[Federal Register Volume 88, Number 131 (Tuesday, July 11, 2023)]
[Rules and Regulations]
[Pages 44045-44052]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-14349]


=======================================================================
-----------------------------------------------------------------------

PENSION BENEFIT GUARANTY CORPORATION

29 CFR Parts 4022, 4044, and 4062

RIN 1212-AB27


Benefit Payments and Allocation of Assets

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Final rule.

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

SUMMARY: This final rule makes changes to PBGC's regulations on 
Benefits Payable in Terminated Single-Employer Plans and Allocation of 
Assets in Single-Employer Plans. The changes make clarifications and 
codify policies involving payment of lump sums, changes to benefit 
form, and valuation of plan assets.

DATES: 
    Effective date. This rule is effective on August 10, 2023.
    Applicability date. The amendments under this final rule apply to 
plan terminations initiated on or after August 10, 2023. However, most 
of the amendments codify policies and practices that PBGC has followed 
for many years, and PBGC will continue to follow those policies and 
practices in the interim.

FOR FURTHER INFORMATION CONTACT: Joseph M. Krettek 
([email protected]), Assistant General Counsel for Benefits, 202-
229-6772; or Hilary Duke ([email protected]), Assistant General 
Counsel for Regulatory Affairs; Office of the General Counsel, 202-229-
3839, Pension Benefit Guaranty Corporation, 445 12th Street SW, 
Washington, DC 20024-2101. If you are deaf or hard of hearing or have a 
speech disability, please dial 7-1-1 to access telecommunications relay 
services.

SUPPLEMENTARY INFORMATION:

Executive Summary

Purpose and Authority

    This final rule amends PBGC's regulations on benefit payments, 
allocation of assets, and termination liability to increase 
transparency of PBGC benefits administration, clarify and simplify 
language, increase flexibility, codify practices, and harmonize 
regulatory provisions with statutory provisions.
    Legal authority for this action comes from section 4002(b)(3) of 
the Employee Retirement Income Security Act of 1974 (ERISA), which 
authorizes PBGC to issue regulations to carry out the purposes of title 
IV of ERISA, section 4022 of ERISA (Single-Employer Plan Benefits 
Guaranteed), section 4044 of ERISA (Allocation of Assets), and section 
4062 of ERISA (Liability For Termination of Single-Employer Plans Under 
a Distress Termination or a Termination by Corporation).

Major Provisions

    This final rule:
    Clarifies that PBGC's rules on payment of a lump sum are 
unaffected by election of a lump-sum distribution before plan 
termination.
    Changes wording that refers to the current statutory dollar 
amount subject to cashout ($5,000) to instead refer to the statutory 
provision that specifies the maximum dollar amount.
    Clarifies that a de minimis benefit of a married participant who 
dies after plan termination will be paid as an amount due a 
decedent, not as a qualified preretirement survivor annuity.
    Clarifies that benefits will be paid to estates only as lump 
sums.
    Clarifies that accumulated mandatory employee contributions may 
not be withdrawn if benefits are in pay status when a plan becomes 
trusteed.
    Clarifies that the form of benefit in pay status when a plan 
becomes trusteed will not be changed.
    Requires that fair market value or fair value, as appropriate, 
be used for purposes of valuing assets to be allocated to 
participants' benefits and in determining employer liability and net 
worth.

Background

    The Pension Benefit Guaranty Corporation (PBGC) administers two 
insurance programs for private-sector defined benefit pension plans 
under title IV of the Employee Retirement Income Security Act of 1974 
(ERISA): a single-employer plan termination insurance program and a 
multiemployer plan insolvency insurance program. This final rule deals 
only with single-employer plans. Covered plans that are underfunded may 
terminate either in a distress termination under section 4041(c) of 
ERISA or in an involuntary termination (one initiated by PBGC) under 
section 4042 of ERISA. When such a plan terminates, PBGC typically is 
appointed statutory trustee of the plan, and becomes responsible for 
paying benefits in accordance with the provisions of title IV.
    The amount of benefits paid by PBGC under a terminated trusteed 
plan is determined by several factors. The starting point is the plan--
PBGC pays only those benefits that the plan provides under the plan's 
terms. Thus, PBGC begins by determining each participant's accrued plan 
benefit.
    After PBGC determines the amount of the participant's plan benefit, 
PBGC determines the amount it can guarantee. There are limitations on 
the benefits that PBGC can guarantee. One limitation, under sections 
4001(a)(8) and 4022(a) of ERISA, is that PBGC guarantees only those 
benefits that are ``nonforfeitable.'' For purposes of title IV, a 
benefit is nonforfeitable if the participant had satisfied the plan's 
(or ERISA's) requirements for the benefit by the plan's termination 
date (or, if applicable, by the bankruptcy filing date of a 
contributing plan sponsor).\1\
---------------------------------------------------------------------------

    \1\ See 29 CFR 4022.3(a)(1). For a plan that terminates while a 
contributing sponsor is the subject of a bankruptcy or other 
insolvency proceeding, the petition or filing date of the proceeding 
is treated as the plan's termination date for purposes of the 
guarantee rules. See section 4022(g) of ERISA and 29 CFR 4022.3(b). 
See also section 404 of the Pension Protection Act of 2006, Public 
Law 109-280 (Aug. 17, 2006).
---------------------------------------------------------------------------

    Another limitation is the ``maximum guaranteeable benefit'' rule 
set forth in section 4022(b)(3) of ERISA, which caps the amount that 
PBGC can guarantee. The cap for a participant in a plan with a 
termination date in 2023 (or, if applicable, a bankruptcy filing date 
of a contributing sponsor in 2023), who retires at age 65 under a 
straight-life annuity, is $6,750.00 per month. PBGC's

[[Page 44046]]

guarantee is further limited by the ``phase-in'' rule, under which 
PBGC's guarantee of benefit increases during the 5-year period ending 
on the plan's termination date (or, if applicable, the bankruptcy 
filing date of a contributing sponsor) is phased in at the number of 
years the benefit increase has been in effect, multiplied by the 
greater of: (1) 20 percent of the amount of the benefit increase; or 
(2) $20 per month.\2\ The ``phase-in'' rule protects the title IV 
insurance program from losses when the sponsor of an underfunded 
pension plan increases benefits shortly before the plan terminates. 
Another limitation, the accrued-at-normal limitation, is equal to the 
dollar amount of a participant's benefit in the straight life annuity 
form at normal retirement age. The portion that exceeds this limitation 
is not a PBGC guaranteeable benefit.
---------------------------------------------------------------------------

    \2\ See section 4022(b)(1), (b)(7), and (g) of ERISA.
---------------------------------------------------------------------------

    In some cases, a participant may receive more than the 
participant's guaranteed benefit, depending on the allocation of the 
plan's assets under section 4044(a) of ERISA or the allocation of 
PBGC's recoveries under section 4022(c) of ERISA, or both. Title IV 
directs PBGC to allocate the assets of a terminated pension plan among 
the participants and beneficiaries of the plan in the order of six 
priority categories. Section 4044(a) gives highest priority to benefits 
derived from participants' own voluntary and mandatory contributions 
(priority categories 1 and 2, respectively), next highest to benefits 
of certain retirees or persons who were or could have been in pay 
status 3 years before the plan terminated based on the lowest annuity 
benefit payable under the plan provisions at any time during the 5-year 
period ending on the termination date (priority category 3),\3\ then to 
benefits guaranteed by PBGC (priority category 4), and last to 
nonguaranteed benefits (priority categories 5 and 6). PBGC allocates 
assets to benefits in priority category 3--some of which may not be 
guaranteed--before guaranteed benefits in priority category 4. So, if a 
terminated plan's assets are sufficient to cover all benefits in 
priority category 3, PBGC will pay those benefits using the plan's 
assets, regardless of whether they are guaranteed.
---------------------------------------------------------------------------

    \3\ For a plan that terminates while a contributing sponsor is 
the subject of a bankruptcy or other insolvency proceeding, the 3-
year and 5-year lookbacks under priority category 3 are based on the 
bankruptcy filing date of the sponsor rather than the plan's 
termination date. See section 4044(e) of ERISA.
---------------------------------------------------------------------------

    PBGC values the benefits in each of a terminated plan's six 
priority categories and values the terminated plan's assets. PBGC 
values both benefits and plan assets as of the termination date. After 
PBGC values the plan benefits and assets, the assets are allocated to 
the priority categories, beginning with priority category 1, either 
until all benefits in all categories have been covered or until the 
assets are insufficient to pay all benefits within a category.
    In determining a participant's PBGC-payable benefit under title IV 
of ERISA, PBGC takes into account any partial plan distribution 
(whether a lump sum or an annuity purchase) that the plan made to the 
participant before plan trusteeship. PBGC offsets the benefit payable 
under title IV by the amount of the earlier distribution. This includes 
accounting for the distribution in determining the participant's 
maximum guaranteeable benefit (i.e., the maximum benefit that PBGC can 
guarantee by law, based on, among other things, the plan's termination 
date (or, if applicable, bankruptcy filing date of the contributing 
sponsor), the participant's age, and the participant's form of 
benefit). PBGC reduces the amount otherwise guaranteed because a 
participant in receipt of a partial plan distribution is effectively 
receiving each month a portion of the participant's plan benefits (even 
if the distribution was paid as a lump sum). Likewise, PBGC accounts 
for the earlier distribution in assigning a participant's benefit to 
the priority categories under section 4044(a) of ERISA. PBGC treats the 
amount paid as in the highest priority category in which the 
participant has benefits, because the participant has already received 
the distribution (or is receiving it as a separate annuity from an 
insurer).
    PBGC prescribes the forms of benefit under which payment may be 
made. For a participant or beneficiary receiving an annuity benefit 
from the plan at the time PBGC becomes trustee of the plan, PBGC 
generally continues payment in the form being paid. For participants 
not yet in pay status, PBGC provides the plan's automatic forms for 
married and unmarried participants and a menu of optional PBGC annuity 
forms. Except in very limited circumstances, PBGC pays benefits as 
annuities, not single lump sums. One exception is where the total value 
of the participant's benefit is de minimis--i.e., $5,000 or less under 
current PBGC regulations. Another exception is where a portion of the 
participant's benefit is attributable to mandatory employee 
contributions. In this case, PBGC allows a participant to elect a 
return of the participant's accumulated mandatory employee 
contributions in a lump sum.
    A participant or beneficiary in pay status in almost all 
circumstances cannot change an elected form of benefit after PBGC 
becomes plan trustee. This rule is consistent with the practices of 
most ongoing plans and prevents adverse selection (for example, by 
allowing a participant to choose a single-life form after the 
participant's spouse dies) and increased actuarial costs. PBGC has 
applied this rule both to participants and beneficiaries who went into 
pay status after PBGC became trustee and to participants and 
beneficiaries who were in pay status at the time PBGC became trustee 
and who later requested a change in benefit form from PBGC.
    When an underfunded title IV-covered plan terminates, a claim 
arises in favor of PBGC and against the former sponsor and its 
controlled group for the difference between the plan's benefit 
liabilities and its assets. PBGC determines this claim for the amount 
of unfunded benefit liabilities as of the termination date which 
accrues interest from that date.\4\ ERISA directs PBGC to collect any 
portion of this claim that exceeds 30 percent of the collective net 
worth of the former sponsor and its controlled group under commercially 
reasonable terms.\5\ PBGC calculates its claim for unfunded benefit 
liabilities consistently with its determination of assets and benefit 
liabilities for purposes of the asset allocation under section 4044(a).
---------------------------------------------------------------------------

    \4\ See sections 4001(a)(18) and 4062(b)(1) of ERISA.
    \5\ See section 4062(b)(2) of ERISA.
---------------------------------------------------------------------------

Proposed Rule

    PBGC's regulations on Benefits Payable in Terminated Single-
Employer Plans, 29 CFR part 4022, Allocation of Assets in Single-
Employer Plans, 29 CFR part 4044, and Liability for Termination of 
Single-Employer Plans, 29 CFR part 4062, govern the areas discussed 
above. In the course of PBGC's regulatory review, PBGC identified 
opportunities to improve benefits administration by making it more 
transparent--filling in gaps where guidance is needed, simplifying or 
removing language, codifying policies, and applying consistency in 
asset valuation.
    On September 30, 2019 (at 84 FR 51494), PBGC published a proposed 
rule to amend these three regulations and received comments from three 
commenters on the proposed rule. The commenters appreciated many of 
PBGC's clarifications but made suggestions for alterations to the 
proposed changes to PBGC's benefit

[[Page 44047]]

payments regulation. The comments, PBGC's responses, and the provisions 
of this final rule are discussed below. The final rule does not include 
the proposed amendments to Sec.  4022.23 of the benefit payments 
regulation and Sec.  4044.10 of the asset allocation regulation dealing 
with partial plan distributions. PBGC is reviewing these provisions in 
light of comments on the proposed rule. Except for these omissions, a 
change to the amendment to Sec.  4022.9 on benefit corrections, and 
some technical and editorial changes, the final rule is substantially 
the same as the proposed rule.

Final Regulatory Changes

General Prohibition of Lump Sums

    Payments of lump sums at or soon before plan termination raise 
concerns about abuse of the insurance program. For example, a lump-sum 
payment reduces the amount of assets in an underfunded plan that could 
be allocated to the benefits of other participants who may have 
benefits in higher priority categories, or that could fund guaranteed 
benefits. Thus, payment of such a lump sum could adversely affect other 
participants or PBGC.\6\ As noted above, PBGC does not pay benefits in 
a lump sum except in certain limited circumstances (e.g., de minimis 
benefits). Section 4022.7(a) of the benefit payments regulation 
currently provides that ``[i]f a benefit that is guaranteed under this 
part is payable in a single installment or substantially so under the 
terms of the plan, or an option elected under the plan by the 
participant, the benefit will not be guaranteed or paid as such,'' but 
PBGC will guarantee the annuity equivalent.
---------------------------------------------------------------------------

    \6\ As an indication that Congress was concerned about lump sums 
affecting other participants, section 4045 of ERISA authorizes PBGC 
to recover a portion of a lump sum made before plan termination. The 
statute allows PBGC to recover, for payments made within the 3-year 
period immediately before termination, the amount which exceeds the 
present value of the guaranteed benefit that the participant would 
have received if the participant had elected to receive the benefit 
as an annuity.
---------------------------------------------------------------------------

    Some have suggested that the prohibition on lump-sum payments does 
not apply to a participant who elected a lump sum before plan 
termination.\7\ To remove any ambiguity in the regulation, the final 
rule, like the proposed, amends Sec.  4022.7(a) of the benefit payments 
regulation to make explicit (and consistent with PBGC's practice) that 
the prohibition on lump sums includes an optional lump sum elected 
under the plan by the participant but not paid before plan trusteeship. 
This rule applies regardless of the reason for not paying the lump sum.
---------------------------------------------------------------------------

    \7\ See, e.g., Fisher v. PBGC, 151 F. Supp. 3d 159 (D.D.C. 
2016), following remand to PBGC, 468 F. Supp. 3d 7 (D.D.C. 2020), 
aff'd, 994 F.3d 664 (D.C. Cir. 2021) (involving a participant who 
sued PBGC to challenge its denial of his request for a lump-sum 
distribution, originally made to the plan. PBGC denied the 
participant's request, and the district court sided with PBGC. On 
appeal, the D.C. Circuit affirmed, holding that PBGC's regulation 
governing lump-sum distributions is a permissible statutory 
interpretation under applicable law and that PBGC's determination 
was not arbitrary and capricious).
---------------------------------------------------------------------------

    PBGC received two comments on this provision. One commenter agreed 
with the provision but suggested a technical change to Sec.  4022.7(a) 
to clarify the language describing the alternative benefit that PBGC 
will guarantee. PBGC agrees that a technical change is needed. In the 
final rule, new Sec.  4022.7(a) provides that PBGC will guarantee the 
alternative benefit, if any, in the plan which provides for the payment 
of equal periodic installments for the life of the recipient. If the 
plan does not provide such an annuity, PBGC will guarantee an 
actuarially equivalent life annuity.
    A second commenter appreciated PBGC's clarification but disagreed 
that payment of a lump sum elected before plan termination should be 
based on the plan's payment process. The commenter stated that this 
could cause one participant to be paid and another not to be paid, 
citing examples such as shortages of administrative personnel due to 
the employer's liquidation or financial problems, data issues, and the 
need to perform calculations under a qualified domestic relations 
order.
    PBGC's prohibition on paying lump sums, including an optional lump 
sum elected under the plan by the participant but not paid before plan 
trusteeship, provides a bright-line test that PBGC is able to 
administer consistently among all of its trusteed plans. The rule is 
consistent with the approach provided under ERISA for distress 
terminations. Section 4041(c)(3)(D) of ERISA provides that beginning on 
the date on which the plan administrator provides a notice of distress 
termination to PBGC, the statutory requirements for approval of the 
termination will be met only if the plan administrator ``pays benefits 
attributable to employer contributions . . . only in the form of an 
annuity . . .''. PBGC recognizes that a plan's payment process may 
cause some optional lump-sum payments to be made and not others, but 
for PBGC to determine whether a lump-sum payment could have been made 
before plan trusteeship would require a facts and circumstances 
analysis. Such review would be administratively burdensome and, 
depending on plan records, could still result in some optional lump-sum 
payments being made and not others. In addition, as explained above, 
the rule preserves assets that could be allocated to the benefits of 
other participants who may have benefits in higher priority categories, 
or that could fund guaranteed benefits. Accordingly, in the final rule, 
PBGC adopts the provision as proposed with the technical change 
described above.
    As in the proposed rule, this change does not affect the payment of 
benefits in a lump sum in the circumstances permitted under Sec.  
4022.7(b) and (c) of the benefit payments regulation.

De Minimis Threshold

    Section 203(e)(1) of ERISA and section 411(a)(11)(A) of the 
Internal Revenue Code (Code) provide a threshold (i.e., maximum present 
value of a benefit) that a pension plan may pay in a mandatory lump-sum 
distribution. From 1997 through 2023, that maximum was $5,000.\8\ After 
2023, it will be $7,000.\9\ PBGC's benefit payments regulation contains 
three provisions that refer to this threshold, and the regulation was 
amended after the statutory amount increased to $5,000.\10\ To avoid 
amending the regulation each time Congress changes the threshold for 
mandatory lump-sum distributions, the final rule, like the proposed, 
amends the three provisions so that they refer not to a set amount, but 
to the dollar amount specified under section 203(e)(1) of ERISA. As a 
result, for purposes of part 4022, the new $7,000 maximum automatically 
will apply to plan terminations after December 31, 2023.
---------------------------------------------------------------------------

    \8\ The Taxpayer Relief Act of 1997 increased the maximum from 
$3,500 to $5,000 effective for plan years beginning after August 5, 
1997.
    \9\ Section 304 of the SECURE 2.0 Act of 2022, Division T of the 
Consolidated Appropriations Act, 2023, Public Law 117-328 (Dec. 29, 
2022).
    \10\ See 63 FR 38305 (July 16, 1998).
---------------------------------------------------------------------------

    The three provisions are Sec. Sec.  4022.7(b)(1)(i) and (iii) and 
4022.7(d)(1) of the current benefit payments regulation.

Deceased Participants With De Minimis Benefits

    Currently, Sec.  4022.7(b)(1)(iii) of the benefit payments 
regulation provides that if (1) the lump-sum value of a qualified 
preretirement survivor annuity (QPSA) is $5,000 or less (after December 
31, 2023, the value will be $7,000 or less), (2) the benefit is not yet 
in pay status, and (3) the participant dies after

[[Page 44048]]

the termination date, then the surviving spouse may elect to receive 
the QPSA benefit as a lump sum or an annuity. Section 4022.7(b)(1)(iii) 
of the benefit payments regulation is silent about the lump-sum value 
of the participant's benefit, and the provision would appear to apply 
regardless, so long as the three conditions above are met. However, if 
the lump-sum value of the participant's benefit is de minimis as of the 
termination date under Sec.  4022.7(b)(1)(i) of the benefit payments 
regulation and the participant dies after the termination date, PBGC's 
policy is to pay the benefit under the rules in subpart F of the 
benefit payments regulation (Certain Payments Owed Upon Death). Subpart 
F provides rules for the payment of benefits that may be owed to a 
deceased participant or beneficiary, such as the reimbursement of an 
earlier underpayment to the participant or beneficiary. PBGC treats de 
minimis benefits as due and owing as of the plan's termination date, 
because they are payable by PBGC at any time, regardless of the 
participant's age, and presumably most participants with de minimis 
benefits would apply for an immediate lump sum if PBGC were able to 
notify them of its availability upon plan termination.
    The final rule, like the proposed, amends Sec.  4022.7(b)(1)(iii) 
of the benefit payments regulation to make clear that in the case of a 
participant with a de minimis benefit who dies after the plan's 
termination date and whose benefit is not yet in pay status, PBGC will 
treat the benefit as payable under subpart F. Furthermore, if a 
participant is married, PBGC will pay the full value of the 
participant's de minimis benefit to the surviving spouse (not limited 
to the value of a QPSA), with any interest owed. PBGC clarifies Sec.  
4022.93 of subpart F (Who will get the benefits PBGC may owe me at the 
time of my death?) by adding an exception to the current order of 
priority. New Sec.  4022.93(d) provides that the surviving spouse of a 
participant with a benefit that does not exceed the dollar amount 
specified in section 203(e)(1) of ERISA, who dies after the termination 
date when the benefit is not yet in pay status, will receive the full 
value of the de minimis benefit of a deceased participant. This benefit 
will at times exceed the value of the QPSA.
    Additionally, the final rule, like the proposed, clarifies the form 
of PBGC's payment to a surviving spouse where the participant has a non 
de minimis benefit. In new Sec.  4022.7(b)(1)(iv), if the deceased 
participant's benefit exceeds the dollar amount specified in section 
203(e)(1) of ERISA, but the lump-sum value of annuity payments under 
the QPSA does not exceed that amount, and the benefit is not in pay 
status, PBGC may pay the QPSA as a lump sum, or as an annuity, if 
available and elected by the surviving spouse. For example, if the 
value of the participant's benefit is $8,000 and the value of the QPSA 
is $4,000, PBGC will pay the QPSA value of $4,000 to the surviving 
spouse in a lump sum, or as an annuity, if available, and if elected by 
the surviving spouse. (By contrast, if the value of the participant's 
benefit is $4,000, PBGC would treat that amount as owed to the 
participant and pay the full $4,000 to the participant's beneficiary 
under subpart F of the benefit payments regulation.)
    One commenter objected to this proposal. The commenter understood 
the reasoning for the proposal, that a de minimis benefit could have 
been cashed out had the participant made a benefit election before 
death but found it inequitable. The commenter noted that a spouse could 
be better off if the participant's benefit was below $5,000 \11\ 
because the spouse would not be limited to the QPSA amount. The 
commenter suggested three alternatives, which PBGC considered. The 
first alternative would pay under subpart F a benefit to the spouse 
based on the value of the QPSA in all cases. Compared to PBGC's 
approach, this alternative would pay a lesser benefit to a surviving 
spouse than to a non-spouse beneficiary.
---------------------------------------------------------------------------

    \11\ The commenter's examples are based upon the pre-2024 dollar 
amount specified in section 203(e)(1) of ERISA.
---------------------------------------------------------------------------

    The commenter's two other suggested alternatives ((1) pay the 
spouse $5,000 if the present value of the participant's benefit is 
between $5,000 and $10,000, and (2) pay the spouse $5,000 plus 25% of 
the amount that exceeds the $5,000 present value of the participant's 
benefit) would result in the anomaly of a benefit payment greater than 
what the participant's plan would have paid. For this reason, PBGC is 
not adopting these alternatives. PBGC provided examples in the preamble 
of the proposed rule showing the effect of the rules on the payment of 
benefits because it recognized that the difference in benefit payments 
for participant benefits at or below the $5,000 de minimis threshold 
and participant benefits between $5,000 and $10,000 could appear 
inequitable. However, PBGC believes its approach results in the most 
consistent administration of payment of benefits and addresses PBGC's 
inability to provide benefit information and election forms immediately 
following plan termination.

Payments to Estates

    PBGC may owe benefits to a deceased participant or beneficiary as 
of the date of death. For example, benefits may be owed if the 
estimated benefit that PBGC paid before the date of death was less than 
the final benefit that PBGC determines should have been paid. Or, as 
described above, the participant may have been owed a de minimis 
benefit. Subpart F of the benefit payments regulation identifies the 
recipient of benefits owed at death. One possible payee is the 
participant's or beneficiary's estate.\12\
---------------------------------------------------------------------------

    \12\ See 29 CFR 4022.93(a).
---------------------------------------------------------------------------

    Currently, Sec.  4022.7(b)(1)(iv) of PBGC's benefit payments 
regulation provides for a lump-sum payment ``if so elected by the 
estate.'' The typical alternative to a lump sum is a life annuity--and 
a life annuity is inappropriate for an estate.
    Accordingly, the final rule, like the proposed, redesignates 
current Sec.  4022.7(b)(1)(iv) as new Sec.  4022.7(b)(1)(v) and 
eliminates the annuity election, so that lump-sum payment becomes 
automatic for an estate. The final rule clarifies that PBGC will always 
pay benefits owed to an estate, regardless of the de minimis threshold, 
in a lump sum, with no annuity option.

Accumulated Mandatory Employee Contributions

    The final rule, like the proposed, clarifies that if a participant 
is not in pay status at the time the plan becomes trusteed, the 
participant may withdraw any accumulated mandatory employee 
contributions (AMECs) in a single lump sum at any time before going 
into pay status, if the plan would have permitted such a withdrawal. 
But if a participant is in pay status at the time the plan becomes 
trusteed, PBGC will not allow the participant to change the 
participant's benefit and elect a withdrawal of AMECs.
    Mandatory employee contributions (MECs) are contributions that are 
required as a condition of employment with the plan sponsor or of 
obtaining benefits under the plan attributable to employer 
contributions. AMECs are MECs credited with interest at a specified 
rate, as described under section 411(c)(2) of the Code. In general, 
AMECs provide for an employee-derived benefit and a preretirement death 
benefit. Some plans provide that participants may withdraw their AMECs 
before retirement.

[[Page 44049]]

    For a terminated plan, section 4044(a)(2) of ERISA makes the 
portion of a participant's benefit derived from the participant's AMECs 
a priority category 2 benefit. Section 4022.7(b)(2) of PBGC's benefit 
payments regulation permits PBGC to pay AMECs in a lump sum if two 
conditions are met: \13\ the participant elects payment of AMECs as a 
lump sum within 61 days after receiving notification that an election 
is available; and payment of AMECs as a lump sum is consistent with the 
plan's provisions.
---------------------------------------------------------------------------

    \13\ PBGC's regulation makes an exception for benefits 
attributable to a rollover from a defined contribution plan. Such 
rollovers are described in IRS's guidance on the purchase of 
additional benefits from a defined benefit plan. See IRS Rev. Rul. 
2012-4. These benefits are generally treated as AMECs, but PBGC does 
not allow payment of them in a lump sum. See 29 CFR 
4022.7(b)(2)(iii).
---------------------------------------------------------------------------

    The final rule, like the proposed, simplifies administration of the 
AMEC provisions by amending Sec.  4022.7(b)(2)(i) to remove the 61-day 
limit.
    Although plans typically offer only a lump-sum return of AMECs, 
Sec.  4022.7(b)(2)(i) of the benefit payments regulation allows a 
participant to withdraw AMECs not just in a single lump sum, but in ``a 
series of installments.'' Providing this treatment has administrative 
costs for PBGC, and the option has low value to participants. If a 
participant wishes to receive AMECs over time, the participant can 
elect to have AMECs increase the participant's monthly annuity benefit. 
PBGC sees no compelling reason for the regulation to continue including 
this separate option. The final rule, like the proposed, eliminates it.
    Section 4022.7(b)(2)(ii) of the benefit payments regulation 
currently permits a participant who has already begun receiving from 
the plan an annuity that is partially derived from AMECs to elect a 
return of AMECs after plan termination. This provision is inconsistent 
with the general rule (discussed below under Change in benefit form and 
benefit corrections) that once a benefit is in pay status, no change is 
permitted. In practice, PBGC does not give a participant who was in pay 
status at the time the plan becomes trusteed the option of withdrawing 
AMECs after payments have begun. The final rule, like the proposed, 
clarifies that PBGC does not permit participants in pay status to elect 
to withdraw AMECs. The final rule amends Sec.  4022.7(b)(2)(ii) to 
provide that if a participant is in pay status at the time the plan 
becomes trusteed,\14\ PBGC will not allow the participant to withdraw 
any AMECs.
---------------------------------------------------------------------------

    \14\ Although ERISA provides only that PBGC ``may'' become the 
trustee (see section 4042(b)(1) of ERISA), in practice PBGC has been 
appointed trustee of almost every underfunded plan that has 
terminated since 1974, and for this reason PBGC's regulations assume 
PBGC trusteeship of an underfunded terminated plan.
---------------------------------------------------------------------------

Change in Benefit Form and Benefit Corrections

    In almost all plans, changes in the form of payment after benefit 
commencement--for example, by allowing a participant to add or 
eliminate a survivor benefit or substitute one beneficiary for 
another--are not permitted. Such changes--made with information not 
available when benefit payments began--could result in increased 
actuarial costs to a plan. For example, a participant might, after 
starting a straight-life annuity, learn that the participant's health 
is failing and therefore wish to add a survivor benefit to continue 
payments after the participant's death.
    Similarly, PBGC generally does not allow a participant to change an 
elected form of benefit after payments begin. Section 4022.8(d) of 
PBGC's current benefit payments regulation provides that ``[o]nce 
payment of a benefit starts, the benefit form cannot be changed.'' 
However, Sec.  4022.8(a) provides, ``[t]his section applies where 
benefits are not already in pay status.''
    The regulation was intended to prevent changes in the form of a 
benefit commenced both before and after PBGC trusteeship.\15\ To remove 
any doubt that the benefit form may not be changed once payment of a 
benefit begins (at any point in time), the final rule, like the 
proposed, amends Sec.  4022.8(a) to remove the words ``[t]his section 
applies where benefits are not already in pay status.'' In addition, 
new Sec.  4022.8(d) provides that, subject to changes that PBGC may 
prescribe under Sec.  4022.9(d), once payment of a benefit begins the 
form cannot be changed, regardless of whether PBGC or the plan put the 
participant into pay status.
---------------------------------------------------------------------------

    \15\ The preamble to the final rule adopting Sec.  4022.8 (67 FR 
16950) explains that ``[i]f a participant's benefit is already in 
pay status, PBGC continues to pay the benefit (subject to the 
limitations in title IV of ERISA) in the form being paid.''
---------------------------------------------------------------------------

    Although PBGC does not generally allow a change in the benefit form 
after benefits begin, PBGC's existing policies recognize that sometimes 
errors are made in the benefit estimates it sends to participants and 
beneficiaries, which may result in benefit elections that would not 
have been made if more accurate estimates had been provided.
    Under PBGC's policy, a change in the form of benefit is permitted 
in only two circumstances: (1) when PBGC erred by 10 percent or more in 
the relative value of optional forms when providing a benefit estimate 
(i.e., PBGC used incorrect form conversion factors), and (2) when PBGC 
erred by 10 percent or more in the early retirement factor used to 
provide a benefit estimate. An incorrect estimate may occur, for 
example, if PBGC later becomes aware of plan information affecting 
factors used by PBGC in calculating a benefit estimate.
    Accordingly, in the final rule, as in the proposed, new Sec.  
4022.9(d) clarifies the circumstances in which PBGC would permit a 
change in form of benefit. New Sec.  4022.9(d) provides that PBGC may 
prescribe the time and manner for correcting errors that affect benefit 
form and benefit starting dates. In addition, the final rule allows 
PBGC to prescribe the time and manner for changes in benefit form to 
mitigate the consequences of a Presidentially declared disaster that 
might be needed to enable participants to make valid benefit elections.
    In the final rule, as in the proposed, current paragraph (d) of 
Sec.  4022.9 becomes paragraph (e) of Sec.  4022.9. In addition, the 
heading of Sec.  4022.9 is revised to reflect the promulgation of 
paragraph (d) concerning prescribed benefit changes.

Valuation Methodology

    The final rule, like the proposed, amends PBGC's asset allocation 
regulation and its regulation on Liability for Termination of Single-
Employer Plans (29 CFR part 4062) to apply fair market value or fair 
value, as appropriate, for purposes of allocating assets to 
participants' benefits and determining and collecting employer 
liability for plan underfunding.
    When an underfunded pension plan terminates, PBGC must allocate the 
plan's assets among participants' benefits under section 4044 of ERISA, 
and it must determine the amount of the plan's unfunded benefit 
liabilities, i.e., the shortfall in assets to cover benefit 
liabilities, and collect it from the contributing sponsor and its 
controlled group under section 4062 of ERISA. PBGC's collection of the 
shortfall may depend on the amount of the shortfall and the net worth 
of the contributing sponsor and each member of its controlled group. 
Thus, it is necessary--in addition to valuing the plan's benefit 
liabilities--to value the plan's assets (to allocate to benefits and 
determine the shortfall) and the contributing sponsor's and controlled 
group members' net worth (to determine how PBGC is to collect the 
employer liability for the shortfall).

[[Page 44050]]

    The statute does not explicitly require that these valuations be 
made in a consistent manner. It seems fair and reasonable, however, to 
use the same methodology to value plan assets for purposes of both 
allocating assets to benefits and determining the amount of unfunded 
benefit liabilities. It likewise seems fair and reasonable to use the 
same methodology for determining both employer liability and employer 
net worth.
    The statute also does not specify the methodologies for valuing 
assets for purposes of allocating them to benefits among the priority 
categories or for determining employer net worth. For purposes of 
employer liability, section 4062(b)(1) of ERISA says that the liability 
is the plan's ``unfunded benefit liabilities,'' which under section 
4001(a)(18) of ERISA is to be determined using the ``current value'' of 
plan assets. ``Current value'' is not defined in title IV.
    Current Sec.  4044.41(b) of the asset allocation regulation 
provides that plan assets are to be valued for allocation purposes at 
their fair market value.\16\ Likewise, Sec.  4062.4(c) of the employer 
liability regulation provides that a person's net worth is equal to its 
fair market value. Section 4062.3 of the employer liability regulation 
simply repeats the statutory direction that employer liability equals 
the total amount of unfunded benefit liabilities. PBGC has in practice 
used fair market value for this purpose. Thus, the valuation 
methodology for allocation, employer liability, and net worth is 
consistent.
---------------------------------------------------------------------------

    \16\ Section 4001.2 of PBGC's regulation on Terminology defines 
``fair market value'' as ``the price at which property would change 
hands between a willing buyer and a willing seller, neither being 
under any compulsion to buy or sell and both having reasonable 
knowledge of relevant facts.''
---------------------------------------------------------------------------

    PBGC believes that the value of pension plan assets determined 
under a ``fair value'' framework may be considered a reasonable 
estimate of value for the same assets for purposes of satisfying the 
above fair market value requirements for allocating assets, determining 
employer liability, and calculating net worth of liable persons. This 
view is reflected in PBGC's plan asset valuation procedures. PBGC, 
therefore, currently applies a fair value methodology in some cases. 
These cases include, but are not limited to, those where PBGC cannot 
reasonably obtain the necessary data or inputs necessary to establish 
the fair market value, such as hedge funds, private equity funds and 
other hard-to-value assets.
    The Financial Accounting Standards Board Accounting Standards 
Codification Section 820, Fair Value Measurements and Disclosures (ASC 
820), establishes a framework for measuring fair value in accordance 
with accounting principles generally accepted in the United States of 
America (U.S. GAAP). Under PBGC's procedures, ``hard-to-value'' assets 
are generally Level 3 assets under the ``fair value'' hierarchy of ASC 
820. Accordingly, to conform PBGC's regulations to current practice, 
PBGC has concluded that it is appropriate to adopt the valuation 
methodologies of fair market value as defined in Sec.  4001.2 of PBGC's 
regulation on Terminology or fair value in accordance with U.S. GAAP, 
as appropriate, for purposes of allocating assets, determining employer 
liability, and calculating net worth of liable persons. The final rule, 
like the proposed, amends PBGC's asset allocation and employer 
liability regulations to achieve this result.

Compliance With Rulemaking Guidelines

Executive Orders 12866 and 13563

    The Office of Management and Budget (OMB) has determined that this 
rule is not a ``significant regulatory action'' under Executive Order 
12866. Accordingly, OMB has not reviewed the final rule under Executive 
Order 12866.
    Executive Order 12866 directs 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, public health and safety 
effects, distributive impacts, and equity).
    Although this is not a significant regulatory action under 
Executive Order 12866, PBGC has examined the economic and policy 
implications of this final rule and has concluded that there will be no 
significant economic impact as a result of the final amendments to 
PBGC's regulations. Most of the amendments merely codify existing PBGC 
policies and practices. Making these policies and practices more 
transparent may decrease uncertainty among those affected by PBGC 
benefit determinations, reducing the need for inquiries, consultations 
or appeals. The change to PBGC's regulation on valuation methodology 
should have no impact, because use of fair value instead of fair market 
value will not result in values that are regularly higher or lower; in 
other words, use of fair value may result in a slightly higher value in 
some cases and a slightly lower value in other cases.
    Section 6 of Executive Order 13563 requires agencies to rethink 
existing regulations by periodically reviewing their regulatory program 
for rules that ``may be outmoded, ineffective, insufficient, or 
excessively burdensome.'' These rules should be modified, streamlined, 
expanded, or repealed as appropriate. PBGC has identified the 
amendments to the regulations on benefit payments, allocation of 
assets, and liability for termination of single-employer plans as 
consistent with the principles for review under Executive Order 13563. 
PBGC believes the codification of policies on how benefits are paid 
provides clearer guidance to the public, and that the changes to the 
asset valuation rule streamline the valuation process and incorporate 
current actuarial best practices.

Regulatory Flexibility Act

    The Regulatory Flexibility Act \17\ imposes certain requirements 
respecting rules that are subject to the notice-and-comment 
requirements of section 553(b) of the Administrative Procedure Act, or 
any other law,\18\ and that are likely to have a significant economic 
impact on a substantial number of small entities. Unless an agency 
certifies that a final rule is not likely to have a significant 
economic impact on a substantial number of small entities, section 603 
of the Regulatory Flexibility Act requires 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. 
Small entities include small businesses, organizations, and 
governmental jurisdictions.\19\
---------------------------------------------------------------------------

    \17\ 5 U.S.C. 601 et seq.
    \18\ The applicable definition of ``rule'' is found in section 
601 of the Regulatory Flexibility Act. See 5 U.S.C. 601(2).
    \19\ The applicable definitions of ``small business,'' ``small 
organization,'' and ``small governmental jurisdiction'' are found in 
section 601 of the Regulatory Flexibility Act. See 5 U.S.C. 601.
---------------------------------------------------------------------------

    For purposes of the Regulatory Flexibility Act requirements with 
respect to this final regulation, PBGC considers a small entity to be a 
plan with fewer than 100 participants.\20\ This is substantially the 
same criterion PBGC uses in other regulations \21\ and is consistent 
with certain requirements in

[[Page 44051]]

title I of ERISA \22\ and the Code,\23\ as well as the definition of a 
small entity that PBGC and the Department of Labor have used for 
purposes of the Regulatory Flexibility Act.\24\
---------------------------------------------------------------------------

    \20\ PBGC consulted with the Small Business Administration 
Office of Advocacy in making this determination as required by 5 
U.S.C. 603(c). Memorandum received from the U.S. Small Business 
Administration, Office of Advocacy on March 9, 2021.
    \21\ See, e.g., special rules for small plans under part 4007 
(Payment of Premiums).
    \22\ See, e.g., section 104(a)(2) of ERISA, which permits the 
Secretary of Labor to prescribe simplified annual reports for 
pension plans that cover fewer than 100 participants.
    \23\ See, e.g., section 430(g)(2)(B) of the Code, which permits 
plans with 100 or fewer participants to use valuation dates other 
than the first day of the plan year.
    \24\ See, e.g., PBGC's proposed rule on Reportable Events and 
Certain Other Notification Requirements, 78 FR 20039, 20057 (April 
3, 2013) and DOL's final rule on Prohibited Transaction Exemption 
Procedures, 76 FR 66637, 66644 (Oct. 27, 2011).
---------------------------------------------------------------------------

    Further, while some large employers that terminate plans may have 
small plans that terminate along with larger ones, 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 amendments in the proposed rule on small entities. PBGC 
received no comments on this point.
    Based on its definition of small entity, PBGC certifies under 
section 605(b) of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) 
that the amendments in this final rule will not have a significant 
economic impact on a substantial number of small entities. All or 
virtually all of the effect of this final rule will be on PBGC or 
persons who receive benefits from PBGC. Accordingly, as provided in 
section 605 of the Regulatory Flexibility Act, sections 603 and 604 do 
not apply.

List of Subjects

29 CFR Part 4022

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

29 CFR Part 4044

    Employee benefit plans, Pension insurance.

29 CFR Part 4062

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

    For the reasons given above, PBGC amends 29 CFR parts 4022, 4044, 
and 4062 as follows.

PART 4022--BENEFITS PAYABLE IN TERMINATED SINGLE-EMPLOYER PLANS

0
1. The authority citation for part 4022 continues to read as follows:

    Authority: 29 U.S.C. 1302, 1322, 1322b, 1341(c)(3)(D), and 1344.


0
2. Amend Sec.  4022.7 by:
0
a. Revising paragraphs (a) and (b);
0
b. In paragraph (c), removing the four instances of the words ``single 
installment'' and adding in their place the words ``lump sum''; and
0
c. In paragraph (d)(1), removing the phrase ``is $5,000 or less'' and 
adding in its place ``does not exceed the dollar amount specified in 
section 203(e)(1) of ERISA''.
    The revisions read as follows:


Sec.  4022.7  Benefits payable in a lump sum.

    (a) Alternative benefit. Except as provided in this part, PBGC pays 
benefits only in annuity form. If a benefit that is guaranteed under 
this part is payable in a lump sum or substantially so under the terms 
of the plan, including an option elected under the plan by the 
participant before plan trusteeship, PBGC will not guarantee the 
benefit in such form. Instead, PBGC will guarantee the alternative 
benefit, if any, in the plan which provides for the payment of equal 
periodic installments for the life of the recipient. If the plan does 
not provide such an annuity, PBGC will guarantee an actuarially 
equivalent life annuity.
    (b) Payment by PBGC--(1) Payment in lump sum. Notwithstanding 
paragraph (a) of this section:
    (i) In general. If the lump-sum value of a benefit (or of an 
estimated benefit) payable by PBGC and calculated as of the termination 
date does not exceed the dollar amount specified in section 203(e)(1) 
of ERISA in effect as of the termination date and the benefit is not 
yet in pay status as of the date PBGC becomes trustee, the benefit (or 
estimated benefit) may be paid in a lump sum.
    (ii) Annuity option. If PBGC would otherwise make a lump-sum 
payment in accordance with paragraph (b)(1)(i) of this section and the 
monthly benefit (or the estimated monthly benefit) is equal to or 
greater than $25 (at normal retirement age and in the normal form for 
an unmarried participant), PBGC will provide the option to receive the 
benefit in the form of an annuity.
    (iii) Deceased participants after plan termination. If the lump-sum 
value of a participant's benefit calculated as of the termination date 
does not exceed the dollar amount specified in section 203(e)(1) of 
ERISA in effect as of the termination date, and the participant dies 
after the plan's termination date and before the benefit is in pay 
status, PBGC will treat the benefit as owed to the participant at the 
time of death and the rules in subpart F of this part apply.
    (iv) Payment of de minimis QPSA as lump sum or annuity. If the 
lump-sum value of a participant's benefit calculated as of the 
termination date exceeds the dollar amount specified in section 
203(e)(1) of ERISA in effect as of the termination date, the lump-sum 
value of annuity payments under the qualified preretirement survivor 
annuity (or under an estimated qualified preretirement survivor 
annuity) does not exceed that amount, and the participant dies after 
the plan's termination date and before the benefit is in pay status, 
then the qualified preretirement survivor annuity (or the estimated 
qualified preretirement survivor annuity) may be paid in a lump sum, or 
as an annuity, if available, and if elected by the surviving spouse.
    (v) Payments to estates. PBGC will pay any annuity payments payable 
to an estate in a lump sum without regard to the threshold in paragraph 
(b)(1)(i) of this section. PBGC will discount the annuity payments 
using the Federal mid-term rate (as determined by the Secretary of the 
Treasury pursuant to section 1274(d)(1)(C)(ii) of the Code) applicable 
for the month the participant died based on monthly compounding.
    (2) Return of employee contributions--(i) In general. 
Notwithstanding any other provision of this part, PBGC will pay as a 
lump sum instead of as an annuity, the value of the portion of an 
individual's basic-type benefit derived from accumulated mandatory 
employee contributions, if payment in a lump sum is consistent with the 
plan's provisions and if the individual elects such payment either 
before or at the time the individual starts receiving annuity payments 
from PBGC for the remainder of the individual's benefit. For purposes 
of this part, the portion of an individual's basic-type benefit derived 
from accumulated mandatory employee contributions is determined under 
Sec.  4044.12 of this chapter (priority category 2 benefits), and the 
value of that portion is computed under the applicable rules contained 
in part 4044, subpart B of this chapter.
    (ii) Benefits in pay status. If an individual is in pay status with 
an annuity as of the date the plan becomes trusteed, and if the 
individual did not

[[Page 44052]]

elect to withdraw any accumulated mandatory employee contributions, 
PBGC will not allow the individual to withdraw any portion of the 
benefit derived from accumulated mandatory employee contributions as a 
lump sum.
* * * * *

0
3. In Sec.  4022.8, amend paragraph (a) introductory text by removing 
the phrase ``This section applies where benefits are not already in pay 
status.'' and by revising paragraph (d) to read as follows:


Sec.  4022.8  Form of payment.

* * * * *
    (d) Change in benefit form. Subject to benefit changes that PBGC 
may prescribe under Sec.  4022.9(d), once payment of a benefit starts, 
the benefit form cannot be changed, regardless of whether the 
participant or beneficiary was put into pay status by the plan before 
the date PBGC becomes trustee of the plan.
* * * * *

0
4. Amend Sec.  4022.9 by:
0
a. Revising the section heading;
0
b. Redesignating paragraph (d) as paragraph (e); and
0
c. Adding new paragraph (d).
    The revision and addition read as follows:


Sec.  4022.9  Time of payment; benefit applications and corrections.

* * * * *
    (d) Benefit corrections. PBGC may prescribe the time and manner for 
corrections of errors that affect benefit form and benefit starting 
dates and for changes in benefit form to mitigate the consequences of a 
Presidentially declared disaster.
* * * * *


Sec.  4022.21  [Amended]

0
5. Amend paragraph (c)(1) by removing the words ``single installment'' 
and adding in their place the words ``lump sum''.

0
6. Amend Sec.  4022.93 by revising the section heading, paragraph (a) 
introductory text, and adding paragraph (d) to read as follows:


Sec.  4022.93.  Who will get benefits PBGC may owe me at the time of my 
death?

    (a) In general. Except as provided in paragraphs (b), (c), and (d) 
of this section, we will pay any benefits we owe you at the time of 
your death to the person(s) surviving you in the following order--
* * * * *
    (d) Lump-sum payments to surviving spouses. For a deceased 
participant whose benefit under Sec.  4022.7(b) has a lump-sum value 
not exceeding the dollar amount specified in section 203(e)(1) of 
ERISA, payment will be made to the surviving spouse (if any) if such 
spouse would otherwise be entitled to receive a qualified preretirement 
survivor annuity under section 205(a)(2) of ERISA, and the surviving 
spouse will receive highest priority under paragraph (a) of this 
section.

PART 4044--ALLOCATION OF ASSETS IN SINGLE-EMPLOYER PLANS

0
7. The authority citation for part 4044 continues to read as follows:

    Authority: 29 U.S.C. 1301(a), 1302(b)(3), 1341, 1344, 1362.


0
8. Amend Sec.  4044.41 by revising paragraph (b) to read as follows:


Sec.  4044.41  General valuation rules.

* * * * *
    (b) Valuation of assets. Plan assets generally will be valued at 
their fair market value as defined in Sec.  4001.2 of this chapter. As 
appropriate, plan assets will be valued at their fair value in 
accordance with accounting principles generally accepted in the United 
States of America (U.S. GAAP).

PART 4062--LIABILITY FOR TERMINATION OF SINGLE-EMPLOYER PLANS

0
9. The authority citation for part 4062 continues to read as follows:

    Authority: 29 U.S.C. 1302(b)(3), 1362-1364, 1367, 1368.


0
10. Amend Sec.  4062.4 by revising paragraph (c) introductory text to 
read as follows:


Sec.  4062.4  Determinations of net worth and collective net worth.

* * * * *
    (c) Factors for determining net worth. A person's net worth is to 
be determined on the basis of the factors set forth below in this 
section, to the extent relevant; different factors may be considered 
with respect to different portions of the person's operations. 
Generally, fair market value, as defined in Sec.  4001.2 of this 
chapter, is to be used. As appropriate, fair value in accordance with 
accounting principles generally accepted in the United States of 
America (U.S. GAAP) is to be used.

    Issued in Washington, DC.
Gordon Hartogensis,
Director, Pension Benefit Guaranty Corporation.
[FR Doc. 2023-14349 Filed 7-10-23; 8:45 am]
BILLING CODE 7709-02-P