[Federal Register Volume 74, Number 224 (Monday, November 23, 2009)]
[Proposed Rules]
[Pages 61248-61258]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-28056]



[[Page 61247]]

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Part IV





Pension Benefit Guaranty Corporation





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29 CFR Parts 4000, 4001, 4043, et al.



Pension Protection Act of 2006; Conforming Amendments; Reportable 
Events and Certain Other Notification Requirements; Proposed Rule

  Federal Register / Vol. 74, No. 224 / Monday, November 23, 2009 / 
Proposed Rules  

[[Page 61248]]


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PENSION BENEFIT GUARANTY CORPORATION

29 CFR Parts 4000, 4001, 4043, 4204, 4206, 4211, and 4231

RIN 1212-AB06


Pension Protection Act of 2006; Conforming Amendments; Reportable 
Events and Certain Other Notification Requirements

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Proposed rule.

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SUMMARY: This is a proposed rule to conform PBGC's reportable events 
regulation under section 4043 of ERISA and a number of other PBGC 
regulations to statutory changes made by the Pension Protection Act of 
2006 (PPA 2006) and to revisions of other PBGC regulations that 
implement the statutory changes. The rule would also eliminate most of 
the automatic waivers and filing extensions currently provided under 
the reportable events regulation and make other amendments to the 
regulation. For example, the rule would create two new reportable 
events based on provisions in PPA 2006 dealing with funding-based 
benefit limits and with asset transfers to retiree health benefits 
accounts.

DATES: Comments must be submitted on or before January 22, 2010.

ADDRESSES: Comments, identified by Regulation Identifier Number (RIN) 
1212-AB06, may be submitted by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the web site instructions for submitting comments.
     E-mail: [email protected].
     Fax: 202-326-4224.
     Mail or Hand Delivery: Legislative and Regulatory 
Department, Pension Benefit Guaranty Corporation, 1200 K Street, NW., 
Washington, DC 20005-4026.
    All submissions must include the Regulation Identifier Number for 
this rulemaking (RIN 1212-AB06). Comments received, including personal 
information provided, will be posted to http://www.pbgc.gov. Copies of 
comments may also be obtained by writing to Disclosure Division, Office 
of the General Counsel, Pension Benefit Guaranty Corporation, 1200 K 
Street, NW., Washington, DC 20005-4026, or calling 202-326-4040 during 
normal business hours. (TTY and TDD users may call the Federal relay 
service toll-free at 1-800-877-8339 and ask to be connected to 202-326-
4040.)

FOR FURTHER INFORMATION CONTACT: John H. Hanley, Director, Legislative 
and Regulatory Department; or Catherine B. Klion, Manager, or Deborah 
C. Murphy, Attorney, Regulatory and Policy Division, Legislative and 
Regulatory Department, Pension Benefit Guaranty Corporation, 1200 K 
Street, NW., Washington, DC 20005-4026; 202-326-4024. (TTY/TDD users 
may call the Federal relay service toll-free at 1-800-877-8339 and ask 
to be connected to 202-326-4024.)

SUPPLEMENTARY INFORMATION:

Background

    Pension Benefit Guaranty Corporation (PBGC) administers the pension 
plan termination insurance program under Title IV of the Employee 
Retirement Income Security Act of 1974 (ERISA). Under section 4007 of 
ERISA, pension plans covered by Title IV must pay premiums to PBGC. 
Section 4006 of ERISA establishes the premium rates and includes 
provisions for determining the variable-rate premium (VRP), which is 
based on plan funding rules. PBGC has regulations on Premium Rates (29 
CFR part 4006) and Payment of Premiums (29 CFR part 4007) that 
implement the premium rules. A number of other provisions of ERISA, and 
of PBGC's other regulations, refer to funding and premium rules. Thus, 
changes in the funding and premium rules may require changes in some 
other PBGC regulations, such as PBGC's regulation on Reportable Events 
and Certain Other Notification Requirements (29 CFR part 4043), which 
implements section 4043 of ERISA (requiring that PBGC be notified of 
the occurrence of certain ``reportable events'').
    On August 17, 2006, the Pension Protection Act of 2006 (PPA 2006), 
Public Law 109-280, was signed into law. PPA 2006 makes changes to the 
plan funding rules in Title I of ERISA and in the Internal Revenue Code 
of 1986 (Code) and amends the VRP provisions of section 4006 of ERISA 
to conform to the changes in the funding rules. On March 21, 2008, PBGC 
published in the Federal Register (at 73 FR 15065) a final rule 
amending its premium rates regulation and its premium payment 
regulation to implement the changes to ERISA and the Code made by PPA 
2006. The changes to the funding and premium rules are effective for 
plan years beginning after 2007.
    On November 28, 2007, PBGC issued Technical Update 07-2 (revised 
December 7, 2007 (corrected December 15, 2007)) (http://www.pbgc.gov/practitioners/law-regulations-informal-guidance/content/tu16267.html), 
providing transitional guidance on the applicability of the changes 
made by PPA 2006, and the corresponding changes proposed for PBGC 
premium regulations, to the determination of funding-related amounts 
for purposes of the reportable events regulation. On March 24, 2008, 
PBGC issued Technical Update 08-2 (http://www.pbgc.gov/practitioners/law-regulations-informal-guidance/content/tu16372.html), providing a 
waiver for reporting of missed quarterly contributions by certain small 
employers in 2008. On January 9, 2009, PBGC issued Technical Update 09-
1 (http://www.pbgc.gov/practitioners/law-regulations-informal-guidance/content/tu16637.html), providing interim guidance on compliance with 
reportable events requirements for plan years beginning in 2009. On 
April 30, 2009, PBGC issued Technical Update 09-3 (http://www.pbgc.gov/practitioners/law-regulations-informal-guidance/content/tu16725.html), 
providing a waiver or alternative compliance method (depending on plan 
size) for reporting of missed quarterly contributions by certain small 
employers in 2009.

Overview of Proposed Regulatory Changes

    This proposed rule would amend PBGC's reportable events regulation 
to make the advance reporting threshold test consistent with the PPA 
2006 funding rules and PBGC's new variable-rate premium rules; 
eliminate most automatic waivers and filing extensions; create two new 
reportable events based on provisions in PPA 2006 dealing with funding-
based benefit limits and with asset transfers to retiree health 
benefits accounts; reduce reporting of active participant reductions; 
clarify the provisions dealing with missed contributions and inability 
to pay benefits when due; clarify the benefit liability transfer event; 
remove from the regulation the lists of information items to be 
submitted (which are listed in the filing instructions); require filers 
to use PBGC forms to file reportable events notices; and eliminate the 
special ``partial electronic filing'' provision.
    The rule would also amend six other PBGC regulations to revise 
statutory cross-references and otherwise accommodate the statutory and 
regulatory changes in the premium rules: the regulations on Filing, 
Issuance, Computation of Time, and Record Retention (29 CFR part 4000); 
Terminology (29 CFR part 4001); Variances for Sale of Assets (29 CFR 
part 4204); Adjustment of Liability for a Withdrawal Subsequent to a 
Partial Withdrawal (29 CFR part 4206); Allocating Unfunded Vested 
Benefits to Withdrawing Employers (29 CFR part

[[Page 61249]]

4211); and Mergers and Transfers Between Multiemployer Plans (29 CFR 
part 4231).

Reportable Events

    PBGC proposes to amend the reportable events regulation to 
accommodate the changes to the funding and premium rules, to eliminate 
most automatic waivers and filing extensions, to add two new reportable 
events, and to make other modifications.

Advance Reporting Test

    Under section 4043(a) of ERISA, plan administrators and 
contributing sponsors must notify PBGC of certain ``reportable events'' 
within 30 days after they occur. Section 4043(b) of ERISA requires 
advance reporting by a contributing sponsor for certain reportable 
events if a ``threshold test'' is met, unless the contributing sponsor 
or controlled group member to which an event relates is a public 
company. The advance reporting threshold test is based on the aggregate 
funding level of plans maintained by the contributing sponsor and 
members of the contributing sponsor's controlled group. The funding 
level criteria are expressed by reference to calculated values that are 
used to determine VRPs under section 4006 of ERISA. The reportable 
events regulation ties the statutory threshold test to the related 
provisions of the premium rates regulation.
    The advance reporting threshold test in ERISA section 4043(b)(1) 
says: ``The [advance reporting] requirements of this subsection shall 
be applicable to a contributing sponsor if, as of the close of the 
preceding plan year--
     The aggregate unfunded vested benefits [(UVBs)] (as 
determined under [ERISA] section 4006(a)(3)(E)(iii)) of plans subject 
to this title which are maintained by such sponsor and members of such 
sponsor's controlled groups (disregarding plans with no unfunded vested 
benefits) exceed $50,000,000, and
     The funded vested benefit percentage for such plans is 
less than 90 percent.

--For purposes of the second bullet above, the funded vested benefit 
percentage means the percentage which the aggregate value of the assets 
of such plans bears to the aggregate vested benefits of such plans 
(determined in accordance with [ERISA] section 4006(a)(3)(E)(iii)).''
    PPA 2006 revised ERISA section 4006(a)(3)(E)(iii) to say that 
UVBs--``means, for a plan year, the excess (if any) of * * * the 
funding target of the plan as determined under [ERISA] section 303(d) 
for the plan year by only taking into account vested benefits and by 
using the interest rate described in [ERISA section 4006(a)(3)(E)(iv)], 
over * * * the fair market value of plan assets for the plan year which 
are held by the plan on the valuation date.''
    The section 303 of ERISA referred to here is a completely new 
section added by PPA 2006. Under new ERISA section 303(g)(1), the value 
of plan assets and the funding target of a plan for a plan year are 
determined as of the valuation date of the plan for the plan year. 
Under new ERISA section 303(g)(2), the valuation date for virtually all 
plans subject to advance reporting under ERISA section 4043 will be the 
first day of the plan year. Thus, while ERISA section 4043(b)(1) refers 
to UVBs, assets, and vested benefits ``as of the close of the preceding 
plan year,'' in nearly all cases these quantities must, with respect to 
plan years beginning after 2007, be calculated as of the beginning of a 
plan year. This creates an ambiguity with regard to the date as of 
which the advance reporting threshold test is to be applied.
    The proposed rule would resolve this ambiguity by requiring that 
the advance reporting threshold test be applied as of the valuation 
date for ``the preceding plan year.'' That is the same date as of which 
UVBs, assets, and vested benefits must be determined for premium 
purposes for the preceding plan year under the premium rates regulation 
as amended by PBGC's final rule on VRPs under PPA 2006. Measuring these 
quantities as of that date for purposes of the advanced reporting 
threshold test will thus be less burdensome than requiring that 
separate computations be made as of the close of that year. It will 
also enable a plan to determine before a reportable event occurs (and 
before an advance report is due) whether it is subject to the advance 
reporting requirement.
    The proposed rule would make a number of editorial changes to the 
advance reporting threshold provisions with a view to improving clarity 
and simplicity as well as accommodating the changes discussed above. It 
would also provide that the plans whose funding status is taken into 
account in applying the threshold test are determined as of the due 
date for the report, and that the ``public company'' status of a 
contributing sponsor or controlled group member to which the event 
relates is also determined as of that date. Although the existing 
regulation does not explicitly address this issue, PBGC believes it is 
implicit that these determinations be current. Requiring that they be 
made as of the due date for the report ensures currency.

Automatic Waivers and Extensions

    Section 4043.4 of the reportable events regulation provides that 
PBGC may grant waivers and extensions case by case. In addition, the 
existing regulation provides automatic waivers and extensions for most 
of the reportable events. For example, waivers are provided for small 
plans, for well-funded plans, and for events affecting de minimis 
segments of controlled groups or foreign entities. In many cases, where 
it may be impossible to know by the filing due date whether criteria 
for a particular waiver are met, an extension gives a potential filer 
an opportunity to determine whether the waiver applies.
    PBGC proposes to eliminate most of these automatic waivers and 
extensions, as indicated in the following tables. The complete waivers 
provided for certain statutory events in Sec. Sec.  4043.21 
(disqualification or noncompliance), 4043.22 (amendment decreasing 
benefits), 4043.24 (termination), and 4043.28 (merger, consolidation, 
or transfer) would be retained.

                                               Post-Event Notices
----------------------------------------------------------------------------------------------------------------
                                                                                Current            Proposed
              Event                 Current waivers    Proposed waivers       extensions          extensions
----------------------------------------------------------------------------------------------------------------
Active participant reduction       Small       Prior       30 days    None.
 (Sec.   4043.23).                 plan.               event reported      after current VRP
                                   Well-       within 1 year.      due date.
                                   funded plan..
                                                                           30 days
                                                                           after next 5500
                                                                           due date.
                                                                           Following
                                                                           year flat-rate
                                                                           premium due date.

[[Page 61250]]

 
Missed contribution (Sec.          Payment    None..............  None..............  None.
 4043.25).                         within 30 days of
                                   due date.
Inability to pay benefits when     Large       Large      None..............  None.
 due (Sec.   4043.26).             plan.               plan.
Distribution to substantial                   None..............   30 days    None.
 owner (Sec.   4043.27).           Distribution up                         after current VRP
                                   to Sec.   415                           due date.
                                   limit.
                                  
                                   Distribution up
                                   to 1% of assets.
                                   Well-
                                   funded plan.
Change in contributing sponsor     De          De          30 days    None.
 or controlled group (Sec.         minimis             minimis             after current VRP
 4043.29).                         transaction.        transaction.        due date.
                                   Foreign    ..................   30 days
                                   entity.                                 after next 5500
                                                                           due date.
                                   Well-      ..................   30 days
                                   funded plan.                            after Form 10Q or
                                                                           press release.
Liquidation (Sec.   4043.30)....   De         None..............   30 days    None.
                                   minimis                                 after current VRP
                                   transaction.                            due date.
                                   Foreign    ..................   30 days
                                   entity.                                 after next 5500
                                                                           due date.
                                   Well-      ..................   30 days
                                   funded plan.                            after Form 10Q or
                                                                           press release.
Extraordinary distribution or      Statutory   Statutory   30 days    None.
 stock redemption (Sec.            event.              event.              after current VRP
 4043.31).                         De                              due date.
                                   minimis
                                   transaction.
                                   Foreign     De          30 days
                                   entity.             minimis             after next 5500
                                                       transaction.        due date.
                                   Well-      ..................   30 days
                                   funded plan.                            after Form 10Q or
                                                                           press release.
Transfer of benefit liabilities    Transfer   None..............  None..............  None.
 (Sec.   4043.32).                 of all assets and
                                   liabilities.
                                   De
                                   minimis transfer.
                                   Sec.
                                   414(l) safe
                                   harbor.
                                   Plans
                                   fully funded.
Funding waiver application (Sec.  None..............  None..............  None..............  None.
   4043.33).
Loan default (Sec.   4043.34)...   Cure or     Cure or     30 days     1 day
                                   waiver.             waiver.             after current VRP   after cure
                                                                           due date.           period,
                                                                                               acceleration, or
                                                                                               default notice.
                                   Foreign    ..................   30 days
                                   entity.                                 after next 5500
                                                                           due date.
                                   Well-      ..................   1 day
                                   funded plan.                            after cure
                                                                           period,
                                                                           acceleration, or
                                                                           default notice.
Bankruptcy (Sec.   4043.35).....   Foreign    None..............   30 days    None.
                                   entity.                                 after filer has
                                                                           actual knowledge.
----------------------------------------------------------------------------------------------------------------


                                                 Advance Notices
----------------------------------------------------------------------------------------------------------------
                                                                                                   Proposed
              Event                 Current waivers    Proposed waivers   Current extensions      extensions
----------------------------------------------------------------------------------------------------------------
Change in contributing sponsor     Change in   De         None..............  None.
 or controlled group (Sec.         sponsor of small    minimis
 4043.62).                         plan.               transaction.
                                   De
                                   minimis
                                   transaction..
Liquidation (Sec.   4043.63)....   De         None..............  None..............  None.
                                   minimis
                                   transaction.
Extraordinary distributions or     De          De         None..............  None.
 stock redemption (Sec.            minimis             minimis
 4043.64).                         transaction.        transaction.
Transfer of benefit liabilities    Transfer   None..............  None..............  None.
 (Sec.   4043.65).                 of all assets and
                                   liabilities.
                                   De
                                   minimis transfer.
                                   Sec.
                                   414(l) safe
                                   harbor.
                                   Plans
                                   fully funded.
Funding waiver application (Sec.  None..............  None..............  10 days after       Same day as event.
   4043.66).                                                               event.
Loan default (Sec.   4043.67)...   Cure or     Cure or     10 days     10 days
                                   waiver.             waiver.             after default.      after default.
                                                                           1 day       1 day
                                                                           after cure          after cure
                                                                           period,             period,
                                                                           acceleration, or    acceleration, or
                                                                           default notice.     default notice.

[[Page 61251]]

 
Bankruptcy (Sec.   4043.68).....  ..................  ..................   10 days     10 days
                                                                           after event.        after event.
----------------------------------------------------------------------------------------------------------------

    Reportable events often signal financial distress and possible plan 
termination. When PBGC has timely information about a reportable event, 
it can take steps to encourage plan continuation--for example, by 
exploring alternative funding options with the plan sponsor--or, if 
plan termination is called for, to minimize the plan's potential 
funding shortfall through involuntary termination and maximize recovery 
of the shortfall from all possible sources. Without such timely 
information, PBGC typically learns that a plan is in danger only when 
most opportunities for protecting participants and the pension 
insurance system may have been lost.
    PBGC believes that many of the automatic waivers and extensions in 
the existing reportable events regulation are depriving it of early 
warnings that would enable it to mitigate distress situations. For 
example, of the 88 small plans terminated in 2007, 21 involved 
situations where, but for an automatic waiver, an active participant 
reduction reportable event notice would have been required an average 
of three years before termination. Had those notices been filed, the 
need for some of those terminations might have been avoided, and PBGC 
might have been able to reduce the impact of other terminations on the 
pension insurance system.
    PBGC believes that the increased reporting burden stemming from the 
elimination of most of the automatic waivers and extensions is 
justified by PBGC's need for timely information that may contribute to 
plan continuation or the minimizing of funding shortfalls. However, 
PBGC plans to monitor reportable events filings to determine whether 
some automatic waivers and extensions can be restored (or newly crafted 
waivers or extensions provided) without jeopardizing efforts to protect 
the benefits of participants in troubled plans and the pension 
insurance program. For each waiver and extension eliminated, PBGC 
solicits public comment on whether it has struck the correct balance 
between ensuring relevant information is received timely and increased 
reporting burden on the regulated community.

Active Participant Reduction--Facility Closings

    An active participant reduction may occur as the result of a 
substantial cessation of operations under ERISA section 4062(e) or a 
substantial employer withdrawal under ERISA section 4063(a). Events 
covered by section 4062(e) or 4063(a) must be reported to PBGC under 
section 4063(a). With a view to avoiding duplicative reporting, PBGC 
proposes to limit the active participant reduction event by excluding 
from consideration--in determining whether a reportable active-
participant-reduction event has occurred--active participant reductions 
to the extent that they (1) fall within the provisions of section 
4062(e) or 4063(a) and (2) are timely reported to PBGC as required 
under ERISA section 4063(a).

Active Participant Reduction--Frequency of Reporting

    The description of the active participant reduction event in the 
statute and the existing regulation suggests that reporting could be 
required multiple times in the course of a year if multiple reductions 
occurred. In fact, any such report leads PBGC to monitor the situation 
for an extended period of time; while that monitoring continues, 
additional formal reports of active participant reductions are 
unnecessary. Accordingly, the proposed rule would waive reporting for 
this event if another active participant reduction was reported within 
the past year.

Failure To Contribute--Clarification

    PBGC proposes to clarify the language in Sec.  4043.25, dealing 
with the reportable event of failure to make required contributions. 
This reportable event does not apply only to contributions required by 
statute (including quarterly contributions under ERISA section 
303(j)(3) and Code section 430(j)(3), liquidity shortfall contributions 
under ERISA section 303(j)(4) and Code section 430(j)(4), and 
contributions to amortize funding waivers under ERISA section 303(e) 
and Code section 430(e)). It also applies to contributions required as 
a condition of a funding waiver that do not fall within the statutory 
provisions on waiver amortization charges. The proposed revision would 
make this point clearer. (Note that such ``non-statutory'' 
contributions are not considered under Sec.  4043.81, dealing with 
missed contributions that give rise to liens under ERISA section 303(k) 
and Code section 430(k).)

Inability To Pay Benefits When Due--Clarification

    PBGC proposes to clarify the language in the provision dealing with 
automatic waiver of the reporting requirement for inability to pay 
benefits when due. This provision reflects PBGC's judgment that it need 
not require reporting of this event by larger plans that are subject to 
the ``liquidity shortfall'' rules imposing more stringent contribution 
requirements where liquid assets are insufficient to cover anticipated 
disbursement requirements. For these larger plans, (1) if the 
contributions required by the liquidity shortfall rules are made, the 
inability to pay benefits when due is resolved, and (2) if the required 
contributions are not made, that fact is reportable to PBGC as a 
failure to make required contributions. Accordingly, this provision 
waives reporting unless the plan is a small plan that is exempt from 
the liquidity shortfall provisions.

Transfer of Benefit Liabilities--Cashouts and Annuitizations

    Section 4043(c)(12) of ERISA requires reporting to PBGC when, in 
any 12-month period, three percent or more of a plan's benefit 
liabilities are transferred to a person outside the transferor plan's 
controlled group or to a plan or plans maintained by a person or 
persons outside the transferor plan's controlled group. Transfers of 
benefit liabilities are of concern to PBGC because they may reduce the 
transferor plan's funded percentage and because the transferee may not 
be as financially healthy as the transferor.
    The existing text of the reportable events regulation does not make 
clear whether the satisfaction of benefit liabilities through the 
payment of a lump sum or the purchase of an irrevocable commitment to 
provide an annuity constitutes a transfer of benefit liabilities for 
purposes of this reporting requirement. PBGC has received inquiries 
seeking clarification of this point. PBGC proposes to provide that such 
cashouts and annuitizations do not constitute transfers of benefit 
liabilities that must be reported under the regulation.
    Section 436 of the Code and section 206(g) of ERISA (as added by 
PPA 2006) prohibit or limit cashouts and annuitizations by 
significantly

[[Page 61252]]

underfunded plans. These provisions thus tend to prevent cashouts and 
annuitizations that would most seriously reduce a transferor plan's 
funded percentage. And since cashouts and annuitizations satisfy 
benefit liabilities (rather than transferring them to another plan), 
there is no concern about a transferee plan's financial health.

Transfer of Benefit Liabilities--Plans of Other Controlled Group 
Members

    Section 4043.32(a) of the existing reportable events regulation 
requires post-event reporting not only for the plan that transfers 
benefit liabilities, but also for every other plan maintained by a 
member of the transferor plan's controlled group. However, existing 
Sec.  4043.32(d) provides a waiver that in effect limits the post-event 
reporting obligation to the transferor plan. Existing Sec.  4043.65 
(dealing with advance reporting of benefit liability transfers) does 
not provide a similar waiver.
    PBGC has concluded that it is unnecessary to extend the advance 
reporting requirement for benefit liability transfers beyond the 
transferor plan. Accordingly, PBGC proposes to revise Sec.  4043.32(a) 
to narrow the reporting requirement to the transferor plan; to remove 
Sec.  4043.32(d) (which would be redundant); and to revise Sec.  
4043.65(a) to remove the provision requiring that Sec.  4043.32(d) be 
disregarded. The effect of these changes would be to leave the post-
event notice requirement unchanged and to limit the advance notice 
requirement to the transferor plan.

New Reportable Event--Low Adjusted Funding Target Attainment Percentage

    Section 436 of the Code and section 206(g) of ERISA (as added by 
PPA 2006) provide that if a plan's ``adjusted funding target attainment 
percentage'' is less than 60 percent, the plan in general must cease 
benefit accruals; may not be amended to increase benefits, establish 
new benefits, or increase accrual or vesting rates; and may not pay 
unpredictable contingent event benefits (such as shut-down benefits) or 
lump sums, or annuitize benefits. ``Adjusted funding target attainment 
percentage'' (a variant of the funding target attainment percentage) is 
defined in Code section 436(j)(2) and ERISA section 206(g)(9)(B). Code 
section 436(h) and ERISA section 206(g)(7) provide a number of rules 
under which the adjusted funding target attainment percentage (AFTAP) 
is presumed in specified circumstances to have specified values.
    PBGC shares Congress's concern about the financial health of plans 
with AFTAPs below 60 percent and believes that a funding percentage 
that low may (depending on the financial condition of the contributing 
sponsor and controlled group members) be indicative of a need to 
terminate the plan. Accordingly, PBGC proposes to create a new 
reportable event under ERISA section 4043(c)(13) that would occur when 
an enrolled actuary certifies that a plan's AFTAP is less than 60 
percent or when the AFTAP is presumed to be less than 60 percent under 
one of the rules in Code section 436(h) and ERISA section 206(g)(7). 
This would be both a post-event notice event and an advance notice 
event (although the due date for the advance notice would be extended 
until ten days after the event occurs).

New Reportable Event--Transfer to Retiree Health Account

    Section 420(f) of the Internal Revenue Code (as added by PPA 2006) 
permits a pension plan to transfer ``excess pension assets'' to a 
health benefits account under the plan to fund health benefits for a 
``transfer period'' of up to 10 years. The term ``excess pension 
assets'' is defined for this purpose as the amount by which plan assets 
exceed 120 percent of plan liabilities for benefits (including benefits 
accruing during the year). If the ratio of assets to liabilities falls 
below 120 percent at any valuation date during the transfer period, 
additional contributions must be made to the pension plan, or assets 
must be transferred back from the health benefits account to the 
pension plan, to restore the funding ratio to 120 percent.
    The 120-percent required funding ratio in this new provision is 
less than the 125-percent ratio previously required under Code section 
420, and the transfer period can be much longer, entailing potentially 
the transfer of significantly greater amounts of plan assets. 
Furthermore, because the actuarial assumptions used to apply the 120-
percent test under Code section 420 may differ significantly from the 
assumptions that would be used to value plan liabilities if a plan 
termination were to occur during the transfer period, a plan could be 
underfunded for termination purposes even if it could pass the 120-
percent funding test in Code section 420. PBGC is accordingly concerned 
that large transfers under Code section 420(f), especially if the 
funded ratio falls below 120 percent during the transfer period, may 
indicate a need to terminate the plan.
    PBGC therefore proposes to create a new reportable event that would 
occur if a section 420(f) transfer of $10 million or more is made or 
if, following such a transfer, the funded ratio falls below 120 percent 
during the transfer period. This would be a post-event notice event 
only. (Even with advance notice, PBGC could not prevent such a transfer 
if it complied with the law; post-event reporting would give PBGC an 
opportunity to monitor the plan going forward.)

Requiring Use of Forms; Putting Data Submission Requirements in 
Instructions

    PBGC issues three reporting forms for use under the reportable 
events regulation. Form 10 is for post-event reporting under subpart B 
of the regulation; Form 10-Advance is for advance reporting under 
subpart C of the regulation; and Form 200 is for reporting under 
subpart D of the regulation.
    Under the existing regulation, use of PBGC forms for reporting 
events under subparts B and C of the regulation is optional. The data 
items in the forms do not correspond exactly with those in the 
regulation, and the regulation recognizes that filers that use the 
forms may report different information from those that do not use the 
forms. With a view to greater uniformity in the reporting process and 
attendant administrative simplicity for PBGC, PBGC proposes to make use 
of prescribed reportable events forms mandatory. PBGC also proposes to 
revise the forms and instructions (see the discussion of Paperwork 
Reduction Act requirements infra).
    Consistent with this change, PBGC proposes to eliminate from the 
regulation the lists of information items that must be reported, so 
that the information to be reported would be described in the filing 
instructions only (rather than in both the filing instructions and the 
regulation). PBGC anticipates that as uncertainties about the operation 
of new PPA 2006 provisions are resolved, it may be appropriate to make 
changes in the information required to be submitted with reportable 
events notices, particularly those for failures to make required 
contributions timely.

``Partial Electronic Filing'' Rule

    The existing regulation contains a ``partial electronic filing'' 
provision under which a filing is considered timely made if certain 
basic information (specified in PBGC's reporting instructions) is 
submitted on time electronically and followed up within one or two 
business days (depending on the type of report) with the remaining

[[Page 61253]]

required information. This provision has facilitated last-minute filing 
where some required information consisted of documents that could not 
conveniently be sent electronically. But in the years since the 
regulation was issued, it has become common for documents to be created 
electronically and easy to create electronic images of documents that 
do not exist in electronic form. Thus PBGC believes that the ``partial 
electronic filing'' provision is no longer needed and that it is 
reasonable to require that all the information required for a filing be 
submitted on time, either electronically or on paper. Accordingly, PBGC 
proposes to eliminate the ``partial electronic filing'' provision. In 
the case of Form 200 filings, PBGC will accept an imaged signature, so 
that Form 200 filers need not submit a paper filing with ink 
signatures. (Forms 10 and 10-Advance do not require signatures.)

Other Changes

    The proposed rule would make a number of editorial and clarifying 
changes to part 4043 and would add definitional cross-references, 
change statutory cross-references to track changes made by PPA 2006, 
and update language to conform to usage in PPA 2006 and regulations and 
reporting requirements thereunder. Some definitions of terms used in 
only one section of the regulation would be moved to the sections where 
they are used.
    The proposed changes to the reportable events regulation make it 
unnecessary to define a number of terms at the beginning of the 
regulation. Accordingly, the definitions of ``de minimis 10-percent 
segment,'' ``fair market value of the plan's assets,'' ``foreign 
entity,'' ``foreign-linked entity,'' ``foreign parent,'' ``Form 5500 
due date,'' ``public company,'' ``testing date,'' ``ultimate parent,'' 
``unfunded vested benefits,'' ``variable-rate premium,'' and ``vested 
benefits amount'' would be removed from Sec.  4043.2. The definition of 
``de minimis 5-percent segment'' (a term that in the existing 
regulation is defined by reference to the definition of ``de minimis 
10-percent segment'') would be made self-contained.
    PBGC recognizes that the changes made by PPA 2006 in the statutory 
provisions dealing with missed contributions--which are reportable 
under Sec. Sec.  4043.25 and 4043.81--affect the computation of 
interest on missed contributions, which in turn affects the reporting 
requirements. This proposed rule includes no amendment to the 
reportable events regulation dealing with such issues, but PBGC may 
provide further guidance on this subject, taking into account as 
appropriate any relevant guidance from the Internal Revenue Service.

Other Regulations

    Several other PBGC regulations also refer to plan funding concepts: 
The regulations on Filing, Issuance, Computation of Time, and Record 
Retention (29 CFR part 4000); Terminology (29 CFR part 4001); Variances 
for Sale of Assets (29 CFR part 4204); Adjustment of Liability for a 
Withdrawal Subsequent to a Partial Withdrawal (29 CFR part 4206); 
Allocating Unfunded Vested Benefits to Withdrawing Employers (29 CFR 
part 4211); and Mergers and Transfers Between Multiemployer Plans (29 
CFR part 4231). Thus, these regulations must also be revised to be 
consistent with ERISA and the Code as amended by PPA 2006 and with the 
revised premium regulations. This proposed rule would make the 
necessary conforming revisions.

Applicability

    In general, the changes to the reportable events regulation made by 
this rule would apply to post-event reports for reportable events 
occurring on or after the effective date of this rule and to advance 
reports due on or after the effective date of this rule. Technical 
Updates 07-2, 08-2, 09-1, and 09-3 would be superseded by this rule 
with respect to any circumstances to which this rule would apply.

Compliance With Rulemaking Guidelines

E.O. 12866

    The PBGC has determined, in consultation with the Office of 
Management and Budget, that this rule is a ``significant regulatory 
action'' under Executive Order 12866. The Office of Management and 
Budget has therefore reviewed this notice under E.O. 12866.

Regulatory Flexibility Act

    PBGC certifies under section 605(b) of the Regulatory Flexibility 
Act (5 U.S.C. 601 et seq.) that the amendments in this rule will not 
have a significant economic impact on a substantial number of small 
entities. Accordingly, as provided in section 605 of the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.), sections 603 and 604 do not 
apply. This certification is based on the fact that the reportable 
events regulation requires only the filing of notices and that the 
economic impact of filing is not significant.

Paperwork Reduction Act

    PBGC is submitting the information requirements under this proposed 
rule to the Office of Management and Budget for review and approval 
under the Paperwork Reduction Act. There are two information 
collections under the reportable events regulation, approved under OMB 
control number 1212-0013 (covering subparts B and C) and OMB control 
number 1212-0041 (covering subpart D), both of which expire March 31, 
2012. Copies of PBGC's requests may be obtained free of charge by 
contacting the Disclosure Division of the Office of the General Counsel 
of PBGC, 1200 K Street, NW., Washington, DC 20005, 202-326-4040.
    PBGC is proposing the following changes to these information 
requirements:
     PBGC's experience is that in order to assess the 
significance of virtually every reportable events filing, it must 
obtain from the filer the most recent month-end statement of the market 
value of plan assets, the most recent adjusted funding target 
attainment percentage (AFTAP) certification, and the most recent 
actuarial valuation report that contains or is supplemented with all 
the items of information described in Sec.  4010.8(a)(11) of PBGC's 
regulation on Annual Financial and Actuarial Information Reporting (29 
CFR part 4010). Accordingly, PBGC proposes to require that every 
reportable events filing include these items.
     To provide better identification of controlled group 
members, PBGC proposes to require that lists of controlled group 
members include addresses as well as names.
     PBGC has found that some filers that should file Form 200 
under Sec.  4043.81 of the reportable events regulation (missed 
contributions totaling over $1 million) file only Form 10 under Sec.  
4043.25 (missed contributions of any amount). This has led to delays in 
enforcing liens under ERISA section 302(f) and Code section 412(n) 
(corresponding to ERISA section 303(k) and Code section 430(k) as 
amended by PPA 2006). To address this issue, PBGC proposes that the 
information collections under the reportable events regulation include 
a requirement to report the aggregate outstanding balance (with 
interest) of all prior contributions not timely made.
     In missed contribution cases, there is sometimes a credit 
balance that is available for application to a contribution that is 
due. PBGC needs to be able to determine whether all or a portion of the 
credit balance has been properly applied toward payment of the

[[Page 61254]]

contribution. Accordingly, PBGC proposes to require filers of both Form 
10 and Form 200 to indicate how much (if any) of the carryover balance 
or prefunding balance was used for partial payment of the missed 
contribution and submit copies of election letters relating to 
application of the carryover balance and prefunding balance to the 
contribution.
     To assist PBGC in assessing the impact of a change in 
contributing sponsor or controlled group, PBGC proposes to require 
submission of ``before-and-after'' financial statements for post-event 
as well as advance reporting. Where the event is the loss of one or 
more controlled group members, financial statements would be required 
for the controlled group before and after the loss of the departing 
member(s). Where the event is a transfer of a plan to another 
controlled group, financial statements would be required for the old 
and new controlled groups. (Filers would not be penalized if they were 
unable to obtain financial statements from controlled groups other than 
their own.)
     To help PBGC assess the significance of a loan default or 
an extraordinary distribution or stock redemption, PBGC proposes to 
require filings for these events to include financial statements for 
all controlled group members to the extent not publicly available.
     PBGC Form 10-Advance (used for advance reporting under 
subpart C of the reportable events regulation) currently includes a 
requirement for the benefit liability transfer event that both the 
transferor and the transferee (and contributing sponsors) be 
identified. Form 10 (used for post-event reporting under subpart B) 
calls only for the identity of the transferee. PBGC proposes to change 
the Form 10 requirement to correspond to the requirement of Form 10-
Advance.
     To assist PBGC in assessing the impact of a transfer of 
benefit liabilities, PBGC proposes to require submission of financial 
statements for both the transferor controlled group and the transferee 
controlled group. (Filers would not be penalized if they were unable to 
obtain financial statements from controlled groups other than their 
own.)
     PBGC Form 10 currently requires for the bankruptcy event 
that the bankruptcy petition and docket (or similar documents) be 
submitted. Form 10-Advance requires that all documents filed in the 
relevant proceeding be submitted. Both forms require that the last date 
for filing claims be reported if known. PBGC proposes to replace these 
requirements with a requirement that filers simply identify the 
judicial district where the bankruptcy petition was filed and the 
docket number of the filing.
     When an advance report of an extraordinary dividend or 
stock redemption is made, PBGC has a 30-day window in which to 
determine whether there is a basis for taking action before the 
dividend is paid and, if so, to act. In order to do so, PBGC needs 
information about contributing sponsors' financial health. Accordingly, 
PBGC proposes to add a requirement for contributing sponsor financial 
statements to the information submission requirements for advance 
reporting of extraordinary dividends and stock redemptions.
     PBGC proposes to require that the notice of a low adjusted 
funding target attainment percentage certified by an enrolled actuary 
include a copy of the enrolled actuary's certification.
     If a section 420(f) transfer of $10 million or more is 
made, PBGC proposes to require that the notice to PBGC include a 
calculation demonstrating that the transfer does not reduce pension 
assets below 120 percent of liabilities for pension benefits.
     If, following a section 420(f) transfer of $10 million or 
more, the funded ratio falls below 120 percent during the transfer 
period, PBGC proposes to require that the notice to PBGC include a 
calculation demonstrating how (by making additional pension plan 
contributions or by transferring assets back from the health benefits 
account to the pension plan) pension assets were restored to an amount 
not less than 120 percent of liabilities for pension benefits.
    PBGC needs the information in reportable events filings under 
subparts B and C of part 4043 (Forms 10 and 10-Advance) to determine 
whether it should terminate plans that experience events that indicate 
plan or contributing sponsor financial problems. PBGC estimates that it 
will receive such filings from about 1,615 respondents each year and 
that the total annual burden of the collection of information will be 
about 6,890 hours and $2,411,500.
    PBGC needs the information in missed contribution filings under 
subpart D of part 4043 (Form 200) to determine the amounts of statutory 
liens arising under ERISA section 303(k) and Code section 430(k) and to 
evaluate the funding status of plans with respect to which such liens 
arise and the financial condition of the persons responsible for their 
funding. PBGC estimates that it will receive such filings from about 
797 respondents each year and that the total annual burden of the 
collection of information will be about 1,636 hours and $572,600.
    Comments on the paperwork provisions under this proposed rule 
should be sent to the Office of Information and Regulatory Affairs, 
Office of Management and Budget, Attention: Desk Officer for Pension 
Benefit Guaranty Corporation, via electronic mail at [email protected] or by fax to (202) 395-6974. Although comments may 
be submitted through January 22, 2010, the Office of Management and 
Budget requests that comments be received on or before December 23, 
2009 to ensure their consideration. Comments may address (among other 
things)--
     Whether each proposed collection of information is needed 
for the proper performance of PBGC's functions and will have practical 
utility;
     The accuracy of PBGC's estimate of the burden of each 
proposed collection of information, including the validity of the 
methodology and assumptions used;
     Enhancement of the quality, utility, and clarity of the 
information to be collected; and
     Minimizing the burden of each collection of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology, e.g., permitting 
electronic submission of responses.

List of Subjects

29 CFR Part 4000

    Employee benefit plans, Pension insurance, Reporting and 
recordkeeping requirements.

29 CFR Part 4001

    Employee benefit plans, Pension insurance.

29 CFR Part 4043

    Employee benefit plans, Pension insurance, Reporting and 
recordkeeping requirements.

29 CFR Part 4204

    Employee benefit plans, Pension insurance, Reporting and 
recordkeeping requirements.

29 CFR Part 4206

    Employee benefit plans, Pension insurance.

29 CFR Part 4211

    Employee benefit plans, Pension insurance, Reporting and 
recordkeeping requirements.

[[Page 61255]]

29 CFR Part 4231

    Employee benefit plans, Pension insurance, Reporting and 
recordkeeping requirements.

    For the reasons given above, PBGC proposes to amend 29 CFR parts 
4000, 4001, 4043, 4204, 4206, 4211, and 4231 as follows.

PART 4000--FILING, ISSUANCE, COMPUTATION OF TIME, AND RECORD 
RETENTION

    1. The authority citation for part 4000 is revised to read as 
follows:

    Authority:  29 U.S.C. 1083(k), 1302(b)(3).


Sec.  4000.53  [Amended]

    2. In Sec.  4000.53, paragraphs (c) and (d) are amended by removing 
the words ``section 302(f)(4), section 307(e), and'' where they occur 
in each paragraph and adding in their place the words ``section 101(f), 
section 303(k)(4), and''.

PART 4001--TERMINOLOGY

    3. The authority citation for part 4001 continues to read as 
follows:

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


Sec.  4001.2  [Amended]

    4. In Sec.  4001.2:
    a. The definition of ``controlled group'' is amended by removing 
the words ``section 412(c)(11)(B) of the Code or section 302(c)(11)(B) 
of ERISA'' and adding in their place the words ``section 412(b)(2) of 
the Code or section 302(b)(2) of ERISA''.
    b. The definition of ``funding standard account'' is amended by 
removing the words ``section 302(b) of ERISA or section 412(b) of the 
Code'' and adding in their place the words ``section 304(b) of ERISA or 
section 431(b) of the Code''.
    c. The definition of ``substantial owner'' is amended by removing 
the words ``section 4022(b)(5)(A)'' and adding in their place the words 
``section 4021(d)''.

PART 4043--REPORTABLE EVENTS AND CERTAIN OTHER NOTIFICATION 
REQUIREMENTS

    5. The authority citation for part 4043 is revised to read as 
follows:

    Authority:  29 U.S.C. 1083(k), 1302(b)(3), 1343.


Sec.  4043.1  [Amended]

    6. Section 4043.1 is amended by removing the reference 
``302(f)(4)'' and adding in its place the reference ``303(k)(4)''; and 
by removing the reference ``412(n)(4)'' and adding in its place the 
reference ``430(k)(4)''.
    7. In Sec.  4043.2:
    a. The introductory text is amended by removing the word ``Code'' 
and adding in its place the words ``benefit liabilities, Code''; and by 
removing the words ``plan administrator, proposed termination date'' 
and adding in their place the words ``plan administrator, plan year, 
proposed termination date''.
    b. The definitions of de minimis 10-percent segment, fair market 
value of the plan's assets, foreign entity, foreign-linked entity, 
foreign parent, Form 5500 due date, public company, testing date, 
ultimate parent, unfunded vested benefits, variable-rate premium, and 
vested benefits are removed.
    c. The definitions of event year and notice date are amended by 
removing the words ``the reportable event'' and adding in their place 
the words ``a reportable event'' in each of the two definitions.
    d. The definition of de minimis 5-percent segment is revised to 
read as follows:


Sec.  4043.2  Definitions.

* * * * *
    De minimis 5-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 5 percent of the controlled group's 
revenue;
    (2) Annual operating income not exceeding the greatest of--
    (i) 5 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) 5 percent of the controlled group's net tangible assets at the 
end of the fiscal year(s); or
    (ii) $5 million.
* * * * *
    8. In Sec.  4043.3:
    a. Paragraph (a)(1) is amended by removing the words ``by this 
part'' and adding in their place the words ``under this part''.
    b. Paragraph (d) is amended by removing the words ``submission of 
additional information'' and adding in their place the words 
``submission of additional information not specified in its forms and 
instructions''.
    c. Paragraphs (b) and (c) are revised to read as follows:


Sec.  4043.3  Requirement of notice.

* * * * *
    (b) Contents of reportable event notice. A person required to file 
a reportable event notice under subpart B or C of this part shall file, 
by the notice date, the form specified by PBGC for that purpose, with 
the information specified in PBGC's reportable events instructions.
    (c) Reportable event forms and instructions. The PBGC shall issue 
reportable events forms and instructions and make them available on its 
Web site.
* * * * *
    9. In Sec.  4043.4:
    a. Paragraphs (a), (b), (c), and (d) are redesignated as paragraphs 
(b), (c), (d), and (a) respectively.
    b. Newly redesignated paragraph (a) is amended by removing the 
heading ``Other waivers and extensions.'' and adding in its place the 
heading ``Waivers and extensions--in general.''.
    c. Newly redesignated paragraph (b) is revised to read as follows:


Sec.  4043.4  Waivers and extensions.

* * * * *
    (b) Waivers and extensions--specific events. For some reportable 
events, automatic 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, 
reporting is automatically waived for an occurrence that constitutes a 
reportable event under more than one section only if the requirements 
for an automatic waiver under each section are satisfied.
* * * * *
    10. Section 4043.5 is amended by adding the following sentence at 
the beginning of the text of the section:


Sec.  4043.5  How and where to file.

    Reportable event notices required under this part must be filed 
using the forms and in accordance with the instructions promulgated by 
PBGC, which are posted on PBGC's Web site. * * *


Sec.  4043.6  [Amended]

    11. In Sec.  4043.6:
    a. Paragraph (a) is amended by removing the heading ``Post-Event 
notice filings.'' and adding in its place the heading ``Post-event 
notice filings.''.
    b. Paragraph (b) is amended by removing the heading ``Advance 
notice and Form 200 Filings.'' and adding in its place the heading 
``Advance notice and Form 200 filings.''.
    c. Paragraph (c) is removed.
    12. In Sec.  4043.23:
    a. The text of paragraph (a) is designated as paragraph (a)(1) and 
a paragraph heading is added.

[[Page 61256]]

    b. New paragraph (a)(2) is added.
    c. Paragraphs (b) and (d) are removed.
    d. Paragraph (e) is redesignated as paragraph (b).
    e. And paragraph (c) is revised.
    The addition and revision read as follows:


Sec.  4043.23  Active participant reduction.

    (a) Reportable event--(1) In general. * * *.
    (2) Certain participant reductions disregarded. For purposes of 
paragraph (a)(1) of this section, a reduction in the number of active 
participants is to be disregarded to the extent that the reduction--
    (i) Is attributable to a substantial cessation of operations under 
ERISA section 4062(e) or to the withdrawal of a substantial employer 
under ERISA section 4063(a), and
    (ii) Is timely reported to PBGC under ERISA section 4063(a).
* * * * *
    (c) Waiver. Notice is waived for an event (the ``current event'') 
if the notice date for another event (the ``prior event'') under 
paragraph (a) of this section was not more than 12 months before the 
notice date for the current event and the prior event was reported to 
PBGC in accordance with the requirements of this part.
    13. Section 4043.25 is revised to read as follows:


Sec.  4043.25  Failure to make required funding payment.

    (a) Reportable event. A reportable event occurs when--
    (1) A contribution required under sections 302 and 303 of ERISA or 
sections 412 and 430 of the Code is not made by the due date for the 
payment under ERISA section 303(j) or Code section 430(j), or
    (2) Any other contribution required as a condition of a funding 
waiver is not made when due.
    (b) Alternative method of compliance--Form 200 filed. If, with 
respect to the same failure, a filing is made in accordance with Sec.  
4043.81, that filing satisfies the requirements of this section.
    14. In Sec.  4043.26:
    a. Paragraph (a)(2) is amended in the second sentence by removing 
the words ``Liquid assets and disbursements from the plan'' and adding 
in their place the words '' `Liquid assets' and `disbursements from the 
plan' ''; by removing the reference ``302(e)(5)(E)'' and adding in its 
place the reference ``303(j)(4)(E)''; and by removing the reference 
``412(m)(5)(E)'' and adding in its place the reference 
``430(j)(4)(E)''.
    b. Paragraph (c) is removed.
    c. Paragraph (b) is revised to read as follows:


Sec.  4043.26  Inability to pay benefits when due.

* * * * *
    (b) Waiver. Notice is waived unless the reportable event occurs 
during a plan year for which the plan is exempt from the liquidity 
shortfall rules in section 303(j)(4) of ERISA and section 430(j)(4) of 
the Code because it is described in section 303(g)(2)(B) of ERISA and 
section 430(g)(2)(B) of the Code.


Sec.  4043.27  [Amended]

    15. In Sec.  4043.27:
    a. Paragraph (a)(4) is amended by removing the words ``as provided 
in Sec.  4022.5'' and adding in their place the words ``as provided in 
Sec.  4022.5 of this chapter''.
    b. Paragraphs (b), (c), and (d) are removed, and paragraph (e) is 
redesignated as paragraph (b).
    16. In Sec.  4043.29:
    a. Paragraphs (c) and (d) are removed, and paragraph (e) is 
redesignated as paragraph (c).
    b. The introductory text of newly redesignated paragraph (c) is 
amended by removing the words ``waivers apply'' and adding in their 
place the words ``waiver applies''.
    c. Paragraph (b) is revised to read as follows:


Sec.  4043.29  Change in contributing sponsor or controlled group.

* * * * *
    (b) Waiver; 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. For this purpose, 
``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.
* * * * *


Sec.  4043.30  [Amended]

    17. In Sec.  4043.30:
    a. The heading of paragraph (a) is removed, and the introductory 
text of paragraph (a) is redesignated as the introductory text of Sec.  
4043.30.
    b. Paragraphs (b), (c), and (d) are removed.
    c. Paragraphs (a)(1), (a)(2), and (a)(3) are redesignated as 
paragraphs (a), (b), and (c).


Sec.  4043.31  [Amended]

    18. In Sec.  4043.31:
    a. Paragraphs (b), (c)(3), (c)(4), (c)(5), and (d) are removed.
    b. Paragraph (c) is redesignated as paragraph (b).
    c. Paragraph (e) is redesignated as paragraph (c).
    d. The reference ``(e)'' is removed and the reference ``(c)'' is 
added in its place once in paragraph (a) introductory text, once in 
paragraph (a)(1)(i), once in paragraph (a)(1)(ii), twice in paragraph 
(a)(2), twice in paragraph (a)(3), once in newly redesignated paragraph 
(c)(2)(i), once in newly redesignated paragraph (c)(2)(ii), once in 
newly redesignated paragraph (c)(5), and once in newly redesignated 
paragraph (c)(6)(iii).
    19. In Sec.  4043.32:
    a. Paragraphs (b) and (d) are removed.
    b. Paragraph (a)(2) is redesignated as paragraph (b).
    c. The heading of paragraph (a)(1) is removed, and the introductory 
text of paragraph (a)(1) is redesignated as the introductory text of 
paragraph (a).
    d. Paragraphs (a)(1)(i) and (a)(1)(ii) are redesignated as 
paragraphs (a)(1) and (a)(2).
    e. Redesignated paragraph (a)(1) is amended by removing the words 
``or any other plan maintained by a person in the plan's controlled 
group''.
    f. Paragraph (c) is revised to read as follows:


Sec.  4043.32  Transfer of benefit liabilities.

* * * * *
    (c) Distributions of lump sums and annuities. For purposes of 
paragraph (a) of this section, the payment of a lump sum, or purchase 
of an irrevocable commitment to provide an annuity, in satisfaction of 
benefit liabilities is not a transfer of benefit liabilities.


Sec.  4043.33  [Amended]

    20. In Sec.  4043.33:
    a. Paragraph (b) is removed.
    b. The heading of paragraph (a) is removed, and the text of 
paragraph (a) is redesignated as the text of Sec.  4043.33.
    c. The figures ``303'' are removed and the figures ``302(c)'' are 
added in their

[[Page 61257]]

place; and the figures ``412(d)'' are removed and the figures 
``412(c)'' are added in their place.


Sec.  4043.34  [Amended]

    21. In Sec.  4043.34:
    a. Paragraph (a) introductory text is amended by removing the words 
``default by'' and adding in their place the words ``default under a 
loan agreement by''.
    b. Paragraph (a)(3) introductory text is amended by removing the 
colon and adding in its place a dash.
    c. Paragraphs (b), (c)(2), (c)(3), (d)(3), and (d)(4) are removed.
    d. The heading of paragraph (c) introductory text is removed.
    e. Paragraph (c)(1) is redesignated as paragraph (b).
    f. Newly redesignated paragraph (b) is amended by removing the 
heading ``Default cured.'' and adding in its place the heading ``Waiver 
for cure of default.''.
    g. Paragraph (d)(5) is redesignated as paragraph (d)(3), and 
paragraph (d) is redesignated as paragraph (c).
    h. Redesignated paragraph (c)(1) is amended by removing the words 
``(d)(2) or (d)(3)'' and adding in their place the figures ``(c)(2)''.
    i. Redesignated paragraph (c)(2) is amended by removing the heading 
``Cure period extensions.'' and adding in its place the heading 
``Extensions.''.


Sec.  4043.35  [Amended]

    22. In Sec.  4043.35:
    a. Paragraphs (b), (c), and (d) are removed.
    b. The heading of paragraph (a) introductory text is removed, and 
the introductory text of paragraph (a) is redesignated as the 
introductory text of Sec.  4043.35.
    c. Paragraphs (a)(1), (a)(2), (a)(3), (a)(4), and (a)(5) are 
redesignated as paragraphs (a), (b), (c), (d), and (e).
    23. New Sec. Sec.  4043.36 and 4043.37 are added to subpart B to 
read as follows:


Sec.  4043.36  Adjusted funding target attainment percentage under 60 
percent.

    A reportable event occurs for a plan when the plan's adjusted 
funding target attainment percentage under Code section 436(j)(2) and 
ERISA section 206(g)(9)(B) either--
    (a) Is certified by an enrolled actuary to be less than 60 percent, 
or
    (b) Is presumed under Code section 436(h) and ERISA section 
206(g)(7) to be less than 60 percent.


Sec.  4043.37  Transfer of assets to retiree health account or 
subsequent reduction in funding ratio.

    A reportable event occurs for a plan when either--
    (a) The plan makes a qualified future transfer or a collectively 
bargained transfer under Code section 420(f) of $10 million dollars or 
more, or
    (b) On any valuation date of the plan during the transfer period 
described in Code section 420(f)(5) following any transfer described in 
paragraph (a) of this section, 120 percent of the sum of the funding 
target and the target normal cost determined under Code section 430 for 
the plan year exceeds the lesser of--
    (1) The fair market value of the plan's assets (reduced by the 
prefunding balance and funding standard account carryover balance 
determined under Code section 430(f)), or
    (2) The value of plan assets as determined under Code section 
430(g)(3) after reduction under Code section 430(f).
    24. In Sec.  4043.61, paragraphs (a), (b), and (c) are revised to 
read as follows:


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 is required to notify 
the PBGC no later than 30 days before the effective date of a 
reportable event described in this subpart C if the contributing 
sponsor is subject to advance reporting for the reportable event. 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 of 
a plan is subject to the advance reporting requirement under paragraph 
(a) of this section for a reportable event if--
    (1) On the notice date, neither the contributing sponsor nor any 
member of the plan's controlled group to which the event relates is 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; and
    (2) The aggregate unfunded vested benefits, determined in 
accordance with paragraph (c) of this section, are more than $50 
million; and
    (3) The aggregate value of plan assets, determined in accordance 
with paragraph (c) of this section, is less than 90 percent of the 
aggregate premium funding target, determined in accordance with 
paragraph (c) of this section.
    (c) Funding determinations. For purposes of paragraph (b) of this 
section, the aggregate unfunded vested benefits, aggregate value of 
plan assets, and aggregate premium funding target are determined by 
aggregating the unfunded vested benefits, values of plan assets, and 
premium funding targets (respectively), as determined for premium 
purposes in accordance with part 4006 of this chapter for the plan year 
preceding the effective date of the event, of plans maintained (on the 
notice date) by the contributing sponsor and any members of the 
contributing sponsor's controlled group, disregarding plans with no 
unfunded vested benefits (as so determined).
* * * * *


Sec.  4043.62  [Amended]

    25. In Sec.  4043.62:
    a. Paragraph (a) is amended by removing the words ``and information 
required'' from the paragraph heading; and by removing the words 
``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'' and adding in their place the figures 
``Sec.  4043.29(a)''.
    b. Paragraph (b) is amended by removing the heading.
    c. Paragraph (b)(1) is removed.
    d. Paragraph (b)(2) is amended by removing the heading ``De minimis 
5-percent segment.'' and adding in its place the heading ``Waiver; de 
minimis 5-percent segment.''.
    e. Paragraph (b)(2) is redesignated as paragraph (b).


Sec.  4043.63  [Amended]

    26. In Sec.  4043.63:
    a. Paragraph (a) is amended by removing the paragraph heading; and 
by removing the words ``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'' and adding in their 
place the reference ``Sec.  4043.30''.
    b. Paragraph (b) is removed.
    c. The text of paragraph (a) is redesignated as the text of Sec.  
4043.63.


Sec.  4043.64  [Amended]

    27. In Sec.  4043.64:
    a. Paragraph (a) is amended by removing the words ``and information 
required'' from the paragraph heading; and by removing the last 
sentence of the paragraph.
    b. Paragraph (b) is amended by removing the word ``Waiver'' from 
the paragraph heading and adding in its place the words ``Waiver; de 
minimis 5-percent segment''.


Sec.  4043.65  [Amended]

    28. In Sec.  4043.65:
    a. Paragraph (a) is amended by removing the paragraph heading; and 
by

[[Page 61258]]

removing the words ``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)'' and adding in their place the reference 
``4043.32(a)''.
    b. Paragraph (b) is removed.
    c. The text of paragraph (a) is redesignated as the text of Sec.  
4043.65.


Sec.  4043.66  [Amended]

    29. In 4043.66:
    a. Paragraph (a) is amended by removing the words ``and information 
required'' from the heading; and by removing the words ``Sec.  
4043.33(a), and the notice shall include the information described in 
Sec.  4043.33(b)'' and adding in their place the reference ``Sec.  
4043.33''.
    b. Paragraph (b) is amended by removing the words ``10 days after'' 
and adding in their place the words ``the day''; and by removing the 
words ``has occurred'' and adding in their place the word ``occurs''.


Sec.  4043.67  [Amended]

    30. In Sec.  4043.67, paragraph (a) is amended by removing the 
words ``and information required'' from the heading; and by removing 
the last sentence of the paragraph.


Sec.  4043.68  [Amended]

    31. In Sec.  4043.68, paragraph (a) is amended by removing the 
words ``and information required'' from the heading; and by removing 
the words ``Sec.  4043.35(a), and the notice shall include the 
information described in Sec.  4043.35(b)'' and adding in their place 
the reference ``Sec.  4043.35''.
    32. New Sec. Sec.  4043.69 and 4043.70 are added to subpart C to 
read as follows:


Sec.  4043.69  Adjusted funding target attainment percentage under 60 
percent.

    (a) Reportable event. Advance notice is required when a plan's 
adjusted funding target attainment percentage is certified or presumed 
to be less than 60 percent, as described in Sec.  4043.36.
    (b) Extension. The notice date is extended until 10 days after the 
reportable event has occurred.


Sec.  4043.70  Transfer of assets to retiree health account or 
subsequent reduction in funding ratio.

    Advance notice is waived for a reportable event described in Sec.  
4043.37.
    33. In Sec.  4043.81:
    a. Paragraph (a) introductory text is amended by removing the 
reference ``302(f)(4)'' and adding in its place the reference 
``303(k)(4)''; by removing the reference ``412(n)(4)'' and adding in 
its place the reference ``430(k)(4)''; by removing the words ``required 
installment or any other'' and adding in their place the word 
``contribution''; by removing the words ``section 302 of ERISA and 
section 412 of the Code'' and adding in their place the words 
``sections 302 and 303 of ERISA and sections 412 and 430 of the Code''; 
and by removing the words ``installments or other''.
    b. Paragraph (a)(2) is amended by removing the reference 
``302(f)(4)'' and adding in its place the reference ``303(k)(4)''; and 
by removing the reference ``412(n)(4)'' and adding in its place the 
reference ``430(k)(4)''.
    c. Paragraph (b) is amended by removing the reference ``302(f)'' 
and adding in its place the reference ``303(k)''; and by removing the 
reference ``412(n)'' and adding in its place the reference ``430(k)''.
    d. Paragraph (c) is added to read as follows:


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

* * * * *
    (c) Ultimate parent. For purposes of this section, the term 
``ultimate parent'' means the parent at the highest level in the chain 
of corporations and/or other organizations constituting a parent-
subsidiary controlled group.

PART 4204--VARIANCES FOR SALE OF ASSETS

    34. The authority citation for part 4204 continues to read as 
follows:

    Authority:  29 U.S.C. 1302(b)(3), 1384(c).


Sec.  4204.12  [Amended]

    35. Section 4204.12 is amended by removing the reference 
``412(b)(3)(A)'' and adding in its place the reference 
``431(b)(3)(A)''.

PART 4206--ADJUSTMENT OF LIABILITY FOR A WITHDRAWAL SUBSEQUENT TO A 
PARTIAL WITHDRAWAL

    36. The authority citation for part 4206 continues to read as 
follows:

    Authority: 29 U.S.C. 1302(b)(3) and 1386(b).


Sec.  4206.7  [Amended]

    37. Section 4206.7 is amended by removing the reference 
``412(b)(4)'' and adding in its place the reference ``431(b)(5)''.

PART 4211--ALLOCATING UNFUNDED VESTED BENEFITS TO WITHDRAWING 
EMPLOYERS

    38. The authority citation for part 4211 continues to read as 
follows:

    Authority: 29 U.S.C. 1302(b)(3); 1391(c)(1), (c)(2)(D), 
(c)(5)(A), (c)(5)(B), (c)(5)(D), and (f).

PART 4231--MERGERS AND TRANSFERS BETWEEN MULTIEMPLOYER PLANS

    39. The authority citation for part 4231 continues to read as 
follows:

    Authority: 29 U.S.C. 1302(b)(3), 1411.


Sec.  4231.2  [Amended]

    40. In Sec.  4231.2, the definitions of ``actuarial valuation'' and 
``fair market value of assets'' are amended by removing the words 
``section 302 of ERISA and section 412 of the Code'' wherever they 
appear in each definition and adding in their place the words ``section 
304 of ERISA and section 431 of the Code''.


Sec.  4231.6  [Amended]

    41. In Sec.  4231.6:
    a. Paragraph (b)(4)(ii) is amended by removing the reference 
``412(b)(4)'' and adding in its place the reference ``431(b)(5)''.
    b. Paragraph (c)(2) is amended by removing the words ``section 412 
of the Code (which requires that such assumptions be reasonable in the 
aggregate)'' and adding in their place the words ``section 431 of the 
Code (which requires that each such assumption be reasonable)''.
    c. Paragraph (c)(5) is amended by removing the figure ``412'' and 
adding in their place the figure ``431''.

    Issued in Washington, DC, this 18th day of November, 2009.
Vincent K. Snowbarger,
Acting Director, Pension Benefit Guaranty Corporation.
[FR Doc. E9-28056 Filed 11-20-09; 8:45 am]
BILLING CODE 7709-01-P