§ 1322. Single-employer plan benefits guaranteed
(a)
Nonforfeitable benefits
Subject to the limitations contained in subsection (b) of this section, the corporation shall guarantee, in accordance with this section, the payment of all nonforfeitable benefits (other than benefits becoming nonforfeitable solely on account of the termination of a plan) under a single-employer plan which terminates at a time when this subchapter applies to it.
(b)
Exceptions
(1)
Except to the extent provided in paragraph (7)—
(2)
For purposes of this subsection, the time a successor plan (within the meaning of section
1321
(a) of this title) has been in effect includes the time a previously established plan (within the meaning of section
1321
(a) of this title) was in effect. For purposes of determining what benefits are guaranteed under this section in the case of a plan to which section
1321 of this title does not apply on September 3, 1974, the 60-month period referred to in paragraph (1) shall be computed beginning on the first date on which such section does apply to the plan.
(3)
The amount of monthly benefits described in subsection (a) of this section provided by a plan, which are guaranteed under this section with respect to a participant, shall not have an actuarial value which exceeds the actuarial value of a monthly benefit in the form of a life annuity commencing at age 65 equal to the lesser of—
(A)
his average monthly gross income from his employer during the 5 consecutive calendar year period (or, if less, during the number of calendar years in such period in which he actively participates in the plan) during which his gross income from that employer was greater than during any other such period with that employer determined by dividing 1/12 of the sum of all such gross income by the number of such calendar years in which he had such gross income, or
(B)
$750 multiplied by a fraction, the numerator of which is the contribution and benefit base (determined under section 230 of the Social Security Act [42 U.S.C. 430]) in effect at the time the plan terminates and the denominator of which is such contribution and benefit base in effect in calendar year 1974.
The provisions of this paragraph do not apply to non-basic benefits. The maximum guaranteed monthly benefit shall not be reduced solely on account of the age of a participant in the case of a benefit payable by reason of disability that occurred on or before the termination date, if the participant demonstrates to the satisfaction of the corporation that the Social Security Administration has determined that the participant satisfies the definition of disability under title II or XVI of the Social Security Act [42 U.S.C. 401 et seq.; 1381 et seq.], and the regulations thereunder. If a benefit payable by reason of disability is converted to an early or normal retirement benefit for reasons other than a change in the health of the participant, such early or normal retirement benefit shall be treated as a continuation of the benefit payable by reason of disability and this subparagraph shall continue to apply.
(4)
(A)
The actuarial value of a benefit, for purposes of this subsection, shall be determined in accordance with regulations prescribed by the corporation.
(B)
For purposes of paragraph (3)—
(i)
the term “gross income” means “earned income” within the meaning of section
911
(b) of title
26 (determined without regard to any community property laws),
(5)
(A)
For purposes of this paragraph, the term “majority owner” means an individual who, at any time during the 60-month period ending on the date the determination is being made—
(ii)
in the case of a partnership, is a partner who owns, directly or indirectly, 50 percent or more of either the capital interest or the profits interest in such partnership, or
(B)
In the case of a participant who is a majority owner, the amount of benefits guaranteed under this section shall equal the product of—
(6)
(A)
No benefits accrued under a plan after the date on which the Secretary of the Treasury issues notice that he has determined that any trust which is a part of a plan does not meet the requirements of section
401
(a) of title
26, or that the plan does not meet the requirements of section
404
(a)(2) of title
26, are guaranteed under this section unless such determination is erroneous. This subparagraph does not apply if the Secretary subsequently issues a notice that such trust meets the requirements of section
401
(a) of title
26 or that the plan meets the requirements of section
404
(a)(2) of title
26 and if the Secretary determines that the trust or plan has taken action necessary to meet such requirements during the period between the issuance of the notice referred to in the preceding sentence and the issuance of the notice referred to in this sentence.
(B)
No benefits accrued under a plan after the date on which an amendment of the plan is adopted which causes the Secretary of the Treasury to determine that any trust under the plan has ceased to meet the requirements of section
401
(a) of title
26 or that the plan has ceased to meet the requirements of section
404
(a)(2) of title
26, are guaranteed under this section unless such determination is erroneous. This subparagraph shall not apply if the amendment is revoked as of the date it was first effective or amended to comply with such requirements.
(7)
Benefits described in paragraph (1) are guaranteed only to the extent of the greater of—
(A)
20 percent of the amount which, but for the fact that the plan or amendment has not been in effect for 60 months or more, would be guaranteed under this section, or
multiplied by the number of years (but not more than 5) the plan or amendment, as the case may be, has been in effect. In determining how many years a plan or amendment has been in effect for purposes of this paragraph, the first 12 months beginning with the date on which the plan or amendment is made or first becomes effective (whichever is later) constitutes one year, and each consecutive period of 12 months thereafter constitutes an additional year. This paragraph does not apply to benefits payable under a plan unless the corporation finds substantial evidence that the plan was terminated for a reasonable business purpose and not for the purpose of obtaining the payment of benefits by the corporation under this subchapter.
(c)
Payment by corporation to participants and beneficiaries of recovery percentage of outstanding amount of benefit liabilities
(1)
In addition to benefits paid under the preceding provisions of this section with respect to a terminated plan, the corporation shall pay the portion of the amount determined under paragraph (2) which is allocated with respect to each participant under section
1344
(a) of this title. Such payment shall be made to such participant or to such participant’s beneficiaries (including alternate payees, within the meaning of section
1056
(d)(3)(K) of this title).
(2)
The amount determined under this paragraph is an amount equal to the product derived by multiplying—
(3)
(A)
In general.—
Except as provided in subparagraph (C), the term “recovery ratio” means the ratio which—
(B)
A plan termination described in this subparagraph is a termination with respect to which—
(i)
the corporation has determined the value of recoveries under section
1362,
1363, or
1364 of this title, and
(ii)
notices of intent to terminate were provided (or in the case of a termination by the corporation, a notice of determination under section
1342 of this title was issued) during the 5-Federal fiscal year period ending with the third fiscal year preceding the fiscal year in which occurs the date of the notice of intent to terminate (or the notice of determination under section
1342 of this title) with respect to the plan termination for which the recovery ratio is being determined.
(C)
In the case of a terminated plan with respect to which the outstanding amount of benefit liabilities exceeds $20,000,000, for purposes of this section, the term “recovery ratio” means, with respect to the termination of such plan, the ratio of—
(d)
Authorization to guarantee other classes of benefits
The corporation is authorized to guarantee the payment of such other classes of benefits and to establish the terms and conditions under which such other classes of benefits are guaranteed as it determines to be appropriate.
(e)
Nonforfeitability of preretirement survivor annuity
For purposes of subsection (a) of this section, a qualified preretirement survivor annuity (as defined in section
1055
(e)(1) of this title) with respect to a participant under a terminated single-employer plan shall not be treated as forfeitable solely because the participant has not died as of the termination date.
(g)
Bankruptcy filing substituted for termination date
If a contributing sponsor of a plan has filed or has had filed against such person a petition seeking liquidation or reorganization in a case under title 11 or under any similar Federal law or law of a State or political subdivision, and the case has not been dismissed as of the termination date of the plan, then this section shall be applied by treating the date such petition was filed as the termination date of the plan.
(h)
Special rule for plans electing certain funding requirements
If any plan makes an election under section 402(a)(1) of the Pension Protection Act of 2006 and is terminated effective before the end of the 10-year period beginning on the first day of the first applicable plan year—
(1)
this section shall be applied—
(2)
notwithstanding section
1344
(a) of this title, plan assets shall first be allocated to pay the amount, if any, by which—