§ 1341. Termination of single-employer plans
(a)
General rules governing single-employer plan terminations
(1)
Exclusive means of plan termination
Except in the case of a termination for which proceedings are otherwise instituted by the corporation as provided in section
1342 of this title, a single-employer plan may be terminated only in a standard termination under subsection (b) of this section or a distress termination under subsection (c) of this section.
(2)
60-day notice of intent to terminate
Not less than 60 days before the proposed termination date of a standard termination under subsection (b) of this section or a distress termination under subsection (c) of this section, the plan administrator shall provide to each affected party (other than the corporation in the case of a standard termination) a written notice of intent to terminate stating that such termination is intended and the proposed termination date. The written notice shall include any related additional information required in regulations of the corporation.
(3)
Adherence to collective bargaining agreements
The corporation shall not proceed with a termination of a plan under this section if the termination would violate the terms and conditions of an existing collective bargaining agreement. Nothing in the preceding sentence shall be construed as limiting the authority of the corporation to institute proceedings to involuntarily terminate a plan under section
1342 of this title.
(b)
Standard termination of single-employer plans
(1)
General requirements
A single-employer plan may terminate under a standard termination only if—
(A)
the plan administrator provides the 60-day advance notice of intent to terminate to affected parties required under subsection (a)(2) of this section,
(2)
Termination procedure
(A)
Notice to the corporation
As soon as practicable after the date on which the notice of intent to terminate is provided pursuant to subsection (a)(2) of this section, the plan administrator shall send a notice to the corporation setting forth—
(i)
certification by an enrolled actuary—
(I)
of the projected amount of the assets of the plan (as of a proposed date of final distribution of assets),
(ii)
such information as the corporation may prescribe in regulations as necessary to enable the corporation to make determinations under subparagraph (C), and
(B)
Notice to participants and beneficiaries of benefit commitments 2
No later than the date on which a notice is sent by the plan administrator under subparagraph (A), the plan administrator shall send a notice to each person who is a participant or beneficiary under the plan—
(i)
specifying the amount of the benefit liabilities (if any) attributable to such person as of the proposed termination date and the benefit form on the basis of which such amount is determined, and
(C)
Notice from the corporation of noncompliance
(i)
In general
Within 60 days after receipt of the notice under subparagraph (A), the corporation shall issue a notice of noncompliance to the plan administrator if—
(I)
it determines, based on the notice sent under paragraph (2)(A) of subsection (b) of this section, that there is reason to believe that the plan is not sufficient for benefit liabilities,
(ii)
Extension
The corporation and the plan administrator may agree to extend the 60-day period referred to in clause (i) by a written agreement signed by the corporation and the plan administrator before the expiration of the 60-day period. The 60-day period shall be extended as provided in the agreement and may be further extended by subsequent written agreements signed by the corporation and the plan administrator made before the expiration of a previously agreed upon extension of the 60-day period. Any extension may be made upon such terms and conditions (including the payment of benefits) as are agreed upon by the corporation and the plan administrator.
(D)
Final distribution of assets in absence of notice of noncompliance
The plan administrator shall commence the final distribution of assets pursuant to the standard termination of the plan as soon as practicable after the expiration of the 60-day (or extended) period referred to in subparagraph (C), but such final distribution may occur only if—
(3)
Methods of final distribution of assets
(A)
In general
In connection with any final distribution of assets pursuant to the standard termination of the plan under this subsection, the plan administrator shall distribute the assets in accordance with section
1344 of this title. In distributing such assets, the plan administrator shall—
(i)
purchase irrevocable commitments from an insurer to provide all benefit liabilities under the plan, or
(ii)
in accordance with the provisions of the plan and any applicable regulations, otherwise fully provide all benefit liabilities under the plan. A transfer of assets to the corporation in accordance with section
1350 of this title on behalf of a missing participant shall satisfy this subparagraph with respect to such participant.
(B)
Certification to the corporation of final distribution of assets
Within 30 days after the final distribution of assets is completed pursuant to the standard termination of the plan under this subsection, the plan administrator shall send a notice to the corporation certifying that the assets of the plan have been distributed in accordance with the provisions of subparagraph (A) so as to pay all benefit liabilities under the plan.
(4)
Continuing authority
Nothing in this section shall be construed to preclude the continued exercise by the corporation, after the termination date of a plan terminated in a standard termination under this subsection, of its authority under section
1303 of this title with respect to matters relating to the termination. A certification under paragraph (3)(B) shall not affect the corporation’s obligations under section
1322 of this title.
(5)
Special rule for certain plans where cessation or change in membership of a controlled group
(A)
In general
Except as provided in subparagraphs (B) and (D), if—
(i)
there is [3] transaction or series of transactions which result in a person ceasing to be a member of a controlled group, and
(ii)
such person immediately before the transaction or series of transactions maintained a single-employer plan which is a defined benefit plan which is fully funded,
then the interest rate used in determining whether the plan is sufficient for benefit liabilities or to otherwise assess plan liabilities for purposes of this subsection or section
1342
(a)(4) of this title shall be not less than the interest rate used in determining whether the plan is fully funded.
(B)
Limitations
Subparagraph (A) shall not apply to any transaction or series of transactions unless—
(i)
any employer maintaining the plan immediately before or after such transaction or series of transactions—
(C)
Fully funded
For purposes of subparagraph (A), a plan shall be treated as fully funded with respect to any transaction or series of transactions if—
(i)
in the case of a transaction or series of transactions which occur in a plan year beginning before January 1, 2008, the funded current liability percentage determined under section
1082
(d) of this title for the plan year is at least 100 percent, and
(ii)
in the case of a transaction or series of transactions which occur in a plan year beginning on or after such date, the funding target attainment percentage determined under section
1083 of this title is, as of the valuation date for such plan year, at least 100 percent.
(D)
2 year limitation
Subparagraph (A) shall not apply to any transaction or series of transactions if the plan referred to in subparagraph (A)(ii) is terminated under subsection (c) or section
1342 of this title after the close of the 2-year period beginning on the date on which the first such transaction occurs.
(c)
Distress termination of single-employer plans
(1)
In general
A single-employer plan may terminate under a distress termination only if—
(2)
Termination requirements
(A)
Information submitted to the corporation
As soon as practicable after the date on which the notice of intent to terminate is provided pursuant to subsection (a)(2) of this section, the plan administrator shall provide the corporation, in such form as may be prescribed by the corporation in regulations, the following information:
(i)
such information as the corporation may prescribe by regulation as necessary to make determinations under subparagraph (B) and paragraph (3);
(ii)
unless the corporation determines the information is not necessary for purposes of paragraph (3)(A) or section
1362 of this title, certification by an enrolled actuary of—
(I)
the amount (as of the proposed termination date and, if applicable, the proposed distribution date) of the current value of the assets of the plan,
(IV)
the actuarial present value (as of such dates) of benefits under the plan guaranteed under section
1322 of this title, and
(B)
Determination by the corporation of necessary distress criteria
Upon receipt of the notice of intent to terminate required under subsection (a)(2) of this section and the information required under subparagraph (A), the corporation shall determine whether the requirements of this subparagraph are met as provided in clause (i), (ii), or (iii). The requirements of this subparagraph are met if each person who is (as of the proposed termination date) a contributing sponsor of such plan or a member of such sponsor’s controlled group meets the requirements of any of the following clauses:
(i)
Liquidation in bankruptcy or insolvency proceedings
The requirements of this clause are met by a person if—
(I)
such person has filed or has had filed against such person, as of the proposed termination date, a petition seeking liquidation in a case under title 11 or under any similar Federal law or law of a State or political subdivision of a State (or a case described in clause (ii) filed by or against such person has been converted, as of such date, to a case in which liquidation is sought), and
(ii)
Reorganization in bankruptcy or insolvency proceedings
The requirements of this clause are met by a person if—
(I)
such person has filed, or has had filed against such person, as of the proposed termination date, a petition seeking reorganization in a case under title 11 or under any similar law of a State or political subdivision of a State (or a case described in clause (i) filed by or against such person has been converted, as of such date, to such a case in which reorganization is sought),
(III)
such person timely submits to the corporation any request for the approval of the bankruptcy court (or other appropriate court in a case under such similar law of a State or political subdivision) of the plan termination, and
(IV)
the bankruptcy court (or such other appropriate court) determines that, unless the plan is terminated, such person will be unable to pay all its debts pursuant to a plan of reorganization and will be unable to continue in business outside the chapter 11 reorganization process and approves the termination.
(iii)
Termination required to enable payment of debts while staying in business or to avoid unreasonably burdensome pension costs caused by declining workforce
The requirements of this clause are met by a person if such person demonstrates to the satisfaction of the corporation that—
(C)
Notification of determinations by the corporation
The corporation shall notify the plan administrator as soon as practicable of its determinations made pursuant to subparagraph (B).
(D)
Disclosure of termination information
(i)
In general
A plan administrator that has filed a notice of intent to terminate under subsection (a)(2) shall provide to an affected party any information provided to the corporation under subparagraph (A) or the regulations under subsection (a)(2) not later than 15 days after—
(ii)
Confidentiality
(iii)
Form and manner of information; charges
(I)
Form and manner
The corporation may prescribe the form and manner of the provision of information under this subparagraph, which shall include delivery in written, electronic, or other appropriate form to the extent that such form is reasonably accessible to individuals to whom the information is required to be provided.
(3)
Termination procedure
(A)
Determinations by the corporation relating to plan sufficiency for guaranteed benefits and for benefit liabilities
If the corporation determines that the requirements for a distress termination set forth in paragraphs (1) and (2) are met, the corporation shall—
(i)
determine that the plan is sufficient for guaranteed benefits (as of the termination date) or that the corporation is unable to make such determination on the basis of information made available to the corporation,
(B)
Implementation of termination
After the corporation notifies the plan administrator of its determinations under subparagraph (A), the termination of the plan shall be carried out as soon as practicable, as provided in clause (i), (ii), or (iii).
(i)
Cases of sufficiency for benefit liabilities
In any case in which the corporation determines that the plan is sufficient for benefit liabilities, the plan administrator shall proceed to distribute the plan’s assets, and make certification to the corporation with respect to such distribution, in the manner described in subsection (b)(3) of this section, and shall take such other actions as may be appropriate to carry out the termination of the plan.
(ii)
Cases of sufficiency for guaranteed benefits without a finding of sufficiency for benefit liabilities
In any case in which the corporation determines that the plan is sufficient for guaranteed benefits, but further determines that it is unable to determine that the plan is sufficient for benefit liabilities on the basis of the information made available to it, the plan administrator shall proceed to distribute the plan’s assets in the manner described in subsection (b)(3) of this section, make certification to the corporation that the distribution has occurred, and take such actions as may be appropriate to carry out the termination of the plan.
(iii)
Cases without any finding of sufficiency
In any case in which the corporation determines that it is unable to determine that the plan is sufficient for guaranteed benefits on the basis of the information made available to it, the corporation shall commence proceedings in accordance with section
1342 of this title.
(C)
Finding after authorized commencement of termination that plan is unable to pay benefits
(i)
Finding with respect to benefit liabilities which are not guaranteed benefits
If, after the plan administrator has begun to terminate the plan as authorized under subparagraph (B)(i), the plan administrator finds that the plan is unable, or will be unable, to pay benefit liabilities which are not benefits guaranteed by the corporation under section
1322 of this title, the plan administrator shall notify the corporation of such finding as soon as practicable thereafter.
(ii)
Finding with respect to guaranteed benefits
If, after the plan administrator has begun to terminate the plan as authorized by subparagraph (B)(i) or (ii), the plan administrator finds that the plan is unable, or will be unable, to pay all benefits under the plan which are guaranteed by the corporation under section
1322 of this title, the plan administrator shall notify the corporation of such finding as soon as practicable thereafter. If the corporation concurs in the finding of the plan administrator (or the corporation itself makes such a finding), the corporation shall institute appropriate proceedings under section
1342 of this title.
(D)
Administration of the plan during interim period
(i)
In general
The plan administrator shall—
(I)
meet the requirements of clause (ii) for the period commencing on the date on which the plan administrator provides a notice of distress termination to the corporation under subsection (a)(2) of this section and ending on the date on which the plan administrator receives notification from the corporation of its determinations under subparagraph (A), and
(ii)
Requirements
The requirements of this clause are met by the plan administrator if the plan administrator—
(I)
refrains from distributing assets or taking any other actions to carry out the proposed termination under this subsection,
(II)
pays benefits attributable to employer contributions, other than death benefits, only in the form of an annuity,
(III)
does not use plan assets to purchase irrevocable commitments to provide benefits from an insurer, and
(IV)
continues to pay all benefit liabilities under the plan, but, commencing on the proposed termination date, limits the payment of benefits under the plan to those benefits which are guaranteed by the corporation under section
1322 of this title or to which assets are required to be allocated under section
1344 of this title.
In the event the plan administrator is later determined not to have met the requirements for distress termination, any benefits which are not paid solely by reason of compliance with subclause (IV) shall be due and payable immediately (together with interest, at a reasonable rate, in accordance with regulations of the corporation).
(d)
Sufficiency
For purposes of this section—
(e)
Limitation on the conversion of a defined benefit plan to a defined contribution plan
The adoption of an amendment to a plan which causes the plan to become a plan described in section
1321
(b)(1) of this title constitutes a termination of the plan. Such an amendment may take effect only after the plan satisfies the requirements for standard termination under subsection (b) of this section or distress termination under subsection (c) of this section.
[1] See References in Text note below.
[2] So in original. Probably should be “benefit liabilities”.
[3] So in original. The word “a” probably should appear.