[Federal Register Volume 82, Number 245 (Friday, December 22, 2017)]
[Rules and Regulations]
[Pages 60800-60833]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-27515]



[[Page 60799]]

Vol. 82

Friday,

No. 245

December 22, 2017

Part II





Pension Benefit Guaranty Corporation





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29 CFR Parts 4000, 4001, 4003, et al.





Missing Participants; Final Rule

  Federal Register / Vol. 82 , No. 245 / Friday, December 22, 2017 / 
Rules and Regulations  

[[Page 60800]]


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PENSION BENEFIT GUARANTY CORPORATION

29 CFR Parts 4000, 4001, 4003, 4041, 4041A, and 4050

RIN 1212-AB13


Missing Participants

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Final rule.

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SUMMARY: The Pension Benefit Guaranty Corporation (PBGC) administers a 
program to hold retirement benefits for missing participants and 
beneficiaries in terminated retirement plans and to help those 
participants and beneficiaries find and receive the benefits being held 
for them. The existing program is limited to single-employer defined 
benefit pension plans covered by the pension insurance system under the 
Employee Retirement Income Security Act of 1974 (ERISA). With this 
final regulation, PBGC revises the existing program to simplify 
procedures and remove unnecessary rules and, as authorized by the 
Pension Protection Act of 2006, establishes similar programs for most 
defined contribution plans, multiemployer plans covered by the pension 
insurance system, and certain defined benefit plans that are not 
covered.

DATES: Effective date: This rule is effective January 22, 2018.
    Applicability date: This rule applies to termination of a plan 
other than a multiemployer plan covered by title IV of ERISA where the 
date of plan termination is after calendar year 2017. This rule applies 
to the close-out of a multiemployer plan covered by title IV of ERISA 
where the close-out is completed after calendar year 2017. This rule 
does not apply to PBGC's payment of missing participant benefits 
attributable to prior terminations. The provisions of 29 CFR part 4050 
as in effect immediately before January 22, 2018 apply to PBGC's 
payment of missing participant benefits attributable to prior 
terminations.

FOR FURTHER INFORMATION CONTACT: Stephanie Cibinic 
([email protected]), Deputy Assistant General Counsel for 
Regulatory Affairs, 202-326-4400 extension 6352; or Deborah C. Murphy 
([email protected]), Assistant General Counsel, Office of the 
General Counsel, Pension Benefit Guaranty Corporation, 1200 K Street 
NW, Washington, DC 20005-4026; 202-326-4400 extension 3451. (TTY and 
TDD users may call the Federal relay service toll-free at 800-877-8339 
and ask to be connected to 202-326-4400 extension 3451 or 202-326-4400 
extension 6352.)

SUPPLEMENTARY INFORMATION:

Executive Summary

Purpose of the Regulatory Action

    This regulation is needed to implement changes in the statutory 
basis for the missing participants program. The changes provide for 
expansion of the program to cover defined contribution (individual 
account) plans, multiemployer pension plans, and small professional 
service employer plans not covered by title IV of ERISA.
    PBGC's legal authority for this action comes from section 
4002(b)(3) of ERISA, which authorizes PBGC to issue regulations to 
carry out the purposes of title IV of ERISA, and section 4050 of ERISA, 
which gives PBGC authority to prescribe regulations regarding missing 
persons owed benefits under terminated retirement plans, including 
rules on the amounts to be paid to and from the program and how to 
search for missing participants and beneficiaries.

Major Provisions of the Regulatory Action

    The final regulation streamlines requirements and eliminates 
unnecessary provisions in the existing missing participants program, 
expands the program to most terminated defined contribution plans, to 
terminated multiemployer plans covered by title IV, and to terminated 
professional service plans with 25 or fewer participants. Under the 
regulatory action, PBGC will charge fees for plans to transfer benefits 
into the program; the fees will not exceed PBGC's costs. Responding to 
comments on the proposed rule, the regulatory action modifies the 
criteria for being ``missing,'' provides more flexibility in the 
diligent search rules for defined benefit plans, and simplifies the 
existing procedures for defined benefit plans to determine the 
appropriate sum to transfer to PBGC on behalf of a missing participant 
or beneficiary.

Background

In General

    The 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), which applies 
to most defined benefit (DB) plans. In general terms, a DB plan is a 
retirement plan that provides specified benefits and is subject to 
certain funding requirements. Within statutory limits, PBGC guarantees 
benefits of participants and their beneficiaries upon the underfunded 
termination of a plan covered by title IV. PBGC also monitors the 
termination of covered plans that are fully funded for guaranteed 
benefits, which must follow procedures provided under title IV.
    The process of closing out a terminated retirement plan involves 
the disposition of plan assets to satisfy the benefits of plan 
participants and beneficiaries. One difficulty faced by a plan 
administrator in closing out a terminated plan is how to provide for 
the benefits of missing persons. This problem was addressed for single-
employer plans subject to the title IV insurance program by the 
creation, under the Retirement Protection Act of 1994 (RPA '94), of a 
program administered by PBGC to deal with the benefits of missing 
participants and beneficiaries in terminated plans.\1\ Section 4050 of 
ERISA, as added by RPA '94, requires a plan administrator to undertake 
a diligent search (subject to definition in PBGC regulations) for each 
missing participant or beneficiary. It further describes procedures for 
a plan to follow in calculating the amount to be transferred to PBGC 
for a person who is missing, and for PBGC to follow in providing 
benefits to the person when the person ultimately appears--also subject 
to PBGC regulations. PBGC implemented the program in part 4050 of its 
regulations in 1996.
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    \1\ Not all terminated plans are included. ERISA section 
4050(a)(1) refers to plans subject to ERISA section 4041(b)(3)(A). 
That includes plans in standard terminations (as stated in section 
4041(b)(3)(A)) and plans in ``sufficient distress terminations'' (as 
provided for in section 4041(c)(3)(B)(i) and (ii)), but not plans 
trusteed by PBGC.
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Authorization of Expanded Program

    The Pension Protection Act of 2006 amended section 4050 of ERISA to 
expand its scope dramatically--offering the prospect of participation 
in the missing participants program to terminated multiemployer plans 
covered by title IV and several categories of terminated non-covered 
plans, including most defined contribution (DC) plans. In general 
terms, a DC plan is a retirement plan that provides for a participant 
to receive whatever is in the vested portion of the participant's 
retirement account. Section 4050(c) of ERISA provides for program 
participation for title IV multiemployer plans similar to that for 
title IV single-employer plans now in the program (although close-out 
of a multiemployer plan may not follow immediately upon plan 
termination). Non-title IV plans described under

[[Page 60801]]

section 4050(d) of ERISA would be eligible (but not required) to turn 
benefits of missing participants and beneficiaries over to PBGC, and 
PBGC is further authorized (but not required) to provide for non-title 
IV plans to report how they dealt with missing persons' benefits not 
placed either with PBGC or another retirement plan. To develop a better 
understanding of the DC plan community's needs and desires for, and 
likely responses to, an expanded missing participants program, PBGC 
published a request for information (RFI) on June 21, 2013 (at 78 FR 
37598). The RFI sought information about the number of missing 
participants in terminated plans, the size of their benefits, and how 
the benefits were handled. PBGC received 22 responses. Commenters 
embraced expansion of PBGC's missing participants program to accept 
accounts from terminated DC plans and to include those owed money in a 
searchable database of missing participants and beneficiaries.\2\ There 
was broad support for coordination among federal agencies on issues 
related to sponsor obligations. Commenters urged the need for both 
flexibility and safe harbors.
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    \2\ See http://www.pbgc.gov/documents/2013-14834.pdf.
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    In November 2013, the Advisory Council on Employee Welfare and 
Pension Benefit Plans (ERISA Advisory Council) issued a report \3\ on 
Locating Missing and Lost Participants based on hearings at which a 
PBGC staff member testified (among other things) about responses to 
PBGC's RFI. The Advisory Council report recommended development of 
effective methods for and guidance on searching for missing 
participants, including use of web search and commercial locator 
services. It also recommended that, if PBGC implemented a missing 
participants program for terminated DC plans, compliance with the PBGC 
program should be accorded safe harbor status under ERISA. And it urged 
cooperation among federal agencies, in particular to develop and 
implement PBGC's missing participants program.
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    \3\ See http://www.dol.gov/ebsa/publications/2013ACreport3.html.
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    On August 14, 2014, the Employee Benefits Security Administration 
(EBSA) of the Department of Labor (DOL) issued Field Assistance 
Bulletin No. 2014-01 on Fiduciary Duties And Missing Participants In 
Terminated Defined Contribution Plans (the FAB).\4\ The FAB provides 
guidance about required search steps and distribution options for 
benefits of missing participants in terminated DC plans.
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    \4\ See http://www.dol.gov/ebsa/regs/fab2014-1.html.
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Coordination and Consultation

    As recommended by the ERISA Advisory Council, PBGC staff consulted 
with EBSA staff and staff at the Solicitor of Labor's Plan Benefits 
Security Division, as well as the Internal Revenue Service (IRS) and 
the Department of the Treasury. Those consultations were very helpful 
in developing the proposed and final regulations.
    In those consultations, the IRS informed PBGC that it anticipates a 
DC plan would not fail to be qualified solely because it transfers 
appropriate amounts to PBGC in accordance with PBGC's missing 
participants program pursuant to section 4050(a)(2) of ERISA.
    IRS also informed PBGC that, consistent with existing treatment of 
transfers to PBGC from terminated single-employer DB plans covered by 
title IV of ERISA, amounts transferred by terminated DC and other plans 
to PBGC under the expanded missing participants program are not taxable 
distributions subject to withholding or reporting.
    The Department of Labor advised PBGC that it intends to review and 
possibly revise its regulations and guidance to coordinate with PBGC's 
implementation of a final rule on missing participants. For instance, 
the Department of Labor indicated its intent to review its fiduciary 
safe harbor regulation entitled ``Safe Harbor for Distributions from 
Terminated Individual Account Plans,'' which provides for distributions 
to individual retirement plans in such circumstances as when the 
participant or beneficiary was furnished a notice but failed to elect a 
form of distribution in a timely manner,\5\ and thus would be 
considered missing under this final rule.\6\ As part of its review, the 
Department of Labor said it specifically intends to consider transfers 
to PBGC appropriate in these same circumstances. The Department of 
Labor also indicated its intent to review its regulation on Termination 
of Abandoned Individual Account Plans, which currently provides for 
distributions generally to individual retirement plans in circumstances 
identical to those set forth in the Safe Harbor for Distributions from 
Terminated Individual Account Plans.\7\
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    \5\ See 29 CFR 2550.404a-3. In certain limited circumstances, 
the Department of Labor's safe harbor permits a fiduciary to 
distribute a missing participant's account balance to a federally 
insured savings account in the missing participant's name or a State 
unclaimed property fund in lieu of a rollover to an individual 
retirement plan.
    \6\ See 29 CFR 4050.202.
    \7\ See 29 CFR 2578.1.
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Proposed Regulation

    On September 20, 2016, PBGC published a proposed regulation (at 81 
FR 64700) to expand the missing participants program to terminated 
multiemployer plans covered by title IV of ERISA similar to the program 
for covered single-employer plans. The proposal also provided for a 
voluntary program for terminated defined contribution plans and small 
professional service defined benefit plans not covered by PBGC 
insurance. PBGC received 14 written comments on the proposal from 
across the retirement community, including comments from plan sponsors, 
third party administrators, financial institutions, representatives of 
participants and beneficiaries, and participants themselves. PBGC 
adopted a few changes in the final regulation in response to comments, 
but the regulation is substantially similar to what was proposed. An 
overview of the program's features, the regulation's organization, and 
the comments and PBGC's responses are discussed below.

Introduction

Features of the Program

    This final rulemaking lays the legal foundation for a program whose 
features extend far beyond the confines of the missing participants 
regulation. Major features of the new program include:
     A new option for DC plans to deal with missing 
participants and beneficiaries when closing out the plan and to make it 
more likely that missing persons will receive their benefits.
     A unified unclaimed pension database of information about 
missing participants and their benefits from terminated DB and DC 
plans.
     A centralized, reliable, easy-to-use directory through 
which persons who may be owed retirement benefits from DB or DC plans 
could find out whether benefits are being held for them.
     Robust features to protect private information about 
missing participants and their beneficiaries from inadvertent 
disclosure.
     Periodic active searches by PBGC for missing participants.
     Considerable benefits gained by reuniting missing 
participants with their lost retirement money that far outweigh the 
modest costs to plans and participants.
     Provision for a one-time administrative fee to be charged 
for

[[Page 60802]]

plans that transfer missing participants' benefits into the program; no 
fee for benefits of $250 or less, no ongoing maintenance fees, and no 
distribution charge.
     Treating participants or beneficiaries as ``missing'' if 
they fail to make necessary benefit elections upon plan termination or 
fail to accept lump sum benefits, such as where there are uncashed 
checks.
     Fewer benefit categories and fewer sets of actuarial 
assumptions for DB plans determining the amount to transfer to PBGC and 
a free on-line calculator to do certain actuarial calculations.
     Elimination of unnecessary rules.

Organization of the Regulation

    While the basic requirements are the same across all four types of 
plans, because some terminology and processes may vary with each plan 
type, the final regulation is divided into four subparts for 
readability, with each subpart describing the requirements for one of 
the four categories of plans. The four subparts of the regulation are:
     A revised version of the existing program for single-
employer DB plans covered by the title IV insurance program (subpart 
A),
     New requirements for DC plans (subpart B),\8\
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    \8\ These are plans that would be described in section 4021 of 
ERISA but for section 4021(b)(1), (5), (12), and (13) of ERISA and 
that could transfer benefits to PBGC in money (even if stock were 
used for other purposes) including plans described in section 403(b) 
of the Code under which benefits are provided through custodial 
accounts described in section 403(b)(7) of the Code. PBGC's reading 
of section 4050(d)(4) of ERISA as plausibly encompassing certain 
plans described in section 403(b) of the Code applies with respect 
to title IV of ERISA only and should not be read to suggest that the 
Internal Revenue Service would interpret this language similarly 
with respect to the application of sections 401(a) and 403(b) of the 
Code or for any other purpose under the Code.
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     New requirements for small professional service DB plans 
(subpart C),\9\ and
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    \9\ These are plans that would be described in section 4021 of 
ERISA but for section 4021(b)(13) of ERISA.
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     New requirements for multiemployer plans covered by the 
title IV insurance program (subpart D).
    Each subpart contains seven sections, dealing with ``Purpose and 
scope,'' ``Definitions,'' ``Duties'' (and options for non-PBGC-insured 
plans), ``Diligent search,'' ``Filing with PBGC'' (including fees), 
``Missing participant benefits,'' and ``PBGC discretion.''
    Used throughout the regulation is the term ``distributee.'' The 
regulation that is being replaced, following the statute, used the 
phrase ``missing participant'' to refer to either a beneficiary or a 
participant. To reduce possible confusion from using the word 
``participant'' in a phrase that may refer to a beneficiary, the final 
regulation (like the proposed) uses the term ``missing distributee'' to 
refer to a missing participant or missing beneficiary. However, some 
headings in the regulation and some discussion in this preamble refer 
to missing participants, the more familiar phrase.

Discussion of Final Regulation and Public Comments

    The public comments focused exclusively on the revised rules for 
PBGC-insured single-employer DB plans and the new rules for DC plans 
(which are not insured by PBGC). There were no comments specific to 
multiemployer plans and non-PBGC-insured small professional service DB 
plans. However, because the diligent search rules, benefit transfer 
(pay-in) rules, and rules PBGC follows for paying benefits to located 
participants (pay-out rules) are the same across all DB plans, changes 
made to those requirements for PBGC-insured single-employer DB plans 
are carried over into the requirements for the other two types of DB 
plans. Similarly, because the program is voluntary for all non-PBGC-
insured plans, any changes to rules implementing the voluntary features 
for DC plans are carried into the same rules for small professional 
service DB plans.

Scope

Terminated Plans

    As authorized by the Pension Protection Act of 2006 (PPA), this 
final regulation makes PBGC's missing participants program--heretofore 
limited to terminated single-employer DB plans covered by title IV's 
insurance program--available to other terminated retirement plans.
    Commenters commended PBGC for opening up the missing participants 
program to terminated DC plans in particular, and six commenters 
expressed support for going even further. They encouraged PBGC to look 
past a plan's terminated status and assert authority to permit ongoing 
plans (particularly ongoing DC plans) with missing participants to use 
the program too.
    Commenters explained that whether ongoing or terminated, plans face 
challenges handling the benefits of participants they can't locate. Two 
commenters explained that the challenges will grow as the number of 
missing participants continues to grow along with an increasingly 
mobile workforce, automatic enrollment in DC plans, etc. Others stated 
that PBGC's unclaimed pension search database would be more 
comprehensive if it also included information about missing 
participants from ongoing plans. Two mentioned legislative efforts in 
the last Congress to create another government repository for missing 
participant information and accounts, and noted that coordination and 
inclusion of ongoing plans in PBGC's program could discourage 
duplication, complication, and inefficiencies that might follow from 
potential multiple federal programs.\10\ Notwithstanding the importance 
of the issues raised by these commenters, such an expansion of the 
program is beyond the scope of this rulemaking.
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    \10\ See, S. 3078, the Retirement Savings Lost and Found Act of 
2016, 114th Congress, which would have required the Department of 
the Treasury and the Social Security Administration to create an 
online ``lost and found'' for missing participant accounts.
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Voluntary Reporting for DC Plans

    The final regulation, like the proposed, provides that PBGC's 
missing participants program is voluntary for terminated non-PBGC-
insured plans, e.g., DC plans, and that a non-PBGC-insured plan that 
chooses to use the program may elect to be a ``transferring plan'' or a 
``notifying plan.'' A transferring plan sends the benefit amounts of 
missing distributees to PBGC's missing participants program. A 
notifying plan informs PBGC of the disposition of the benefits of one 
or more of its missing distributees. PBGC received comments both 
supporting and opposing this voluntary reporting program for DC plans.
    Section 4050(d)(1) of ERISA permits but does not require non-PBGC-
insured plans covered by the program to turn missing participants' 
benefits over to PBGC. Section 4050(d)(2) of ERISA, on the other hand, 
says that (to the extent provided in PBGC regulations) non-PBGC-insured 
plans must upon plan termination provide information about the 
disposition of missing participants' benefits that are not transferred 
to another pension plan. PBGC's 2013 request for information (RFI) 
flagged this reporting provision for public comment. There were some 
differences of opinion on whether reporting should be required or just 
permitted. In general, employer advocates considered mandatory 
reporting unnecessarily burdensome, while participant advocates 
considered it an essential part of an effective pension search program. 
PBGC proposed to begin by making participation in the missing 
participants

[[Page 60803]]

program voluntary for such plans. PBGC received the same division of 
comment on the proposal as on the RFI. Participant advocates denied 
reporting would be burdensome to plans and employers since information 
needed to establish an individual retirement account (IRA) on behalf of 
the participant should be the same information needed to report to 
PBGC. They also continued to support mandatory reporting as essential 
to having a complete unclaimed pension search database and effective 
missing participants program. Employers, practitioners, and financial 
institutions supported a voluntary program to ensure that plan 
fiduciaries continue to have options in handling missing participant 
benefits.
    PBGC again considered the comments from both sides and decided to 
maintain the direction taken in the proposal--that is, to keep 
reporting voluntary for plans not covered by title IV--but to 
reevaluate the decision after plans and PBGC gain actual experience 
with the program. That will allow PBGC to use experience to determine 
the need for and costs of a mandatory requirement weighed against the 
completeness of the unclaimed pension search database.

Anti-Cherry-Picking for Transferring DC Plans

    Under the final regulation, as under the proposed, a DC plan that 
chooses to participate in the missing participants program and elects 
to be a transferring plan must transfer the benefits of all its missing 
participants into the missing participants program. In the preamble to 
the proposal, PBGC stated that it was concerned about the possibility 
of ``cherry-picking''--that is, selective use of the missing 
participants program--by transferring plans. For example, a plan might 
turn over all its small accounts to PBGC, while larger accounts that 
can generate larger maintenance fees for commercial individual 
retirement plan providers might be turned over to private-sector 
institutions that charge asset-based fees. PBGC proposed that if a DC 
plan voluntarily participates in the missing participants program as a 
transferring plan, it may not pick and choose the missing distributees 
whose benefits it turns over to PBGC. PBGC invited public comment on 
the validity of its concerns about cherry-picking and on its proposal 
for dealing with those concerns.
    PBGC received four comments: Three supporting the anti-cherry-
picking rule and one objecting to it. Two supporters asserted that the 
rule would increase the number of individuals about whom PBGC has 
information in the unclaimed pension search database, making the 
database and overall missing participants program more effective, with 
one adding that the rule would simplify program administration and 
alleviate participant confusion. Another said it did not object if PBGC 
believes such a rule improves the program's ability to succeed. The 
commenter opposing the rule stated the rule is inconsistent with, and 
unnecessary to, a voluntary program. In the commenter's experience, the 
market hasn't failed to adequately handle larger missing participant 
accounts, which can be rolled over into IRAs, and some commercial 
providers have routinely taken in smaller automatic rollover accounts. 
The same commenter noted that the rule in any event may be unnecessary 
because most missing participant accounts are small.
    PBGC considered the commenters' arguments. PBGC disagrees that the 
anti-cherry-picking rule changes the voluntary nature of the program; 
DC plans may participate in PBGC's missing participants program as 
transferring or notifying plans, or not at all. Further, the rule 
ensures that the amount in a missing participant's account, and the 
ability of that account to withstand fees charged by IRA providers, 
aren't factors in whether a plan transfers accounts into the missing 
participants program or into IRAs. The rule is consonant with section 
4050 of ERISA, which does not put upper or lower limits on the size of 
the accounts DC plans may transfer into the missing participants 
program. Therefore, PBGC has adopted the anti-cherry-picking rule with 
respect to transferring plans without change in the final regulation.

Scope of DB Plan Program

    The final regulation, like the proposed, defines what is a DB plan 
for purposes of the rules under subparts A (single-employer), C (small 
professional service), and D (multiemployer). For all three types of DB 
plans, the regulation provides that individual account plans (DC plans) 
are not included in the scope of the program for DB plans. One 
commenter asked PBGC to clarify that the regulation treats ``rollover 
accounts'' in DB plans like DC plans.
    The IRS regulations under Code section 414(l) are instructive in 
responding to this comment. For purposes of 26 CFR 1.414(l)-1 (dealing 
with mergers and consolidations), a plan is a ``single plan'' if and 
only if, on an ongoing basis, all of the plan assets are available to 
pay benefits to plan participants and beneficiaries. Where a plan 
document provides that a portion of the assets is reserved for payment 
of individual account benefits and another portion for payment of 
pension annuities, the two portions of the assets pertain to two 
distinct plans. For example, see Code section 414(k).\11\ When a DB 
plan under section 414(k) of the Code terminates, the DB portion and 
the individual account portion must each be terminated according to the 
rules associated with each kind of benefit. It follows that if the 
terminated plan has missing participants in the DB portion, individual 
account portion, or both, the DB portion would follow the processes 
with respect to those missing participants under the relevant subpart 
for DB plans, and the individual account portion would follow the 
processes under subpart B for DC plans.
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    \11\ Under Code section 414(k), a DB plan that provides a 
benefit derived from employer contributions based partly on the 
balance of a participant's separate account is treated as a DC plan 
for certain purposes and as a DB plan for other purposes.
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    In other cases, a participant may roll over a distribution from the 
participant's DC plan into the same sponsor's DB plan, pursuant to 
section 402(c) of the Code, to enable payment of a larger annuity 
benefit under the DB plan. These rollovers increase the participant's 
benefit under the DB plan and there is no separate DC account 
maintained in the DB plan.\12\ If the participant is missing upon 
close-out of the plan, for purposes of the missing participants 
program, the entire benefit would be treated under the rules for DB 
plans, including how plans calculate the benefit and how PBGC pays the 
benefit when the participant is located.
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    \12\ See 79 FR 70090 (November 25, 2014); such a rollover is 
discussed in Rev. Rul. 2012-4, 2012-8 IRB 386.
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Fees

    PBGC stated in the preamble to its proposed regulation that it will 
charge fees for participation in the missing participants program. PBGC 
received five comments on fees, which are discussed below.
    PBGC determined in the proposal to set fees at levels not to exceed 
its costs to run the missing participants program and provide essential 
services, such as periodically looking for participants and paying 
benefits. PBGC's methodology for setting fees under the missing 
participants program would incorporate the following elements and 
principles:
    (1) PBGC would set fees in a manner consistent with the 
requirements of 31 U.S.C. 9701 and relevant guidance of the Office of 
Management and Budget \13\ and the Government Accountability

[[Page 60804]]

Office.\14\ Fees would be based on PBGC's costs, the value of the 
program to plans and participants, policy considerations (of plans, 
sponsors, practitioners, and participants and beneficiaries, 
encouraging plan participation in the program, and with due regard for 
private-sector providers' concerns), and other relevant factors.
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    \13\ See OMB Circular A-25, User Charges, https://www.whitehouse.gov/omb/circulars_a025.
    \14\ See GAO reports numbers GAO-12-193, User Fees: Additional 
Guidance and Documentation Could Further Strengthen IRS's Biennial 
Review of Fees, http://www.gao.gov/assets/590/586448.html, and GAO-
08-386SP, Federal User Fees: A Design Guide, http://www.gao.gov/assets/210/203357.pdf.
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    (2) PBGC would set fees with a view to collecting, on average and 
over time, no more than its out-of-pocket costs for performance of non-
governmental functions in support of the missing participants program. 
PBGC would not seek to recover through fees the value of performance of 
governmental functions by government employees.
    (3) PBGC would set fees as one-time charges, payable when benefits 
are paid to PBGC, without any obligation to pay PBGC continuing 
``maintenance'' fees or a distribution fee. Fees would not be charged 
for reporting to PBGC the disposition of benefits where no amount is 
transferred to PBGC.
    After considering various fee structures, PBGC proposed a flat fee 
that would be simple to understand and easy for plans to administer. 
The fee was based on preliminary cost estimates to provide services for 
an estimated number of DB and DC missing participants coming into the 
new expanded program each year. Based on those estimates, PBGC will 
charge a one-time $35 fee per missing distributee, payable when benefit 
transfer amounts are paid to PBGC. There will be no charge for amounts 
transferred to PBGC of $250 or less. There will be no charge for plans 
that only send to PBGC information about where benefits are held (such 
as in an IRA or under an annuity contract). Fees will be set forth in 
the program's forms and instructions.
    Most of the five commenters agreed that $35 is reasonable. Three 
commenters suggested PBGC would further increase the value and 
encourage the use of its missing participants program by increasing the 
size of the benefit exempt from the fee. Commenters suggested a range 
of benefit amounts--from $1,000 or less, to $700 or $500 or less--to 
exempt from the one-time fee. The commenter that recommended a fee 
exemption for accounts of $1,000 or less suggested, alternatively, a 
tiered fee structure for small accounts up to $1,000. Another commenter 
added that plan sponsors should pay the fee because they make the 
decisions to terminate plans.
    Whether an expense is properly paid by the sponsor or the plan (or 
charged to a participant's account in the case of a DC plan) is an 
issue outside the scope of this rule. With respect to the suggestions 
for raising the benefit amount exempt from the fee, the various amounts 
presented show there isn't consensus supporting a fee amount or 
structure different from what PBGC initially proposed, and no 
quantitative data to back up one amount over another. Therefore, PBGC 
has decided not to change its initial fee structure. PBGC will review 
both the amount of the fee and fee structure to determine what is 
appropriate based on PBGC's actual experience with the new program and 
the principles stated herein.
    Concurrently with publication of this final regulation, PBGC has 
posted on its website (www.pbgc.gov) forms and instructions for the 
missing participants program, which include the statement of fees, for 
which approval by the Office of Management and Budget has been 
requested.

Missing

Missing--Proposed Regulation

    The proposed regulation provided that a distributee is ``missing'' 
if, for a DB plan, the plan does not know where the distributee is on 
close-out. A DB plan distributee also would be missing if the 
distributee's benefit was subject to mandatory ``cash-out'' under the 
terms of the plan and the distributee failed to elect a method of 
distribution on close-out of the plan.\15\ For a DC plan, the proposal 
provided that a distributee is missing if the distributee failed to 
elect a method of distribution on close-out of the plan.
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    \15\ A qualified plan is permitted to require a mandatory cash 
out of a participant's benefit pursuant to section 203(e) of ERISA 
and section 411(a)(11) of the Code.
---------------------------------------------------------------------------

    PBGC distinguished in the proposed rule DB plan distributees with 
benefits not subject to mandatory cash-out under plan terms, i.e., 
distributees with a right to an annuity. No benefit election is 
generally required of these distributees, and absent an election, the 
distributee's benefit would be annuitized, preserving the distributee's 
rights and options under the DB plan. Accordingly, the proposed rule 
provided that DB plan distributees who are not subject to mandatory 
cash out under plan terms are missing only if the plan did not know 
where they were. The proposed definition of ``missing'' for DC plans 
followed Department of Labor regulations,\16\ which treat DC plan 
distributees who cannot be found following a diligent search similar to 
distributees whose whereabouts are known but who do not elect a form of 
distribution.\17\
---------------------------------------------------------------------------

    \16\ See 29 CFR 2550.404a-3 and 2578.1.
    \17\ A missing distributee in a terminated DC plan would include 
a distributee who fails to elect a form of distribution in response 
to a notice meeting the requirements of 29 CFR 2550.404a-3. If the 
notice is returned as undeliverable, the DC plan administrator must 
conduct a diligent search that meets the requirements of section 404 
of ERISA.
---------------------------------------------------------------------------

Missing--Final Regulation

    The final rule adopts the proposed rule's definition of ``missing'' 
for DB plans and the proposed rule's definition of ``missing'' for DC 
plans, but with some refinements.
    The criterion of not knowing the whereabouts of a distributee was 
stated expressly for DB plans in the proposed rule. It is stated 
expressly for DB and DC plans in the final rule. PBGC also reconsidered 
the language in the proposed rule describing the concept of a 
distributee as being missing if the plan does not know where the 
distributee is on close-out. If this language were taken literally, a 
plan may never know with absolute certainty where a distributee is on 
close-out. The final rule provides that one of the conditions for 
``missing'' is that the plan does not know ``with reasonable 
certainty'' (e.g., if a notice from the plan to a distributee's last 
known address was returned as undeliverable) the location of the 
distributee on close-out.
    In addition to the above refinements, PBGC further modified the 
definition of ``missing,'' and clarified the definition in the 
preamble, in response to several comments. Those comments are discussed 
below.

Uncashed Benefit Checks

    Two commenters recommended that PBGC clarify that plans may 
transfer into the missing participants program assets being held for 
distributees who do not accept lump sum distributions due them, for 
example amounts held to pay uncashed benefit distribution checks issued 
by a terminated plan. Under the proposed regulation, a distributee was 
not considered missing if the distributee had elected a form of 
distribution upon close-out of the plan. This definition would not have 
included a distributee whose benefit was being paid from the plan by 
check even if the check subsequently went uncashed.
    PBGC considered the commenters' recommendations and modified 
``missing'' for DB and DC plans in the

[[Page 60805]]

final regulation. Under the revised definition, a distributee is 
treated as missing if, upon close-out, the distributee does not accept 
a lump sum distribution made in accordance with the terms of the plan 
and, if applicable, any election made by the distributee. For example, 
if a check issued pursuant to a distributee's election of a lump sum 
remains uncashed after the last date prescribed on the check or an 
accompanying notice (e.g., by the bank or the plan) for cashing it (the 
``cash-by'' date), the distributee is considered not to have accepted 
the lump sum. The ``cash-by'' date must be a date that is at least 45 
days after issuance of the check. If there is no such ``cash-by'' date, 
the lump sum is considered unaccepted if the check remains uncashed 
after its stale date. This definition applies regardless of whether the 
lump sum distribution was the result of a mandatory cash out provision 
or a voluntary election.
    The benefit transfer amount for a missing distributee who does not 
cash a distribution check is to be determined in the same way as for 
any other missing distributee. The distributee's benefit transfer 
amount must reflect the total value of the benefit without any 
reduction for tax withholding.\18\ PBGC will withhold taxes as 
appropriate when a missing distributee is found and paid. However, PBGC 
believes that there is room for flexibility in how the benefit is paid 
to PBGC in circumstances where it may not be practical to reflect the 
total value of the benefit in the amount transferred. For example, it 
would be permissible for the qualified termination administrator (QTA) 
of an abandoned DC plan (as defined under Department of Labor 
regulations at 29 CFR 2578.1) to transfer to PBGC the net amount of the 
uncashed check. PBGC believes that the final rule's provision allowing 
discretion to promote the purposes of the missing participants program 
provides PBGC with the necessary flexibility to accommodate such 
situations.
---------------------------------------------------------------------------

    \18\ A payor or plan administrator may file with the IRS to 
request a refund of tax amounts withheld. See IRS Internal Revenue 
Manual 21.7.2.4.6. Adjusted Employer's Federal Tax Return or Claim 
for Refund.
---------------------------------------------------------------------------

    PBGC believes this modified definition of ``missing'' for DB and DC 
plans relieves some administrative burden on plans trying to complete a 
termination when a distributee's benefit check remains uncashed. And it 
gives distributees some protection by allowing transfer of the benefit 
amount to the missing participants program where the distributee can 
search and be searched for and retirement benefits eventually claimed.

Conditional Forfeitures

    Two commenters asked PBGC to clarify whether participants for whom 
benefits were previously forfeited pursuant to Department of the 
Treasury regulation Sec.  1.411(a)-4(b)(6), because the plan could not 
locate them, may be treated as missing under the final regulation. 
Treasury regulation Sec.  1.411(a)-4(b)(6) provides that a right to a 
benefit isn't treated as forfeitable ``merely because the benefit is 
forfeitable on account of the inability to find the participant or 
beneficiary to whom payment is due, provided that the plan provides for 
reinstatement of the benefit if a claim is made by the participant or 
beneficiary for the forfeited benefit.'' PBGC believes that such a 
claim to benefits isn't lost on plan termination, and so the final 
missing participants regulation treats these individuals the same as 
any other missing participant. Thus, for example, in a single-employer 
DB plan covered by title IV of ERISA, the plan must either purchase an 
irrevocable commitment from an insurer or transfer the benefits to 
PBGC's program. In a DC plan, the plan may use PBGC's program as either 
a transferring or notifying plan. PBGC takes no position on the 
permissibility of conditional forfeitures under title I of ERISA.
    One commenter requested that if the final regulation treats these 
individuals as any other missing participant (as it does), that PBGC 
provide transition guidance for terminating single-employer DB plans. 
The commenter stated that some plans may not have the records necessary 
to value the benefit of a missing participant whose benefit was 
conditionally forfeited under Treas. Reg. Sec.  1.411(a)-4(b)(6). 
Because forfeiture is conditioned on the right to reinstatement if a 
claim is made for the benefits, the plan necessarily should have the 
records to determine the benefits the plan must reinstate if a 
participant makes a claim. PBGC therefore assumes plans will have such 
records. PBGC would expect to deal with defects in such records as it 
would with defects in any records on a case-by-case basis.
    PBGC also recognizes that QTAs of abandoned DC plans for which 
there is no plan sponsor may not be able to reinstate benefits if there 
have been conditional forfeitures. As stated elsewhere with respect to 
abandoned DC plans, PBGC believes that the final rule's provision 
allowing discretion to promote the purposes of the missing participants 
program provides flexibility to accommodate this situation if it 
arises.

DB Plan De Minimis Benefits Rolled Over Into IRAs

    As stated above, the final regulation modifies the existing 
definition of ``missing'' for DB plans to include a non-responsive 
distributee, i.e., a distributee whose benefit is to be paid as a lump 
sum and who has not responded to a notice about the distribution of the 
distributee's benefit, or has not accepted the distribution, upon 
close-out of the plan. Two commenters requested that PBGC clarify how 
it will treat a distributee's benefit that was subject to mandatory 
cash-out under the plan and rolled over into an IRA around the time of 
the plan's termination. Commenters questioned whether terminating 
single-employer DB plans that have rolled over mandatory cash-out 
amounts to IRAs could be required to recover those amounts and transfer 
them into the missing participants program.
    Distributions made in contemplation of plan termination but before 
the formal commencement of termination proceedings under title IV of 
ERISA have been a matter of concern to PBGC because those to whom such 
distributions are made do not receive the protections that the 
termination process is designed to give distributees on termination. 
Transfers made just before the formal commencement of termination 
proceedings in a form that would be improper for a transfer upon plan 
termination deserve particular scrutiny. If such a distribution were 
found to be in violation of title IV,\19\ the appropriate remedy might 
be to reverse it.
---------------------------------------------------------------------------

    \19\ 29 CFR 4044.4 Violations.
---------------------------------------------------------------------------

    In general, however, distributions made by an on-going DB plan in 
accordance with plan provisions and consistent with the plan's pre-
termination practices would not be swept into the termination process. 
``Distributee'' under this final rule refers to a person entitled to a 
distribution pursuant to close-out of a plan. Someone whose benefit is 
rolled over to an IRA before plan termination is not entitled to a 
distribution pursuant to close-out because the benefit has already been 
distributed. The final rule does not contemplate the undoing of pre-
termination rollovers.

Diligent Search

Whom To Search For

    As discussed under Missing, some distributees may be considered

[[Page 60806]]

``missing'' because they are non-responsive, without regard to whether 
their plan knows with reasonable certainty their location. If a plan 
does indeed know where a non-responsive distributee is, there is 
clearly nothing to be gained by a diligent search for that distributee.
    The proposed rule provided that a diligent search was required for 
every missing participant, but contained a proviso (in the section on 
plan duties) that a diligent search was not required for a missing 
distributee if the plan knew where the distributee was. PBGC concluded 
that this way of expressing the applicability of the diligent search 
requirement was potentially confusing. Accordingly, PBGC in the final 
rule in both the section on plan duties and the section on diligent 
search states that diligent searches are required only for missing 
distributees whose location the plan doesn't know with reasonable 
certainty.
    As in the proposed rule, whether a distributee is considered 
missing depends on the distributee's status upon close-out; and 
likewise, whether a plan knows with reasonable certainty a missing 
distributee's whereabouts, for purposes of the diligent search 
requirement, is determined as of close-out.

Diligent Search Methods for DC Plans

    The final regulation, like the proposed, provides that a DC plan 
must search for each missing distributee whose location the plan does 
not know with reasonable certainty. The plan must search in accordance 
with regulations and other applicable guidance issued by the Secretary 
of Labor under section 404 of ERISA. Compliance with that guidance 
satisfies PBGC's ``diligent search'' standard for DC plans.\20\ PBGC 
received several comments on this topic, with two commenters 
specifically commending PBGC for harmonizing the DC program with search 
guidance already established by the Department of Labor and followed by 
terminated plans. Another commenter recommended PBGC incorporate 
specific search methods into the final regulation (much the same as for 
DB plans). In that way, PBGC, as the agency administering the missing 
participants program, would have control over the search methods used 
to meet the diligent search standard. The same commenter recommended 
that the Department of Labor in turn harmonize its search guidance for 
DC plans with PBGC's diligent search standard. Another commenter 
recommended waiving use of a commercial locator service to find a 
participant with an account balance of less than $200 as fees for 
locator services can be charged to DC plan accounts and may reduce 
small accounts by large percentages.
---------------------------------------------------------------------------

    \20\ A distribution generally is permitted under the Department 
of Labor's safe harbor regulation with no additional search beyond 
the notification sent to the last known address of the participant 
or beneficiary in accordance with the requirements of 29 CFR 
2520.104b-1(b)(1). If a notice is returned to the plan as 
undeliverable, the plan fiduciary must, consistent with its duties 
under section 404(a)(1) of ERISA, take steps to locate the 
participant or beneficiary and provide notice before making the 
distribution. See EBSA's FAB 2014-01 for guidance on search steps.
---------------------------------------------------------------------------

    Harmonization is the hallmark of the DC plan missing participants 
program. The ERISA Advisory Council in its 2013 report (see the 
discussion above in Background) urged cooperation among federal 
agencies to develop and implement the missing participants program. 
Commenters to the RFI also urged agreement in guidance and rules from 
the Department of the Treasury (and Internal Revenue Service), the 
Department of Labor's Employee Benefits Security Administration (EBSA), 
and the Pension Benefit Guaranty Corporation that affect searching for 
and distributing the benefits of missing participants. Guidance from 
EBSA on searching for missing participants of terminated DC plans has 
been available since 2004 and was updated in 2014. The Department of 
Labor's (DOL's) regulatory safe harbor for terminated plans was 
effective in 2006. Noting the existing fiduciary guidance on search 
requirements for terminated DC plans, PBGC determined that double 
search standards established by two agencies applicable to one type of 
plan (DCs) would create unnecessary administrative burden and confusion 
for plans, service providers, and participants. PBGC therefore adopts 
in the final regulation without change the provision that compliance 
with DOL's fiduciary search guidance satisfies PBGC's diligent search 
standard.
    As for waiving use of a commercial locator service, EBSA has 
advised PBGC that use of a commercial locator service is not 
necessarily required for DC plans. As explained in FAB 2014-01, a plan 
fiduciary at a minimum should take certain steps to find a participant. 
If those steps fail, ERISA's duties of prudence and loyalty require the 
fiduciary to consider if additional search steps are appropriate. In 
making this determination, the fiduciary should consider the size of 
the participant's account balance and cost of further search efforts. 
As a result, the specific additional steps that a plan fiduciary takes 
to locate a missing participant may vary depending on the facts and 
circumstances. Possible additional search steps include the use of 
internet search tools, commercial locator services, credit reporting 
agencies, information brokers, investigation databases and analogous 
services that may involve charges.

Unknown Beneficiary of a Deceased DC Plan Participant

    As noted in the preamble to the proposed regulation, where a DC 
plan knows a participant is deceased and has no known beneficiary, the 
unknown beneficiary is a distributee under the missing participants 
program. In the context of an abandoned DC plan (as defined under 
Department of Labor regulations at 29 CFR 2578.1), one commenter asked 
for clarification on how to handle benefits where a beneficiary can't 
be determined based on available information. The commenter said that a 
QTA of an abandoned plan particularly may not have adequate information 
to determine beneficiaries as the QTA may not have been the plan's 
contractor for services such as maintaining beneficiary designations or 
providing qualified domestic relations order (QDRO) review.
    PBGC expects that there will be instances where a DC plan knows a 
participant is deceased but has little or no information about a 
beneficiary. Where an unknown beneficiary of a deceased participant is 
missing, as defined in the final regulation, the account balance of the 
deceased participant may be transferred into the missing participants 
program. PBGC will take into account the fact that there is no known 
person to search for in evaluating the plan's fulfillment of the 
diligent search requirement for any such distributee. Plan fiduciaries 
and QTAs would file in accordance with the forms and instructions for 
DC plans what information they have about the participant and 
beneficiary. See the section on Filing with PBGC, below, about 
flexibilities in filing for abandoned DC plans.

Diligent Search Methods for DB Plans

    The search standard for DB plans in the proposed regulation was 
based on the requirements in the existing regulation with modifications 
inspired by the guidelines in EBSA's FAB.\21\ The proposed standard 
listed five specific search methods. The first three were to

[[Page 60807]]

seek information from records of the plan that is closing out, from the 
employer, and from other plans of the employer (including health 
plans), and to mine these sources for information to locate the missing 
individual as well as leads to beneficiaries. The fourth method was to 
use a no-fee internet search engine or database, and the fifth was to 
use a commercial locator service as specifically defined in the 
regulation. PBGC received several comments on the proposed DB plan 
diligent search requirement, which are described below.
---------------------------------------------------------------------------

    \21\ Under the existing regulation, the diligent search rules 
for single-employer DB plans covered by title IV imposed three 
requirements: Timeliness, seeking information from beneficiaries of 
a missing participant, and use of a commercial locator service.
---------------------------------------------------------------------------

    While PBGC's proposed regulation attempted to bring its existing 
search rules into closer alignment with the search guidance in the FAB, 
PBGC believed that DB plans would welcome a more explicit and concrete 
``checklist'' of steps as outlined in the proposal. PBGC sought comment 
on whether DB plans would be better served by a different or less 
prescriptive search standard. The one response affirmed PBGC's belief 
that a more explicit checklist for DB plans is warranted. Therefore the 
final regulation, like the proposed, retains this structure.
    PBGC also invited comment on searching using a commercial locator 
service. The proposed regulation gave meaning to what is a commercial 
locator service for purposes of a diligent search to ensure a more 
robust, but also necessarily more expensive search, which might not be 
cost-effective for distributees with relatively small benefits. PBGC 
proposed to address this issue by reserving to itself the authority to 
place limits in the missing participants forms and instructions on the 
requirement for DB plans to use a commercial locator service. PBGC 
asked whether a waiver should be based on the monthly amount of a 
distributee's benefit or the present value of the benefit or on some 
other criterion, and on whether the waiver should be codified in the 
regulation.
    In response, two commenters said they supported waiving use of the 
commercial locator service method for certain DB distributees and 
codifying such waiver. One commenter suggested a waiver for small plans 
(not small benefits) with fewer than 500 participants because a locator 
service may not be cost-effective for these plans. Another suggested a 
waiver for monthly annuity benefits of less than $100. One of these 
commenters added that codification would give plans notice that a 
waiver is available and if a waiver is subsequently changed.
    PBGC considered the commenters' feedback and re-structured the 
final regulation so that a DB plan need not use the commercial locator 
service method for a distributee with a very small monthly benefit. The 
final regulation provides that a plan administrator must have 
diligently searched for a missing distributee using one of two search 
methods: A commercial locator service or, as an alternative for a 
distributee with a very small benefit, i.e., a distributee whose normal 
retirement benefit is $50 or less per month, the ``records search 
method.'' PBGC did not draw the line at plan size, as recommended by 
one commenter, because small plans may have distributees with large 
benefits. With more at stake, more expense is justified. In contrast, 
the smaller the benefit, the weaker the justification for requiring use 
of an expensive search method. Therefore, the final regulation provides 
that DB plans can choose to use, instead of a commercial locator 
service, a potentially less costly search method (the ``records search 
method'') for a participant with a very small benefit.
    The ``records search method'' includes the following steps: 
Searching the records of the plan that is closing out, of the employer, 
and of each retirement or welfare plan of the employer, for information 
to locate the distributee; contacting each beneficiary of the 
distributee identified from the records; and using an internet search 
for which no fee is charged, such as a search engine, a network 
database, a public record database (such as those for licenses, 
mortgages, and real estate taxes) or a ``social media'' website.
    PBGC received comments on two search steps in the proposal that are 
now part of the final rule's ``records search method''--searching using 
no-fee internet search engines and databases, and searching employer 
records.
    Regarding no-fee internet searches, one commenter recommended that 
a plan that has used a commercial locator service but has not found a 
distributee be permitted to skip a no-charge internet search for that 
distributee. The commenter argued that no-fee internet searches are 
unwieldy for plans with large numbers of missing participants and that 
search results can be hard to verify. As stated above, the final 
regulation provides that a DB plan must have diligently searched for a 
distributee who is missing upon close-out using only one of two search 
methods, a commercial locator service or the ``records search method.'' 
If a DB plan uses a commercial locator service and does not locate the 
distributee, regardless of whether the benefit is large or small, no 
further searching is required. Similarly, if the ``records search 
method'' does not locate the distributee with a very small benefit, no 
further searching is required.
    Two commenters recommended that PBGC modify or eliminate a search 
of the records of the employer that last employed the distributee and 
maintained the plan, claiming that this search could be more burdensome 
than useful. One commenter's suggestion was to limit the period for 
searching to the last employer that employed the participant within the 
previous 12 months. Another suggested the method should be optional to 
account for situations where a plan is acquired by another employer and 
the missing participant is a terminated vested participant of the 
former sponsor. In this case, the former sponsor is unlikely to have 
kept records on the separated employee.
    PBGC considered the potential burden and fruitfulness of records 
searches that could go back many years or require searching the records 
of another employer. To that end and to keep the cost of the ``records 
search method'' in general reasonable, the final regulation provides 
that its requirements (e.g., searching the records of the employer (the 
contributing sponsor) that most recently maintained the plan and 
employed the distributee) apply only to the extent reasonably feasible 
and affordable. Searching is not affordable to the extent that the cost 
(including the value of labor) is more than a reasonable fraction of 
the benefit of the distributee being searched for. What is reasonable 
is a matter of judgment and plan fiduciaries are familiar with 
reasonableness requirements. See for example ERISA section 
404(a)(1)(A)(ii). Spending more to search for a distributee than the 
value of the distributee's benefit would seem clearly unreasonable. 
Searching is not feasible to the extent that it is thwarted by legal or 
practical lack of access to records.
    All these requirements are designed to support the basic function 
of a diligent search--to demonstrate that an appropriate level of 
effort has gone into finding a person who remains missing. To that end, 
plan administrators are expected to the extent possible to search using 
as much information about a distributee as possible, such as name, 
social security number, date of birth, and last known address. As one 
commenter explained, searches using multiple data points reduce false 
positives and oversized search results, producing a more effective 
search.
    A plan (DB or DC) that uses PBGC's missing participants program to 
provide for the benefits of, or to provide information about the 
disposition of

[[Page 60808]]

benefits for, a person whose whereabouts are unknown, must have 
followed the diligent search requirements and failed to locate the 
participant.

Diligent Search Timeframe

    Under the proposed regulation, a diligent search must have been 
completed within six months before the last distribution to a non-
missing distributee (if the plan is sending information to PBGC) or 
within six months before the date the benefit is transferred to PBGC's 
program. One commenter recommended allowing a period longer than six 
months to do a diligent search. Experience shows that missing 
distributees can be found, and it is more efficient--and typically more 
advantageous for the distributee--to be found before close-out, so that 
benefits can be distributed in the normal manner. The fact that a 
distributee could not be found in the past does not mean that the 
distributee is forever lost. PBGC thus believes that diligent searches 
should be relatively recent. But after considering the comment, PBGC 
has concluded that nine months--rather than the six months provided in 
the proposal--is a reasonable time frame for a diligent search.
    As stated above, the proposed regulation measured the diligent 
search period from a different date depending on whether PBGC received 
money or just information about a missing distributee. PBGC believes 
different dates aren't necessary and may be unworkable, for example if 
a plan has only missing distributees. So, the final regulation uses the 
same date for all cases. The nine-month period ends when the 
distributee is identified as missing in a filing with PBGC.

Amounts To Be Transferred

DC Plan Pay-In Rules

    The amount to be transferred to PBGC on behalf of a missing 
distributee--the ``benefit transfer amount''--is relatively simple for 
DC plans: It is the amount available for distribution to the 
distributee in connection with the close-out of the plan. PBGC received 
no comments on its proposed definition of benefit transfer amount for 
DC plans, and the final regulation follows the proposed in this regard. 
For a missing distributee who was a participant, the benefit transfer 
amount would generally be the participant's account balance, but might 
not be if (for example) a qualified domestic relations order (QDRO) 
required distribution of a portion of the account to another person. 
The benefit transfer amount for a DC plan missing distributee also 
might (but might not) reflect the deduction of expenses. PBGC will not 
inquire into whether an account balance has been reduced for 
administrative expenses before it was transferred to PBGC. Whether plan 
termination expenses were properly allocated among all plan 
participants by the plan's fiduciary before the transfer is beyond the 
scope of this regulation.

DB Plan Pay-In Rules--Proposal

    For DB plans, the proposed regulation provided that the amount to 
be transferred to PBGC is the ``benefit transfer amount'' of a missing 
distributee (and a ``plan make-up amount'' if applicable). The benefit 
transfer amount would be the present value of future payments of an 
annuity.
    The proposed valuation rules for determining the benefit transfer 
amount represented a significant departure from the existing valuation 
rules (for benefits from single-employer plans covered by title IV 
insurance). The proposal abandoned a four-category approach to valuing 
benefits in the existing regulation in favor of a leaner three-category 
approach consistent with that of the statute.\22\ The four benefit 
categories under the existing regulation were arrived at by breaking 
the first statutory category into two: Benefits actually subject to 
mandatory cash-out under plan terms, and benefits that could be 
involuntarily cashed out under the law but not under plan terms. The 
existing regulation prescribed three sets of assumptions: Plan lump sum 
assumptions and two sets of PBGC missing participant assumptions 
(``missing participant lump sum assumptions'' and ``missing participant 
annuity assumptions).'' \23\ Whichever assumptions were used, the 
existing regulation specified that they were to be applied to the most 
valuable benefit. Thus, the plan had to value each benefit separately 
for a starting date in each year out into the future in order to find 
the most valuable one.
---------------------------------------------------------------------------

    \22\ Section 4050 of ERISA describes three benefit categories: 
``de minimis'' benefits that a plan could lawfully cash out without 
consent; benefits payable only as annuities; and benefits for which 
a lump sum is elective. A plan is to use its own lump sum 
assumptions to value benefits in the first category; PBGC missing 
participant assumptions for those in the second category; and for 
the third category, whichever of the two sets of assumptions 
produces the greater present value.
    \23\ Under the existing regulation, benefits actually subject to 
mandatory cash-out under plan terms are to be valued using plan 
assumptions. Benefits that could be involuntarily cashed out under 
the law but not under plan terms are to be valued using the 
``missing participant lump sum assumptions.'' Benefits not subject 
to either voluntary cash-out under the plan or mandatory cash-out 
under the statute are to be valued using the ``missing participant 
annuity assumptions.'' Finally, benefits that could not be 
involuntarily cashed out under the law but for which a lump sum 
option is available are to be valued using either the ``missing 
participant annuity assumptions'' or plan assumptions, whichever 
produces the greater value. Among missing participants whose 
benefits are transferred to PBGC under the current program, about 87 
percent have benefits that are de minimis under plan or PBGC 
assumptions.
---------------------------------------------------------------------------

    In addition to discarding the four-category approach to benefit 
valuations, PBGC proposed to abandon the ``missing participant lump sum 
assumptions'' and to modify the ``missing participant annuity 
assumptions'' (which were closer to termination assumptions in PBGC's 
regulation on Allocation of Assets in Single-Employer Plans (29 CFR 
part 4044)) into a new, single set of ``PBGC missing participant 
assumptions.'' The proposed ``PBGC missing participant assumptions'' 
included no adjustment for expenses--neither the adjustment that is 
part of the 4044 assumptions nor the load that is part of the missing 
participant annuity assumptions in the existing regulation. Mortality 
and interest under the proposed new assumptions were to be the same as 
under the existing old assumptions, except that the interest assumption 
in effect for valuations in January would be used for the entire 
calendar year.
    Also under the proposal, pre-retirement death benefits were to be 
disregarded and the benefit to be valued was to be a straight life 
annuity beginning at the expected retirement age (XRA).\24\ Using XRA 
avoided the requirement to value the benefit at every age to determine 
the most valuable benefit and made the new assumptions more like the 
4044 assumptions.
---------------------------------------------------------------------------

    \24\ Special ``XRA'' rules would apply to pay-status 
distributees and non-participant distributees.
---------------------------------------------------------------------------

    A plan that pays no lump sums (even for de minimis amounts) would 
have no ``plan assumptions'' for lump sums. Under the existing 
regulation, such plans used ``missing participant lump sum 
assumptions'' to value all benefits that could lawfully be cashed out. 
With the elimination of the ``missing participant lump sum 
assumptions'' and the associated benefit valuation category, the 
proposed regulation provided that such plans should use assumptions 
specified under section 205(g)(3) of ERISA and section 417(e)(3) of the 
Code (dealing with determination of the present value of certain 
benefits).
    Benefits were to be valued as of the date the benefit transfer 
amount was paid to PBGC (the ``benefit transfer date''). PBGC invited 
comment on this point. Valuing benefits as of the benefit transfer date 
would eliminate the need for the rules in the existing regulation about 
interest on transfers to PBGC

[[Page 60809]]

between the valuation date and the payment date, since those two dates 
would be the same.
    Plans were to account separately for the value of benefits payable 
in the future (the ``benefit transfer amount'') and the value of 
benefit payments missed (or treated as missed) in the past (the ``plan 
make-up amount''). The value of a missed payment would be the 
accumulated value of the payment (reflecting interest from the date the 
payment was due to the date of the plan's payment to PBGC), without 
reduction for mortality--that is, on the assumption that the annuitant 
was alive. Interest was to be calculated in the same way as for 
underpayments of guaranteed benefits by PBGC under PBGC's regulation on 
Benefits Payable in Terminated Single-Employer Plans (29 CFR part 4022) 
using the Federal mid-term rate described in section 1274(d) of the 
Code with monthly compounding. PBGC was to use the same interest 
assumption for crediting interest between the date of receipt of a 
payment from a plan and the date of payment of a lump sum by PBGC. This 
rate, to be called the ``missing participants interest rate,'' is the 
same rate prescribed in the existing missing participants regulation as 
the ``designated benefit interest rate.''
    The proposed plan make-up amount was to include not only missed 
payments to distributees who became missing after they had begun to 
receive benefit payments, but also payments not made after the required 
beginning date under section 401(a)(9)(C) of the Code, regardless of 
which assumptions (PBGC or Plan) were used to determine the transfer 
amount.

DB Plan Pay-In Rules--Final; Benefit Determination Date

    PBGC received three comments dealing with determining the value of 
benefits as of the benefit transfer date. One appreciated the clarity 
and consistency of valuing benefits as of the benefit transfer date as 
proposed. But two commenters expressed concern that the proposal would 
create undue complications and additional work where the actual 
transfer took place after the anticipated close-out date, especially 
with respect to lump sums. Commenters noted that plans determine the 
lump sum amounts payable to participants as of an assumed payment date, 
generally the anticipated close-out date. However, in some cases, a 
plan might not know that a participant is missing at the time the 
calculations are done. If the plan finds out that someone is missing 
after the fact, the actual benefit transfer date might be a month or 
two later than originally anticipated (i.e., not the assumed date used 
to determine the lump sum amount). In such situations, the proposal 
would seem to require that the plan recalculate the missing 
participant's benefit transfer amount on the participant's actual 
benefit transfer date, which adds cost and burden to the termination 
process. In addition, one commenter said that recalculation using a 
much-later-than-anticipated benefit transfer date could affect whether 
a participant is still subject to mandatory cash-out and treated as 
missing.
    Commenters recommended PBGC apply either a 30-day grace period 
during which no adjustment to the benefit transfer amount is required, 
or essentially go back to the existing rule under which interest is 
owed if payment to PBGC is made significantly after the assumed payment 
date underlying the calculation of the benefit transfer amount.
    In response, the final regulation departs significantly from the 
proposed, with a view to reducing burden and simplifying the procedures 
DB plans must follow. The benefit transfer date is replaced by a 
benefit determination date. The benefit transfer amount will be 
determined as of the benefit determination date and will not change 
even if it is paid to PBGC on a later date. When paying lump sums, PBGC 
will pay a participant the value of the participant's benefit plus 
interest for the full period from the date as of which the benefit was 
valued by the plan to the date PBGC pays the participant. But for 
administrative convenience, PBGC will allow DB plans a 90-day grace 
period from the benefit determination date before it collects interest 
for amounts not yet transferred. However, if payment is more than 90 
days after the benefit determination date, interest at the Federal mid-
term rate will be owed for the period after 90 days through the actual 
transfer date. (For a DC plan, the benefit determination date is the 
same as the date the plan pays PBGC, because the plan simply pays PBGC 
the amount in the account on that date.)
    The benefit determination date will be selected by the plan subject 
to the limitation that it be within the period from the first 
distribution to a non-missing distributee to the last such 
distribution.

DB Plan Pay-In Rules--Final; Reported Amounts

    While the proposed regulation recognized that benefits must begin 
no later than the required beginning date under section 401(a)(9)(C) of 
the Code, it did not consider that some plans do not actuarially 
increase benefits for terminated vested participants that commence 
after normal retirement date and instead provide a lump sum to account 
for the accumulated value of benefits that weren't paid from normal 
retirement date to the benefit commencement date. For such plans, the 
proposal had a few shortcomings. For example, with respect to a missing 
participant under age 55 with a non-de minimis benefit, the proposal 
anticipated that a plan would be required to report the monthly 
straight life annuity payable at each integral age from 55 through the 
required beginning date. When the participant was located, the annuity 
PBGC would have provided would have been based on those reported 
amounts. For a plan that doesn't actuarially increase benefits after 
normal retirement age, the amounts reported to PBGC would have been the 
same at each age from normal retirement date through required beginning 
date, so the monthly benefit PBGC would have provided had the 
participant been located and commenced payment after normal retirement 
age would have been the same as if the participant had commenced 
payment at normal retirement date. Since there was no ``pay-out'' 
provision to account for missing payments before the required beginning 
date in the proposal, that participant would have been shortchanged.
    To take plans of this type into account while still having a 
simplified approach that works for all DB plans, the final regulation 
modifies the pay-out rules for post-normal retirement age start dates, 
and the methodology for determining benefit transfer amounts using 
``PBGC missing participant assumptions,'' for non-pay status 
participants past normal retirement age (with a corresponding change in 
the filing requirements).
    Under the revised approach, a plan is required to report the 
monthly straight life annuity payable at each integral age from 55 
through the normal retirement date (or in some cases accrual cessation 
date as explained below). When the participant is located, the annuity 
PBGC provides is based on those reported amounts (with missed payments 
paid as a lump sum with interest). With this approach, participants 
whose benefits aren't actuarially increased after normal retirement 
date aren't short-changed, and neither are participants who accrued 
benefits after normal retirement date.

DB Plans--Final; Normal Retirement Date and Accrual Cessation Date

    As stated above, the normal retirement date, or if later, the date 
the participant stopped accruing benefits

[[Page 60810]]

(i.e., ``accrual cessation date'') replaces the required beginning 
date.
    In the proposal, for purposes of determining the present value of 
future benefits using PBGC missing participant assumptions, the assumed 
benefit start date (for determining the annuity to value) for a 
participant past normal retirement date but not yet past required 
beginning date, was the benefit transfer date and for a participant 
past required beginning date, the required beginning date. In the final 
rule, the assumed benefit start date for a participant past normal 
retirement date is generally the normal retirement date. However, to 
account for situations where a non-pay status missing participant 
accrued benefits after the plan's normal retirement date, the final 
rule provides that the assumed benefit start date in this situation is 
the date the participant ceased accruals. (The final rule does this to 
ensure that the annuity PBGC will provide to such a missing participant 
when found is no less than what the plan would have provided.)
    With respect to participants not yet past normal retirement age, 
participants in pay status, and beneficiaries, the final rule retains 
the assumed benefit start date provisions from the proposed regulation 
for purposes of determining pay-in amounts.
    In summary, under the final pay-in rules, the assumed benefit start 
date for purposes of the PBGC missing participant assumptions is:
     The expected retirement age (XRA) in PBGC's valuation 
regulation, for a participant not in pay status who has not reached 
normal retirement date;
     The normal retirement date (or accrual cessation date if 
later), for a participant not in pay status who has reached normal 
retirement date;
     The actual benefit start date, for a participant in pay 
status; and
     For a beneficiary, the later of the benefit determination 
date or the earliest date the beneficiary could receive benefits under 
the plan.
    PBGC has created an on-line spreadsheet that will calculate the 
present value of a missing participant's benefit expected to be paid on 
or after the benefit determination date with the new PBGC missing 
participant assumptions. A person would simply enter data, such as 
eligibility for early and unreduced retirement and benefit amounts, and 
the spreadsheet would do the calculations--including XRA calculations--
necessary to determine the present value of benefits, thus making the 
new PBGC missing participant assumptions easier to use.
    Except for making the change from required beginning date to normal 
retirement date (or accrual cessation date if later), the final 
regulation retains the other PBGC missing participant assumptions in 
the proposed regulation (e.g., mortality, interest, form of payment).

DB Plans--Final; Missed Payments

    Under the proposed regulation, the amount transferred to PBGC for 
some distributees--those in pay status or past the required beginning 
date--included both the benefit transfer amount and a ``plan make-up 
amount,'' representing payments that should have been made but were 
missed. The plan make-up amount accumulated the missed payments with 
interest at the Federal mid-term rate. In reconsidering its proposal as 
described above, PBGC found itself questioning whether the proposed 
manner of valuing missed payments, and the requirement to include it in 
the amount transferred, was appropriate in situations where benefits 
are valued using plan lump sum assumptions. For example, if a plan 
determines lump sum amounts for participants past normal retirement age 
as the present value of an actuarially increased benefit, there is no 
need for a plan make up amount (i.e., the value of post-normal 
retirement age missed payments is built into the present value 
calculation). In addition, it seems unlikely that plans generally would 
use the Federal mid-term rate to accumulate missed payments in 
calculating lump sums. Accordingly, PBGC in the final regulation has 
revised how the benefit transfer amount is determined for calculations 
based on plan lump sum assumptions to provide that missed payments are 
to be valued in whatever way the plan would ordinarily value them.
    Thus, the term ``plan make-up amount'' is eliminated. However, the 
concept is retained for calculations determined using PBGC missing 
participant assumptions. For those calculations, the amount of missed 
payments with interest is added to the present value of future benefits 
to yield the benefit transfer amount.

Filing With PBGC

What To File

    The proposed regulation specified certain items to be filed for 
each missing distributee, such as the benefit transfer amount or 
information about where the missing distributee's benefit is being 
held, diligent search documentation and other information, fees, and 
certifications.
    There was some support among the comments for documentation of 
diligent searches, and PBGC considered this matter in developing the 
final regulation. With a view primarily to reducing burden, PBGC 
decided that it would not initially require that a plan submit specific 
documentation of diligent searches with its filing, since compliance 
with the regulation (including the performance of diligent searches) 
must be certified on the form. PBGC might revisit this decision if it 
appears necessary to encourage compliance with the diligent search 
requirements.
    PBGC decided further to make the regulation less specific about 
documentation generally. PBGC realized, for example, that information 
would be required not just for each missing distributee (as the 
proposed regulation said) but also for the filing plan. Rather than 
trying to be more inclusive about data to be filed, the final rule 
simply refers to the missing participant forms and instructions for 
data required. The final rule does, however, list the three types of 
payments required: fees, benefit transfer amounts, and interest on the 
latter (for DB plans, if owed). And it retains the supplemental filing 
requirement from the proposed regulation for a plan to submit 
additional information if PBGC requests. But the nature of supplemental 
information that may be requested is more generally stated.
    Not within the scope of this rule are documentation, recordkeeping 
and other requirements of plans and plan terminations elsewhere under 
ERISA and the Code. While PBGC as administrator of the title IV 
insurance program can and will audit ERISA title IV plans (such as 
single-employer DB plans under a standard termination), such other 
requirements for non-title IV plans are properly subject to the audit 
and enforcement mechanisms under title I of ERISA and the Code for 
ensuring that terminations are properly carried out.

Forms and Instructions

    The missing participants forms and instructions for DB plans 
require the reporting of the monthly amount of each missing 
participant's accrued benefit (if not de minimis) in straight-life form 
assuming commencement at each integral age going forward from the later 
of the benefit determination date or age 55 to the normal retirement 
date (or accrual cessation date if later).\25\ Because of the change in 
the final rule from the required beginning date to the normal 
retirement date as the last date

[[Page 60811]]

when benefits can be paid or begin to be paid, plans will have fewer 
amounts to calculate and report for missing participants with non-de 
minimis benefits.
---------------------------------------------------------------------------

    \25\ PBGC would interpolate where necessary to obtain figures 
for fractional ages.
---------------------------------------------------------------------------

    Information on missing participants forms filed for DB and DC plans 
with PBGC must be certified. A commenter suggested that PBGC add a 
checkbox to the forms requiring filers to assert that benefit transfer 
amounts are correct, to remind filers of their obligations. PBGC 
believes the general certification is sufficient and that adding 
another check box to the form is unlikely to increase compliance.
    One commenter recommended that some questions be added to the Form 
5500 Annual Return/Report of Employee Benefit Plan about whether and 
how DC plans used the missing participants program. PBGC will consider 
this comment as part of its review of the Form 5500.

Filing for Abandoned DC Plans

    The final regulation, like the proposed, provides that the 
requirements to use the missing participants program, including filing 
requirements and forms and instructions, apply to all terminated DC 
plans that choose to use the program, including abandoned plans and 
QTAs winding up such plans. One commenter asked PBGC to clarify filing 
requirements for abandoned DC plans with respect to diligent searches. 
The commenter noted that a QTA may not have or have access to the kinds 
of records that typically yield participant contact information as part 
of a diligent search.
    The diligent search requirement for DC plans, including abandoned 
DC plans, is basically the same as the corresponding guidance for 
fiduciaries issued by the Department of Labor under section 404 of 
ERISA. PBGC expects that any documentation sufficient to demonstrate 
compliance with the fiduciary duty to search for missing participants 
would likewise satisfy any filing requirements PBGC might impose for 
diligent searches.\26\ As indicated under What to file above, PBGC has 
decided not to require submission of diligent search documentation with 
missing participants forms; but if it were to do so, such documentation 
would most naturally relate to the QTA's search efforts rather than to 
the content of historical records.
---------------------------------------------------------------------------

    \26\ See, FAB 2014-01, which states: ``Plan fiduciaries must be 
able to demonstrate compliance with ERISA's fiduciary standards for 
all decisions made to locate missing participants and distribute 
benefits on their behalf. If audited, plan fiduciaries could 
demonstrate compliance using paper or electronic records.''
---------------------------------------------------------------------------

    Missing or incomplete historical records can present a challenge to 
any plan, not just abandoned DC plans (although the latter as a group 
are particularly likely to suffer from this problem). PBGC expects the 
challenges of making, keeping, finding, and using records to be dealt 
with carefully, skillfully, prudently, and diligently, and where that 
is the case, PBGC believes this final rule provides flexibility to 
accommodate difficulties of the kind contemplated by the commenter.

Filing Deadline

    In the proposed regulation, the filing deadline for title IV 
single-employer DB plans would have been 90 days after the distribution 
deadline in PBGC's regulation on Termination of Single-Employer Plans 
(29 CFR part 4041). (For plans undergoing sufficient distress 
terminations, the distribution deadline reflects such plans' special 
circumstances.) For all other plans, including DC plans, the filing 
deadline would be 90 days after completion of all distributions not 
subject to the missing participants program.
    One commenter expressed concern that the proposed filing deadline 
for DC plans--90 days after the last distribution to a participant who 
isn't missing--might not give DC plans enough time to complete diligent 
search and other termination tasks if the plan potentially has many 
missing participants. The commenter suggested the timeframe be extended 
to 180 days. There was also a question from a commenter as to whether 
payment from DC plans (of the benefit transfer amount and fees, if any) 
would be required when forms were filed. PBGC responds to this latter 
comment that it expects that forms and any required payment would be 
sent simultaneously.
    As to the former, PBGC has given new thought to its administrative 
procedures for processing filings and now believes that the mechanics 
of filing are better left to the missing participants forms and 
instructions, where there is a bit more flexibility than if the 
procedures were hard-wired in the regulatory text. With regard to 
filing deadlines for DC plans, while PBGC wants plans to act promptly, 
it does not want to set standards that discourage DC plan 
participation. PBGC's understanding is that plans not covered by title 
IV of ERISA must distribute all assets to participants and 
beneficiaries as soon as administratively feasible after the plan's 
termination date. As a rule of thumb, plans are expected to complete 
termination within one year. Accordingly, the filing instructions set 
the filing deadline for plans not covered by title IV as the later of 
90 days after the last distribution not subject to the missing 
participants regulation or one year after the plan's termination date 
under IRS Rev. Rul. 89-87.\27\
---------------------------------------------------------------------------

    \27\ 1989-2 CB 81.
---------------------------------------------------------------------------

    For single-employer plans covered by title IV, the filing deadline 
set in the filing instructions is the same as under the existing 
regulations, the date the post-distribution certification is due, i.e., 
within 30 days after the last distribution date. This deadline was 
changed back to the existing rule from what was in the proposed 
regulation to maintain consistency in filing for single-employer DB 
plans undergoing standard terminations.

PBGC Reliance

    The vast majority of plans using the expanded missing participants 
program will be DC plans, over which (beyond their participation in the 
program) PBGC has no authority. The same is true of small professional 
service DB plans. This circumstance has led PBGC to re-evaluate its 
function under the missing participants program with respect to all 
plans covered by the program; that re-evaluation is reflected in the 
revision of the administrative review regulation including noting that 
a participant's recourse is against the plan or plan sponsor, and not 
PBGC, if a plan incorrectly calculated a benefit transfer amount (see 
Administrative Review under Related Regulatory Amendments below). PBGC 
has concluded that in its role as administrator of the missing 
participants program, it has and may exercise only very constrained 
authority. Accordingly, PBGC has removed from the final regulation 
provisions dealing with audits and related matters and replaced them 
with provisions making clear that as the missing participants program 
administrator, PBGC relies on information from plans participating in 
the program and accepts that information. PBGC holds the information 
and funds entrusted to it and passes them on to proper claimants. While 
this does not mean that mistakes cannot be corrected, it does mean that 
the missing participants program will not be expected to take the 
initiative in making corrections. However, PBGC's role as administrator 
of the missing participants program does not detract from its authority 
as administrator of the title IV insurance program, including as to 
matters bearing on the missing participants program (such as the amount 
of benefit a missing distributee

[[Page 60812]]

may be entitled to from a plan terminated in a standard termination). 
The extent of that authority is not a proper subject of the missing 
participants regulation. Neither is the extent of the authority of 
other federal agencies to pursue violations of ERISA and the Code 
including with respect to plan terminations and the distribution of 
assets to participants missing or not. No provision of the missing 
participants regulation detracts from that authority.

Benefits Paid to Located Participants

Pay-Out Rules Common to DB and DC Plans

    One principle that carries over from the existing regulation to the 
final regulation is that PBGC will receive money for the benefits of 
some missing distributees but only information about the benefits of 
others. As under the current program, therefore, there will be two ways 
PBGC may connect claimants with their benefits. PBGC may pay benefits 
itself (where PBGC has received a benefit transfer amount from the 
claimant's plan) or may provide information to the claimant from the 
plan about how benefits not transferred to PBGC can be claimed (for 
example, where they have been annuitized with an insurer or transferred 
to an IRA). The final regulation, like the proposed, modifies the 
language about PBGC's providing information to clarify that PBGC's role 
in such circumstances (which is subject to the Privacy Act) does not 
include resolution of questions about entitlement to a benefit held by 
another entity (such as an insurance company). Those questions, and 
questions about revealing personal information about such a missing 
participant to a different claimant, are more properly resolved by the 
entity (for example, insurer or custodian) holding the benefit.
    A concept common to both DB and DC plans in the final regulation, 
as in the proposed, is that of ``qualified survivors,'' who would be 
entitled to benefits with respect to a missing participant in 
situations involving--for example--deceased missing participants 
without spouses.
    The difference between the proposed and final rules is that for 
both DB and DC plans, PBGC in the final rule would look to beneficiary 
designations provided by the plan in its filing with PBGC as part of 
determining who would be entitled to benefits with respect a deceased 
missing participant. The proposed rule only included this provision for 
DC plans. While it may be uncommon that a DB plan would have a valid 
beneficiary designation on file before a benefit election is made, it 
is not unheard-of. To recognize these cases, PBGC included in the 
definition of ``qualified survivor'' for DB plans reference to 
beneficiary designations provided by the plan in its filing with PBGC.
    The final rule, therefore, provides that PBGC will identify 
qualified survivors for both DB and DC plan missing distributees by 
looking first to provisions of any applicable QDRO; then, PBGC will 
look to the plan's filing with PBGC for identification of persons 
potentially entitled to benefits with respect to the decedent under 
plan provisions (including beneficiary designations consistent with 
plan provisions); finally, if the plan's filing did not identify a 
person entitled to benefits with respect to a decedent, PBGC will refer 
to a list of relatives that echoes Sec.  4022.93 of PBGC's regulation 
on Benefits Payable in Terminated Single-Employer Plans, but includes 
just four categories: \28\ Spouses, children, parents, and 
siblings.\29\
---------------------------------------------------------------------------

    \28\ The final rule does not include on this list the two other 
categories of Sec.  4022.93 which are: Estates, if open, and next of 
kin in accordance with applicable state law.
    \29\ In PBGC's view, this terminology includes adoptive 
relationships (but not ``step'' relationships); thus the terminology 
is used without qualifying adjectives (such as ``natural or 
adopted'').
---------------------------------------------------------------------------

    When PBGC finds a participant, depending on whether the amount is 
de minimis, the participant has a choice of distribution options and 
methods. Several commenters queried whether PBGC could distribute lump 
sum retirement savings to found participants in a direct rollover to a 
qualified plan or IRA. PBGC does offer participants the option of tax-
free rollovers directly into a qualified retirement plan or IRA. PBGC 
also allows for partial rollovers, rollovers to Roth IRAs, and taxable 
direct deposit into a savings or checking account (and participants may 
choose to be paid out by check). In addition, PBGC believes the missing 
participants program complies with all applicable tax withholding and 
reporting rules with respect to retirement plan money held in the 
program and rolled over or otherwise distributed to found participants.
    The final regulation, like the proposed, does not provide pay-out 
rules for situations involving DB participants whose benefits went into 
pay status under the plan before they became missing. Nor does it 
provide pay-out rules for situations--under either DB or DC plans--
involving missing beneficiaries (such as situations involving missing 
alternate payees or situations where a plan knows a participant is dead 
and has a beneficiary, but the beneficiary is missing). PBGC considers 
such circumstances sufficiently uncommon that the new regulation need 
not address them. PBGC had invited public comment about whether the 
regulation should address such circumstances and if so, how. One 
commenter acknowledged PBGC's conclusion, but suggested that PBGC might 
find those circumstances more common under the new program. While PBGC 
did not make a change in the final regulation, it intends to review 
whether pay-out rules may be necessary in such circumstances as it 
gains experience with the new missing participants program.
    For both DB and DC plans, the final regulation does not deal (as 
the existing regulation does) with details such as election of annuity 
starting dates, which are left to policies and procedures reflected in 
PBGC's missing participants forms and instructions.

DC Plan Pay-Out Rules

    The DC plan pay-out rules in the final regulation, like the 
proposed, are relatively simple. The rules specify that PBGC will pay 
lump sums to found participants whose benefit transfer amounts are de 
minimis (defined under section 411(a)(11) of the Code and section 
203(e) of ERISA as $5,000 or less). A found distributee whose benefit 
transfer amount is non-de minimis will be paid an annuity (a 50 percent 
joint and survivor annuity if married), unless the distributee elects 
(with spousal consent if married) a lump sum (or another type of 
annuity) instead. PBGC will make available the same annuity forms that 
it does for participants in trusteed plans under Sec.  4022.8.
    One commenter pointed out that most DC plans don't include annuity 
options and are designed to satisfy the statutory exception under the 
Code and ERISA (section 401(a)(11)(B)(iii) of the Code and section 
205(b)(1)(C) of ERISA) from the qualified joint and survivor annuity 
rules. The commenter questioned why PBGC would propose a pay-out rule 
for participants with non-de minimis benefits contrary to the 
distribution options these DC plan participants might be expecting. 
Another commenter stated its support for having annuity options as the 
default pay-out for non-de minimis accounts.
    As stated above, found participants with de minimis benefit 
transfer amounts will receive their distribution in a lump sum, as will 
the survivors of a deceased participant with no living spouse. This 
makes sense where benefits are small or spouses don't exist. PBGC 
believes found participants (and

[[Page 60813]]

their spouses) with larger benefits should have a choice of 
distribution options, which include various annuity forms and lump 
sums. Participants are not prevented from choosing a lump sum, and PBGC 
makes valuable lifetime income options available to them regardless of 
whether the plan did so. PBGC has retained this choice for DC plan 
participants and adopted the proposed pay-out rules in the final 
regulation without change.
    Additionally, as in the proposed regulation, lump sum distributions 
will include interest at the Federal mid-term rate. Conversions to 
annuities will be made using assumptions under section 205(g)(3) of 
ERISA and section 417(e)(3) of the Code. For elections before the 
participant's age 55, PBGC will provide information on all available 
payment options for the individual's consideration, including annuity 
benefits, which are only available at 55 or later.

DB Plan Pay-Out Rules

    As discussed above (under DB Plans--Final; Reported Amounts), PBGC 
in the final regulation recognizes that some DB plans require that 
benefits begin no later than the normal retirement date. Thus, wherever 
the proposed regulation specified the required beginning date, the 
final regulation specifies the normal retirement date (or accrual 
cessation date if later), to maintain a simplified approach consistent 
with the rules for valuing benefit transfer amounts.
    The pay-out rules that PBGC proposed for DB plan participants were 
generally standardized, rather than reflecting each participant's plan 
provisions. To collect, retain (perhaps for decades), interpret, and 
apply plan provisions for hundreds of plans, some of which might apply 
to only one missing distributee, seemed (and still seems) a daunting 
administrative challenge--a challenge out of proportion to the ideal of 
paying the benefits of found distributees as their plans would have 
paid them. Instead, PBGC focused on two pay-out features that loomed 
largest as having the most value to participants--eligibility for lump 
sums and early retirement subsidies--and proposed to preserve those, 
while in other respects treating all distributees according to common 
rules.
    Two commenters recommended that PBGC preserve more of the features 
of each participant's plan--such as the early retirement date--or even 
that PBGC follow all pay-out provisions of each distributee's plan. 
PBGC understands the allure of reproducing the features of every 
distributee's plan, but believes it has drawn the line at a reasonable 
place. Accordingly, the pay-out rules are personalized in the final 
regulation only as much as in the proposed.
    Flowing from the principle of preserving certain material rights 
under plans, PBGC will no longer compute annuity benefits for a 
participant as the actuarial equivalent of the benefit transfer amount 
(as under the existing regulation). Rather, PBGC will provide annuity 
benefits based on what the plan would have provided, including any 
early retirement subsidies to which participants would have been 
entitled had they not been missing. This is possible because plans must 
report the straight life annuity payable to the participant commencing 
at each integral age from age 55 to normal retirement date (or accrual 
cessation date if later).
    Another commenter recommended that lump-sum pay-outs by PBGC for 
non-de minimis benefits be based on the value of distributees' benefits 
determined using plan assumptions. The benefit transfer amount is the 
larger of the amount determined using plan assumptions or the amount 
determined using PBGC missing participant assumptions. Thus, accepting 
this recommendation would appear to require additional reporting by 
plans and record-keeping by PBGC and to result in somewhat lower 
benefits for some distributees. PBGC has concluded on balance that the 
recommendation would introduce unnecessary administrative complexity 
without providing a clearly commensurate advantage. Accordingly, PBGC 
has not adopted this suggestion.
    In the proposed rule, PBGC provided pay-out rules for deceased 
missing participants in DB plans that were the same whether the benefit 
was de minimis or non-de minimis. PBGC has rethought this approach in 
light of the fact that its benefit payment policy for trusteed plans 
treats the two categories of benefits differently. Lump sums are 
routinely paid to participants with de minimis benefits and become 
available for distribution to participants' heirs. In contrast, non-de 
minimis benefits are routinely paid as annuities. PBGC anticipates less 
opportunity for confusion in processing payments to located 
participants if its approach to deceased missing participants with de 
minimis benefits follows more closely its approach to deceased 
participants with de minimis benefits in trusteed plans. Accordingly, 
PBGC has revised the proposed DB pay-out rules for deceased 
participants to make those rules applicable to non-de minimis benefits 
only, and has added a new provision for payment of a deceased missing 
participant's de minimis benefit to the participant's qualified 
survivors as a lump sum.
    The main elements of the DB pay-out rules are:
     Mandatory lump sums paid if the amount transferred to PBGC 
is $5,000 or less.
     Elective lump sums available if available under the plan 
and the amount transferred to PBGC is over $5,000 (subject to spousal 
consent if married).
     A variety of annuity payment forms available if the amount 
transferred to PBGC is over $5,000.
     Annuities available as early as age 55 if the amount 
transferred to PBGC is over $5,000.
     Amount of a straight life annuity starting at an integral 
age equal to the amount the plan would have paid at that age (as 
reported by the plan) (with linear interpolation between integral ages 
\30\); amounts of other annuity forms determined using PBGC conversion 
methodology.
---------------------------------------------------------------------------

    \30\ For example, a monthly benefit starting at age 55\3/4\ 
would be 75 percent of the age 56 amount plus 25 percent of the age 
55 amount.
---------------------------------------------------------------------------

     Annuity payments starting after normal retirement date 
calculated as if the annuity began at normal retirement date (or 
accrual cessation date if later), with missed payments paid as a lump 
sum with interest.
     Pre-retirement death benefits available if a married 
missing participant dies before the normal retirement date; but not if 
the participant is unmarried.
     Post-retirement death benefits available if a missing 
participant dies after normal retirement date whether married or not.
    If the annuity PBGC would pay a participant is not a straight life 
annuity, the payments would be set to make the benefit actuarially 
equivalent to the straight life annuity that would have been payable 
starting at the same time. PBGC will use the actuarial assumptions 
under its regulation dealing with optional forms of benefit in trusteed 
plans (29 CFR 4022.8(c)(7)) to make the conversion. If, on the other 
hand, PBGC pays a lump sum, it would be equal to the amount transferred 
to PBGC plus interest at the Federal mid-term rate.
    Lump sums--where available--are payable at any age (while annuities 
are not paid before a participant's age 55). Spousal consent is 
required if a participant wants to receive a non-de minimis benefit in 
any form other than a joint and 50-percent survivor annuity. In 
situations requiring spousal consent to payment of a lump sum before 
age 55,

[[Page 60814]]

PBGC will provide the participant with information about the 
availability of payment options.
    If an annuity begins later than the participant's normal retirement 
date (or accrual cessation date if later), missed payments with 
interest (make-up amount) will be paid in a lump sum. If the 
participant dies before normal retirement age, the survivor annuity 
will be deemed to begin on the later of the participant's 55th birthday 
or date of death. If the participant dies on or after the normal 
retirement date, the survivor annuity will be deemed to begin at the 
normal retirement date (or accrual cessation date if later). For 
missing participants under contributory plans, PBGC will pay benefits 
(including pre-retirement death benefits) at least equal to the 
accumulated mandatory employee contributions.

PBGC Discretion

    It is impossible to anticipate and appropriately provide for every 
state of events in an undertaking like the missing participants 
program. To preserve as much flexibility as possible while treating 
like cases in like manner, the final regulation, like the proposed, 
incorporates in each subpart a section authorizing PBCG to grant 
waivers, extend deadlines, and in general adapt to unforeseen 
circumstances, with the proviso that similar treatment be given to 
similar situations. This provision takes the place of Sec.  4050.12(g). 
No comments were received on the proposed provision and it is adopted 
without change in the final regulation.

Repeal of Unnecessary Provisions

    Most of the special provisions in Sec. Sec.  4050.11 and 4050.12 of 
the existing regulation are repealed as unnecessary or inappropriate:
     References to the maximum benefit under Code section 415 
(if any) (Sec.  4050.5(a) of the existing regulation) and the minimum 
benefit under a contributory plan (Sec.  4050.12(c)(1)). Those 
limitations apply to the provisions and administration of plans 
generally and are not specific to the missing participants program.
     The exclusive benefit provision in Sec.  4050.11(a) and 
the limitation on benefits to the amount transferred to PBGC by a plan 
for a missing participant (Sec.  4050.11(a) and (b)). The first of 
these seems unnecessary and the second would no longer be true.
     Relationship of benefits paid to the guaranteed benefit 
(Sec.  4050.11(c)), benefits payable in a sufficient distress 
termination (Sec.  4050.12(e)), and benefits payable on audit or other 
events (Sec.  4050.12(f)).
     Limitations on the annuity starting date (Sec.  
4050.11(d)). PBGC plans to deal with such matters in its policies for 
administering the expanded missing participants program.
     Disposition of voluntary contributions (Sec.  
4050.12(c)(2)) and residual assets (Sec.  4050.12(d)). PBGC 
specifically solicited comment on repeal of the treatment of residual 
assets (assets not needed to satisfy plan benefits), but received none.
     Provisions regarding missing participants located quickly 
by PBGC (Sec.  4050.12(a)). This provision has not been used, and PBGC 
believes that enforcement measures where a plan misrepresents its 
compliance with diligent search requirements will be more effective 
than this provision.
     QDROs (Sec.  4050.12(b)). PBGC provides in the pay-out 
rules that allowance be made for QDROs.
     Payments beginning after the required beginning date 
(Sec.  4050.12(h)). This subject is dealt with in the benefit pay-out 
provisions.

Related Regulatory Amendments

In General

    PBGC is making conforming amendments to its regulations on Filing, 
Issuance, Computation of Time, and Record Retention (29 CFR part 4000), 
Terminology (29 CFR part 4001), Termination of Single-Employer Plans 
(29 CFR part 4041), and Termination of Multiemployer Plans (29 CFR part 
4041A).

Administrative Review

    PBGC's regulation on Rules for Administrative Review of Agency 
Decisions (29 CFR part 4003) sets forth the determinations, listed in 
Sec.  4003.1(b), for which aggrieved persons are required to seek 
administrative review, (i.e., in the form of administrative appeals or 
reconsiderations) before they may seek judicial review. Section 
4003.1(b)(11) applies to the missing participants program. Subparagraph 
(i) of Sec.  4003.1(b)(11) relates to a determination about the 
benefits payable by PBGC based on the amount paid to PBGC under the 
program (assuming the amount paid to PBGC was correct). Subparagraph 
(ii) of Sec.  4003.1(b)(11) relates to a determination as to the 
correctness of an amount paid to PBGC under the program (to the extent 
that the benefit to be paid does not exceed the guaranteed benefit).
    PBGC proposed changes to the administrative review regulation and 
received no comment on the proposed changes. The changes, which are 
adopted in the final regulation, are as follows. PBGC is changing Sec.  
4003.1(b)(11) by revising the content of paragraph (b)(11)(i) and 
eliminating paragraph (b)(11)(ii). Therefore section 4003.1(b)(11) will 
no longer have two subparagraphs. Section 4003.1(b)(11) does not refer 
to benefits based on an amount paid to PBGC, because in some cases 
benefits paid by PBGC under the new program will be monthly annuities 
based on information, such as calculations, reported by the plan, not 
on amounts paid to PBGC. Thus, an appeal right based on a determination 
pursuant to revised Sec.  4003.1(b)(11) relates simply to a 
determination of the benefit payable under section 4050 of ERISA and 
the missing participants regulation.
    An appeal based on a determination made under existing regulation 
Sec.  4003.1(b)(11)(ii)--that the right amount was paid to PBGC--is no 
longer permitted. PBGC does not make determinations about the amounts 
to be transferred to PBGC by plans under the missing participants 
program; rather, it is plans themselves that determine how much to 
transfer. Thus, there is no PBGC action for a person to be aggrieved by 
or for PBGC to revoke or change. Recourse must be against the plan or, 
if the plan no longer exists, the plan sponsor. If a claimant's benefit 
is guaranteed by PBGC, and the claimant is unable to collect from the 
plan or sponsor, the claimant may have a right to payment of the 
guaranteed benefit by PBGC, and a dispute about PBGC's determination of 
the amount of that benefit is subject to the requirement to pursue 
administrative review under Sec.  4003.1(b)(8).

Cost-Benefit Analysis

In General

    This rulemaking is not subject to the requirements of Executive 
Order 13771 because it results in no more than de minimis net costs. 
The rule has been determined to be ``significant'' under Executive 
Order 12866. The Office of Management and Budget has reviewed this 
final rule under E.O. 12866.
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, and public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes retrospective review of regulations, harmonizing 
rules, and promoting flexibility. E.O. 13771 directs agencies

[[Page 60815]]

to offset new incremental costs imposed by new regulations by the 
elimination of existing costs associated with two prior regulations; 
where there are no new incremental costs, as here, this requirement 
does not apply.
    Executive Orders 12866 and 13563 require that a comprehensive 
regulatory impact analysis be performed for any economically 
significant regulatory action, defined as an action that would result 
in an annual effect of $100 million or more on the national economy or 
which would have other substantial impacts. It has been determined that 
this final rule is not economically significant. Thus a comprehensive 
regulatory impact analysis is not required. PBGC has nonetheless 
examined the economic and policy implications of this rule and has 
concluded that the net effect of the action is to reduce costs in 
relation to benefits.
    This final rule repeals part 4050 of PBGC's regulations and 
substitutes an expanded but simpler and more cost-effective part.
    This final rule is the cornerstone of a freshly designed program 
that expects to improve the process of reconnecting American workers 
with lost retirement benefits, at a relatively tiny cost. Here's how 
the program will work.
     PBGC will accept the retirement benefits and record 
information of missing participants from terminating retirement plans.
     PBGC will maintain a pension search directory where 
missing participants can find their lost retirement benefits.
     PBGC will actively search for missing participants.
     The benefits held by PBGC will earn interest and be 
protected against investment losses.
     When missing participants are found, PBGC will pay their 
benefits in annuity or lump sum form.
    This program will save retirement plans time and money in dealing 
with the benefits of missing participants. More participants will 
receive their retirement benefits because the centralized pension 
search directory will make finding lost benefits much easier and PBGC 
will search for missing participants.
    PBGC has been successfully operating a small-scale version of this 
program for years, limited to single-employer DB plans covered by title 
IV of ERISA. Allowing the far greater number of DC plans into the 
program will permit economies of scale. PBGC estimates that the 
transfer impacts of this final rule will be close to $19 million, as 
shown in the table below.

--------------------------------------------------------------------------------------------------------------------------------------------------------
      Annual transfer amounts                  Before final rule                       After final rule                         Net transfer
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benefits recovered.................  $7 million...........................  $26 million..........................  $19 million.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual cost amounts                  Before final rule....................  After final rule.....................  Net cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
Filling out forms..................  $456,590.............................  $645,750.............................  $189,160.
Valuing benefits (DB)..............  No change............................
Searching (DB).....................  $19,100..............................  $32,500..............................  $13,400.
                                    --------------------------------------------------------------------------------------------------------------------
    Total..........................  $0.5 million.........................  $0.7 million.........................  $0.2 million.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The ``before'' column of the table shows benefits and costs if the 
final rule did not become effective. The ``after'' column shows 
benefits and costs if the final rule becomes effective. The ``net'' 
column shows the effect of the final rule (the ``after'' column minus 
the ``before'' column). (The costs for DC plans are not imposed by the 
final rule, but arise from plans' voluntary election to participate in 
the program.)

Benefits Recovered

    The missing participants program provides the promise of a ``one-
stop shop'' for workers to find lost benefits from terminated 
retirement plans, augmented by active searches by PBGC to find those to 
whom benefits are owed. By expanding the number of those who benefit 
from the current program, both absolutely and in relation to associated 
costs, this final rule cuts costs in relation to benefits.
    For fiscal years 2013-2015, PBGC restored about $2.27 million in 
lost benefits annually to those entitled to them, while taking in about 
955 missing participants per year from about 200 DB plans. 
Extrapolating from data gleaned from the existing single-employer DB 
program and Form 5500 filings, PBGC is projecting that its intake under 
this final rule will expand by 10,000 missing participants per year 
from 3,100 DC plans. In the proposed rule, PBGC calculated the 
anticipated benefit recovery based on the increase in the number of 
plans (about a 16-fold increase). PBGC believes a better and more 
conservative approach is to calculate its anticipated payment of 
benefits based on the projected increase in the number of missing 
participants (about an 11-fold increase). Accordingly, PBGC is 
projecting that it will unite missing participants with an estimated 
$26 million worth of lost retirement benefits each year under this 
final rule ($2.27 million x 10,955/955).\31\
---------------------------------------------------------------------------

    \31\ Benefits paid out each year are not limited to those of 
missing participants taken into the program that year. It may take 
years to find a missing participant. But the number of participants 
entering the program is an indication of the program's size.
---------------------------------------------------------------------------

    As noted above, PBGC's current benefit pay-out is about $2.27 
million. But this is for DB plans only. Although DC plans have not been 
able to participate in the centralized missing participants program, 
PBGC assumes that some lost DC benefits are recovered. PBGC also 
assumes that the difference between the ease of finding benefits in a 
single centralized governmental data base versus many fragmented 
private-sector ones means that the benefit recovery ratio is far more 
favorable for the former. Accordingly, PBGC assumes that, among the DC 
plans that will choose to participate in the expanded missing 
participants program, the amount of benefits that would be recovered 
without the program is about 20 percent of the amount recoverable with 
the program, or about $4.75 million. Thus the total benefits that PBGC 
assumes would be reunited with those entitled to them in the absence of 
this final rule is about $7 million. The effect of the final rule will 
be to increase benefits by $19 million.

Filling Out Forms

    As discussed in the proposal, the burden of using PBGC's existing 
forms (or comparable forms) for the expanded program would be about 
$861,000 (for 3,300 plans per year), assuming two hours per plan. In 
the absence of this final rule, the portion of this cost attributable 
to 200 DB plans (about $52,180) would still be incurred. In addition, 
the 3,100 DC plans that PBGC expects to participate in the expanded

[[Page 60816]]

program would, in the absence of this final rule, have to provide 
comparable information about their missing participants to whatever 
financial institutions were to hold the participants' benefits. PBGC 
thinks it likely that such institutions would require plans to spend at 
least an hour filling out forms or otherwise providing information 
about missing participants. Using the same assumptions for pricing 
paperwork burden, this represents a cost of about $404,410. Thus in the 
absence of this rule, the cost incurred for filling out forms would be 
about $456,590.
    PBGC has redesigned its missing participants forms for use in the 
new program. The new forms contain only about 75 percent as many blanks 
to fill in as the current forms. Accordingly, PBGC is revising the 
assumed cost of filing under the final rule to 75 percent of the 
$861,000 previously assumed, or $645,750. For DB plans, this represents 
a decrease in costs. For DC plans, the costs will only be incurred by 
plans that decide to use the missing participants program. If, as PBGC 
assumes, 3,100 DC plans make that decision, the impact of the final 
rule is to increase costs by $189,160.

Valuing Benefits

    Since DC plans simply send missing participants' account balances 
to PBGC, they incur no cost for benefit valuation. And although the 
final rule changes the valuation rules for DB plans, the changes tend 
to offset each other. As indicated in the proposed rule, therefore, 
PBGC believes that the final rule makes no significant change in costs 
or benefits associated with valuing benefits.

Searching

    Since the final rule imposes no search requirement on DC plans 
beyond what is already required under title I of ERISA, DC search costs 
are the same with or without the final rule and thus can be ignored in 
considering the changes in benefits and costs attributable to adoption 
of the final rule.
    In the proposed rule, PBGC discussed DB search costs on a plan-by-
plan basis, consistent with the proposal that the same search rules 
(records searches plus a commercial locator service search) apply to 
all missing participants. The final rule generally requires a 
commercial locator service search, but permits plans to use a simple 
records search method for participants with normal retirement benefits 
of not more than $50 a month. Accordingly, the analysis must now be 
participant-by-participant.
    PBGC believes its estimate that a search using a commercial locator 
service as defined in the final rule costs about $40 per participant is 
conservative. PBGC further believes that under the existing program 
(without a definition of ``commercial locator service''), many plans 
are incurring such costs, although many are not, and thus that it is 
reasonable to estimate that on average, search costs under the existing 
regulation are $20 per participant. On that basis, search costs under 
the existing program may be estimated at $19,100 ($20 each for 955 
missing participants).
    PBGC does not currently collect data on missing participants' 
normal retirement benefits because it simply pays annuities that are 
actuarially equivalent to the amounts plans deposit with PBGC. But the 
actuarial value of a $50 normal retirement benefit can be calculated 
for any age, and PBGC has statistics on the distribution of ages and 
benefit sizes among missing participants. Using this information, PBGC 
estimates that 80 percent of missing participants have normal 
retirement benefits of not more than $50. Out of 955 missing 
participants, therefore, PBGC expects 764 to be searched for by the 
commercial locator service method at a cost of $40 each (total 
$30,560).
    Plans could choose to use commercial locator services for the 191 
other missing participants, but since this group includes some very 
small benefits, PBGC assumes that simple records searches will be done 
for them. For smaller benefits, the ``affordability'' limitation in the 
final rule will keep costs low. For larger benefits, the cost of 
records searches will vary with the availability and format of records, 
but PBGC expects many record systems to be electronic, permitting 
nearly instantaneous searching. For purposes of this analysis, PBGC is 
putting a figure of $10 on the records search process. That makes the 
search cost for this group $1,910, and the total cost of searching 
under the final rule $32,470.

Fees

    While actions establishing or changing fees for governmental 
services are not considered costs requiring offsets, as explained in 
OMB guidance on the requirements of E.O. 13771,\32\ fees are taken into 
account for purposes of analyzing the transfers, costs and benefits of 
a rulemaking under E.O. 12866. Therefore, the missing participant 
program administrative fee is described here.
---------------------------------------------------------------------------

    \32\ M-17-21, Guidance Implementing Executive Order 13771, 
Titled ``Reducing Regulation and Controlling Regulatory Costs.,'' 
Q&A 13, April 5, 2017.
---------------------------------------------------------------------------

    As noted above, PBGC's working hypothesis is that opening the 
missing participants program to DC plans will add 10,000 missing 
participants per year to the current figure of 955. The fee is only 
paid on benefits transferred that are greater than $250. Statistics on 
the current DB-only program indicate that about 86 percent of missing 
participants have benefits worth over $250. Extrapolating to the new 
combined program, PBGC expects $35 fees to be paid for about 9,420 
missing participants, a total of about $330,000.
    Under the current DB-only program, fees are paid in the form of a 
``load'' of $300 built into the actuarial assumptions for valuing 
benefits over $5,000. About 210 (22 percent) of the 955 missing 
participants currently entering the program annually have benefits at 
least that high; thus annual fees are currently running at about 
$63,000. But fees are a factor in the placement of retirement benefits 
outside PBGC's program as well. One commenter described the exhaustion 
of a $100 account within months due to a combination of set-up and 
maintenance fees. Fees for account statements and for processing 
withdrawals are also common. Because it may be years before a missing 
participant finds and claims a benefit, maintenance or management fees 
can cumulate to very substantial levels. For the 10,000 missing 
participants that PBGC assumes DC plans would choose to bring into the 
PBGC missing participants program, the burden of fees in the absence of 
the program--in the absence of the final rule--can conservatively be 
considered equivalent to a single up-front charge of $100. For an 
assumed 10,000 missing participants, that amounts to $1 million a year. 
Thus, in the absence of this final rule, fees would be running about 
$1.06 million a year.
    Accordingly, the effect of the final rule will be to reduce fees by 
about $730,000.

Regulatory Flexibility Act

    The Regulatory Flexibility Act imposes certain requirements with 
respect to rules that are subject to the notice and comment 
requirements of section 553(b) of the Administrative Procedure Act and 
that are likely to have a significant economic impact on a substantial 
number of small entities. Unless an agency determines that a final rule 
is not likely to have a significant economic impact on a substantial 
number of small entities, section 604 of the Regulatory Flexibility Act 
requires

[[Page 60817]]

that the agency present a final regulatory flexibility analysis at the 
time of the publication of the final rule describing the impact of the 
rule on small entities and steps taken to minimize the impact. Small 
entities include small businesses, organizations and governmental 
jurisdictions.

Small Entities

    For purposes of the Regulatory Flexibility Act requirements with 
respect to this final rule, PBGC considers a small entity to be a plan 
with fewer than 100 participants. This is consistent with certain 
requirements in title I of ERISA \33\ and the Internal Revenue 
Code,\34\ as well as the definition of a small entity that the 
Department of Labor (DOL) has used for purposes of the Regulatory 
Flexibility Act.\35\
---------------------------------------------------------------------------

    \33\ See, e.g., ERISA section 104(a)(2), which permits the 
Secretary of Labor to prescribe simplified annual reports for 
pension plans that cover fewer than 100 participants.
    \34\ See, e.g., Code section 430(g)(2)(B), which permits single-
employer plans with 100 or fewer participants to use valuation dates 
other than the first day of the plan year.
    \35\ See, e.g., DOL's final rule on Prohibited Transaction 
Exemption Procedures, 76 FR 66,637, 66,644 (Oct. 27, 2011).
---------------------------------------------------------------------------

    Further, while some large employers may have small plans, in 
general most small plans are maintained by small employers. Thus, PBGC 
believes that assessing the impact of the final rule on small plans is 
an appropriate substitute for evaluating the effect on small entities. 
The definition of small entity considered appropriate for this purpose 
differs, however, from a definition of small business based on size 
standards promulgated by the Small Business Administration (13 CFR 
121.201) pursuant to the Small Business Act. PBGC therefore requested 
comments on the appropriateness of the size standard used in evaluating 
the impact of the proposed rule on small entities. PBGC received no 
comments on this point.

Certification

    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 PBGC's estimate (discussed above) 
that the economic impact of the final rule on any entity would be 
insignificant. PBGC believes that the expanded missing participants 
program will be particularly helpful to small DC plans and that the 
improvements to the existing program will be helpful to small DB plans.

Paperwork Reduction Act

    PBGC is submitting the information collection requirements under 
part 4050 to the Office of Management and Budget (OMB) for review and 
approval under the Paperwork Reduction Act. The collection of 
information under part 4050 is currently approved under OMB control 
number 1212-0036 (expires November 30, 2017). That control number also 
covers PBGC's information collection on plan termination. PBGC is 
seeking paperwork approval of the new missing participants forms and 
instructions under a new control number. 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.
    PBGC needs the information submitted by plans under part 4050 to 
identify the entities that are to provide benefits with respect to 
missing distributees whose benefits are not transferred to PBGC; and to 
attempt to find missing distributees whose benefits are transferred to 
PBGC and to pay their benefits.
    PBGC estimates that the time for a plan to comply with the 
collection of information for the current program is 2 hours. But PBGC 
has significantly simplified its forms, reducing the number of items by 
a quarter. PBGC thus estimates that the burden of compliance will be 75 
percent of the burden estimated in the proposed rule. As discussed in 
this final rulemaking, there would be about 3,300 respondents each 
year, and the total hours spent on the information collection would be 
4,950. PBGC estimates that 20 percent of the work will be done in-house 
and 80 percent contracted out. Thus the hour burden for plans is 
estimated at about 990 hours (20 percent of 4,950 hours). The dollar 
burden of the 3,960 hours contracted out (80 percent of 4,950 hours) is 
estimated at about $621,750. The dollar equivalent of the 990 in-house 
hours is about $24,000. Total paperwork burden is estimated at 
$646,000.

List of Subjects

29 CFR Part 4000

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

29 CFR Part 4001

    Employee benefit plans, Pension insurance, Pensions.

29 CFR Part 4003

    Administrative practice and procedure, Employee benefit plans, 
Pension insurance, Pensions.

29 CFR Part 4041

    Employee benefit plans, Pension insurance, Pensions.

29 CFR Part 4041A

    Employee benefit plans, Pension insurance, Pensions.

29 CFR Part 4050

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

    In consideration of the foregoing, PBGC amends 29 CFR parts 4000, 
4001, 4003, 4041, 4041A, and 4050 as follows:

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

0
 1. The authority citation for part 4000 continues to read as follows:

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


Sec.  4000.41   [Amended]

0
 2. In Sec.  4000.41, remove ``(premium payments), Sec.  4050.6(d)(3) 
of this chapter (payment of designated benefits for missing 
participants)'' and add in its place ``(premium payments)''.

PART 4001--TERMINOLOGY

0
 3. The authority citation for part 4001 continues to read as follows:

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

0
 4. In Sec.  4001.1:
0
 a. The existing text is designated as paragraph (a) with the paragraph 
heading ``In general.'' added.
0
 b. Paragraph (b) is added to read as follows:


Sec.  4001.1   Purpose and scope.

* * * * *
    (b) Title IV coverage. Coverage by section 4050 of ERISA is not and 
does not result in or confer coverage by title IV of ERISA.


Sec.  4001.2   [Amended]

0
 5. In Sec.  4001.2, the definition of ``Distribution date'' is amended 
as follows:
0
 a. Paragraph (2) and paragraph (1) introductory text are removed.
0
 b. Paragraphs (1)(i) and (ii) are redesignated as paragraphs (1) and 
(2), respectively.

[[Page 60818]]

PART 4003--RULES FOR ADMINISTRATIVE REVIEW OF AGENCY DECISIONS

0
6. The authority citation for part 4003 continues to read as follows:

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


0
 7. In Sec.  4003.1, paragraph (b)(11) is revised to read as follows:


Sec.  4003.1   Purpose and scope.

* * * * *
    (b) * * *
    (11) Determinations with respect to benefits payable by PBGC under 
section 4050 of ERISA and part 4050 of this chapter.
* * * * *

PART 4041--TERMINATION OF SINGLE-EMPLOYER PLANS

0
 8. The authority citation for part 4041 continues to read as follows:

    Authority:  29 U.S.C. 1302(b)(3), 1341, 1344, 1350.


0
 9. In Sec.  4041.28:
0
 a. Paragraph (a)(3) is added;
0
 b. Paragraph (c)(5) is amended by removing ``part 4050'' and adding in 
its place ``subpart A of part 4050 of this chapter''.
    The addition reads as follows:


Sec.  4041.28   Closeout of plan.

    (a) * * *
    (3) Missing participants and beneficiaries. The distribution 
deadline is considered met with respect to a missing distributee to 
whom subpart A of part 4050 of this chapter applies if the benefit 
transfer amount for the missing distributee is considered timely 
transferred to PBGC under subpart A of part 4050 of this chapter.
* * * * *

PART 4041A--TERMINATION OF MULTIEMPLOYER PLANS

0
10. The authority citation for part 4041A continues to read as follows:

    Authority:  29 U.S.C. 1302(b)(3), 1341a, 1441.


0
 11. In Sec.  4041A.42:
0
 a. The existing text of Sec.  4041A.42 is designated as paragraph (a) 
with the paragraph heading ``In general.'' added.
0
 b. Paragraph (b) is added to read as follows:


Sec.  4041A.42   Method of distribution.

* * * * *
    (b) Missing participants and beneficiaries. The plan sponsor must 
distribute plan benefits of missing distributees in accordance with 
subpart D of part 4050 of this chapter.

0
 12. Part 4050 is revised to read as follows:

PART 4050--MISSING PARTICIPANTS

Subpart A--Single-Employer Plans Covered by Title IV
Sec.
4050.101 Purpose and scope.
4050.102 Definitions.
4050.103 Duties of plan administrator.
4050.104 Diligent search.
4050.105 Filing with PBGC.
4050.106 Missing participant benefits.
4050.107 PBGC discretion.
Subpart B--Defined Contribution Plans
4050.201 Purpose and scope.
4050.202 Definitions.
4050.203 Options and duties of plan.
4050.204 Diligent search.
4050.205 Filing with PBGC.
4050.206 Missing participant benefits.
4050.207 PBGC discretion.
Subpart C--Certain Defined Benefit Plans Not Covered by Title IV
4050.301 Purpose and scope.
4050.302 Definitions.
4050.303 Options and duties of plan administrator.
4050.304 Diligent search.
4050.305 Filing with PBGC.
4050.306 Missing participant benefits.
4050.307 PBGC discretion.
Subpart D--Multiemployer Plans Covered by Title IV
4050.401 Purpose and scope.
4050.402 Definitions.
4050.403 Duties of plan sponsor.
4050.404 Diligent search.
4050.405 Filing with PBGC.
4050.406 Missing participant benefits.
4050.407 PBGC discretion.

    Authority:  29 U.S.C. 1302(b)(3), 1350.

Subpart A--Single-Employer Plans Covered by Title IV


Sec.  4050.101   Purpose and scope.

    (a) In general. This subpart describes PBGC's missing participants 
program for single-employer defined benefit retirement plans covered by 
title IV of ERISA. The missing participants program is a program to 
hold retirement benefits for missing participants and beneficiaries in 
terminated retirement plans and to help them find and receive the 
benefits being held for them. For a plan to which this subpart applies, 
this subpart describes what the plan must do upon plan termination if 
it has missing participants or beneficiaries who are entitled to 
distributions. This subpart applies to a plan only if it is a single-
employer defined benefit plan that--
    (1) Is described in section 4021(a) of ERISA and not in any 
paragraph of section 4021(b) of ERISA and
    (2) Terminates in a standard termination or in a distress 
termination described in section 4041(c)(3)(B)(i) or (ii) of ERISA 
(``sufficient distress termination'').
    (b) Plans that terminate but do not close out. This subpart does 
not apply to a plan that terminates but does not close out, such as a 
plan that terminates in a distress termination described in section 
4041(c)(3)(B)(iii) of ERISA (``insufficient distress termination'').
    (c) Individual account plans. This subpart does not apply to an 
individual account plan under section 3(34) of ERISA, even if it is 
described in the same plan document as a plan to which this subpart 
applies. This subpart also does not apply to a plan to the extent that 
it is treated as an individual account plan under section 3(35)(B) of 
ERISA. For example, this subpart does not apply to employee 
contributions (or interest or earnings thereon) held as an individual 
account. (Subpart B deals with individual account plans.)


Sec.  4050.102   Definitions.

    The following terms are defined in Sec.  4001.2 of this chapter: 
Annuity, Code, ERISA, insurer, irrevocable commitment, PBGC, person, 
and plan administrator. In addition, for purposes of this subpart:
    Accrual cessation date for a participant under a subpart A plan 
means the date the participant stopped accruing benefits under the 
terms of the plan.
    Accumulated single sum means, with respect to a missing 
distributee, the distributee's benefit transfer amount accumulated at 
the missing participants interest rate from the benefit determination 
date to the date when PBGC makes or commences payment to or with 
respect to the distributee.
    Benefit determination date with respect to a subpart A plan means 
the single date selected by the plan administrator for valuing benefits 
under Sec.  4050.103(d); this date must be during the period beginning 
on the first day a distribution is made pursuant to close-out of the 
plan to a distributee who is not a missing distributee and ending on 
the last day such a distribution is made.
    Benefit transfer amount for a missing distributee of a subpart A 
plan means the amount determined by the plan administrator under Sec.  
4050.103(d) in the close-out of the plan.
    Close-out or close out with respect to a subpart A plan means the 
process of the final distribution or transfer of assets pursuant to the 
termination of the plan.
    De minimis means, with respect to the value of a benefit (or other 
amount), that the value does not exceed the amount specified under 
section 203(e)(1) of ERISA and section 411(a)(11)(A) of the

[[Page 60819]]

Code (without regard to plan provisions).
    Distributee means, with respect to a subpart A plan, a participant 
or beneficiary entitled to a distribution under the plan pursuant to 
the close-out of the plan.
    Missing, with respect to a distributee under a subpart A plan, 
means that any one or more of the following three conditions exists 
upon close-out of the plan.
    (1) The plan administrator does not know with reasonable certainty 
the location of the distributee.
    (2) Under the terms of the plan, the distributee's benefit is to be 
paid in a lump sum without the distributee's consent, and the 
distributee has not responded to a notice about the distribution of the 
lump sum.
    (3) Under the terms of the plan and any election made by the 
distributee, the distributee's benefit is to be paid in a lump sum, but 
the distributee does not accept the lump sum. For this purpose, a lump 
sum paid by check is not accepted if the check remains uncashed after--
    (i) A ``cash-by'' date prescribed (on the check or in an 
accompanying notice) that is at least 45 days after the issuance of the 
check, or
    (ii) If no such ``cash-by'' date is so prescribed, the check's 
stale date.
    Missing participants forms and instructions means the forms and 
instructions provided by PBGC for use in connection with the missing 
participants program.
    Missing participants interest rate means, for each month, the 
applicable federal mid-term rate (as determined by the Secretary of the 
Treasury pursuant to section 1274(d)(1)(C)(ii) of the Code) for that 
month, compounded monthly.
    Normal retirement date for a participant under a subpart A plan 
means the normal retirement date of the participant under the terms of 
the plan.
    Pay-status or pay status means one of the following (according to 
context):
    (1) With respect to a benefit, that payment of the benefit has 
actually started before the benefit determination date; or
    (2) With respect to a distributee, that payment of the 
distributee's benefit has actually started before the benefit 
determination date.
    PBGC missing participants assumptions means the actuarial 
assumptions prescribed in Sec. Sec.  4044.51 through 4044.57 of this 
chapter with the following modifications:
    (1) The present value is determined as of the benefit determination 
date instead of the plan termination date.
    (2) The mortality assumption is a fixed blend of 50 percent of the 
healthy male mortality rates in Sec.  4044.53(c)(1) of this chapter and 
50 percent of the healthy female mortality rates in Sec.  4044.53(c)(2) 
of this chapter.
    (3) No adjustment is made for loading expenses under Sec.  
4044.52(d) of this chapter.
    (4) The interest assumption used is the assumption applicable to 
valuations occurring in January of the calendar year in which the 
benefit determination date occurs.
    (5) The assumed payment form of a benefit not in pay status is a 
straight life annuity.
    (6) Pre-retirement death benefits are disregarded.
    (7) Notwithstanding the expected retirement age (XRA) assumptions 
in Sec. Sec.  4044.55 through 4044.57 of this chapter,--
    (i) In the case of a participant who is not in pay status and whose 
normal retirement date is on or after the benefit determination date, 
benefits are assumed to commence at the XRA, determined using the high 
retirement rate category under Table II-C of Appendix D to part 4044 of 
this chapter;
    (ii) In the case of a participant who is not in pay status and 
whose normal retirement date is before the benefit determination date, 
benefits are assumed to commence on the participant's normal retirement 
date (or accrual cessation date if later);
    (iii) In the case of a participant who is in pay status, benefits 
are assumed to commence on the date on which benefits actually 
commenced; and
    (iv) In the case of a beneficiary, benefits are assumed to commence 
on the benefit determination date or, if later, the earliest date the 
beneficiary can begin to receive benefits.
    Plan lump sum assumptions means, with respect to a subpart A plan, 
the following:
    (1) If the plan specifies actuarial assumptions and methods to be 
used to calculate a lump sum distribution, such actuarial assumptions 
and methods, or
    (2) Otherwise, the actuarial assumptions specified under section 
205(g)(3) of ERISA and section 417(e)(3) of the Code, determined as of 
the benefit determination date, including use of the missing 
participants interest rate to calculate the present value as of the 
benefit determination date of a payment or payments missed in the past.
    QDRO means a qualified domestic relations order as defined in 
section 206(d)(3) of ERISA and section 414(p) of the Code.
    Qualified survivor of a participant or beneficiary under a subpart 
A plan means, for any benefit with respect to the participant or 
beneficiary,--
    (1) A person who survives the participant or beneficiary and is 
entitled under applicable provisions of a QDRO to receive the benefit;
    (2) A person that is identified by the plan in a submission to PBGC 
by the plan as being entitled under applicable plan provisions 
(including elections, designations, and waivers consistent with such 
provisions) to receive the benefit; or
    (3) If no such person is so entitled, a survivor of the participant 
or beneficiary who is the participant's or beneficiary's living--
    (i) Spouse, or if none,
    (ii) Child, or if none,
    (iii) Parent, or if none,
    (iv) Sibling.
    Subpart A plan or plan means a plan to which this subpart A 
applies, as described in Sec.  4050.101.


Sec.  4050.103   Duties of plan administrator.

    (a) Providing for benefits. For each distributee who is missing 
upon close-out of a subpart A plan, the plan administrator must provide 
for the distributee's plan benefits either--
    (1) By purchasing an irrevocable commitment from an insurer, or
    (2) By--
    (i) Determining the distributee's benefit transfer amount under 
paragraph (d) of this section, and
    (ii) Transferring to PBGC as described in this subpart A an amount 
equal to the distributee's benefit transfer amount.
    (b) Diligent search. For each distributee whose location the plan 
administrator does not know with reasonable certainty upon close-out of 
a subpart A plan, the plan administrator must have conducted a diligent 
search as described in Sec.  4050.104.
    (c) Filing with PBGC. For each distributee who is missing upon 
close-out of a subpart A plan, the plan administrator must file with 
PBGC as described in Sec.  4050.105.
    (d) Benefit transfer amount. The benefit transfer amount for a 
missing distributee is the amount determined by the plan administrator 
as of the benefit determination date using whichever one of the 
following three methods applies:
    (1) De minimis. If the single sum actuarial equivalent of the 
distributee's benefits (including any payments missed in the past) 
determined using plan lump sum assumptions is de minimis, then the 
missing distributee's benefit transfer amount is equal to that single 
sum.
    (2) Non-de minimis; single sum payment cannot be elected. If the 
single sum actuarial equivalent of the distributee's benefits 
(including any payments missed in the past)

[[Page 60820]]

determined using plan lump sum assumptions is not de minimis, and a 
single sum payment cannot be elected, then the missing distributee's 
benefit transfer amount is the present value of the distributee's 
accrued benefit determined using PBGC missing participants assumptions, 
plus
    (i) For a missing distributee not in pay status whose normal 
retirement date (or accrual cessation date if later) precedes the 
benefit determination date, the aggregate value of payments of the 
straight life annuity that would have been payable beginning on the 
normal retirement date (or accrual cessation date if later), 
accumulated at the missing participants interest rate from the date 
each payment would have been made to the benefit determination date, 
assuming that the distributee survived to the benefit determination 
date, as determined by the plan administrator; or
    (ii) For a missing distributee in pay status, the aggregate value 
of payments of the pay status annuity due but not made, accumulated at 
the missing participants interest rate from each payment due date to 
the benefit determination date, assuming that the distributee survived 
to the benefit determination date.
    (3) Non-de minimis; single sum payment can be elected. If the 
single sum actuarial equivalent of the distributee's benefits 
(including any payments missed in the past) determined using plan lump 
sum assumptions is not de minimis, and a single sum payment can be 
elected, then the missing distributee's benefit transfer amount is the 
greater of the amounts determined using the methodology in paragraph 
(d)(1) or (d)(2) of this section.


Sec.  4050.104   Diligent search.

    (a) Search requirement. The plan administrator of a subpart A plan 
must, within the time frame described in paragraph (d) of this section, 
have diligently searched for each distributee of the plan whose 
location the plan administrator does not know with reasonable certainty 
upon close-out, using one of the following two methods:
    (1) For any distributee, regardless of the size of the 
distributee's benefit, the commercial locator service method described 
in paragraph (b) of this section; or
    (2) For a distributee whose normal retirement benefit is not more 
than $50 per month, the records search method described in paragraph 
(c) of this section.
    (b) Commercial locator service method--(1) In general. Using the 
commercial locator service method means paying a commercial locator 
service to search for information to locate a distributee.
    (2) Meaning of ``commercial locator service.'' For purposes of this 
section, a commercial locator service is a business that holds itself 
out as a finder of lost persons for compensation using information from 
a database maintained by a consumer reporting agency (as defined in 15 
U.S.C. 1681a(f)).
    (c) Records search method--(1) In general. Using the records search 
method means searching for information to locate a distributee by doing 
all of the following to the extent reasonably feasible and affordable:
    (i) Searching the records of the plan for information to locate the 
distributee.
    (ii) Searching the records of the plan's contributing sponsor that 
is the most recent employer of the distributee for information to 
locate the distributee.
    (iii) Searching the records of each retirement or welfare plan of 
the plan's contributing sponsor in which the distributee was a 
participant for information to locate the distributee.
    (iv) Contacting each beneficiary of the distributee identified from 
the records referred to in paragraphs (c)(1)(i), (ii), and (iii) of 
this section for information to locate the distributee.
    (v) Using an internet search method for which no fee is charged, 
such as a search engine, a network database, a public record database 
(such as those for licenses, mortgages, and real estate taxes) or a 
``social media'' website.
    (2) Limits on method. For purposes of this section--
    (i) Searching is not feasible to the extent that, as a practical 
matter, it is thwarted by legal or practical lack of access to records, 
and
    (ii) Searching is not affordable to the extent that the cost of 
searching (including the value of labor) is more than a reasonable 
fraction of the benefit of the distributee being searched for. In no 
event would searching need to be pursued beyond the point where the 
cost equals the value of the benefit.
    (d) Time frame. A search for a distributee under this section must 
have been made within nine months before a filing is made under Sec.  
4050.105 identifying the distributee as a missing distributee.


Sec.  4050.105   Filing with PBGC.

    (a) What to file. The plan administrator of a subpart A plan must 
file with PBGC the information specified in the missing participants 
forms and instructions and, for a missing distributee referred to in 
Sec.  4050.103(a)(2), payment of--
    (1) The benefit transfer amount for the missing distributee;
    (2) If the benefit transfer amount is paid more than 90 days after 
the benefit determination date, interest on the benefit transfer amount 
computed at the missing participants interest rate for the period 
beginning on the 90th day after the benefit determination date and 
ending on the date the benefit transfer amount is paid to PBGC; and
    (3) Any fee provided for in the missing participants forms and 
instructions.
    (b) When to file. The plan administrator must file the information 
and payments referred to in paragraph (a) of this section in accordance 
with the missing participants forms and instructions. Payment of a 
benefit transfer amount will, if considered timely made for purposes of 
this paragraph (b), be considered timely made for purposes of part 4041 
of this chapter.
    (c) Place, method and date of filing; time periods. (1) For rules 
about where to file, see Sec.  4000.4 of this chapter.
    (2) For rules about permissible methods of filing with PBGC under 
this subpart, see subpart A of part 4000 of this chapter.
    (3) For rules about the date that a submission under this subpart 
was filed with PBGC, see subpart C of part 4000 of this chapter.
    (4) For rules about any time period for filing under this subpart, 
see subpart D of part 4000 of this chapter.
    (d) Supplemental information. Within 30 days after a written 
request by PBGC (or such other time as may be specified in the 
request), the plan administrator of a subpart A plan required to file 
under paragraph (a) of this section must file with PBGC supplemental 
information for any proper purpose under the missing participants 
program.
    (e) Reliance. As administrator of the missing participants program, 
PBGC will rely on determinations made and information reported by plan 
administrators in connection with the program. This reliance does not 
affect PBGC's authority as administrator of the title IV insurance 
program to audit or make inquiries of subpart A plans, including about 
the amount to which a missing distributee may be entitled.


Sec.  4050.106   Missing participant benefits.

    (a) In general--(1) Benefit transfer amount not paid. If a subpart 
A plan files with PBGC information about an irrevocable commitment 
provided by the subpart A plan for a missing distributee, PBGC will 
provide information about the irrevocable commitment to the distributee 
or another claimant that may be entitled to

[[Page 60821]]

payment pursuant to the irrevocable commitment.
    (2) Benefit transfer amount paid. If a subpart A plan pays PBGC a 
benefit transfer amount for a missing distributee, PBGC will pay 
benefits with respect to the missing distributee in accordance with 
this section, subject to the provisions of a QDRO.
    (b) Benefits for missing distributees who are participants. 
Paragraphs (c), (d), (e), and (k) of this section describe the benefits 
that PBGC will pay to a non-pay status missing participant of a subpart 
A plan who claims a benefit under the missing participants program.
    (c) De minimis benefit. If the benefit transfer amount of a 
participant described in paragraph (b) of this section is de minimis, 
PBGC will pay the participant a lump sum equal to the accumulated 
single sum.
    (d) Non-de minimis benefit of unmarried participant. If the benefit 
transfer amount of an unmarried participant described in paragraph (b) 
of this section is not de minimis, PBGC will pay the participant either 
the annuity described in paragraph (d)(1) of this section, beginning 
not before age 55, and (if applicable) the make-up amount described in 
paragraph (d)(2) of this section; or, if the participant could have 
elected a lump sum under the subpart A plan, and the participant so 
elects under the missing participants program, the lump sum described 
in paragraph (d)(3) of this section.
    (1) Annuity. The annuity described in this paragraph (d)(1) is 
either--
    (i) Straight life annuity. A straight life annuity in the amount 
that the subpart A plan would have paid the participant, starting at 
the date that PBGC payments start (or, if earlier, the later of the 
participant's normal retirement date or accrual cessation date), as 
reported to PBGC by the subpart A plan (including any early retirement 
subsidies), or through linear interpolation for participants who start 
payments between integral ages; or
    (ii) Other form of annuity. At the participant's election, any form 
of annuity available to the participant under Sec.  4022.8 of this 
chapter, in an amount that is actuarially equivalent to the straight 
life annuity in paragraph (d)(1)(i) of this section as of the date that 
PBGC payments start (or, if earlier, the later of the participant's 
normal retirement date or accrual cessation date), determined using the 
actuarial assumptions in Sec.  4022.8(c)(7) of this chapter.
    (2) Make-up amount. If PBGC begins to pay the annuity under 
paragraph (d)(1) of this section after the normal retirement date (or 
accrual cessation date if later), the make-up amount described in this 
paragraph (d)(2) is a lump sum equal to the aggregate value of payments 
of the annuity that would have been payable to the participant (in the 
elected form) beginning on the normal retirement date (or accrual 
cessation date if later), accumulated at the missing participants 
interest rate from the date each payment would have been made to the 
date when PBGC begins to pay the annuity.
    (3) Lump sum. The lump sum described in this paragraph (d)(3) is 
equal to the participant's accumulated single sum.
    (e) Non-de minimis benefit of married participant. If the benefit 
transfer amount of a married participant described in paragraph (b) of 
this section is not de minimis, PBGC will pay the participant either 
the annuity described in paragraph (e)(1) of this section, beginning 
not before age 55, and (if applicable) the make-up amount described in 
paragraph (e)(2) of this section; or, if the participant could have 
elected a lump sum under the subpart A plan, and the participant so 
elects under the missing participants program with the consent of the 
participant's spouse, the lump sum described in paragraph (e)(3) of 
this section.
    (1) Annuity. The annuity described in this paragraph (e)(1) is 
either--
    (i) Joint and survivor annuity. A joint and 50 percent survivor 
annuity in an amount that is actuarially equivalent to the straight 
life annuity under paragraph (d)(1)(i) of this section as of the date 
that PBGC payments start (or, if earlier, the later of the 
participant's normal retirement date or accrual cessation date), 
determined using the actuarial assumptions in Sec.  4022.8(c)(7) of 
this chapter; or
    (ii) Other form of annuity. At the participant's election, with the 
consent of the participant's spouse, any form of annuity available to 
the participant under Sec.  4022.8 of this chapter, in an amount that 
is actuarially equivalent to the joint and 50 percent survivor annuity 
under paragraph (e)(1)(i) of this section as of the date that PBGC 
payments start (or, if earlier, the later of the participant's normal 
retirement date or accrual cessation date), determined using the 
actuarial assumptions in Sec.  4022.8(c)(7) of this chapter.
    (2) Make-up amount. If PBGC begins to pay the annuity under 
paragraph (e)(1) of this section after the normal retirement date (or 
accrual cessation date if later), the make-up amount described in this 
paragraph (e)(2) is a lump sum equal to the aggregate value of payments 
of the annuity that would have been payable to the participant 
beginning on the normal retirement date (or accrual cessation date if 
later), accumulated at the missing participants interest rate from the 
date each payment would have been made to the date when PBGC begins to 
pay the annuity.
    (3) Lump sum. The lump sum described in this paragraph (e)(3) is 
equal to the participant's accumulated single sum.
    (f) Benefits with respect to deceased missing distributees who were 
participants. Paragraphs (g), (h), (i), (j), and (k) of this section 
describe the benefits that PBGC will pay with respect to a non-pay 
status missing participant of a subpart A plan who dies without 
receiving a benefit under the missing participants program.
    (g) De minimis benefit. If the benefit transfer amount of a 
participant described in paragraph (f) of this section is de minimis, 
PBGC will pay to the qualified survivor(s) of the participant a lump 
sum equal to the participant's accumulated single sum.
    (h) Non-de minimis benefit; unmarried participant. In the case of 
an unmarried participant described in paragraph (f) of this section 
whose benefit transfer amount is not de minimis,--
    (1) Death before normal retirement date. If the participant dies 
before the normal retirement date (or accrual cessation date if later), 
PBGC will pay no benefits with respect to the participant; and
    (2) Death after normal retirement date. If the participant dies on 
or after the normal retirement date (or accrual cessation date if 
later), PBGC will pay to the participant's qualified survivor(s) an 
amount equal to the aggregate value of payments of the straight life 
annuity described in paragraph (d)(1)(i) of this section that would 
have been payable to the participant from the normal retirement date 
(or accrual cessation date if later) to the participant's date of 
death, accumulated at the missing participants interest rate from the 
date each payment would have been made to the date when PBGC pays the 
qualified survivor(s).
    (i) Non-de minimis benefit; married participant with living spouse. 
In the case of a married participant described in paragraph (f) of this 
section whose benefit transfer amount is not de minimis and whose 
spouse survives the participant and claims a benefit under the missing 
participants program, PBGC will pay the spouse, beginning not before 
the participant would have reached age 55, the annuity (if any) 
described in paragraph (i)(1) of this section and the make-up amounts 
(if applicable) described in paragraph (i)(2)

[[Page 60822]]

of this section, except that PBGC will pay the spouse, as a lump sum, 
the small benefit described in paragraph (i)(3) of this section.
    (1) Annuity. The annuity described in this paragraph (i)(1) is the 
survivor portion of a joint and 50 percent survivor annuity that is 
actuarially equivalent as of the assumed starting date (determined 
using the actuarial assumptions in Sec.  4022.8(c)(7) of this chapter) 
to the straight life annuity in the amount that the subpart A plan 
would have paid the participant with an assumed starting date of--
    (i) The date when the participant would have reached age 55, if the 
participant died before that date, or
    (ii) The participant's date of death, if the participant died 
between age 55 and the normal retirement date (or accrual cessation 
date if later), or
    (iii) The normal retirement date (or accrual cessation date if 
later), if the participant died after that date.
    (2) Make-up amounts. The make-up amounts described in this 
paragraph (i)(2) are the amounts described in paragraphs (i)(2)(i) and 
(ii) of this section.
    (i) Payments from participant's death or 55th birthday to 
commencement of survivor annuity. The make-up amount described in this 
paragraph (i)(2)(i) is a lump sum equal to the aggregate value of 
payments of the survivor portion of the joint and 50 percent survivor 
annuity described in paragraph (i)(1) of this section that would have 
been payable to the spouse beginning on the later of the participant's 
date of death or the date when the participant would have reached age 
55, accumulated at the missing participants interest rate from the date 
each payment would have been made to the date when PBGC pays the 
spouse.
    (ii) Payments from normal retirement date to participant's death. 
The make-up amount described in this paragraph (i)(2)(ii) is a lump sum 
equal to the aggregate value of payments (if any) of the joint portion 
of the joint and 50 percent survivor annuity described in paragraph 
(i)(1) of this section that would have been payable to the participant 
from the normal retirement date (or accrual cessation date if later) to 
the participant's date of death thereafter, accumulated at the missing 
participants interest rate from the date each payment would have been 
made to the date when PBGC pays the spouse.
    (3) Small benefit. If the sum of the actuarial present value of the 
annuity described in paragraph (i)(1) of this section plus the make-up 
amounts described in paragraph (i)(2) of this section is de minimis, 
then the lump sum that PBGC will pay the spouse under this paragraph 
(i)(3) is an amount equal to that sum. For this purpose, the actuarial 
present value of the annuity is determined using the actuarial 
assumptions in Sec.  4022.8(c)(7) of this chapter as of the date when 
PBGC pays the spouse.
    (j) Non-de minimis benefit; married participant with deceased 
spouse. In the case of a married participant described in paragraph (f) 
of this section whose benefit transfer amount is not de minimis and 
whose spouse survives the participant but dies without receiving a 
benefit under the missing participants program, PBGC will pay to the 
qualified survivor(s) of the participant's spouse the make-up amount 
described in paragraph (j)(1) of this section and to the qualified 
survivor(s) of the participant the make-up amount described in 
paragraph (j)(2) of this section.
    (1) Payments from participant's death or 55th birthday to spouse's 
death. The make-up amount described in this paragraph (j)(1) is a lump 
sum equal to the aggregate value of payments of the survivor portion of 
the joint and 50 percent survivor annuity described in paragraph (i)(1) 
of this section that would have been payable to the spouse from the 
later of the participant's date of death or the date when the 
participant would have reached age 55 to the spouse's date of death, 
accumulated at the missing participants interest rate from the date 
each payment would have been made to the date when PBGC pays the 
spouse's qualified survivor(s).
    (2) Payments from normal retirement date to participant's death. 
The make-up amount described in this paragraph (j)(2) is a lump sum 
equal to the aggregate value of payments of the joint portion of the 
joint and 50 percent survivor annuity described in paragraph (i)(1) of 
this section that would have been payable to the participant from the 
normal retirement date (or accrual cessation date if later) to the 
participant's date of death thereafter, accumulated at the missing 
participants interest rate from the date each payment would have been 
made to the date when PBGC pays the participant's qualified 
survivor(s).
    (k) Benefits under contributory plans. If a subpart A plan reports 
to PBGC that a portion of a missing participant's benefit transfer 
amount represents accumulated contributions as described in section 
204(c)(2)(C) of ERISA and section 411(c)(2)(C) of the Code, PBGC will 
pay with respect to the missing participant at least the amount of 
accumulated contributions as reported by the subpart A plan, 
accumulated at the missing participants interest rate from the benefit 
determination date to the date when PBGC makes payment.
    (l) Date for determining marital status. For purposes of this 
section, whether a participant is married, and if so the identity of 
the spouse, is determined as of the earlier of--
    (1) The date the participant receives or begins to receive a 
benefit, or
    (2) The date the participant dies.


Sec.  4050.107   PBGC discretion.

    PBGC may in appropriate circumstances extend deadlines, excuse 
noncompliance, and grant waivers with regard to any provision of this 
subpart to promote the purposes of the missing participants program and 
title IV of ERISA. Like circumstances will be treated in like manner 
under this section.

Subpart B--Defined Contribution Plans


Sec.  4050.201   Purpose and scope.

    (a) In general. This subpart describes PBGC's missing participants 
program for single-employer and multiemployer defined contribution 
retirement plans. The missing participants program is a program to hold 
retirement benefits for missing participants and beneficiaries in 
terminated retirement plans and to help them find and receive the 
benefits being held for them. For a plan to which this subpart applies, 
this subpart describes what the plan must do upon plan termination if 
it elects to use the missing participants program for missing 
participants and beneficiaries who are entitled to distributions. This 
subpart applies to a plan only if it is a plan--
    (1) That--
    (i) Is a defined contribution (individual account) plan described 
in section 3(34) of ERISA; or
    (ii) Is treated as a defined contribution (individual account) plan 
under section (3)(35) of ERISA (to the extent so treated);
    (2) That is described in section 4021(a) of ERISA and not in any 
paragraph of section 4021(b) of ERISA other than paragraph (1), (5), 
(12), or (13), including a plan described in section 403(b) of the Code 
under which benefits are provided through custodial accounts described 
in section 403(b)(7) of the Code;
    (3) That, if it is a transferring plan, pays all benefit transfer 
amounts to PBGC in money, consistent with plan provisions and 
applicable law; and
    (4) That terminates and closes out.
    (b) Defined contribution plans that are part of defined benefit 
plans. This subpart does not fail to apply to a plan

[[Page 60823]]

merely because the plan is described in the same plan document as a 
defined benefit plan (to which this subpart does not apply). For 
example, this subpart may apply to employee contributions (or interest 
or earnings thereon) held as an individual account under a defined 
benefit plan.
    (c) Defined contribution plans that are abandoned plans. This 
subpart does not fail to apply to a plan merely because the plan is an 
abandoned plan, as defined in 29 CFR 2578.1.


Sec.  4050.202   Definitions.

    The following terms are defined in Sec.  4001.2 of this chapter: 
Annuity, Code, ERISA, PBGC, and person. In addition, for purposes of 
this subpart:
    Accumulated single sum means, with respect to a missing 
distributee, the distributee's benefit transfer amount accumulated at 
the missing participants interest rate from the date when the subpart B 
plan pays PBGC the benefit transfer amount for the missing distributee 
to the date when PBGC makes or commences payment to or with respect to 
the distributee.
    Benefit conversion assumptions means, with respect to an annuity, 
the applicable mortality table and applicable interest rate under 
section 205(g)(3) of ERISA and section 417(e)(3) of the Code for 
January of the calendar year in which PBGC begins paying the annuity.
    Benefit transfer amount for a missing distributee in a transferring 
plan means the amount available for distribution to the distributee in 
connection with the close-out of the subpart B plan.
    Close-out or close out with respect to a subpart B plan means the 
process of the final distribution or transfer of assets pursuant to the 
termination of the subpart B plan.
    De minimis means, with respect to the value of a benefit (or other 
amount), that the value does not exceed the amount specified under 
section 203(e)(1) of ERISA and section 411(a)(11)(A) of the Code 
(without regard to plan provisions).
    Distributee means, with respect to a subpart B plan, a participant 
or beneficiary entitled to a distribution under the plan pursuant to 
the close-out of the plan, except that a person is not a distributee if 
the subpart B plan transfers assets to another pension plan (within the 
meaning of section 3(2) of ERISA) to pay the person's benefits.
    Missing, with respect to a distributee under a subpart B plan, 
means that any one or more of the following three conditions exists 
upon close-out of the plan.
    (1) The plan does not know with reasonable certainty the location 
of the distributee.
    (2) The distributee has not elected a form of distribution in 
response to a notice about the distribution.
    (3) Under the terms of the plan and any election made by the 
distributee, the distributee's benefit is to be paid in a lump sum, but 
the distributee does not accept the lump sum. For this purpose, a lump 
sum paid by check is not accepted if the check remains uncashed after--
    (i) A ``cash-by'' date prescribed (on the check or in an 
accompanying notice) that is at least 45 days after the issuance of the 
check, or
    (ii) If no such ``cash-by'' date is so prescribed, the check's 
stale date.
    Missing participants forms and instructions means the forms and 
instructions provided by PBGC for use in connection with the missing 
participants program.
    Missing participants interest rate means, for each month, the 
applicable federal mid-term rate (as determined by the Secretary of the 
Treasury pursuant to section 1274(d)(1)(C)(ii) of the Code) for that 
month, compounded monthly.
    Notifying plan means a subpart B plan that elects notifying plan 
status in accordance with Sec.  4050.203.
    QDRO means a qualified domestic relations order as defined in 
section 206(d)(3) of ERISA and section 414(p) of the Code.
    Qualified survivor of a participant or beneficiary under a subpart 
B plan means, for any benefit with respect to the participant or 
beneficiary,--
    (1) A person who survives the participant or beneficiary and is 
entitled under applicable provisions of a QDRO to receive the benefit;
    (2) A person that is identified by the plan in a submission to PBGC 
by the plan as being entitled under applicable plan provisions 
(including elections, designations, and waivers consistent with such 
provisions) to receive the benefit; or
    (3) If no such person is so entitled, a survivor of the participant 
or beneficiary who is the participant's or beneficiary's living--
    (i) Spouse, or if none,
    (ii) Child, or if none,
    (iii) Parent, or if none,
    (iv) Sibling.
    Subpart B plan or plan means a plan to which this subpart B 
applies, as described in Sec.  4050.201.
    Transferring plan means a subpart B plan that elects transferring 
plan status in accordance with Sec.  4050.203.


Sec.  4050.203   Options and duties of plan.

    (a) Options. A subpart B plan that is closing out upon plan 
termination may (but need not) elect, by filing under Sec.  4050.205, 
that the subpart B plan--
    (1) Will be a ``transferring plan,'' that is, will pay a benefit 
transfer amount to PBGC for each distributee who is missing upon close-
out of the plan and will be bound by the provisions of this subpart B 
to the extent that they apply to transferring plans, or
    (2) Will be a ``notifying plan,'' that is, will notify PBGC of the 
disposition of the benefits of each distributee identified in the 
filing who is missing upon close-out of the plan and will, with respect 
to those distributees, be bound by the provisions of this subpart B to 
the extent that they apply to notifying plans.
    (b) Diligent search--(1) In general. Except as provided in 
paragraph (b)(2) of this section, for each distributee whose location 
the plan does not know with reasonable certainty upon close-out of a 
subpart B plan, the plan must have conducted a diligent search as 
described in Sec.  4050.204.
    (2) Notifying plans. For a notifying plan, the requirement of 
paragraph (b)(1) of this section applies only to distributees 
identified in the filing with PBGC.
    (c) Filing with PBGC--(1) In general. Except as provided in 
paragraph (c)(2) of this section, for each distributee who is missing 
upon close-out of a subpart B plan, the plan must file with PBGC as 
described in Sec.  4050.205.
    (2) Notifying plans. For a notifying plan, the requirement of 
paragraph (c)(1) of this section applies only to distributees 
identified in the filing with PBGC.


Sec.  4050.204   Diligent search.

    (a) Search requirement--(1) In general. Except as provided in 
paragraph (a)(2) of this section, a subpart B plan must, within the 
time frame described in paragraph (b) of this section, have diligently 
searched for each distributee of the plan whose location the plan does 
not know with reasonable certainty upon close-out in accordance with 
regulations and other applicable guidance issued by the Secretary of 
Labor under section 404 of ERISA.
    (2) Notifying plans. For a notifying plan, the requirement of 
paragraph (a)(1) of this section applies only to distributees 
identified in the filing with PBGC.
    (b) Time frame. A search for a missing distributee must be made 
within nine months before a filing is made under

[[Page 60824]]

Sec.  4050.205 identifying the distributee as a missing distributee.


Sec.  4050.205   Filing with PBGC.

    (a) What to file. A subpart B plan must file with PBGC the 
information specified in the missing participants forms and 
instructions, and if the plan is a transferring plan, payment of--
    (1) The benefit transfer amount for the missing distributee; and
    (2) Any fee provided for in the missing participants forms and 
instructions.
    (b) When to file. The plan must file the information and payments 
referred to in paragraph (a) of this section in accordance with the 
missing participants forms and instructions.
    (c) Place, method and date of filing; time periods. (1) For rules 
about where to file, see Sec.  4000.4 of this chapter.
    (2) For rules about permissible methods of filing with PBGC under 
this subpart, see subpart A of part 4000 of this chapter.
    (3) For rules about the date that a submission under this subpart 
was filed with PBGC, see subpart C of part 4000 of this chapter.
    (4) For rules about any time period for filing under this subpart, 
see subpart D of part 4000 of this chapter.
    (d) Supplemental information. Within 30 days after a written 
request by PBGC (or such other time as may be specified in the 
request), the plan administrator of a subpart B plan required to file 
under paragraph (a) of this section must file with PBGC supplemental 
information for any proper purpose under the missing participants 
program.
    (e) Reliance. As administrator of the missing participants program, 
PBGC will rely on determinations made and information reported by plans 
in connection with the program.


Sec.  4050.206   Missing participant benefits.

    (a) In general--(1) Notifying plan. If a notifying plan files with 
PBGC information about a disposition of benefits made by the subpart B 
plan for a missing distributee, PBGC will provide information about the 
disposition of benefits to the distributee or another claimant that may 
be entitled to the benefits.
    (2) Transferring plan. If a transferring plan pays PBGC a benefit 
transfer amount for a missing distributee, PBGC will pay benefits with 
respect to the missing distributee in accordance with this section, 
subject to the provisions of a QDRO.
    (b) Benefits for missing distributees who are participants. 
Paragraphs (c), (d), and (e) of this section describe the benefits that 
PBGC will pay to a missing participant of a subpart B plan who claims a 
benefit under the missing participants program.
    (c) De minimis benefit. If the benefit transfer amount of a 
participant described in paragraph (b) of this section is de minimis, 
PBGC will pay the participant a lump sum equal to the accumulated 
single sum.
    (d) Non-de minimis benefit of unmarried participant. If the benefit 
transfer amount of an unmarried participant described in paragraph (b) 
of this section is not de minimis, PBGC will pay the participant either 
the annuity described in paragraph (d)(1) of this section, beginning 
not before age 55; or, if the participant so elects, the lump sum 
described in paragraph (d)(2) of this section.
    (1) Annuity. The annuity described in this paragraph (d)(1) is, at 
the participant's election, any form of annuity available to the 
participant under Sec.  4022.8 of this chapter, in an amount that is 
actuarially equivalent, under the benefit conversion assumptions, to 
the participant's accumulated single sum.
    (2) Lump sum. The lump sum described in this paragraph (d)(2) is 
the participant's accumulated single sum.
    (e) Non-de minimis benefit of married participant. If the benefit 
transfer amount of a married participant described in paragraph (b) of 
this section is not de minimis, PBGC will pay the participant either 
the annuity described in paragraph (e)(1) of this section, beginning 
not before age 55; or, if the participant so elects with the consent of 
the participant's spouse, the lump sum described in paragraph (e)(2) of 
this section.
    (1) Annuity. The annuity described in this paragraph (e)(1) is 
either--
    (i) Joint and survivor annuity. A joint and 50 percent survivor 
annuity in an amount that is actuarially equivalent, under the benefit 
conversion assumptions, to the participant's accumulated single sum; or
    (ii) Other form of annuity. At the participant's election, with the 
consent of the participant's spouse, any form of annuity available to 
the participant under Sec.  4022.8 of this chapter, in an amount that 
is actuarially equivalent, under the benefit conversion assumptions, to 
the participant's accumulated single sum.
    (2) Lump sum. The lump sum described in this paragraph (e)(2) is 
the participant's accumulated single sum.
    (f) Benefits with respect to deceased missing distributees who were 
participants. Paragraphs (g), (h), and (i) of this section describe the 
benefits that PBGC will pay with respect to a missing participant of a 
subpart B plan who dies without receiving a benefit under the missing 
participants program.
    (g) De minimis benefit. If the benefit transfer amount of a 
participant described in paragraph (f) of this section is de minimis, 
and the participant's qualified survivor claims a benefit under the 
missing participants program, PBGC will pay the claimant a lump sum 
equal to the participant's accumulated single sum.
    (h) Non-de minimis benefit; non-spousal qualified survivor. If the 
benefit transfer amount of a married or unmarried participant described 
in paragraph (f) of this section is not de minimis, and the 
participant's qualified survivor is not the participant's surviving 
spouse and claims a benefit under the missing participants program, 
PBGC will pay the claimant a lump sum equal to the participant's 
accumulated single sum.
    (i) Non-de minimis benefit; surviving spouse is qualified survivor. 
If the benefit transfer amount of a married participant described in 
paragraph (f) of this section is not de minimis, and the participant's 
qualified survivor is the participant's surviving spouse and claims a 
benefit under the missing participants program, PBGC will, at the 
spouse's election, either pay the spouse, beginning not before the 
participant would have reached age 55, the annuity described in 
paragraph (i)(1) of this section; or pay the spouse the lump sum 
described in paragraph (i)(2) of this section.
    (1) Annuity. The annuity described in this paragraph (i)(1) is a 
straight life annuity for the life of the spouse in an amount that is 
actuarially equivalent, under the benefit conversion assumptions, to 
the participant's accumulated single sum.
    (2) Lump sum. The lump sum described in this paragraph (i)(2) is a 
lump sum equal to the participant's accumulated single sum.
    (j) Date for determining marital status. For purposes of this 
section, whether a participant is married, and if so the identity of 
the spouse, is determined as of the earlier of--
    (1) The date the participant receives or begins to receive a 
benefit, or
    (2) The date the participant dies.


Sec.  4050.207   PBGC discretion.

    PBGC may in appropriate circumstances extend deadlines, excuse 
noncompliance, and grant waivers with regard to any provision of this 
subpart to promote the purposes of the missing participants program and 
title IV of ERISA. Like circumstances will be

[[Page 60825]]

treated in like manner under this section.

Subpart C--Certain Defined Benefit Plans Not Covered by Title IV


Sec.  4050.301   Purpose and scope.

    (a) In general. This subpart describes PBGC's missing participants 
program for small professional service defined benefit retirement plans 
not covered by title IV of ERISA. The missing participants program is a 
program to hold retirement benefits for missing participants and 
beneficiaries in terminated retirement plans and to help them find and 
receive the benefits being held for them. For a plan to which this 
subpart applies, this subpart describes what the plan must do upon plan 
termination if it elects to use the missing participants program for 
missing participants and beneficiaries who are entitled to 
distributions. This subpart applies to a plan only if it is a single-
employer defined benefit plan that--
    (1) Is described in section 4021(a) of ERISA and not in any 
paragraph of section 4021(b) of ERISA other than paragraph (13), and
    (2) Terminates and closes out with sufficient assets to satisfy all 
liabilities with respect to employees and their beneficiaries.
    (b) Individual account plans. This subpart does not apply to an 
individual account plan under section 3(34) of ERISA, even if it is 
described in the same plan document as a plan to which this subpart 
applies. This subpart also does not apply to a plan to the extent that 
it is treated as an individual account plan under section 3(35)(B) of 
ERISA. For example, this subpart does not apply to employee 
contributions (or interest or earnings thereon) held as an individual 
account. (Subpart B deals with individual account plans.)


Sec.  4050.302   Definitions.

    The following terms are defined in Sec.  4001.2 of this chapter: 
Annuity, Code, ERISA, PBGC, person, and plan administrator. In 
addition, for purposes of this subpart:
    Accrual cessation date for a participant under a subpart C plan 
means the date the participant stopped accruing benefits under the 
terms of the plan.
    Accumulated single sum means, with respect to a missing 
distributee, the distributee's benefit transfer amount accumulated at 
the missing participants interest rate from the benefit determination 
date to the date when PBGC makes or commences payment to or with 
respect to the distributee.
    Benefit determination date with respect to a subpart C plan means 
the single date selected by the plan administrator for valuing benefits 
under Sec.  4050.303(d); this date must be during the period beginning 
on the first day a distribution is made pursuant to close-out of the 
plan to a distributee who is not a missing distributee and ending on 
the last day such a distribution is made.
    Benefit transfer amount for a missing distributee in a transferring 
plan means the amount determined by the plan administrator under Sec.  
4050.303(d) in the close-out of the subpart C plan.
    Close-out or close out with respect to a subpart C plan means the 
process of the final distribution or transfer of assets pursuant to the 
termination of the subpart C plan.
    De minimis means, with respect to the value of a benefit (or other 
amount), that the value does not exceed the amount specified under 
section 203(e)(1) of ERISA and section 411(a)(11)(A) of the Code 
(without regard to plan provisions).
    Distributee means, with respect to a subpart C plan, a participant 
or beneficiary entitled to a distribution under the subpart C plan 
pursuant to the close-out of the subpart C plan, except that a person 
is not a distributee if the subpart C plan transfers assets to another 
pension plan (within the meaning of section 3(2) of ERISA) to pay the 
person's benefits.
    Missing, with respect to a distributee under a subpart C plan, 
means that any one or more of the following three conditions exists 
upon close-out of the plan.
    (1) The plan administrator does not know with reasonable certainty 
the location of the distributee.
    (2) Under the terms of the plan, the distributee's benefit is to be 
paid in a lump sum without the distributee's consent, and the 
distributee has not responded to a notice about the distribution of the 
lump sum.
    (3) Under the terms of the plan and any election made by the 
distributee, the distributee's benefit is to be paid in a lump sum, but 
the distributee does not accept the lump sum. For this purpose, a lump 
sum paid by check is not accepted if the check remains uncashed after--
    (i) A ``cash-by'' date prescribed (on the check or in an 
accompanying notice) that is at least 45 days after the issuance of the 
check, or
    (ii) If no such ``cash-by'' date is so prescribed, the check's 
stale date.
    Missing participants forms and instructions means the forms and 
instructions provided by PBGC for use in connection with the missing 
participants program.
    Missing participants interest rate means, for each month, the 
applicable federal mid-term rate (as determined by the Secretary of the 
Treasury pursuant to section 1274(d)(1)(C)(ii) of the Code) for that 
month, compounded monthly.
    Normal retirement date for a participant under a subpart C plan 
means the normal retirement date of the participant under the terms of 
the plan.
    Notifying plan means a subpart C plan for which the plan 
administrator elects notifying plan status in accordance with Sec.  
4050.303.
    Pay-status or pay status means one of the following (according to 
context):
    (1) With respect to a benefit, that payment of the benefit has 
actually started before the benefit determination date; or
    (2) With respect to a distributee, that payment of the 
distributee's benefit has actually started before the benefit 
determination date.
    PBGC missing participants assumptions means the actuarial 
assumptions prescribed in Sec. Sec.  4044.51 through 4044.57 of this 
chapter with the following modifications:
    (1) The present value is determined as of the benefit determination 
date instead of the plan termination date.
    (2) The mortality assumption is a fixed blend of 50 percent of the 
healthy male mortality rates in Sec.  4044.53(c)(1) of this chapter and 
50 percent of the healthy female mortality rates in Sec.  4044.53(c)(2) 
of this chapter.
    (3) No adjustment is made for loading expenses under Sec.  
4044.52(d) of this chapter.
    (4) The interest assumption used is the assumption applicable to 
valuations occurring in January of the calendar year in which the 
benefit determination date occurs.
    (5) The assumed payment form of a benefit not in pay status is a 
straight life annuity.
    (6) Pre-retirement death benefits are disregarded.
    (7) Notwithstanding the expected retirement age (XRA) assumptions 
in Sec. Sec.  4044.55 through 4044.57 of this chapter,--
    (i) In the case of a participant who is not in pay status and whose 
normal retirement date is on or after the benefit determination date, 
benefits are assumed to commence at the XRA, determined using the high 
retirement rate category under Table II-C of Appendix D to part 4044 of 
this chapter;
    (ii) In the case of a participant who is not in pay status and 
whose normal retirement date is before the benefit determination date, 
benefits are

[[Page 60826]]

assumed to commence on the participant's normal retirement date (or 
accrual cessation date if later);
    (iii) In the case of a participant who is in pay status, benefits 
are assumed to commence on the date on which benefits actually 
commenced; and
    (iv) In the case of a beneficiary, benefits are assumed to commence 
on the benefit determination date or, if later, the earliest date the 
beneficiary can begin to receive benefits.
    Plan lump sum assumptions means, with respect to a subpart C plan, 
the following:
    (1) If the plan specifies actuarial assumptions and methods to be 
used to calculate a lump sum distribution, such actuarial assumptions 
and methods, or
    (2) Otherwise, the actuarial assumptions specified under section 
205(g)(3) of ERISA and section 417(e)(3) of the Code, determined as of 
the benefit determination date, including use of the missing 
participants interest rate to calculate the present value as of the 
benefit determination date of a payment or payments missed in the past.
    QDRO means a qualified domestic relations order as defined in 
section 206(d)(3) of ERISA and section 414(p) of the Code.
    Qualified survivor of a participant or beneficiary under a subpart 
C plan means, for any benefit with respect to the participant or 
beneficiary--
    (1) A person who survives the participant or beneficiary and is 
entitled under applicable provisions of a QDRO to receive the benefit;
    (2) A person that is identified by the plan in a submission to PBGC 
by the plan as being entitled under applicable plan provisions 
(including elections, designations, and waivers consistent with such 
provisions) to receive the benefit; or
    (3) If no such person is so entitled, a survivor of the participant 
or beneficiary who is the participant's or beneficiary's living--
    (i) Spouse, or if none,
    (ii) Child, or if none,
    (iii) Parent, or if none,
    (iv) Sibling.
    Subpart C plan or plan means a plan to which this subpart C 
applies, as described in Sec.  4050.301.
    Transferring plan means a subpart C plan for which the plan 
administrator elects transferring plan status in accordance with Sec.  
4050.303.


Sec.  4050.303  Options and duties of plan administrator.

    (a) Options. The plan administrator of a subpart C plan that is 
closing out upon plan termination may (but need not), by filing under 
Sec.  4050.305, elect that the subpart C plan--
    (1) Will be a ``transferring plan,'' that is, will pay a benefit 
transfer amount to PBGC for each distributee who is missing upon close-
out of the subpart C plan and will be bound by the provisions of this 
subpart C to the extent that they apply to transferring plans, or
    (2) Will be a ``notifying plan,'' that is, will notify PBGC of the 
disposition of the benefits of each distributee identified in the 
filing who is missing upon close-out of the plan and will, with respect 
to those distributees, be bound by the provisions of this subpart C to 
the extent that they apply to notifying plans.
    (b) Diligent search--(1) In general. Except as provided in 
paragraph (b)(2) of this section, for each distributee whose location 
the plan administrator does not know with reasonable certainty upon 
close-out of a subpart C plan, the plan administrator must have 
conducted a diligent search as described in Sec.  4050.304.
    (2) Notifying plans. For a notifying plan, the requirement of 
paragraph (b)(1) of this section applies only to distributees 
identified in the filing with PBGC.
    (c) Filing with PBGC--(1) In general. Except as provided in 
paragraph (c)(2) of this section, for each distributee who is missing 
upon close-out of a subpart C plan, the plan administrator must file 
with PBGC as described in Sec.  4050.305.
    (2) Notifying plans. For a notifying plan, the requirement of 
paragraph (c)(1) of this section applies only to distributees 
identified in the filing with PBGC.
    (d) Benefit transfer amount. The benefit transfer amount for a 
missing distributee is the amount determined by the plan administrator 
as of the benefit determination date using whichever one of the 
following three methods applies:
    (1) De minimis. If the single sum actuarial equivalent of the 
distributee's benefits (including any payments missed in the past) 
determined using plan lump sum assumptions is de minimis, then the 
missing distributee's benefit transfer amount is equal to that single 
sum.
    (2) Non-de minimis; single sum payment cannot be elected. If the 
single sum actuarial equivalent of the distributee's benefits 
(including any payments missed in the past) determined using plan lump 
sum assumptions is not de minimis, and a single sum payment cannot be 
elected, then the missing distributee's benefit transfer amount is the 
present value of the distributee's accrued benefit determined using 
PBGC missing participants assumptions, plus
    (i) For a missing distributee not in pay status whose normal 
retirement date (or accrual cessation date if later) precedes the 
benefit determination date, the aggregate value of payments of the 
straight life annuity that would have been payable beginning on the 
normal retirement date (or accrual cessation date if later), 
accumulated at the missing participants interest rate from the date 
each payment would have been made to the benefit determination date, 
assuming that the distributee survived to the benefit determination 
date, as determined by the plan administrator; or
    (ii) For a missing distributee in pay status, the aggregate value 
of payments of the pay status annuity due but not made, accumulated at 
the missing participants interest rate from each payment due date to 
the benefit determination date, assuming that the distributee survived 
to the benefit determination date.
    (3) Non-de minimis; single sum payment can be elected. If the 
single sum actuarial equivalent of the distributee's benefits 
(including any payments missed in the past) determined using plan lump 
sum assumptions is not de minimis, and a single sum payment can be 
elected, then the missing distributee's benefit transfer amount is the 
greater of the amounts determined using the methodology in paragraph 
(d)(1) or (d)(2) of this section.


Sec.  4050.304  Diligent search.

    (a) Search requirement. For each distributee of a subpart C plan 
who is described in Sec.  4050.303(b), the plan administrator must, 
within the time frame described in paragraph (d) of this section, have 
diligently searched for each distributee of the plan whose location the 
plan administrator does not know with reasonable certainty upon close 
out, using one of the following two methods:
    (1) For any distributee, regardless of the size of the 
distributee's benefit, the commercial locator service method described 
in paragraph (b) of this section; or
    (2) For a distributee whose normal retirement benefit is not more 
than $50 per month, the records search method described in paragraph 
(c) of this section.
    (b) Commercial locator service method--(1) In general. Using the 
commercial locator service method means paying a commercial locator 
service to search for information to locate a distributee.
    (2) Meaning of ``commercial locator service.'' For purposes of this 
section, a commercial locator service is a business

[[Page 60827]]

that holds itself out as a finder of lost persons for compensation 
using information from a database maintained by a consumer reporting 
agency (as defined in 15 U.S.C. 1681a(f)).
    (c) Records search method--(1) In general. Using the records search 
method means searching for information to locate a distributee by doing 
all of the following to the extent reasonably feasible and affordable:
    (i) Searching the records of the plan for information to locate the 
distributee.
    (ii) Searching the records of the plan's contributing sponsor that 
is the most recent employer of the distributee for information to 
locate the distributee.
    (iii) Searching the records of each retirement or welfare plan of 
the plan's contributing sponsor in which the distributee was a 
participant for information to locate the distributee.
    (iv) Contacting each beneficiary of the distributee identified from 
the records referred to in paragraphs (c)(1)(i), (ii), and (iii) of 
this section for information to locate the distributee.
    (v) Using an internet search method for which no fee is charged, 
such as a search engine, a network database, a public record database 
(such as those for licenses, mortgages, and real estate taxes) or a 
``social media'' website.
    (2) Limits on method. For purposes of this section--
    (i) Searching is not feasible to the extent that, as a practical 
matter, it is thwarted by legal or practical lack of access to records, 
and
    (ii) Searching is not affordable to the extent that the cost of 
searching (including the value of labor) is more than a reasonable 
fraction of the benefit of the distributee being searched for. In no 
event would searching need to be pursued beyond the point where the 
cost equals the value of the benefit.
    (d) Time frame. A search for a distributee under this section must 
have been made within nine months before a filing is made under Sec.  
4050.305 identifying the distributee as a missing distributee.


Sec.  4050.305   Filing with PBGC.

    (a) What to file. The plan administrator of a subpart C plan must 
file with PBGC the information specified in the missing participants 
forms and instructions, and if the plan is a transferring plan, payment 
of--
    (1) The benefit transfer amount for the missing distributee;
    (2) If the benefit transfer amount is paid more than 90 days after 
the benefit determination date, interest on the benefit transfer amount 
computed at the missing participants interest rate for the period 
beginning on the 90th day after the benefit determination date and 
ending on the date the benefit transfer amount is paid to PBGC; and
    (3) Any fee provided for in the missing participants forms and 
instructions.
    (b) When to file. The plan administrator must file the information 
and payments referred to in paragraph (a) of this section in accordance 
with the missing participants forms and instructions.
    (c) Place, method and date of filing; time periods.
    (1) For rules about where to file, see Sec.  4000.4 of this 
chapter.
    (2) For rules about permissible methods of filing with PBGC under 
this subpart, see subpart A of part 4000 of this chapter.
    (3) For rules about the date that a submission under this subpart 
was filed with PBGC, see subpart C of part 4000 of this chapter.
    (4) For rules about any time period for filing under this subpart, 
see subpart D of part 4000 of this chapter.
    (d) Supplemental information. Within 30 days after a written 
request by PBGC (or such other time as may be specified in the 
request), the plan administrator of a subpart C plan required to file 
under paragraph (a) of this section must file with PBGC supplemental 
information for any proper purpose under the missing participants 
program.
    (e) Reliance. As administrator of the missing participants program, 
PBGC will rely on determinations made and information reported by plan 
administrators in connection with the program.


Sec.  4050.306   Missing participant benefits.

    (a) In general--(1) Notifying plan. If a notifying plan files with 
PBGC information about a disposition of benefits made by the subpart C 
plan for a missing distributee, PBGC will provide information about the 
disposition of benefits to the distributee or another claimant that may 
be entitled to the benefits.
    (2) Transferring plan. If a transferring plan pays PBGC a benefit 
transfer amount for a missing distributee, PBGC will pay benefits with 
respect to the missing distributee in accordance with this section, 
subject to the provisions of a QDRO.
    (b) Benefits for missing distributees who are participants. 
Paragraphs (c), (d), (e), and (k) of this section describe the benefits 
that PBGC will pay to a non-pay status missing participant of a subpart 
C plan who claims a benefit under the missing participants program.
    (c) De minimis benefit. If the benefit transfer amount of a 
participant described in paragraph (b) of this section is de minimis, 
PBGC will pay the participant a lump sum equal to the accumulated 
single sum.
    (d) Non-de minimis benefit of unmarried participant. If the benefit 
transfer amount of an unmarried participant described in paragraph (b) 
of this section is not de minimis, PBGC will pay the participant either 
the annuity described in paragraph (d)(1) of this section, beginning 
not before age 55, and (if applicable) the make-up amount described in 
paragraph (d)(2) of this section; or, if the participant could have 
elected a lump sum under the subpart C plan, and the participant so 
elects under the missing participants program, the lump sum described 
in paragraph (d)(3) of this section.
    (1) Annuity. The annuity described in this paragraph (d)(1) is 
either--
    (i) Straight life annuity. A straight life annuity in the amount 
that the subpart C plan would have paid the participant, starting at 
the date that PBGC payments start (or, if earlier, the later of the 
participant's normal retirement date or accrual cessation date), as 
reported to PBGC by the subpart C plan (including any early retirement 
subsidies), or through linear interpolation for participants who start 
payments between integral ages; or
    (ii) Other form of annuity. At the participant's election, any form 
of annuity available to the participant under Sec.  4022.8 of this 
chapter, in an amount that is actuarially equivalent to the straight 
life annuity in paragraph (d)(1)(i) of this section as of the date that 
PBGC payments start (or, if earlier, the later of the participant's 
normal retirement date or accrual cessation date), determined using the 
actuarial assumptions in Sec.  4022.8(c)(7) of this chapter.
    (2) Make-up amount. If PBGC begins to pay the annuity under 
paragraph (d)(1) of this section after the normal retirement date (or 
accrual cessation date if later), the make-up amount described in this 
paragraph (d)(2) is a lump sum equal to the aggregate value of payments 
of the annuity that would have been payable to the participant (in the 
elected form) beginning on the normal retirement date (or accrual 
cessation date if later), accumulated at the missing participants 
interest rate from the date each payment would have been made to the 
date when PBGC begins to pay the annuity.
    (3) Lump sum. The lump sum described in this paragraph (d)(3) is 
equal to the participant's accumulated single sum.
    (e) Non-de minimis benefit of married participant. If the benefit 
transfer

[[Page 60828]]

amount of a married participant described in paragraph (b) of this 
section is not de minimis, PBGC will pay the participant either the 
annuity described in paragraph (e)(1) of this section, beginning not 
before age 55, and (if applicable) the make-up amount described in 
paragraph (e)(2) of this section; or, if the participant could have 
elected a lump sum under the subpart C plan, and the participant so 
elects under the missing participants program with the consent of the 
participant's spouse, the lump sum described in paragraph (e)(3) of 
this section.
    (1) Annuity. The annuity described in this paragraph (e)(1) is 
either--
    (i) Joint and survivor annuity. A joint and 50 percent survivor 
annuity in an amount that is actuarially equivalent to the straight 
life annuity under paragraph (d)(1)(i) of this section as of the date 
that PBGC payments start (or, if earlier, the later of the 
participant's normal retirement date or accrual cessation date), 
determined using the actuarial assumptions in Sec.  4022.8(c)(7) of 
this chapter; or
    (ii) Other form of annuity. At the participant's election, with the 
consent of the participant's spouse, any form of annuity available to 
the participant under Sec.  4022.8 of this chapter, in an amount that 
is actuarially equivalent to the joint and 50 percent survivor annuity 
under paragraph (e)(1)(i) of this section as of the date that PBGC 
payments start (or, if earlier, the later of the participant's normal 
retirement date or accrual cessation date), determined using the 
actuarial assumptions in Sec.  4022.8(c)(7) of this chapter.
    (2) Make-up amount. If PBGC begins to pay the annuity under 
paragraph (e)(1) of this section after the normal retirement date (or 
accrual cessation date if later), the make-up amount described in this 
paragraph (e)(2) is a lump sum equal to the aggregate value of payments 
of the annuity that would have been payable to the participant 
beginning on the normal retirement date (or accrual cessation date if 
later), accumulated at the missing participants interest rate from the 
date each payment would have been made to the date when PBGC begins to 
pay the annuity.
    (3) Lump sum. The lump sum described in this paragraph (e)(3) is 
equal to the participant's accumulated single sum.
    (f) Benefits with respect to deceased missing distributees who were 
participants. Paragraphs (g), (h), (i), (j), and (k) of this section 
describe the benefits that PBGC will pay with respect to a non-pay 
status missing participant of a subpart C plan who dies without 
receiving a benefit under the missing participants program.
    (g) De minimis benefit. If the benefit transfer amount of a 
participant described in paragraph (f) of this section is de minimis, 
PBGC will pay to the qualified survivor(s) of the participant a lump 
sum equal to the participant's accumulated single sum.
    (h) Non-de minimis benefit; unmarried participant. In the case of 
an unmarried participant described in paragraph (f) of this section 
whose benefit transfer amount is not de minimis,--
    (1) Death before normal retirement date. If the participant dies 
before the normal retirement date (or accrual cessation date if later), 
PBGC will pay no benefits with respect to the participant; and
    (2) Death after normal retirement date. If the participant dies on 
or after the normal retirement date (or accrual cessation date if 
later), PBGC will pay to the participant's qualified survivor(s) an 
amount equal to the aggregate value of payments of the straight life 
annuity described in paragraph (d)(1)(i) of this section that would 
have been payable to the participant from the normal retirement date 
(or accrual cessation date if later) to the participant's date of 
death, accumulated at the missing participants interest rate from the 
date each payment would have been made to the date when PBGC pays the 
qualified survivor(s).
    (i) Non-de minimis benefit; married participant with living spouse. 
In the case of a married participant described in paragraph (f) of this 
section whose benefit transfer amount is not de minimis and whose 
spouse survives the participant and claims a benefit under the missing 
participants program, PBGC will pay the spouse, beginning not before 
the participant would have reached age 55, the annuity (if any) 
described in paragraph (i)(1) of this section and the make-up amounts 
(if applicable) described in paragraph (i)(2) of this section, except 
that PBGC will pay the spouse, as a lump sum, the small benefit 
described in paragraph (i)(3) of this section.
    (1) Annuity. The annuity described in this paragraph (i)(1) is the 
survivor portion of a joint and 50 percent survivor annuity that is 
actuarially equivalent as of the assumed starting date (determined 
using the actuarial assumptions in Sec.  4022.8(c)(7) of this chapter) 
to the straight life annuity in the amount that the subpart C plan 
would have paid the participant with an assumed starting date of--
    (i) The date when the participant would have reached age 55, if the 
participant died before that date, or
    (ii) The participant's date of death, if the participant died 
between age 55 and the normal retirement date (or accrual cessation 
date if later), or
    (iii) The normal retirement date (or accrual cessation date if 
later), if the participant died after that date.
    (2) Make-up amounts. The make-up amounts described in this 
paragraph (i)(2) are the amounts described in paragraphs (i)(2)(i) and 
(ii) of this section.
    (i) Payments from participant's death or 55th birthday to 
commencement of survivor annuity. The make-up amount described in this 
paragraph (i)(2)(i) is a lump sum equal to the aggregate value of 
payments of the survivor portion of the joint and 50 percent survivor 
annuity described in paragraph (i)(1) of this section that would have 
been payable to the spouse beginning on the later of the participant's 
date of death or the date when the participant would have reached age 
55, accumulated at the missing participants interest rate from the date 
each payment would have been made to the date when PBGC pays the 
spouse.
    (ii) Payments from normal retirement date to participant's death. 
The make-up amount described in this paragraph (i)(2)(ii) is a lump sum 
equal to the aggregate value of payments (if any) of the joint portion 
of the joint and 50 percent survivor annuity described in paragraph 
(i)(1) of this section that would have been payable to the participant 
from the normal retirement date (or accrual cessation date if later) to 
the participant's date of death thereafter, accumulated at the missing 
participants interest rate from the date each payment would have been 
made to the date when PBGC pays the spouse.
    (3) Small benefit. If the sum of the actuarial present value of the 
annuity described in paragraph (i)(1) of this section plus the make-up 
amounts described in paragraph (i)(2) of this section is de minimis, 
then the lump sum that PBGC will pay the spouse under this paragraph 
(i)(3) is an amount equal to that sum. For this purpose, the actuarial 
present value of the annuity is determined using the actuarial 
assumptions in Sec.  4022.8(c)(7) of this chapter as of the date when 
PBGC pays the spouse.
    (j) Non-de minimis benefit; married participant with deceased 
spouse. In the case of a married participant described in paragraph (f) 
of this section whose benefit transfer amount is not de minimis and 
whose spouse survives the participant but dies without receiving a

[[Page 60829]]

benefit under the missing participants program, PBGC will pay to the 
qualified survivor(s) of the participant's spouse the make-up amount 
described in paragraph (j)(1) of this section and to the qualified 
survivor(s) of the participant the make-up amount described in 
paragraph (j)(2) of this section.
    (1) Payments from participant's death or 55th birthday to spouse's 
death. The make-up amount described in this paragraph (j)(1) is a lump 
sum equal to the aggregate value of payments of the survivor portion of 
the joint and 50 percent survivor annuity described in paragraph (i)(1) 
of this section that would have been payable to the spouse from the 
later of the participant's date of death or the date when the 
participant would have reached age 55 to the spouse's date of death, 
accumulated at the missing participants interest rate from the date 
each payment would have been made to the date when PBGC pays the 
spouse's qualified survivor(s).
    (2) Payments from normal retirement date to participant's death. 
The make-up amount described in this paragraph (j)(2) is a lump sum 
equal to the aggregate value of payments of the joint portion of the 
joint and 50 percent survivor annuity described in paragraph (i)(1) of 
this section that would have been payable to the participant from the 
normal retirement date (or accrual cessation date if later) to the 
participant's date of death thereafter, accumulated at the missing 
participants interest rate from the date each payment would have been 
made to the date when PBGC pays the participant's qualified 
survivor(s).
    (k) Benefits under contributory plans. If a subpart C plan reports 
to PBGC that a portion of a missing participant's benefit transfer 
amount represents accumulated contributions as described in section 
204(c)(2)(C) of ERISA and section 411(c)(2)(C) of the Code, PBGC will 
pay with respect to the missing participant, at least the amount of 
accumulated contributions as reported by the subpart C plan, 
accumulated at the missing participants interest rate from the benefit 
determination date to the date when PBGC makes payment.
    (l) Date for determining marital status. For purposes of this 
section, whether a participant is married, and if so the identity of 
the spouse, is determined as of the earlier of--
    (1) The date the participant receives or begins to receive a 
benefit, or
    (2) The date the participant dies.


Sec.  4050.307  PBGC discretion.

    PBGC may in appropriate circumstances extend deadlines, excuse 
noncompliance, and grant waivers with regard to any provision of this 
subpart to promote the purposes of the missing participants program and 
title IV of ERISA. Like circumstances will be treated in like manner 
under this section.

Subpart D--Multiemployer Plans Covered by Title IV


Sec.  4050.401  Purpose and scope.

    (a) In general. This subpart describes PBGC's missing participants 
program for multiemployer defined benefit retirement plans covered by 
title IV of ERISA. The missing participants program is a program to 
hold retirement benefits for missing participants and beneficiaries in 
retirement plans that are closing out and to help them find and receive 
the benefits being held for them. For a plan to which this subpart 
applies, this subpart describes what the plan must do upon plan 
termination if it has missing participants or beneficiaries who are 
entitled to distributions. This subpart applies to a plan only if it is 
a multiemployer defined benefit plan that--
    (1) Is described in section 4021(a) of ERISA and not in any 
paragraph of section 4021(b) of ERISA, and
    (2) Completes the process of closing out under subpart D of PBGC's 
regulation on Termination of Multiemployer Plans (29 CFR part 4041A).
    (b) Plans that terminate but do not close out. This subpart does 
not apply to plans that terminate but do not close out.
    (c) Individual account plans. This subpart does not apply to an 
individual account plan under section 3(34) of ERISA, even if it is 
described in the same plan document as a plan to which this subpart 
applies. This subpart also does not apply to a plan to the extent that 
it is treated as an individual account plan under section 3(35)(B) of 
ERISA. For example, this subpart does not apply to employee 
contributions (or interest or earnings thereon) held as an individual 
account. (Subpart B deals with individual account plans.)


Sec.  4050.402  Definitions.

    The following terms are defined in Sec.  4001.2 of this chapter: 
Annuity, Code, ERISA, insurer, PBGC, person, and plan sponsor. In 
addition, for purposes of this subpart:
    Accrual cessation date for a participant under a subpart D plan 
means the date the participant stopped accruing benefits under the 
terms of the plan.
    Accumulated single sum means, with respect to a missing 
distributee, the distributee's benefit transfer amount accumulated at 
the missing participants interest rate from the benefit determination 
date to the date when PBGC makes or commences payment to or with 
respect to the distributee.
    Benefit determination date with respect to a subpart D plan means 
the single date selected by the plan sponsor for valuing benefits under 
Sec.  4050.103(d); this date must be during the period beginning on the 
first day a distribution is made pursuant to close-out of the plan to a 
distributee who is not a missing distributee and ending on the last day 
such a distribution is made.
    Benefit transfer amount for a missing distributee of a subpart D 
plan means the amount determined by the plan sponsor under Sec.  
4050.403(d) in the close-out of the plan.
    Close-out or close out with respect to a subpart D plan means the 
process of the final distribution or transfer of assets in satisfaction 
of plan benefits.
    De minimis means, with respect to the value of a benefit (or other 
amount), that the value does not exceed the amount specified under 
section 203(e)(1) of ERISA and section 411(a)(11)(A) of the Code 
(without regard to plan provisions).
    Distributee means, with respect to a subpart D plan, a participant 
or beneficiary entitled to a distribution under the subpart D plan 
pursuant to the close-out of the subpart D plan.
    Missing, with respect to a distributee under a subpart D plan, 
means that any one or more of the following three conditions exists 
upon close-out of the plan.
    (1) The plan sponsor does not know with reasonable certainty the 
location of the distributee.
    (2) Under the terms of the plan, the distributee's benefit is to be 
paid in a lump sum without the distributee's consent, and the 
distributee has not responded to a notice about the distribution of the 
lump sum.
    (3) Under the terms of the plan and any election made by the 
distributee, the distributee's benefit is to be paid in a lump sum, but 
the distributee does not accept the lump sum. For this purpose, a lump 
sum paid by check is not accepted if the check remains uncashed after--
    (i) A ``cash-by'' date prescribed (on the check or in an 
accompanying notice) that is at least 45 days after the issuance of the 
check, or
    (ii) If no such ``cash-by'' date is so prescribed, the check's 
stale date.
    Missing participants forms and instructions means the forms and 
instructions provided by PBGC for use

[[Page 60830]]

in connection with the missing participants program.
    Missing participants interest rate means, for each month, the 
applicable federal mid-term rate (as determined by the Secretary of the 
Treasury pursuant to section 1274(d)(1)(C)(ii) of the Code) for that 
month, compounded monthly.
    Normal retirement date for a participant under a subpart D plan 
means the normal retirement date of the participant under the terms of 
the plan.
    Pay-status or pay status means one of the following (according to 
context):
    (1) With respect to a benefit, that payment of the benefit has 
actually started before the benefit determination date; or
    (2) With respect to a distributee, that payment of the 
distributee's benefit has actually started before the benefit 
determination date.
    PBGC missing participants assumptions means the actuarial 
assumptions prescribed in Sec. Sec.  4044.51 through 4044.57 of this 
chapter with the following modifications:
    (1) The present value is determined as of the benefit determination 
date instead of the plan termination date.
    (2) The mortality assumption is a fixed blend of 50 percent of the 
healthy male mortality rates in Sec.  4044.53(c)(1) of this chapter and 
50 percent of the healthy female mortality rates in Sec.  4044.53(c)(2) 
of this chapter.
    (3) No adjustment is made for loading expenses under Sec.  
4044.52(d) of this chapter.
    (4) The interest assumption used is the assumption applicable to 
valuations occurring in January of the calendar year in which the 
benefit determination date occurs.
    (5) The assumed payment form of a benefit not in pay status is a 
straight life annuity.
    (6) Pre-retirement death benefits are disregarded.
    (7) Notwithstanding the expected retirement age (XRA) assumptions 
in Sec. Sec.  4044.55 through 4044.57 of this chapter,--
    (i) In the case of a participant who is not in pay status and whose 
normal retirement date is on or after the benefit determination date, 
benefits are assumed to commence at the XRA, determined using the high 
retirement rate category under Table II-C of Appendix D to part 4044 of 
this chapter;
    (ii) In the case of a participant who is not in pay status and 
whose normal retirement date is before the benefit determination date, 
benefits are assumed to commence on the participant's normal retirement 
date (or accrual cessation date if later);
    (iii) In the case of a participant who is in pay status, benefits 
are assumed to commence on the date on which benefits actually 
commenced; and
    (iv) In the case of a beneficiary, benefits are assumed to commence 
on the benefit determination date or, if later, the earliest date the 
beneficiary can begin to receive benefits.
    Plan lump sum assumptions means, with respect to a subpart D plan, 
the following:
    (1) If the plan specifies actuarial assumptions and methods to be 
used to calculate a lump sum distribution, such actuarial assumptions 
and methods, or
    (2) Otherwise, the actuarial assumptions specified under section 
205(g)(3) of ERISA and section 417(e)(3) of the Code, determined as of 
the benefit determination date, including use of the missing 
participants interest rate to calculate the present value as of the 
benefit determination date of a payment or payments missed in the past.
    QDRO means a qualified domestic relations order as defined in 
section 206(d)(3) of ERISA and section 414(p) of the Code.
    Qualified survivor of a participant or beneficiary under a subpart 
D plan means, for any benefit with respect to the participant or 
beneficiary,--
    (1) A person who survives the participant or beneficiary and is 
entitled under applicable provisions of a QDRO to receive the benefit;
    (2) A person that is identified by the plan in a submission to PBGC 
by the plan as being entitled under applicable plan provisions 
(including elections, designations, and waivers consistent with such 
provisions) to receive the benefit; or
    (3) If no such person is so entitled, a survivor of the participant 
or beneficiary who is the participant's or beneficiary's living--
    (i) Spouse, or if none,
    (ii) Child, or if none,
    (iii) Parent, or if none,
    (iv) Sibling.
    Subpart D plan or plan means a plan to which this subpart D 
applies, as described in Sec.  4050.401.


Sec.  4050.403  Duties of plan sponsor.

    (a) Providing for benefits. For each distributee who is missing 
upon close-out of a subpart D plan, the plan sponsor must provide for 
the distributee's plan benefits either--
    (1) By purchase of an annuity contract from an insurer; or
    (2) By--
    (i) Determining the distributee's benefit transfer amount under 
paragraph (e) of this section, and
    (ii) Transferring to PBGC as described in this subpart D an amount 
equal to the distributee's benefit transfer amount.
    (b) Diligent search. For each distributee whose location the plan 
sponsor does not know with reasonable certainty upon close-out of a 
subpart D plan, the plan sponsor must have conducted a diligent search 
as described in Sec.  4050.404.
    (c) Filing with PBGC. For each distributee who is missing upon 
close-out of a subpart D plan, the plan sponsor must file with PBGC as 
described in Sec.  4050.405.
    (d) Benefit transfer amount. The benefit transfer amount for a 
missing distributee is the amount determined by the plan sponsor as of 
the benefit determination date using whichever one of the following 
three methods applies:
    (1) De minimis. If the single sum actuarial equivalent of the 
distributee's benefits (including any payments missed in the past) 
determined using plan lump sum assumptions is de minimis, then the 
missing distributee's benefit transfer amount is equal to that single 
sum.
    (2) Non-de minimis; single sum payment cannot be elected. If the 
single sum actuarial equivalent of the distributee's benefits 
(including any payments missed in the past) determined using plan lump 
sum assumptions is not de minimis, and a single sum payment cannot be 
elected, then the missing distributee's benefit transfer amount is the 
present value of the distributee's accrued benefit determined using 
PBGC missing participants assumptions, plus
    (i) For a missing distributee not in pay status whose normal 
retirement date (or accrual cessation date if later) precedes the 
benefit determination date, the aggregate value of payments of the 
straight life annuity that would have been payable beginning on the 
normal retirement date (or accrual cessation date if later), 
accumulated at the missing participants interest rate from the date 
each payment would have been made to the benefit determination date, 
assuming that the distributee survived to the benefit determination 
date, as determined by the plan sponsor; or
    (ii) For a missing distributee in pay status, the aggregate value 
of payments of the pay status annuity due but not made, accumulated at 
the missing participants interest rate from each payment due date to 
the benefit determination date, assuming that the distributee survived 
to the benefit determination date.
    (3) Non-de minimis; single sum payment can be elected. If the 
single sum actuarial equivalent of the distributee's benefits 
(including any payments missed in the past) determined using plan lump 
sum

[[Page 60831]]

assumptions is not de minimis, and a single sum payment can be elected, 
then the missing distributee's benefit transfer amount is the greater 
of the amounts determined using the methodology in paragraph (d)(1) or 
(d)(2) of this section.


Sec.  4050.404  Diligent search.

    (a) Search requirement. The plan sponsor of a subpart D plan must, 
within the time frame described in paragraph (d) of this section, have 
diligently searched for each distributee of the plan whose location the 
plan sponsor does not know with reasonable certainty upon close-out, 
using one of the following two methods:
    (1) For any distributee, regardless of the size of the 
distributee's benefit, the commercial locator service method described 
in paragraph (b) of this section; or
    (2) For a distributee whose normal retirement benefit is not more 
than $50 per month, the records search method described in paragraph 
(c) of this section.
    (b) Commercial locator service method--(1) In general. Using the 
commercial locator service method means paying a commercial locator 
service to search for information to locate a distributee.
    (2) Meaning of ``commercial locator service.'' For purposes of this 
section, a commercial locator service is a business that holds itself 
out as a finder of lost persons for compensation using information from 
a database maintained by a consumer reporting agency (as defined in 15 
U.S.C. 1681a(f)).
    (c) Records search method--(1) In general. Using the records search 
method means searching for information to locate a distributee by doing 
all of the following to the extent reasonably feasible and affordable:
    (i) Searching the records of the plan for information to locate the 
distributee.
    (ii) Searching the records of the contributing sponsor that is the 
most recent employer of the distributee for information to locate the 
distributee.
    (iii) Searching the records of each retirement or welfare plan of 
the contributing sponsor in which the distributee was a participant for 
information to locate the distributee.
    (iv) Contacting each beneficiary of the distributee identified from 
the records referred to in paragraphs (c)(1)(i), (ii), and (iii) of 
this section for information to locate the distributee.
    (v) Using an internet search method for which no fee is charged, 
such as a search engine, a network database, a public record database 
(such as those for licenses, mortgages, and real estate taxes) or a 
``social media'' website.
    (2) Limits on method. For purposes of this section,--
    (i) Searching is not feasible to the extent that, as a practical 
matter, it is thwarted by legal or practical lack of access to records, 
and
    (ii) Searching is not affordable to the extent that the cost of 
searching (including the value of labor) is more than a reasonable 
fraction of the benefit of the distributee being searched for. In no 
event would searching need to be pursued beyond the point where the 
cost equals the value of the benefit.
    (d) Time frame. A search for a distributee under this section must 
have been made within nine months before a filing is made under Sec.  
4050.405 identifying the distributee as a missing distributee.


Sec.  4050.405  Filing with PBGC.

    (a) What to file. The plan sponsor of a subpart D plan must file 
with PBGC the information specified in the missing participants forms 
and instructions and, for a missing distributee referred to in Sec.  
4050.403(a)(2), payment of--
    (1) The benefit transfer amount for the missing distributee;
    (2) If the benefit transfer amount is paid more than 90 days after 
the benefit determination date, interest on the benefit transfer amount 
computed at the missing participants interest rate for the period 
beginning on the 90th day after the benefit determination date and 
ending on the date the benefit transfer amount is paid to PBGC; and
    (3) Any fee provided for in the missing participants forms and 
instructions.
    (b) When to file. The plan sponsor must file the information and 
payments referred to in paragraph (a) of this section in accordance 
with the missing participants forms and instructions. Payment of a 
benefit transfer amount will, if considered timely made for purposes of 
this paragraph (b), be considered timely made for purposes of part 
4041A of this chapter.
    (c) Place, method and date of filing; time periods. (1) For rules 
about where to file, see Sec.  4000.4 of this chapter.
    (2) For rules about permissible methods of filing with PBGC under 
this subpart, see subpart A of part 4000 of this chapter.
    (3) For rules about the date that a submission under this subpart 
was filed with PBGC, see subpart C of part 4000 of this chapter.
    (4) For rules about any time period for filing under this subpart, 
see subpart D of part 4000 of this chapter.
    (d) Supplemental information. Within 30 days after a written 
request by PBGC (or such other time as may be specified in the 
request), the plan sponsor of a subpart D plan required to file under 
paragraph (a) of this section must file with PBGC supplemental 
information for any proper purpose under the missing participants 
program.
    (e) Reliance. As administrator of the missing participants program, 
PBGC will rely on determinations made and information reported by plan 
sponsors in connection with the program. This reliance does not affect 
PBGC's authority as administrator of the title IV insurance program to 
audit or make inquiries of subpart D plans, including about the amount 
to which a missing distributee may be entitled.


Sec.  4050.406  Missing participant benefits.

    (a) In general--(1) Benefit transfer amount not paid. If a subpart 
D plan files with PBGC information about an annuity contract purchased 
by the subpart D plan from an insurer for a missing distributee, PBGC 
will provide information about the annuity contract to the distributee 
or another claimant that may be entitled to payment pursuant to the 
contract.
    (2) Benefit transfer amount paid. If a subpart D plan pays PBGC a 
benefit transfer amount for a missing distributee, PBGC will pay 
benefits with respect to the missing distributee in accordance with 
this section, subject to the provisions of a QDRO.
    (b) Benefits for missing distributees who are participants. 
Paragraphs (c), (d), (e), and (k) of this section describe the benefits 
that PBGC will pay to a non-pay status missing participant of a subpart 
D plan who claims a benefit under the missing participants program.
    (c) De minimis benefit. If the benefit transfer amount of a 
participant described in paragraph (b) of this section is de minimis, 
PBGC will pay the participant a lump sum equal to the accumulated 
single sum.
    (d) Non-de minimis benefit of unmarried participant. If the benefit 
transfer amount of an unmarried participant described in paragraph (b) 
of this section is not de minimis, PBGC will pay the participant either 
the annuity described in paragraph (d)(1) of this section, beginning 
not before age 55, and (if applicable) the make-up amount described in 
paragraph (d)(2) of this section; or, if the participant could have 
elected a lump sum under the subpart D plan, and the participant so 
elects under the missing participants program, the lump sum described 
in paragraph (d)(3) of this section.
    (1) Annuity. The annuity described in this paragraph (d)(1) is 
either--
    (i) Straight life annuity. A straight life annuity in the amount 
that the subpart

[[Page 60832]]

D plan would have paid the participant, starting at the date that PBGC 
payments start (or, if earlier, the later of the participant's normal 
retirement date or accrual cessation date), as reported to PBGC by the 
subpart D plan (including any early retirement subsidies), or through 
linear interpolation for participants who start payments between 
integral ages; or
    (ii) Other form of annuity. At the participant's election, any form 
of annuity available to the participant under Sec.  4022.8 of this 
chapter, in an amount that is actuarially equivalent to the straight 
life annuity in paragraph (d)(1)(i) of this section as of the date that 
PBGC payments start (or, if earlier, the later of the participant's 
normal retirement date or accrual cessation date), determined using the 
actuarial assumptions in Sec.  4022.8(c)(7) of this chapter.
    (2) Make-up amount. If PBGC begins to pay the annuity under 
paragraph (d)(1) of this section after the normal retirement date (or 
accrual cessation date if later), the make-up amount described in this 
paragraph (d)(2) is a lump sum equal to the aggregate value of payments 
of the annuity that would have been payable to the participant (in the 
elected form) beginning on the normal retirement date (or accrual 
cessation date if later), accumulated at the missing participants 
interest rate from the date each payment would have been made to the 
date when PBGC begins to pay the annuity.
    (3) Lump sum. The lump sum described in this paragraph (d)(3) is 
equal to the participant's accumulated single sum.
    (e) Non-de minimis benefit of married participant. If the benefit 
transfer amount of a married participant described in paragraph (b) of 
this section is not de minimis, PBGC will pay the participant either 
the annuity described in paragraph (e)(1) of this section, beginning 
not before age 55, and (if applicable) the make-up amount described in 
paragraph (e)(2) of this section; or, if the participant could have 
elected a lump sum under the subpart D plan, and the participant so 
elects under the missing participants program with the consent of the 
participant's spouse, the lump sum described in paragraph (e)(3) of 
this section.
    (1) Annuity. The annuity described in this paragraph (e)(1) is 
either--
    (i) Joint and survivor annuity. A joint and 50 percent survivor 
annuity in an amount that is actuarially equivalent to the straight 
life annuity under paragraph (d)(1)(i) of this section as of the date 
that PBGC payments start (or, if earlier, the later of the 
participant's normal retirement date or accrual cessation date), 
determined using the actuarial assumptions in Sec.  4022.8(c)(7) of 
this chapter; or
    (ii) Other form of annuity. At the participant's election, with the 
consent of the participant's spouse, any form of annuity available to 
the participant under Sec.  4022.8 of this chapter, in an amount that 
is actuarially equivalent to the joint and 50 percent survivor annuity 
under paragraph (e)(1)(i) of this section as of the date that PBGC 
payments start (or, if earlier, the later of the participant's normal 
retirement date or accrual cessation date), determined using the 
actuarial assumptions in Sec.  4022.8(c)(7) of this chapter.
    (2) Make-up amount. If PBGC begins to pay the annuity under 
paragraph (e)(1) of this section after the normal retirement date (or 
accrual cessation date if later), the make-up amount described in this 
paragraph (e)(2) is a lump sum equal to the aggregate value of payments 
of the annuity that would have been payable to the participant 
beginning on the normal retirement date (or accrual cessation date if 
later), accumulated at the missing participants interest rate from the 
date each payment would have been made to the date when PBGC begins to 
pay the annuity.
    (3) Lump sum. The lump sum described in this paragraph (e)(3) is 
equal to the participant's accumulated single sum.
    (f) Benefits with respect to deceased missing distributees who were 
participants. Paragraphs (g), (h), (i), (j), and (k) of this section 
describe the benefits that PBGC will pay with respect to a non-pay 
status missing participant of a subpart D plan who dies without 
receiving a benefit under the missing participants program.
    (g) De minimis benefit. If the benefit transfer amount of a 
participant described in paragraph (f) of this section is de minimis, 
PBGC will pay to the qualified survivor(s) of the participant a lump 
sum equal to the participant's accumulated single sum.
    (h) Non-de minimis benefit; unmarried participant. In the case of 
an unmarried participant described in paragraph (f) of this section 
whose benefit transfer amount is not de minimis--
    (1) Death before normal retirement date. If the participant dies 
before the normal retirement date (or accrual cessation date if later), 
PBGC will pay no benefits with respect to the participant; and
    (2) Death after normal retirement date. If the participant dies on 
or after the normal retirement date (or accrual cessation date if 
later), PBGC will pay to the participant's qualified survivor(s) an 
amount equal to the aggregate value of payments of the straight life 
annuity described in paragraph (d)(1)(i) of this section that would 
have been payable to the participant from the normal retirement date 
(or accrual cessation date if later) to the participant's date of 
death, accumulated at the missing participants interest rate from the 
date each payment would have been made to the date when PBGC pays the 
qualified survivor(s).
    (i) Non-de minimis benefit; married participant with living spouse. 
In the case of a married participant described in paragraph (f) of this 
section whose benefit transfer amount is not de minimis and whose 
spouse survives the participant and claims a benefit under the missing 
participants program, PBGC will pay the spouse, beginning not before 
the participant would have reached age 55, the annuity (if any) 
described in paragraph (i)(1) of this section and the make-up amounts 
(if applicable) described in paragraph (i)(2) of this section, except 
that PBGC will pay the spouse, as a lump sum, the small benefit 
described in paragraph (i)(3) of this section.
    (1) Annuity. The annuity described in this paragraph (i)(1) is the 
survivor portion of a joint and 50 percent survivor annuity that is 
actuarially equivalent as of the assumed starting date (determined 
using the actuarial assumptions in Sec.  4022.8(c)(7) of this chapter) 
to the straight life annuity in the amount that the subpart D plan 
would have paid the participant with an assumed starting date of--
    (i) The date when the participant would have reached age 55, if the 
participant died before that date, or
    (ii) The participant's date of death, if the participant died 
between age 55 and the normal retirement date (or accrual cessation 
date if later), or
    (iii) The normal retirement date (or accrual cessation date if 
later), if the participant died after that date.
    (2) Make-up amounts. The make-up amounts described in this 
paragraph (i)(2) are the amounts described in paragraphs (i)(2)(i) and 
(ii) of this section.
    (i) Payments from participant's death or 55th birthday to 
commencement of survivor annuity. The make-up amount described in this 
paragraph (i)(2)(i) is a lump sum equal to the aggregate value of 
payments of the survivor portion of the joint and 50 percent survivor 
annuity described in paragraph (i)(1) of this section that would have 
been payable to the spouse beginning on the later of the participant's 
date of death or the date when the participant would

[[Page 60833]]

have reached age 55, accumulated at the missing participants interest 
rate from the date each payment would have been made to the date when 
PBGC pays the spouse.
    (ii) Payments from normal retirement date to participant's death. 
The make-up amount described in this paragraph (i)(2)(ii) is a lump sum 
equal to the aggregate value of payments (if any) of the joint portion 
of the joint and 50 percent survivor annuity described in paragraph 
(i)(1) of this section that would have been payable to the participant 
from the normal retirement date (or accrual cessation date if later) to 
the participant's date of death thereafter, accumulated at the missing 
participants interest rate from the date each payment would have been 
made to the date when PBGC pays the spouse.
    (3) Small benefit. If the sum of the actuarial present value of the 
annuity described in paragraph (i)(1) of this section plus the make-up 
amounts described in paragraph (i)(2) of this section is de minimis, 
then the lump sum that PBGC will pay the spouse under this paragraph 
(i)(3) is an amount equal to that sum. For this purpose, the actuarial 
present value of the annuity is determined using the actuarial 
assumptions in Sec.  4022.8(c)(7) of this chapter as of the date when 
PBGC pays the spouse.
    (j) Non-de minimis benefit; married participant with deceased 
spouse. In the case of a married participant described in paragraph (f) 
of this section whose benefit transfer amount is not de minimis and 
whose spouse survives the participant but dies without receiving a 
benefit under the missing participants program, PBGC will pay to the 
qualified survivor(s) of the participant's spouse the make-up amount 
described in paragraph (j)(1) of this section and to the qualified 
survivor(s) of the participant the make-up amount described in 
paragraph (j)(2) of this section.
    (1) Payments from participant's death or 55th birthday to spouse's 
death. The make-up amount described in this paragraph (j)(1) is a lump 
sum equal to the aggregate value of payments of the survivor portion of 
the joint and 50 percent survivor annuity described in paragraph (i)(1) 
of this section that would have been payable to the spouse from the 
later of the participant's date of death or the date when the 
participant would have reached age 55 to the spouse's date of death, 
accumulated at the missing participants interest rate from the date 
each payment would have been made to the date when PBGC pays the 
spouse's qualified survivor(s).
    (2) Payments from normal retirement date to participant's death. 
The make-up amount described in this paragraph (j)(2) is a lump sum 
equal to the aggregate value of payments of the joint portion of the 
joint and 50 percent survivor annuity described in paragraph (i)(1) of 
this section that would have been payable to the participant from the 
normal retirement date (or accrual cessation date if later) to the 
participant's date of death thereafter, accumulated at the missing 
participants interest rate from the date each payment would have been 
made to the date when PBGC pays the participant's qualified 
survivor(s).
    (k) Benefits under contributory plans. If a subpart D plan reports 
to PBGC that a portion of a missing participant's benefit transfer 
amount represents accumulated contributions as described in section 
204(c)(2)(C) of ERISA and section 411(c)(2)(C) of the Code, PBGC will 
pay with respect to the missing participant, at least the amount of 
accumulated contributions as reported by the subpart D plan, 
accumulated at the missing participants interest rate from the benefit 
determination date to the date when PBGC makes payment.
    (l) Date for determining marital status. For purposes of this 
section, whether a participant is married, and if so the identity of 
the spouse, is determined as of the earlier of--
    (1) The date the participant receives or begins to receive a 
benefit, or
    (2) The date the participant dies.


Sec.  4050.407  PBGC discretion.

    PBGC may in appropriate circumstances extend deadlines, excuse 
noncompliance, and grant waivers with regard to any provision of this 
subpart to promote the purposes of the missing participants program and 
title IV of ERISA. Like circumstances will be treated in like manner 
under this section.

    Issued in Washington, DC.
W. Thomas Reeder,
Director, Pension Benefit Guaranty Corporation.
[FR Doc. 2017-27515 Filed 12-21-17; 8:45 am]
 BILLING CODE 7709-02-P