person timely submits to the corporation any
request for the approval of the bankruptcy court (or other
appropriate court in a case under such similar law of a
State or political subdivision) of the plan termination,
and
(IV) the bankruptcy court (or such other appropriate
court) determines that, unless the plan is terminated, such
person will be unable to pay all its debts pursuant to a
plan of reorganization and will be unable to continue in
business outside the chapter 11 reorganization process and
approves the termination.
(iii) Termination required to enable payment of debts while
staying in business or to avoid unreasonably burdensome
pension costs caused by declining workforce
The requirements of this clause are met by a person if such
person demonstrates to the satisfaction of the corporation
that -
(I) unless a distress termination occurs, such person
will be unable to pay such person's debts when due and will
be unable to continue in business, or
(II) the costs of providing pension coverage have become
unreasonably burdensome to such person, solely as a result
of a decline of such person's workforce covered as
participants under all single-employer plans of which such
person is a contributing sponsor.
(C) Notification of determinations by the corporation
The corporation shall notify the plan administrator as soon
as practicable of its determinations made pursuant to
subparagraph (B).
(3) Termination procedure
(A) Determinations by the corporation relating to plan
sufficiency for guaranteed benefits and for benefit
liabilities
If the corporation determines that the requirements for a
distress termination set forth in paragraphs (1) and (2) are
met, the corporation shall -
(i) determine that the plan is sufficient for guaranteed
benefits (as of the termination date) or that the corporation
is unable to make such determination on the basis of
information made available to the corporation,
(ii) determine that the plan is sufficient for benefit
liabilities (as of the termination date) or that the
corporation is unable to make such determination on the basis
of information made available to the corporation, and
(iii) notify the plan administrator of the determinations
made pursuant to this subparagraph as soon as practicable.
(B) Implementation of termination
After the corporation notifies the plan administrator of its
determinations under subparagraph (A), the termination of the
plan shall be carried out as soon as practicable, as provided
in clause (i), (ii), or (iii).
(i) Cases of sufficiency for benefit liabilities
In any case in which the corporation determines that the
plan is sufficient for benefit liabilities, the plan
administrator shall proceed to distribute the plan's assets,
and make certification to the corporation with respect to
such distribution, in the manner described in subsection
(b)(3) of this section, and shall take such other actions as
may be appropriate to carry out the termination of the plan.
(ii) Cases of sufficiency for guaranteed benefits without a
finding of sufficiency for benefit liabilities
In any case in which the corporation determines that the
plan is sufficient for guaranteed benefits, but further
determines that it is unable to determine that the plan is
sufficient for benefit liabilities on the basis of the
information made available to it, the plan administrator
shall proceed to distribute the plan's assets in the manner
described in subsection (b)(3) of this section, make
certification to the corporation that the distribution has
occurred, and take such actions as may be appropriate to
carry out the termination of the plan.
(iii) Cases without any finding of sufficiency
In any case in which the corporation determines that it is
unable to determine that the plan is sufficient for
guaranteed benefits on the basis of the information made
available to it, the corporation shall commence proceedings
in accordance with section 1342 of this title.
(C) Finding after authorized commencement of termination that
plan is unable to pay benefits
(i) Finding with respect to benefit liabilities which are not
guaranteed benefits
If, after the plan administrator has begun to terminate the
plan as authorized under subparagraph (B)(i), the plan
administrator finds that the plan is unable, or will be
unable, to pay benefit liabilities which are not benefits
guaranteed by the corporation under section 1322 of this
title, the plan administrator shall notify the corporation of
such finding as soon as practicable thereafter.
(ii) Finding with respect to guaranteed benefits
If, after the plan administrator has begun to terminate the
plan as authorized by subparagraph (B)(i) or (ii), the plan
administrator finds that the plan is unable, or will be
unable, to pay all benefits under the plan which are
guaranteed by the corporation under section 1322 of this
title, the plan administrator shall notify the corporation of
such finding as soon as practicable thereafter. If the
corporation concurs in the finding of the plan administrator
(or the corporation itself makes such a finding), the
corporation shall institute appropriate proceedings under
section 1342 of this title.
(D) Administration of the plan during interim period
(i) In general
The plan administrator shall -
(I) meet the requirements of clause (ii) for the period
commencing on the date on which the plan administrator
provides a notice of distress termination to the
corporation under subsection (a)(2) of this section and
ending on the date on which the plan administrator receives
notification from the corporation of its determinations
under subparagraph (A), and
(II) meet the requirements of clause (ii) commencing on
the date on which the plan administrator or the corporation
makes a finding under subparagraph (C)(ii).
(ii) Requirements
The requirements of this clause are met by the plan
administrator if the plan administrator -
(I) refrains from distributing assets or taking any other
actions to carry out the proposed termination under this
subsection,
(II) pays benefits attributable to employer
contributions, other than death benefits, only in the form
of an annuity,
(III) does not use plan assets to purchase irrevocable
commitments to provide benefits from an insurer, and
(IV) continues to pay all benefit liabilities under the
plan, but, commencing on the proposed termination date,
limits the payment of benefits under the plan to those
benefits which are guaranteed by the corporation under
section 1322 of this title or to which assets are required
to be allocated under section 1344 of this title.
In the event the plan administrator is later determined not
to have met the requirements for distress termination, any
benefits which are not paid solely by reason of compliance
with subclause (IV) shall be due and payable immediately
(together with interest, at a reasonable rate, in accordance
with regulations of the corporation).
(d) Sufficiency
For purposes of this section -
(1) Sufficiency for benefit liabilities
A single-employer plan is sufficient for benefit liabilities if
there is no amount of unfunded benefit liabilities under the
plan.
(2) Sufficiency for guaranteed benefits
A single-employer plan is sufficient for guaranteed benefits if
there is no amount of unfunded guaranteed benefits under the
plan.
(e) Limitation on the conversion of a defined benefit plan to a
defined contribution plan
The adoption of an amendment to a plan which causes the plan to
become a plan described in section 1321(b)(1) of this title
constitutes a termination of the plan. Such an amendment may take
effect only after the plan satisfies the requirements for standard
termination under subsection (b) of this section or distress
termination under subsection (c) of this section.