CFR > Title 29 - Labor > SUBTITLE B—Regulations Relating to Labor > CHAPTER XL—PENSION BENEFIT GUARANTY CORPORATION (parts 4000 to 4907) > SUBCHAPTER D—COVERAGE AND BENEFITS (parts 4022 to 4022B) > PART 4022—BENEFITS PAYABLE IN TERMINATED SINGLE-EMPLOYER PLANS > SUBPART B—Limitations on Guaranteed Benefits (§4022.21 to §4022.27) > 4022.25—Five-year phase-in of benefit guarantee for participants other than substantial owners.

4022.25—Five-year phase-in of benefit guarantee for participants other than substantial owners.

(a) Scope. This section applies to the guarantee of benefit increases which have been in effect for less than five years with respect to participants other than substantial owners.
(b) Phase-in formula. The amount of a benefit increase computed pursuant to § 4022.24 shall be guaranteed to the extent provided in the following formula: the number of years the benefit increase has been in effect, not to exceed five, multiplied by the greater of (1) 20 percent of the amount computed pursuant to § 4022.24; or (2) $20 per month.
(c) Computation of years. In computing the number of years a benefit increase has been in effect, each complete 12-month period ending on or before the termination date during which such benefit increase was in effect constitutes one year.
(d) Multiple benefit increases. In applying the formula contained in paragraph (b) of this section, multiple benefit increases within any 12-month period ending on or before the termination date and calculated from that date are aggregated and treated as one benefit increase.
(e) Notwithstanding the provisions of paragraph (b) of this section, a benefit increase described in paragraph (a) of this section shall be guaranteed only if PBGC determines that the plan was terminated for a reasonable business purpose and not for the purpose of obtaining the payment of benefits by PBGC.

Code of Federal Regulations

[61 FR 34028, July 1, 1996, as amended at 67 FR 16956, Apr. 8, 2002]

Code of Federal Regulations

Effective Date Note: At 76 FR 34603, June 14, 2011, § 4022.25 was amended by adding paragraph (f), effective July 14, 2011. For the convenience of the user, the added text is set forth as follows: § 4022.25 Five-year phase-in of benefit guarantee for participants other than substantial owners. (f) PPA 2006 bankruptcy termination. In a PPA 2006 bankruptcy termination, “bankruptcy filing date” is substituted for “termination date” each place that “termination date” appears in paragraphs (c) and (d) of this section. Example: A plan amendment that was adopted and effective in February 2007 increased a participant's benefit by $300 per month (as computed under § 4022.24 ). The contributing sponsor of the plan filed a bankruptcy petition in March 2009 and the plan has a termination date in April 2010. PBGC's guarantee of the participant's benefit increase is limited to $120 ($300 × 40%), because the increase was made more than 2 years but less than 3 years before the bankruptcy filing date.