[Federal Register Volume 61, Number 232 (Monday, December 2, 1996)]
[Rules and Regulations]
[Pages 63988-63998]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-30779]



[[Page 63987]]

_______________________________________________________________________

Part VII





Pension Benefit Guaranty Corporation





_______________________________________________________________________



29 CFR Parts 4001, 4043 and 4065



Reportable Events; Annual Report; Final Rule

  Federal Register / Vol. 61, No. 232 / Monday, December 2, 1996 / 
Rules and Regulations  

[[Page 63988]]



PENSION BENEFIT GUARANTY CORPORATION

29 CFR Parts 4001, 4043 and 4065

RIN 1212-AA80


Reportable Events; Annual Report

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Pension Benefit Guaranty Corporation is amending its 
reportable events regulation. The Retirement Protection Act of 1994 
made significant changes to the reportable events requirements, 
including adding four new events. This rule addresses the statutory 
changes and provides extensions of time and waivers for certain 
filings. The PBGC developed the proposed rule through negotiated 
rulemaking. The final rule makes only minor modifications and 
clarifications.

EFFECTIVE DATE: January 1, 1997. This regulation is applicable for 
reportable events under subpart B that occur on or after January 1, 
1997, and for reportable events under subpart C and Form 200 filings 
under Subpart D for which notice is due on or after January 1, 1997. 
The PBGC will treat any waivers or extensions under the rule as if they 
had been in effect as of the effective date of the Retirement 
Protection Act amendments to section 4043 of the Employee Retirement 
Income Security Act of 1974.

FOR FURTHER INFORMATION CONTACT: Harold J. Ashner, Assistant General 
Counsel, or James L. Beller, Attorney, Office of the General Counsel, 
PBGC, 1200 K Street, NW., Washington, DC 20005-4026, 202-326-4024 (202-
326-4179 for TTY and TDD).

SUPPLEMENTARY INFORMATION: On July 24, 1996, the Pension Benefit 
Guaranty Corporation published in the Federal Register (61 FR 38409) a 
proposed rule amending its regulation on reportable events (29 CFR part 
4043).
    The proposed rule provided guidance with respect to amendments made 
by the Retirement Protection Act of 1994, added new reportable events, 
and provided extensions of time and waivers for certain filings. It was 
the result of a negotiated rulemaking process involving a committee 
consisting of representatives of employers, participants, pension 
practitioners, and the PBGC. The PBGC received only one written comment 
on the proposed rule. The final rule follows the proposed rule except 
for a few minor modifications and clarifications.
    The commenter sought clarification of the types of ``transactions'' 
that will result in one or more persons ceasing to be members of the 
plan's controlled group and therefore trigger reporting under 
Sec. 4043.29. The final rule clarifies that a binding agreement to 
transfer ownership of a controlled group member, such as an agreement 
to transfer a subsidiary to a new controlled group in a stock sale or 
to spin off a subsidiary to shareholders, triggers reporting.
    In response to an inquiry, the final rule provides that, when there 
is a change in plan administrator or contributing sponsor, the person 
who is obligated to report is the plan administrator or contributing 
sponsor on the 30th day after the reportable event occurs (for post-
event reporting) or the notice date (for advance reporting). Since 
filings may be made by designated representatives, the parties may 
negotiate which party actually prepares and submits the reportable 
event filing. The regulation merely identifies which party will be 
liable for penalties if no report is filed.
    Under the final rule, the PBGC will permit filing by electronic 
mail or facsimile transmission. The proposed regulation provided a 
special rule for electronic filings that was limited to advance 
reporting. The final regulation extends the benefit of this rule to all 
filings under the regulation. Under the rule, a filing will be timely 
if certain minimal information is submitted electronically by the due 
date and the remaining information is received by the PBGC within one 
day after the due date for advance notice and Form 200 filings and two 
days after the due date for post-event notice.
    The commenter sought clarification on proof of filing by electronic 
mail or facsimile transmission. Facsimiles and some other electronic 
filings generally provide proof of receipt. The PBGC will provide 
automatic receipts for electronic mail submissions. If these automatic 
receipts prove inadequate in the future, the PBGC will work with filers 
to establish alternative receipts.
    The final regulation provides that, for post-event information sent 
to the PBGC by commercial delivery service, the date of filing is the 
date of deposit with the delivery service, provided the information is 
received by the PBGC within two regular business days.
    The proposed rule added a requirement to report certain defaults on 
a loan with an outstanding balance exceeding $10 million. The rule 
requires reporting of a default with respect to such a loan if the 
debtor receives written notice of the default on account of, among 
other things, ``a persisting failure by the debtor to attain agreed-
upon performance levels.'' The commenter suggested that the PBGC 
clarify this language and, in particular, clarify ``performance 
levels'' and delete the word ``persisting.''
    In response to this comment and to conform with the recommendation 
of the negotiated rulemaking committee, the PBGC has added the word 
``financial'' before the term ``performance levels.'' The PBGC agrees 
with the committee's recommendation that a failure to meet agreed-upon 
financial performance levels that does not persist should not be 
reportable and therefore has not deleted the word ``persisting.''
    The PBGC also has made minor clarifying and editorial changes.

Compliance With Rulemaking and Paperwork Guidelines

    The PBGC submitted the proposed rule as a ``significant regulatory 
action'' under Executive Order 12866 because the rule was the product 
of the PBGC's first use of the negotiated rulemaking process. There are 
no material changes in the final rule. This action is not economically 
significant.
    The PBGC certifies under section 605(b) of the Regulatory 
Flexibility Act that this rule will not have a significant economic 
impact on a substantial number of small entities. For most reportable 
events, waivers based on plan size or funding level will exempt 
reporting for small plans. Even where reporting is required, there is 
no significant economic impact because the filing burden averages only 
8.2 hours. Accordingly, sections 603 and 604 of the Regulatory 
Flexibility Act do not apply.
    The collection of information requirements in this rule and the 
related forms and instructions have been approved by the Office of 
Management and Budget. The collection of information requirements 
relating to reportable events (Subparts A through C of part 4043, Form 
10, and Form 10-ADVANCE) were approved under control number 1212-0013. 
The collection of information requirements relating to notice of 
failure to make required contributions (Subpart D of part 4043 and Form 
200) were approved under control number 1212-0041. 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.

[[Page 63989]]

List of Subjects

29 CFR Part 4001

    Pension insurance, Pensions, Reporting and Recordkeeping 
requirements.

29 CFR Part 4043

    Pension insurance, Pensions, Reporting and Recordkeeping 
requirements.

29 CFR Part 4065

    Pension insurance, Pensions, Reporting and Recordkeeping 
requirements.
    For the reasons set forth above, the PBGC proposes to amend parts 
4001, 4043, and 4065 of 29 CFR chapter LX as follows.

PART 4001--[AMENDED]

    1. The authority citation for Part 4001 continues to read as 
follows:

    Authority: 29 U.S.C. 1301, 1302(b)(3).

    2. Section 4001.2 is amended by adding the following definitions:


Sec. 4001.2  Definitions.

* * * * *
    EIN means the nine-digit employer identification number assigned by 
the Internal Revenue Service to a person.
* * * * *
    PN means the three-digit plan number assigned to a plan.
* * * * *
    3. Section 4001.2 is further amended by adding the following to the 
end of the definition of controlled group:
* * * * *
    Controlled group * * * Any reference to a plan's controlled group 
means all contributing sponsors of the plan and all members of each 
contributing sponsor's controlled group.
* * * * *
    4. Part 4043 is revised to read as follows:

PART 4043--REPORTABLE EVENTS AND CERTAIN OTHER NOTIFICATION 
REQUIREMENTS

Subpart A--General Provisions

Sec.
4043.1  Purpose and scope.
4043.2  Definitions.
4043.3  Requirement of notice.
4043.4  Waivers and extensions.
4043.5  How and where to file.
4043.6  Date of filing.
4043.7  Computation of time.
4043.8  Confidentiality.

Subpart B--Post-Event Notice of Reportable Events

4043.20  Post-event filing obligation.
4043.21  Tax disqualification and Title I noncompliance.
4043.22  Amendment decreasing benefits payable.
4043.23  Active participant reduction.
4043.24  Termination or partial termination.
4043.25  Failure to make required minimum funding payment.
4043.26  Inability to pay benefits when due.
4043.27  Distribution to a substantial owner.
4043.28  Plan merger, consolidation, or transfer.
4043.29  Change in contributing sponsor or controlled group.
4043.30  Liquidation.
4043.31  Extraordinary dividend or stock redemption.
4043.32  Transfer of benefit liabilities.
4043.33  Application for minimum funding waiver.
4043.34  Loan default.
4043.35  Bankruptcy or similar settlement.

Subpart C--Advance Notice of Reportable Events

4043.61  Advance reporting filing obligation.
4043.62  Change in contributing sponsor or controlled group.
4043.63  Liquidation.
4043.64  Extraordinary dividend or stock redemption.
4043.65  Transfer of benefit liabilities.
4043.66  Application for minimum funding waiver.
4043.67  Loan default.
4043.68  Bankruptcy or similar settlement.

Subpart D--Notice of Failure To Make Required Contributions

4043.81  PBGC Form 200, notice of failure to make required 
contributions; supplementary information.

    Authority: 29 U.S.C. 1082(f), 1302(b)(3), 1343.

Subpart A--General Provisions


Sec. 4043.1  Purpose and scope.

    This part prescribes the requirements for notifying the PBGC of a 
reportable event under section 4043 of ERISA or of a failure to make 
certain required contributions under section 302(f)(4) of ERISA or 
section 412(n)(4) of the Code. Subpart A contains definitions and 
general rules. Subpart B contains rules for post-event notice of a 
reportable event. Subpart C contains rules for advance notice of a 
reportable event. Subpart D contains rules for notifying the PBGC of a 
failure to make certain required contributions.


Sec. 4043.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
Code, contributing sponsor, controlled group, ERISA, fair market value, 
irrevocable commitment, multiemployer plan, notice of intent to 
terminate, PBGC, person, plan, plan administrator, proposed termination 
date, single-employer plan, and substantial owner.
    In addition, for purposes of this part:
    De minimis 10-percent segment means, in connection with a plan's 
controlled group, one or more entities that in the aggregate have for a 
fiscal year--
    (1) Revenue not exceeding 10 percent of the controlled group's 
revenue;
    (2) Annual operating income not exceeding the greatest of--
    (i) 10 percent of the controlled group's annual operating income;
    (ii) 5 percent of the controlled group's first $200 million in net 
tangible assets at the end of the fiscal year(s); or
    (iii) $5 million; and
    (3) Net tangible assets at the end of the fiscal year(s) not 
exceeding the greater of--
    (i) 10 percent of the controlled group's net tangible assets at the 
end of the fiscal year(s); or
    (ii) $5 million.
    De minimis 5-percent segment has the same meaning as a de minimis 
10-percent segment, except that ``5 percent'' is substituted for ``10 
percent'' each time it appears.
    Event year means the plan year in which the reportable event 
occurs.
    Fair market value of the plan's assets means the fair market value 
of the plan's assets as of the testing date for the applicable plan 
year, including contributions attributable to the previous plan year 
for funding purposes under section 302(c)(10) of ERISA or section 
412(c)(10) of the Code if made by the earlier of the due date or filing 
date of the variable rate premium for the applicable plan year, but not 
to the extent contributions are used to satisfy the quarterly 
contribution requirements under section 302(e) of ERISA or section 
412(m) of the Code for the applicable plan year.
    Foreign entity means a member of a controlled group that--
    (1) Is not a contributing sponsor of a plan;
    (2) Is not organized under the laws of (or, if an individual, is 
not a domiciliary of) any state (as defined in section 3(10) of ERISA); 
and
    (3) For the fiscal year that includes the date the reportable event 
occurs, meets one of the following tests--
    (i) Is not required to file any United States federal income tax 
form;
    (ii) Has no income reportable on any United States federal income 
tax form other than passive income not exceeding $1,000; or
    (iii) Does not own substantial assets in the United States 
(disregarding stock of a member of the plan's controlled group) and is 
not required to file any quarterly United States tax returns for 
employee withholding.
    Foreign-linked entity means a person that--

[[Page 63990]]

    (1) Is neither a foreign entity nor a contributing sponsor of a 
plan; and
    (2) Is a member of the plan's controlled group only because of 
ownership interests in or by foreign entities.
    Foreign parent means a foreign entity that is a direct or indirect 
parent of a person that is a contributing sponsor.
    Form 5500 due date means the deadline (including extensions) for 
filing the annual report under section 103 of ERISA.
    Notice date means the deadline (including extensions) for filing 
notice of the reportable event with the PBGC.
    Participant means a participant as defined in Sec. 4006.2.
    Public company means a person subject to the reporting requirements 
of section 13 or 15(d) of the Securities Exchange Act of 1934 or a 
subsidiary (as defined for purposes of the Securities Exchange Act of 
1934) of a person subject to such reporting requirements.
    Testing date means, with respect to a plan year--
    (1) The last day of the prior plan year, except as provided in 
paragraphs (2) or (3) of this definition;
    (2) In the case of a new or newly-covered plan (as defined in 
Sec. 4006.2 of this chapter), the first day of the plan year or, if 
later, the date on which the plan becomes effective for benefit 
accruals for future service; or
    (3) In the case of a plan described in Sec. 4006.5(e)(2) of this 
chapter (relating to certain mergers or spinoffs), the first day of the 
plan year.
    Ultimate parent means the parent at the highest level in the chain 
of corporations and/or other organizations constituting the parent-
subsidiary controlled group.
    Unfunded vested benefits means unfunded vested benefits determined 
in accordance with Sec. 4006.4 of this chapter, without regard to the 
exemptions and special rules in Sec. 4006.5(a)-(c) of this chapter. For 
purposes of subpart B only, unfunded vested benefits may be determined 
by subtracting the fair market value of the plan's assets from the 
plan's vested benefits amount.
    Variable rate premium means the portion of the premium determined 
under section 4006(a)(3)(E) of ERISA and Sec. 4006.3(b) of this 
chapter.
    Vested benefits amount means the vested benefits amount determined 
under Sec. 4006.4(b)(1) of this chapter.


Sec. 4043.3  Requirement of notice.

    (a) Obligation to file--(1) In general. Each person that is 
required to file a notice under this part, or a duly authorized 
representative, shall submit the information required by this part by 
the time specified in Sec. 4043.20 (for post-event notice), 
Sec. 4043.61 (for advance notice), or Sec. 4043.81 (for Form 200 
filings). Any information previously filed with the PBGC may be 
incorporated by reference.
    (2) Multiple plans. If a reportable event occurs for more than one 
plan, the filing obligation with respect to each plan is independent of 
the filing obligation with respect to any other plan.
    (3) Optional consolidated filing. A filing by any person will be 
deemed to be a filing by all persons required to notify the PBGC under 
this part. If notices are required for two or more events, the notices 
may be combined in one filing.
    (b) Contents of reportable event notice. A person required to file 
a reportable event notice shall provide, by the notice date, the 
following general information, along with any other information 
required for each reportable event under subpart B or C of this part:
    (1) The name of the plan;
    (2) The name, address, and telephone number of the contributing 
sponsor(s) and of an individual that should be contacted;
    (3) The name, address, and telephone number of the plan 
administrator and of an individual that should be contacted;
    (4) The EIN of the contributing sponsor and the EIN/PN of the plan;
    (5) A brief statement of the pertinent facts relating to the 
reportable event;
    (6) A copy of the plan document in effect, i.e., the last 
restatement of the plan and all amendments thereto;
    (7) A copy of the most recent actuarial statement and opinion (if 
any) relating to the plan; and
    (8) A statement of any material change in the assets or liabilities 
of the plan occurring after the date of the most recent actuarial 
statement and opinion.
    (c) Optional reportable event forms. The PBGC shall issue optional 
reportable events forms, which may provide for reduced initial 
information submissions.
    (d) Requests for additional information. The PBGC may, in any case, 
require the submission of additional information. Any such information 
shall be submitted for subpart B of this part within 30 days, and for 
subpart C or D of this part within 7 days, after the date of a written 
request by the PBGC, or within a different time period specified 
therein. The PBGC may in its discretion shorten the time period where 
it determines that the interests of the PBGC or participants may be 
prejudiced by a delay in receipt of the information.
    (e) Effect of failure to file. If a notice (or any other 
information required under this part) is not provided within the 
specified time limit, the PBGC may assess against each person required 
to provide the notice a separate penalty under section 4071 of ERISA of 
up to $1,000 a day for each day that the failure continues. The PBGC 
may pursue any other equitable or legal remedies available to it under 
the law.


Sec. 4043.4  Waivers and extensions.

    (a) Specific events. For specific reportable events, waivers from 
reporting and information requirements and extensions of time are 
provided in subparts B and C of this part. If an occurrence constitutes 
two or more reportable events, reporting requirements for each event 
are determined independently. For example, any event reportable under 
more than one section will be exempt from reporting only if it 
satisfies the requirements for a waiver under each section.
    (b) Multiemployer plans. The requirements of section 4043 of ERISA 
are waived with respect to multiemployer plans.
    (c) Terminating plans. No notice is required from the plan 
administrator or contributing sponsor of a plan if the notice date is 
on or after the date on which--
    (1) All of the plan's assets (other than any excess assets) are 
distributed pursuant to a termination; or
    (2) A trustee is appointed for the plan under section 4042(c) of 
ERISA.
    (d) Other waivers and extensions. The PBGC may extend any deadline 
or waive any other requirement under this part where it finds 
convincing evidence that the waiver or extension is appropriate under 
the circumstances. Any waiver or extension may be subject to 
conditions. A request for a waiver or extension must be filed in 
writing with the PBGC and must state the facts and circumstances on 
which the request is based.


Sec. 4043.5  How and where to file.

    Requests and information shall be filed in accordance with the 
instructions to the applicable PBGC reporting form.


Sec. 4043.6  Date of filing.

    (a) Post-event notice. Information filed under subpart B of this 
part is considered filed--
    (1) On the date of the United States postmark stamped on the cover 
in which the information is mailed, if--
    (i) The postmark was made by the United States Postal Service; and

[[Page 63991]]

    (ii) The document was mailed postage prepaid, properly addressed to 
the PBGC;
    (2) On the date it is deposited for delivery to the PBGC with a 
commercial delivery service, provided it is received by the PBGC within 
two regular business days; or
    (3) Except as provided in paragraphs (a)(1) and (a)(2), on the date 
it is received by the PBGC.
    (b) Advance notice and Form 200 filings. Information filed under 
subpart C or D of this part is considered filed on the date it is 
received by PBGC.
    (c) Electronic filing. A reportable event notice or Form 200 will 
be deemed timely filed if--
    (1) An electronic transmission containing at least the minimum 
initial information (as specified in the instruction to the applicable 
form) is filed on or before the notice date; and
    (2) The remaining initial information is received by the PBGC on or 
before--
    (i) The first regular business day following the notice date, in 
the case of advance notice or a Form 200; or
    (ii) The second regular business day following the notice date, in 
the case of post-event notice.
    (d) Receipt date. Information received on a weekend or Federal 
holiday or after 5:00 p.m. on a weekday is considered filed on the next 
regular business day.


Sec. 4043.7  Computation of time.

    In computing any period of time, the day of the event from which 
the period of time begins to run shall not be included. The last day so 
computed shall be included, unless it is a weekend or Federal holiday, 
in which case the period runs until the end of the next regular 
business day.


Sec. 4043.8  Confidentiality.

    In accordance with section 4043(f) of ERISA and Sec. 4901.21(a)(3) 
of this chapter, any information or documentary material that is not 
publicly available and is submitted to the PBGC pursuant to this part 
shall not be made public, except as may be relevant to any 
administrative or judicial action or proceeding or for disclosures to 
either body of Congress or to any duly authorized committee or 
subcommittee of the Congress.

Subpart B--Post-Event Notice of Reportable Events


Sec. 4043.20  Post-Event filing obligation.

    The plan administrator and each contributing sponsor of a plan for 
which a reportable event under this subpart has occurred are required 
to notify the PBGC within 30 days after that person knows or has reason 
to know that the reportable event has occurred, unless a waiver or 
extension applies. If there is a change in plan administrator or 
contributing sponsor, the reporting obligation applies to the person 
who is the plan administrator or contributing sponsor of the plan on 
the 30th day after the reportable event occurs.


Sec. 4043.21  Tax disqualification and Title I noncompliance.

    (a) Reportable event. A reportable event occurs when the Secretary 
of the Treasury issues notice that a plan has ceased to be a plan 
described in section 4021(a)(2) of ERISA, or when the Secretary of 
Labor determines that a plan is not in compliance with title I of 
ERISA.
    (b) Waivers. Notice is waived for this event.


Sec. 4043.22  Amendment decreasing benefits payable.

    (a) Reportable event. A reportable event occurs when an amendment 
to a plan is adopted under which the retirement benefit payable from 
employer contributions with respect to any participant may be 
decreased.
    (b) Waivers. Notice is waived for this event.


Sec. 4043.23  Active participant reduction.

    (a) Reportable event. A reportable event occurs when the number of 
active participants under a plan is reduced to less than 80 percent of 
the number of active participants at the beginning of the plan year, or 
to less than 75 percent of the number of active participants at the 
beginning of the previous plan year.
    (b) Initial information required. In addition to the information in 
Sec. 4043.3(b), the notice shall include--
    (1) A statement explaining the cause of the reduction (e.g., 
facility shutdown or sale); and
    (2) The number of active participants at the date the reportable 
event occurs, at the beginning of the plan year, and at the beginning 
of the prior plan year.
    (c) Waivers--(1) Small plan. Notice is waived if the plan has fewer 
than 100 participants at the beginning of either the current or the 
previous plan year.
    (2) Plan funding. Notice is waived if--
    (i) No variable rate premium. No variable rate premium is required 
to be paid for the plan for the event year;
    (ii) $1 million unfunded vested benefits. As of the testing date 
for the event year, the plan has less than $1 million in unfunded 
vested benefits; or
    (iii) No unfunded vested benefits. As of the testing date for the 
event year, the plan would have no unfunded vested benefits if unfunded 
vested benefits were determined in accordance with the assumptions and 
methodology in Sec. 4010.4(b)(2) of this chapter.
    (3) No facility closing event/80-percent funded. Notice is waived 
if--
    (i) The active participant reduction would not be reportable if 
only those active participant reductions resulting from cessation of 
operations at one or more facilities were taken into account; and
    (ii) As of the testing date for the event year, the fair market 
value of the plan's assets is at least 80 percent of the plan's vested 
benefits amount.
    (d) Extensions. The notice date is extended to the latest of--
    (1) Form 1 extension. 30 days after the plan's variable rate 
premium filing due date for the event year if a waiver under any of 
paragraphs (c)(2)(i) through (c)(2)(iii) or (c)(3) of this section 
would apply if ``the plan year preceding the event year'' were 
substituted for ``the event year'';
    (2) Form 5500 extension. 30 days after the plan's Form 5500 due 
date that next follows the date the reportable event occurs, provided 
the event would not be reportable counting only those participant 
reductions resulting from cessation of operations at a single facility; 
and
    (3) Form 1-ES extension. The due date for the Form 1-ES for the 
plan year following the event year if--
    (i) The plan is required to file a Form 1-ES for the plan year 
following the event year;
    (ii) The event would not be reportable counting only those 
participant reductions resulting from cessation of operations at a 
single facility; and
    (iii) The participant reduction represents no more than 20 percent 
of the total active participants (at the beginning of the plan year(s) 
in which the reduction occurs) in all plans maintained by any member of 
the plan's controlled group.
    (e) Determination of the number of active participants--(1) 
Determination date. The number of active participants at the beginning 
of a plan year may be determined by using the number of active 
participants at the end of the previous plan year.
    (2) Active participant. ``Active participant'' means a participant 
who--
    (i) Is receiving compensation for work performed;
    (ii) Is on paid or unpaid leave granted for a reason other than a 
layoff;
    (iii) Is laid off from work for a period of time that has lasted 
less than 30 days; or
    (iv) Is absent from work due to a recurring reduction in employment 
that occurs at least annually.

[[Page 63992]]

Sec. 4043.24  Termination or partial termination.

    (a) Reportable event. A reportable event occurs when the Secretary 
of the Treasury determines that there has been a termination or partial 
termination of a plan within the meaning of section 411(d)(3) of the 
Code.
    (b) Waivers. Notice is waived for this event.


Sec. 4043.25  Failure to make required minimum funding payment.

    (a) Reportable event. A reportable event occurs when a required 
installment or a payment required under section 302 of ERISA or section 
412 of the Code (including a payment required as a condition of a 
funding waiver) is not made by the due date for the payment. In the 
case of a payment needed to avoid a deficiency in the plan's funding 
standard account, the due date is the latest date such payment may be 
made under section 302(c)(10)(A) of ERISA or section 412(c)(10)(A) of 
the Code.
    (b) Initial information required. In addition to the information in 
Sec. 4043.3(b), the notice shall include--
    (1) The due date and amount of the required minimum funding payment 
that was not made and of the next payment due;
    (2) The name of each member of the plan's controlled group and its 
ownership relationship to other members of that controlled group; and
    (3) For each other plan maintained by any member of the plan's 
controlled group, identification of the plan and its contributing 
sponsor(s) by name and EIN/PN or EIN, as appropriate.
    (c) Waiver. Notice is waived if the required minimum funding 
payment is made by the 30th day after its due date.
    (d) Form 200 filed. If, with respect to the same failure, a Form 
200 has been completed and submitted in accordance with Sec. 4043.81, 
the Form 200 filing shall satisfy the requirements of this section.


Sec. 4043.26  Inability to pay benefits when due.

    (a) Reportable event. A reportable event occurs when a plan is 
currently unable or projected to be unable to pay benefits.
    (1) Current inability. A plan is currently unable to pay benefits 
if it fails to provide any participant or beneficiary the full benefits 
to which the person is entitled under the terms of the plan, at the 
time the benefit is due and in the form in which it is due. A plan 
shall not be treated as being currently unable to pay benefits if its 
failure to pay is caused solely by the need to verify the person's 
eligibility for benefits; the inability to locate the person; or any 
other administrative delay if the delay is for less than the shorter of 
two months or two full benefit payment periods.
    (2) Projected inability. A plan is projected to be unable to pay 
benefits when, as of the last day of any quarter of a plan year, the 
plan's ``liquid assets'' are less than two times the amount of the 
``disbursements from the plan'' for such quarter. Liquid assets and 
disbursements from the plan have the same meaning as under section 
302(e)(5)(E) of ERISA and section 412(m)(5)(E) of the Code.
    (b) Initial information required. In addition to the information in 
Sec. 4043.3(b), the notice shall include--
    (1) The date of any current inability and the amount of benefit 
payments not made;
    (2) The next date on which the plan is expected to be unable to pay 
benefits, the amount of the projected shortfall, and the number of plan 
participants and beneficiaries expected to be affected by the inability 
to pay benefits;
    (3) For a projected inability described in paragraph (a)(2), the 
amount of the plan's liquid assets at the end of the quarter, and the 
amount of its disbursements for the quarter; and
    (4) The name, address, and phone number of the trustee of the plan 
(and of any custodian).
    (c) Waivers. Notice is waived unless the reportable event occurs 
during a plan year for which the plan is described in section 
302(d)(6)(A) of ERISA or section 412(l)(6)(A) of the Code.


Sec. 4043.27  Distribution to a substantial owner.

    (a) Reportable event. A reportable event occurs for a plan when--
    (1) There is a distribution to a substantial owner of a 
contributing sponsor of the plan;
    (2) The total of all distributions made to the substantial owner 
within the one-year period ending with the date of such distribution 
exceeds $10,000;
    (3) The distribution is not made by reason of the substantial 
owner's death; and
    (4) Immediately after the distribution, the plan has nonforfeitable 
benefits (as provided in Sec. 4022.5) that are not funded.
    (b) Initial information required. In addition to the information in 
Sec. 4043.3(b), the notice shall include--
    (1) The name, address and telephone number of the substantial owner 
receiving the distribution(s); and
    (2) The amount, form, and date of each distribution.
    (c) Waivers.--(1) Distribution up to section 415 limit. Notice is 
waived if the total of all distributions made to the substantial owner 
within the one-year period ending with the date of the distribution 
does not exceed the limitation (as of the date the reportable event 
occurs) under section 415(b)(1)(A) of the Code (as adjusted in 
accordance with section 415(d)) when expressed as an annual benefit in 
the form of a straight life annuity to a participant beginning at 
Social Security retirement age ($120,000 for calendar year 1996).
    (2) Plan funding. Notice is waived if--
    (i) No variable rate premium. No variable rate premium is required 
to be paid for the plan for the event year;
    (ii) No unfunded vested benefits. As of the testing date for the 
event year, the plan would have no unfunded vested benefits if unfunded 
vested benefits were determined in accordance with the assumptions and 
methodology in Sec. 4010.4(b)(2) of this chapter; or
    (iii) 80-percent funded. As of the testing date for the event year, 
the fair market value of the plan's assets is at least 80 percent of 
the plan's vested benefits amount.
    (3) Distribution up to one percent of assets. Notice is waived if 
the sum of the values of all distributions that are made to the 
substantial owner within the one-year period ending with the date of 
the distribution is one percent or less of the end-of-year current 
value of the plan's assets (as required to be reported on the plan's 
Form 5500) for either of the two plan years immediately preceding the 
event year.
    (d) Form 1 extension. The notice date is extended until 30 days 
after the plan's variable rate premium filing due date for the event 
year, provided that a waiver under any of paragraphs (c)(2)(i) through 
(c)(2)(iii) of this section would apply if ``the plan year preceding 
the event year'' were substituted for ``the event year.''
    (e) Determination rules--(1) Valuation of distribution. The value 
of a distribution under this section is the sum of--
    (i) The cash amounts actually received by the substantial owner;
    (ii) The purchase price of any irrevocable commitment; and
    (iii) The fair market value of any other assets distributed, 
determined as of the date of distribution to the substantial owner.
    (2) Date of substantial owner distribution. The date of 
distribution to a substantial owner of a cash distribution is the date 
it is received by the substantial owner. The date of distribution to a 
substantial owner of an irrevocable commitment is the date on

[[Page 63993]]

which the obligation to provide benefits passes from the plan to the 
insurer. The date of any other distribution to a substantial owner is 
the date when the plan relinquishes control over the assets transferred 
directly or indirectly to the substantial owner.
    (3) Determination date. The determination of whether a participant 
is (or has been in the preceding 60 months) a substantial owner is made 
on the date when there has been a distribution that would be reportable 
under this section if made to a substantial owner.


Sec. 4043.28  Plan merger, consolidation, or transfer.

    (a) Reportable event. A reportable event occurs when a plan merges, 
consolidates, or transfers its assets or liabilities under section 208 
of ERISA or section 414(1) of the Code.
    (b) Waivers. Notice is waived for this event. However, notice may 
be required under Sec. 4043.29 (for a controlled group change) or 
Sec. 4043.32 (for a transfer of benefit liabilities).


Sec. 4043.29  Change in contributing sponsor or controlled group.

    (a) Reportable event. A reportable event occurs for a plan when 
there is a transaction that results, or will result, in one or more 
persons ceasing to be members of the plan's controlled group. For 
purposes of this section, the term ``transaction'' includes, but is not 
limited to, a legally binding agreement, whether or not written, to 
transfer ownership, an actual transfer of ownership, and an actual 
change in ownership that occurs as a matter of law or through the 
exercise or lapse of pre-existing rights. A transaction is not 
reportable if it will result solely in a reorganization involving a 
mere change in identity, form, or place of organization, however 
effected.
    (b) Initial information required. In addition to the information in 
Sec. 4043.3(b), the notice shall include--
    (1) The name of each member of the plan's old and new controlled 
groups and the member's ownership relationship to other members of 
those groups;
    (2) For each other plan maintained by any member of the plan's old 
or new controlled group, identification of the plan and its 
contributing sponsor(s) by name and EIN/PN or EIN, as appropriate; and
    (3) A copy of the most recent audited (or if not available, 
unaudited) financial statements, and the most recent interim financial 
statements, of the plan's contributing sponsor (both old and new, in 
the case of a change in the contributing sponsor) and any persons that 
will cease to be in the plan's controlled group.
    (c) Waivers.--(1) De minimis 10-percent segment. Notice is waived 
if the person or persons that will cease to be members of the plan's 
controlled group represent a de minimis 10-percent segment of the 
plan's old controlled group for the most recent fiscal year(s) ending 
on or before the date the reportable event occurs.
    (2) Foreign entity. Notice is waived if each person that will cease 
to be a member of the plan's controlled group is a foreign entity other 
than a foreign parent.
    (3) Plan funding. Notice is waived if--
    (i) No variable rate premium. No variable rate premium is required 
to be paid for the plan for the event year;
    (ii) $1 million unfunded vested benefits. As of the testing date 
for the event year, the plan has less than $1 million in unfunded 
vested benefits; or
    (iii) No unfunded vested benefits. As of the testing date for the 
event year, the plan would have no unfunded vested benefits if unfunded 
vested benefits were determined in accordance with the assumptions and 
methodology in Sec. 4010.4(b)(2) of this chapter.
    (4) Public company/80-percent funded. Notice is waived if--
    (i) The plan's contributing sponsor before the effective date of 
the transaction is a public company; and
    (ii) As of the testing date for the event year, the fair market 
value of the plan's assets is at least 80 percent of the plan's vested 
benefits amount.
    (d) Extensions. The notice date is extended to the latest of--
    (1) Form 1 extension. 30 days after the plan's variable rate 
premium filing due date for the event year if a waiver under any of 
paragraphs (c)(3)(i) through (c)(3)(iii) or (c)(4) of this section 
would apply if ``the plan year preceding the event year'' were 
substituted for ``the event year';
    (2) Foreign parent and foreign-linked entities. With respect to a 
transaction in which only foreign parents or foreign-linked entities 
will cease to be members of the plan's controlled group, 30 days after 
the plan's first Form 5500 due date after the person required to notify 
the PBGC has actual knowledge of the transaction and of the controlled 
group relationship; and
    (3) Press releases; Forms 10Q. If the plan's contributing sponsor 
before the effective date of the transaction is a public company, 30 
days after the earlier of--
    (i) The first Form 10Q filing deadline that occurs after the 
transaction; or
    (ii) The date (if any) when a press release with respect to the 
transaction is issued.
    (e) Examples. The following examples assume that no waivers apply.
    (1) Controlled group breakup. Plan A's controlled group consists of 
Company A (its contributing sponsor), Company B (which maintains Plan 
B), and Company C. As a result of a transaction, the controlled group 
will break into two separate controlled groups--one segment consisting 
of Company A and the other segment consisting of Companies B and C. 
Both Company A (Plan A's contributing sponsor) and the plan 
administrator of plan A are required to report that Companies B and C 
will leave plan A's controlled group. Company B (Plan B's contributing 
sponsor) and the plan administrator of Plan B are required to report 
that Company A will leave Plan B's controlled group. Company C is not 
required to report because it is not a contributing sponsor or a plan 
administrator.
    (2) Change in contributing sponsor. Plan Q is maintained by Company 
Q. Company Q enters into a binding contract to sell a portion of its 
assets and to transfer employees participating in Plan Q, along with 
Plan Q, to Company R, which is not a member of Company Q's controlled 
group. There will be no change in the structure of Company Q's 
controlled group. On the effective date of the sale, Company R will 
become the contributing sponsor of Plan Q. A reportable event occurs on 
the date of the transaction (i.e., the binding contract), because as a 
result of the transaction, Company Q (and any other member of its 
controlled group) will cease to be a member of Plan Q's controlled 
group. If, on the 30th day after Company Q and Company R enter into the 
binding contract, the change in the contributing sponsor has not yet 
become effective, Company Q has the reporting obligation. If the change 
in the contributing sponsor has become effective by the 30th day, 
Company R has the reporting obligation.
    (3) Merger/consolidation within a controlled group. Company X and 
Company Y are subsidiaries of Company Z, which maintains Plan Z. 
Company Y merges into Company X (only Company X survives). Company Z 
and the plan administrator of Plan Z must report that Company Y has 
ceased to be a member of Plan Z's controlled group.


Sec. 4043.30  Liquidation.

    (a) Reportable event. A reportable event occurs for a plan when a 
member of the plan's controlled group--

[[Page 63994]]

    (1) Is involved in any transaction to implement its complete 
liquidation (including liquidation into another controlled group 
member);
    (2) Institutes or has instituted against it a proceeding to be 
dissolved or is dissolved, whichever occurs first; or
    (3) Liquidates in a case under the Bankruptcy Code, or under any 
similar law.
    (b) Initial information required. In addition to the information in 
Sec. 4043.3(b), the notice shall include--
    (1) The name of each member of the plan's controlled group before 
and after the liquidation and its ownership relationship to other 
members of that controlled group; and
    (2) For each other plan maintained by any member of the plan's 
controlled group, identification of the plan and its contributing 
sponsor(s) by name and EIN/PN or EIN, as appropriate.
    (c) Waivers--(1) De minimis 10-percent segment. Notice is waived 
if--
    (i) The person or persons that liquidate represent a de minimis 10-
percent segment of the plan's controlled group for the most recent 
fiscal year(s) ending on or before the date the reportable event 
occurs; and
    (ii) Each plan that was maintained by the liquidating member is 
maintained by another member of the plan's controlled group after the 
liquidation.
    (2) Foreign entity. Notice is waived if each person that liquidates 
is a foreign entity other than a foreign parent.
    (3) Plan funding. Notice is waived if each plan that was maintained 
by the liquidating member is maintained by another member of the plan's 
controlled group after the liquidation and--
    (i) No variable rate premium. No variable rate premium is required 
to be paid for the plan for the event year;
    (ii) $1 million unfunded vested benefits. As of the testing date 
for the event year, the plan has less than $1 million in unfunded 
vested benefits; or
    (iii) No unfunded vested benefits. As of the testing date for the 
event year, the plan would have no unfunded vested benefits if unfunded 
vested benefits were determined in accordance with the assumptions and 
methodology in Sec. 4010.4(b)(2) of this chapter.
    (4) Public company/80-percent funded. Notice is waived if--
    (i) The plan's contributing sponsor is a public company;
    (ii) As of the testing date for the event year, the fair market 
value of the plan's assets is at least 80 percent of the plan's vested 
benefits amount; and
    (iii) Each plan that was maintained by the liquidating member is 
maintained by another member of the plan's controlled group after the 
liquidation.
    (d) Extensions. The notice date is extended to the latest of--
    (1) Form 1 extension. 30 days after the plan's variable rate 
premium filing due date for the event year if a waiver under any of 
paragraphs (c)(3)(i) through (c)(3)(iii) or (c)(4) of this section 
would apply if ``the plan year preceding the event year'' were 
substituted for ``the event year';
    (2) Foreign parent and foreign-linked entity. 30 days after the 
plan's first Form 5500 due date after the person required to notify the 
PBGC has actual knowledge of the transaction and of the controlled 
group relationship, if the person liquidating is a foreign parent or 
foreign-linked entity; and
    (3) Press releases; Forms 100. If the plan's contributing sponsor 
is a public company, 30 days after the earlier of--
    (i) The first Form 10Q filing deadline that occurs after the 
transaction; or
    (ii) The date (if any) when a press release with respect to the 
transaction is issued.


Sec. 4043.31  Extraordinary dividend or stock redemption.

    (a) Reportable event. A reportable event occurs for a plan when any 
member of the plan's controlled group declares a dividend (as defined 
in paragraph (e)(3) of this section) or redeems its own stock, if the 
resulting distribution is reportable under this paragraph.
    (1) Cash distributions. A cash distribution is reportable if--
    (i) The distribution, when combined with any other cash 
distributions to shareholders previously made during the fiscal year, 
exceeds the adjusted net income (as defined in paragraph (e)(1) of this 
section) of the person making the distribution for the preceding fiscal 
year; and
    (ii) The distribution, when combined with any other cash 
distributions to shareholders previously made during the fiscal year or 
during the three prior fiscal years, exceeds the adjusted net income 
(as defined in paragraph (e)(1) of this section) of the person making 
the distribution for the four preceding fiscal years.
    (2) Non-cash distributions. A non-cash distribution is reportable 
if its net value (as defined in paragraph (e)(4) of this section), when 
combined with the net value of any other non-cash distributions to 
shareholders previously made during the fiscal year, exceeds 10 percent 
of the total net assets (as defined in paragraph (e)(6) of this 
section) of the person making the distribution.
    (3) Combined distributions. If both cash and non-cash distributions 
to shareholders are made during a fiscal year, a distribution is 
reportable when the sum of the cash distribution percentage (as defined 
in paragraph (e)(2) of this section) and the non-cash distribution 
percentages (as defined in paragraph (e)(5) of this section) for the 
fiscal year exceeds 100 percent.
    (b) Information required. In addition to the information in 
Sec. 4043.5(b), the notice shall include--
    (1) Identification of the person making the distribution (by name 
and EIN); and
    (2) The date and amount of any cash distribution during the fiscal 
year;
    (3) A description of any non-cash distribution during the fiscal 
year, the fair market value of each asset distributed, and the date or 
dates of distribution; and
    (4) A statement as to whether the recipient was a member of the 
plan's controlled group.
    (c) Waivers--(1) Extraordinary dividends and stock redemptions. The 
reportable event described in section 4043(c)(11) of ERISA related to 
extraordinary dividends and stock redemptions is waived except to the 
extent reporting is required under this section.
    (2) De minimis 5-percent segment. Notice is waived if the person 
making the distribution is a de minimis 5-percent segment of the plan's 
controlled group for the most recent fiscal year(s) ending on or before 
the date the reportable event occurs.
    (3) Foreign entity. Notice is waived if the person making the 
distribution is a foreign entity other than a foreign parent.
    (4) Foreign parent. Notice is waived if the person making the 
distribution is a foreign parent, and the distribution is made solely 
to other members of the plan's controlled group.
    (5) Plan funding. Notice is waived if--
    (i) No variable rate premium. No variable rate premium is required 
to be paid for the plan for the event year;
    (ii) $1 million unfunded vested benefits. As of the testing date 
for the event year, the plan has less than $1 million in unfunded 
vested benefits;
    (iii) No unfunded vested benefits. As of the testing date for the 
event year, the plan would have no unfunded vested benefits if unfunded 
vested benefits were determined in accordance with the assumptions and 
methodology in Sec. 4010.4(b)(2) of this chapter; or
    (iv) 80-percent funded. As of the testing date for the event year, 
the fair market value of the plan's assets is at least 80 percent of 
the plan's vested benefits amount.
    (d) Extensions. The notice date is extended to the latest of--
    (1) Form 1 extension. 30 days after the plan's variable rate 
premium filing due

[[Page 63995]]

date for the event year if a waiver under any of paragraphs (c)(5)(i) 
through (c)(5)(iv) of this section would apply if ``the plan year 
preceding the event year'' were substituted for ``the event year';
    (2) Foreign parent and foreign-linked entity. 30 days after the 
plan's first Form 5500 due date after the person required to notify the 
PBGC has actual knowledge of the distribution and the controlled group 
relationship, if the person making the distribution is a foreign parent 
or foreign-linked entity; and
    (3) Press releases; Forms 10Q. If the plan's contributing sponsor 
is a public company, 30 days after the earlier of--
    (i) The first Form 10Q filing deadline that occurs after the 
distribution; or
    (ii) The date (if any) when a press release with respect to the 
distribution is issued.
    (e) Definitions--(1) Adjusted net income means the net income 
before after-tax gain or loss on any sale of assets, as determined in 
accordance with generally accepted accounting principles and practices.
    (2) Cash distribution percentage means, for a fiscal year, the 
lesser of--
    (i) The percentage that all cash distributions to one or more 
shareholders made during that fiscal year bears to the adjusted net 
income (as defined in paragraph (e)(1) of this section) of the person 
making the distributions for the preceding fiscal year, or
    (ii) The percentage that all cash distributions to one or more 
shareholders made during that fiscal year and the three preceding 
fiscal years bears to the adjusted net income (as defined in paragraph 
(e)(1) of this section) of the person making the distributions for the 
four preceding fiscal years.
    (3) Dividend means a distribution to one or more shareholders. A 
payment by a person to a member of its controlled group is treated as a 
distribution to its shareholder(s).
    (4) Net value of non-cash distribution means the fair market value 
of assets transferred by the person making the distribution, reduced by 
the fair market value of any liabilities assumed or consideration given 
by the recipient in connection with the distribution. A distribution of 
stock that one controlled group member holds in another controlled 
group member is disregarded. Net value determinations should be based 
on readily available fair market value(s) or independent appraisal(s) 
performed within one year before the distribution is made. To the 
extent that fair market values are not readily available and no such 
appraisals exist, the fair market value of an asset transferred in 
connection with a distribution or a liability assumed by a recipient of 
a distribution shall be deemed to be equal to 200 percent of the book 
value of the asset or liability on the books of the person making the 
distribution. Stock redeemed is deemed to have no value.
    (5) Non-cash distribution percentage means the percentage that the 
net value of the non-cash distribution bears to one-tenth of the value 
of the total net assets (as defined in paragraph (e)(6) of this 
section) of the person making the distribution.
    (6) Total net assets means, with respect to the person declaring a 
non-cash distribution--
    (i) If all classes of the person's securities are publicly traded, 
the total market value (immediately before the distribution is made) of 
the publicly-traded securities of the person making the distribution;
    (ii) If no classes of the person's securities are publicly traded, 
the excess (immediately before the distribution is made) of the book 
value of the person's assets over the book value of the person's 
liabilities, adjusted to reflect the net value of the non-cash 
distribution; or
    (iii) If some but not all classes of the person's securities are 
publicly traded, the greater of the amounts in paragraphs (e)(6)(i) or 
(ii) of this section.


Sec. 4043.32  Transfer of benefit liabilities.

    (a) Reportable event--(1) In general. A reportable event occurs for 
a plan when--
    (i) The plan or any other plan maintained by a person in the plan's 
controlled group makes a transfer of benefit liabilities to a person, 
or to a plan or plans maintained by a person or persons, that are not 
members of the transferor plan's controlled group; and
    (ii) The amount of benefit liabilities transferred, in conjunction 
with other benefit liabilities transferred during the 12-month period 
ending on the date of the transfer, is 3 percent or more of the plan's 
total benefit liabilities. Both the benefit liabilities transferred and 
the plan's total benefit liabilities shall be valued as of any one date 
in the plan year in which the transfer occurs, using actuarial 
assumptions that comply with section 414(l) of the Code.
    (2) Date of transfer. The date of transfer shall be determined on 
the basis of the facts and circumstances of the particular situation. 
For transfers subject to the requirements of section 414(l) of the 
Code, the date determined in accordance with 26 CFR 1.414(l)-1(b)(11) 
will be considered the date of transfer.
    (b) Initial information required. In addition to the information 
required in Sec. 4043.3(b), the notice shall include--
    (1) Identification of the transferee(s) and each contributing 
sponsor of each transferee plan by name and EIN/PN or EIN, as 
appropriate;
    (2) An explanation of the actuarial assumptions used in determining 
the value of benefit liabilities (and, if appropriate, the value of 
plan assets) for each transfer; and
    (3) An estimate of the amounts of assets and liabilities being 
transferred, and the number of participants whose benefits are 
transferred.
    (c) Waivers--(1) Complete plan transfer. Notice is waived if the 
transfer is a transfer of all of the transferor plan's benefit 
liabilities and assets to one other plan.
    (2) Transfer of less than 3 percent of assets. Notice is waived if 
the value of the assets being transferred--
    (i) Equals the present value of the accrued benefits (whether or 
not vested) being transferred, using actuarial assumptions that comply 
with section 414(l) of the Code; and
    (ii) In conjunction with other assets transferred during the same 
plan year, is less than 3 percent of the assets of the transferor plan 
as of at least one day in that year.
    (3) Section 414(l) safe harbor. Notice is waived if the transfer 
complies with section 414(l) of the Code using the actuarial 
assumptions prescribed for valuing benefits in trusteed plans under 
Sec. 4044.51-57 of this chapter.
    (4) Fully funded plans. Notice is waived if the transfer complies 
with section 414(l) of the Code using reasonable actuarial assumptions 
and, after the transfer, the transferor and transferee plans are fully 
funded (using the actuarial assumptions prescribed for valuing benefits 
in trusteed plans under Sec. 4044.51-57) of this chapter.
    (d) Who must file. Only the plan administrator and contributing 
sponsor of the plan that made the transfer described in paragraph 
(a)(1) of this section are required to file a notice of a reportable 
event under this section. Notice by any other contributing sponsor or 
plan administrator is waived.


Sec. 4043.33  Application for minimum funding waiver.

    (a) Reportable event. A reportable event for a plan occurs when an 
application for a minimum funding waiver for the plan is submitted 
under section 303 of ERISA or section 412(d) of the Code.
    (b) Initial information required. In addition to the information in

[[Page 63996]]

Sec. 4043.3(b), the notice shall include a copy of the waiver 
application, including all attachments.


Sec. 4043.34  Loan default.

    (a) Reportable event. A reportable event occurs for a plan whenever 
there is a default by a member of the plan's controlled group with 
respect to a loan with an outstanding balance of $10 million or more, 
if--
    (1) The default results from the debtor's failure to make a 
required loan payment when due (unless the payment is made within 30 
days after the due date);
    (2) The lender accelerates the loan; or
    (3) The debtor receives a written notice of default from the lender 
(and does not establish the notice was issued in error) on account of:
    (i) A drop in the debtor's cash reserves below an agreed-upon 
level;
    (ii) An unusual or catastrophic event experienced by the debtor; or
    (iii) A persisting failure by the debtor to attain agreed-upon 
financial performance levels.
    (b) Initial information required. In addition to the information in 
Sec. 4043.3(b), the notice shall include--
    (1) A copy of the relevant loan documents (e.g., promissory note, 
security agreement);
    (2) The due date and amount of any missed payment;
    (3) A copy of any notice of default from the lender; and
    (4) A copy of any notice of acceleration from the lender.
    (c) Waivers--(1) Default cured. Notice is waived if the default is 
cured, or waived by the lender, within 30 days or, if later, by the end 
of any cure period provided by the loan agreement.
    (2) Foreign entity. Notice is waived if the debtor is a foreign 
entity other than a foreign parent.
    (3) Plan funding. Notice is waived if--
    (i) No variable rate premium. No variable rate premium is required 
to be paid for the plan for the event year;
    (ii) $1 million unfunded vested benefits. As of the testing date 
for the event year, the plan has less than $1 million in unfunded 
vested benefits;
    (iii) No unfunded vested benefits. As of the testing date for the 
event year, the plan would have no unfunded vested benefits if unfunded 
vested benefits were determined in accordance with the assumptions and 
methodology in Sec. 4010.4(b)(2) of this chapter; or
    (iv) 80-percent funded. As of the testing date for the event year, 
the fair market value of the plan's assets is at least 80 percent of 
the plan's vested benefits amount.
    (d) Notice date and extensions.
    (1) In general. Except as provided in paragraph (d)(2) or (d)(3) of 
this section, the notice date is 30 days after the person required to 
report knows or has reason to know of the occurrence of the default, 
without regard to the time of any other conditions required for the 
default to be reportable.
    (2) Cure period extensions. The notice date is extended to one day 
after--
    (i) The applicable cure period provided in the loan agreement (in 
the case of a reportable event described in paragraph (a)(1) of this 
section);
    (ii) The date the loan is accelerated (in the case of a reportable 
event described in paragraph (a)(2) of this section); or
    (iii) The date the debtor receives written notice of the default 
(in the case of a reportable event described in paragraph (a)(3) of 
this section).
    (3) Form 1 extension. The notice date is extended to 30 days after 
the plan's variable rate premium filing due date for the event year, if 
a waiver under any of paragraphs (c)(3)(i) through (c)(3)(iv) of this 
section would apply if the ``the plan year preceding the event year'' 
were substituted for ``the event year.''
    (4) Foreign parent and foreign-linked entities. With respect to a 
loan default involving only a foreign parent or a foreign-linked 
entity, the notice date is extended to 30 days after the plan's first 
Form 5500 due date after the person required to notify the PBGC has 
actual knowledge of the default and of the controlled group 
relationship.
    (5) Example. Company A has a debt with an outstanding balance of 
$20 million, for which a payment is due on October 1. Under the terms 
of the loan, the default may be cured within 10 days. Company A does 
not make the payment until October 31. Because Company A has made the 
payment within 30 days of the due date, no reportable event has 
occurred. If Company A does not make the payment by October 31, a 
reportable event will have occurred on October 1, and notice will be 
due by October 31.


Sec. 4043.35  Bankruptcy or similar settlement.

    (a) Reportable event. A reportable event occurs for a plan when any 
member of the plan's controlled group--
    (1) Commences a bankruptcy case (under the Bankruptcy Code), or has 
a bankruptcy case commenced against it;
    (2) Commences or has commenced against it any other type of 
insolvency proceeding (including, but not limited to, the appointment 
of a receiver);
    (3) Commences, or has commenced against it, a proceeding to effect 
a composition, extension, or settlement with creditors;
    (4) Executes a general assignment for the benefit of creditors; or
    (5) Undertakes to effect any other nonjudicial composition, 
extension, or settlement with substantially all its creditors.
    (b) Initial information required. In addition to the information in 
Sec. 4043.3(b), the notice shall include--
    (1) A copy of all papers filed in the relevant proceeding, 
including, but not limited to, petitions and supporting schedules;
    (2) The last date for filing claims;
    (3) The name, address, and phone number of any trustee or receiver 
(or similar person);
    (4) The name of each member of the plan's controlled group and its 
ownership relationship to other members of that controlled group; and
    (5) For each other plan maintained by any member of the plan's 
controlled group, identification of the plan and its contributing 
sponsor(s) by name and EIN/PN or EIN, as appropriate.
    (c) Waivers. Notice is waived if the person described in paragraph 
(a) of this section is a foreign entity other than a foreign parent.
    (d) Extensions. Unless the controlled group member described in 
paragraph (a) of this section is the contributing sponsor of the plan, 
the notice date is extended until 30 days after the person required to 
notify the PBGC has actual knowledge of the reportable event.

Subpart C--Advance Notice of Reportable Events


Sec. 4043.61  Advance reporting filing obligation.

    (a) In general. Unless a waiver or extension applies with respect 
to the plan, each contributing sponsor of a plan for which a reportable 
event under this subpart is going to occur is required to notify the 
PBGC no later than 30 days before the effective date of the reportable 
event if the contributing sponsor is subject to advance reporting. If 
there is a change in contributing sponsor, the reporting obligation 
applies to the person who is the contributing sponsor of the plan on 
the notice date.
    (b) Persons subject to advance reporting. A contributing sponsor is 
subject to the advance reporting requirement under paragraph (a) of 
this section if--
    (1) Neither the contributing sponsor nor the member of the plan's 
controlled group to which the event relates is a public company; and
    (2) The contributing sponsor is a member of a controlled group 
maintaining one or more plans that, in the aggregate (disregarding 
plans with no unfunded vested benefits) have--

[[Page 63997]]

    (i) Vested benefits amounts that exceed the actuarial values of 
plan assets by more than $50 million; and
    (ii) A funded vested benefit percentage of less than 90 percent.
    (c) Funding determinations. For purposes of paragraph (b)(2) of 
this section--
    (1) Actuarial value of assets. The actuarial value of plan assets 
is determined in accordance with Sec. 4006.4(b)(2) of this chapter;
    (2) Funded vested benefit percentage. The aggregate funded vested 
percentage of one or more plans is the percentage that the total 
actuarial values of plan assets bears to the plans' total vested 
benefits amounts; and
    (3) Testing date. Each plan's assets and vested benefits amount are 
determined as of that plan's testing date for the plan year that 
includes the effective date of the reportable event.
    (d) Shortening of 30-day period. Pursuant to Sec. 4043.3(d), the 
PBGC may, upon review of an advance notice, shorten the notice period 
to allow for an earlier effective date.


Sec. 4043.62  Change in contributing sponsor or controlled group.

    (a) Reportable event and information required. Advance notice is 
required for a change in a plan's contributing sponsor or controlled 
group, as described in Sec. 4043.29(a), and the notice shall include 
the information described in Sec. 4043.29(b) and, if known, the 
expected effective date of the reportable event.
    (b) Waivers.
    (1) Small plan. Notice is waived with respect to a change of 
contributing sponsor if the transferred plan has 500 or fewer 
participants.
    (2) De minimis 5-percent segment. Notice is waived if the person or 
persons that will cease to be members of the plan's controlled group 
represent a de minimis 5-percent segment of the plan's old controlled 
group for the most recent fiscal year(s) ending on or before the 
effective date of the reportable event.


Sec. 4043.63  Liquidation.

    (a) Reportable event and information required. Advance notice is 
required for a liquidation of a member of a plan's controlled group, as 
described in Sec. 4043.30(a), and the notice shall include the 
information described in Sec. 4043.30(b) and, if known, the expected 
effective date of the reportable event.
    (b) Waiver. Notice is waived if the person that liquidates is a de 
minimis 5-percent segment of the plan's controlled group for the most 
recent fiscal year(s) ending on or before the effective date of the 
reportable event, and each plan that was maintained by the liquidating 
member is maintained by another member of the plan's controlled group.


Sec. 4043.64  Extraordinary dividend or stock redemption.

    (a) Reportable event and information required. Advance notice is 
required for a distribution by a member of a plan's controlled group 
that would be described in Sec. 4043.31(a) if both assets and 
liabilities were valued at fair market value. The notice shall include 
the information described in Sec. 4043.31(b).
    (b) Waiver. Notice is waived if the person making the distribution 
is a de minimis 5-percent segment of the plan's controlled group for 
the most recent fiscal year(s) ending on or before the effective date 
of the reportable event.


Sec. 4043.65  Transfer of benefit liabilities.

    (a) Reportable event and information required. Advance notice is 
required for a transfer of benefit liabilities, as described in 
Sec. 4043.32(a) (determined without regard to Sec. 4043.32(d)), and the 
notice shall include the information described in Sec. 4043.32(b).
    (b) Waivers. Notice is waived--
    (1) In the circumstances described in Sec. 4043.32 (c)(1), (c)(2), 
and (c)(4); and
    (2) If the benefit liabilities of 500 or fewer participants are 
transferred, in the circumstances described in Sec. 4043.32(c)(3).


Sec. 4043.66  Application for minimum funding waiver.

    (a) Reportable event and information required. Advance notice is 
required for an application for a minimum funding waiver, as described 
in Sec. 4043.33(a), and the notice shall include the information 
described in Sec. 4043.33(b).
    (b) Extension. The notice date is extended until 10 days after the 
reportable event has occurred.


Sec. 4043.67  Loan default.

    (a) Reportable event and information required. Advance notice is 
required for a loan default, as described in Sec. 4043.34(a) (or that 
would be so described if ``10 days'' were substituted for ``30 days'' 
in Sec. 4043.34(a)(1)). The notice shall include the information 
described in Sec. 4043.34(b).
    (b) Waivers. Notice is waived if the reportable default is cured, 
or the lender waives the default, within 10 days or, if later, by the 
end of any cure period.
    (c) Extensions. The notice date is extended to the later of--
    (1) 10 days after default. 10 days after the default occurs 
(without regard to the time of any other conditions required for the 
default to be reportable); and
    (2) One day after subsequent event. One day after--
    (i) The applicable cure period provided in the loan agreement (in 
the case of a default described in Sec. 4043.34(a)(1));
    (ii) The date the loan is accelerated (in the case of a default 
described in Sec. 4043.34(a)(2)); and
    (iii) The date the debtor receives written notice of the default 
(in the case of a default described in Sec. 4043.34(a)(3)).


Sec. 4043.68  Bankruptcy or similar settlement.

    (a) Reportable event and information required. Advance notice is 
required for a bankruptcy or similar settlement, as described in 
Sec. 4043.35(a), and the notice shall include the information described 
in Sec. 4043.35(b).
    (b) Extension. The notice date is extended until 10 days after the 
reportable event has occurred.

Subpart D--Notice of Failure To Make Required Contributions


Sec. 4043.81  PBGC Form 200, notice of failure to make required 
contributions; supplementary information.

    (a) General rules. To comply with the notification requirement in 
section 302(f)(4) of ERISA and section 412(n)(4) of the Code, a 
contributing sponsor of a single-employer plan that is covered under 
section 4021 of ERISA and, if that contributing sponsor is a member of 
a parent-subsidiary controlled group, the ultimate parent must complete 
and submit in accordance with this section a properly certified Form 
200 that includes all required documentation and other information, as 
described in the related filing instructions. Notice is required 
whenever the unpaid balance of a required installment or any other 
payment required under section 302 of ERISA and section 412 of the Code 
(including interest), when added to the aggregate unpaid balance of all 
preceding such installments or other payments for which payment was not 
made when due (including interest), exceeds $1 million.
    (1) Form 200 must be filed with the PBGC no later than 10 days 
after the due date for any required payment for which payment was not 
made when due.
    (2) If a contributing sponsor or the ultimate parent completes and 
submits Form 200 in accordance with this section, the PBGC will 
consider the notification requirement in section 302(f)(4) of ERISA and 
section 412(n)(4) of the Code to be satisfied by all members of a 
controlled group of which the person who has filed Form 200 is a 
member.

[[Page 63998]]

    (b) Supplementary information. If, upon review of a Form 200, the 
PBGC concludes that it needs additional information in order to make 
decisions regarding enforcement of a lien imposed by section 302(f) of 
ERISA and section 412(n) of the Code, the PBGC may require any member 
of the contributing sponsor's controlled group to supplement the Form 
200 in accordance with Sec. 4043.3(d).

PART 4065--ANNUAL REPORT

    5. The authority citation for part 4065 is revised to read as 
follows:

    Authority: 29 U.S.C. 1302(b)(3), 1365.

    6. Section 4065.3 is amended by redesignating the existing text as 
paragraph (b); and adding a new paragraph (a) to read as follows:


Sec. 4065.3  Filing requirement.

    (a) The requirement to report the occurrence of a reportable event 
under section 4043 of ERISA in the Annual Report is waived.

    Issued in Washington, DC, this 27th day of November 1996.
Robert B. Reich,
Chairman, Board of Directors, Pension Benefit Guaranty Corporation.
    Issued on the date set forth above pursuant to a resolution of 
the Board of Directors authorizing its Chairman to issue this final 
rule.
James J. Keightley,
Secretary, Board of Directors, Pension Benefit Guaranty Corporation.
[FR Doc. 96-30779 Filed 11-29-96; 8:45 am]
BILLING CODE 7708-01-P