PART 4022—BENEFITS PAYABLE IN TERMINATED SINGLE-EMPLOYER PLANS Authority: 29 U.S.C. 1302, 1322, 1322b, 1341(c)(3)(D), and 1344. Source: 61 FR 34028, July 1, 1996, unless otherwise noted. Subpart A—General Provisions; Guaranteed Benefits § 4022.1 Purpose and scope. The purpose of this part is to prescribe rules governing the calculation and payment of benefits payable in terminated single-employer plans under section 4022 of ERISA. Subpart A, which applies to each plan providing benefits guaranteed under title IV of ERISA, contains definitions applicable to all subparts, and describes benefits that are guaranteed by the PBGC subject to the limitations set forth in subpart B. Subpart C is reserved for rules relating to the calculation and payment of unfunded nonguaranteed benefits under section 4022(c) of ERISA. Subpart D prescribes procedures that minimize the overpayment of benefits by plan administrators after initiating distress terminations of single-employer plans that are not expected to be sufficient for guaranteed benefits. Subpart E sets forth the method of recoupment of benefit payments in excess of the amounts permitted under sections 4022, 4022B, and 4044 of ERISA from participants and beneficiaries in PBGC-trusteed plans, and provides for reimbursement of benefit underpayments. (The provisions of this part have not been amended to take account of changes made in section 4022 of ERISA by sections 766 and 777 of the Retirement Protection Act of 1994.) [61 FR 34028, July 1, 1996, as amended at 62 FR 67728, Dec. 30, 1997] § 4022.2 Definitions. The following terms are defined in § 4001.2 of this chapter: annuity, bankruptcy filing date, Code, employer, ERISA, guaranteed benefit, majority owner, mandatory employee contributions, nonforfeitable benefit, non-PPA 2006 bankruptcy termination, normal retirement age, notice of intent to terminate, PBGC, person, plan, plan administrator, plan year, PPA 2006 bankruptcy termination, proposed termination date, statutory hybrid plan, and title IV benefit. In addition, for purposes of this part (unless otherwise required by the context): Accumulated mandatory employee contributions Benefit in pay status Benefit increase Covered employment Pension benefit Straight life annuity Unpredictable contingent event (UCE) Unpredictable contingent event benefit (UCEB) [61 FR 34028, July 1, 1996, as amended at 74 FR 59096, Nov. 17, 2009; 76 FR 34601, June 14, 2011; 79 FR 25672, May 6, 2014; 79 FR 70094, Nov. 25, 2014; 83 FR 49803, Oct. 3, 2018] § 4022.3 Guaranteed benefits. (a) General. (1) The benefit is, on the termination date, a nonforfeitable benefit; (2) The benefit qualifies as a pension benefit as defined in § 4022.2; and (3) The participant is entitled to the benefit under § 4022.4. (b) PPA 2006 bankruptcy termination Substitution of bankruptcy filing date. (2) Condition for entitlement satisfied between bankruptcy filing date and termination date. (3) Examples Vesting. i.e., (ii) Subsidized early retirement benefit. i.e., (iii) Accruals after bankruptcy filing date. [61 FR 34028, July 1, 1996; 61 FR 67943, Dec. 26, 1996; 76 FR 34601, June 14, 2011] § 4022.4 Entitlement to a benefit. (a) A participant or his surviving beneficiary is entitled to a benefit if under the provisions of a plan: (1) The benefit was in pay status on the termination date of the plan. (2) The benefit is payable in an optional life-annuity form of benefit that the participant or beneficiary elected on or before the termination date of the plan or, if later, the date on which PBGC became statutory trustee of the plan. (3) Except for a benefit described in paragraph (a)(2) of this section, before the termination date (or on or before the termination date, in the case of a requirement that a participant attain a particular age, earn a particular amount of service, become disabled, or die) the participant had satisfied the conditions of the plan necessary to establish the right to receive the benefit prior to such date (prior to or on such date, in the case of a requirement that a participant attain a particular age, earn a particular amount of service, become disabled, or die) other than application for the benefit, satisfaction of a waiting period described in the plan, or retirement; or (4) Absent an election by the participant, the benefit would be payable upon retirement. (5) In the case of a benefit that returns all or a portion of a participant's accumulated mandatory employee contributions upon death, the participant (or beneficiary) had satisfied the conditions of the plan necessary to establish the right to the benefit other than death or designation of a beneficiary. (b) If none of the conditions set forth in paragraph (a) of this section is met, the PBGC will determine whether the participant is entitled to a benefit on the basis of the provisions of the plan and the circumstances of the case. (c) In a PPA 2006 bankruptcy termination, “bankruptcy filing date” is substituted for “termination date” each place that “termination date” appears in paragraphs (a)(1) and (3) of this section. In making this substitution for purposes of paragraph (a)(3) of this section, the rule in § 4022.3(b)(2) (dealing with the situation where the condition for entitlement was satisfied between the bankruptcy filing date and the termination date) shall apply. [61 FR 34028, July 1, 1996, as amended at 67 FR 16954, Apr. 8, 2002; 76 FR 34602, June 14, 2011] § 4022.5 Determination of nonforfeitable benefits. (a) A guaranteed benefit payable to a surviving beneficiary is not considered to be forfeitable solely because the plan provides that the benefit will cease upon the remarriage of such beneficiary or his attaining a specified age. However, the PBGC will observe the provisions of the plan relating to the effect of such remarriage or attainment of such specified age on the surviving beneficiary's eligibility to continue to receive benefit payments. (b) Any other provision in a plan that the right to a benefit in pay status will cease or be suspended upon the occurrence of any specified condition does not automatically make that benefit forfeitable. In each such case the PBGC will determine whether the benefit is forfeitable. (c) A benefit guaranteed under § 4022.6 shall not be considered forfeitable solely because the plan provides that upon recovery of the participant the benefit will cease. § 4022.6 Annuity payable for total disability. (a) Except as otherwise provided in this section, an annuity which is payable (or would be payable after a waiting period described in the plan, whether or not the participant is in receipt of other benefits during such waiting period), under the terms of a plan on account of the total and permanent disability of a participant which is expected to last for the life of the participant and which began on or before the termination date is considered to be a pension benefit. (b) In any case in which the PBGC determines that the standards for determining such total and permanent disability under a plan were unreasonable, or were modified in anticipation of termination of the plan, the disability benefits payable to a participant under such standard shall not be guaranteed unless the participant meets the standards of the Social Security Act and the regulations promulgated thereunder for determining total disability. (c) For the purpose of this section, a participant may be required, upon the request of the PBGC, to submit to an examination or to submit proof of continued total and permanent disability. If the PBGC finds that a participant is no longer so disabled, it may suspend, modify, or discontinue the payment of the disability benefit. (d) PPA 2006 bankruptcy termination. [61 FR 34028, July 1, 1996, as amended at 67 FR 16954, Apr. 8, 2002; 76 FR 34602, June 14, 2011] § 4022.7 Benefits payable in a lump sum. (a) Alternative benefit. (b) Payment by PBGC Payment in lump sum. (i) In general. (ii) Annuity option. (iii) Deceased participants after plan termination. (iv) Payment of de minimis QPSA as lump sum or annuity. (v) Payments to estates. (2) Return of employee contributions In general. (ii) Benefits in pay status. (c) Death benefits General. (2) Exception. (d) Determination of lump sum amount. (1) Benefits disregarded. (2) Actuarial assumptions. (i) Loading for expenses. (ii) Mortality assumption. (iii) Interest rate assumption. (iv) Date for determining lump sum value. (e) Private-sector lump sum rates. [61 FR 34028, July 1, 1996, as amended at 63 FR 38306, July 16, 1998; 65 FR 14752, 14755, Mar. 17, 2000; 67 FR 16954, Apr. 8, 2002; 79 FR 70094, Nov. 25, 2014; 85 FR 55591, Sept. 9, 2020; 88 FR 44051, July 11, 2023] § 4022.8 Form of payment. (a) In general. (1) In the automatic PBGC form described in paragraph (b) of this section; or (2) If an optional PBGC form described in paragraph (c) of this section is elected, in that optional form. (b) Automatic PBGC form Participants Married participants. (ii) Unmarried participants. (2) Beneficiaries QPSA beneficiaries. (ii) Alternate payees. (c) Optional PBGC forms Participant and beneficiary elections. (2) Permitted designees. (3) Spousal consent. (4) Permitted optional single-life forms. (i) A straight-life annuity; (ii) A 5-year certain-and-continuous annuity; (iii) A 10-year certain-and-continuous annuity; (iv) A 15-year certain-and-continuous annuity; and (v) The form an unmarried person would be entitled to receive from the plan in the absence of an election. (5) Permitted optional joint-life forms. (i) A joint-and-50%-survivor annuity; (ii) A joint-and-50%-survivor-“pop-up” annuity ( i.e., (iii) A joint-and-75%-survivor annuity; and (iv) A joint-and-100%-survivor annuity. (6) Determination of benefit amount; starting benefit. (i) Single-life forms. (ii) Joint-life forms. (7) Determination of benefit amount; conversion factors. (i) Mortality. (ii) Interest. (8) Determination of benefit amount; limitation. (9) Incidental benefits. (d) Change in benefit form. (e) PBGC discretion. (f) Rollover amounts. [67 FR 16954, Apr. 8, 2002, as amended at 79 FR 70095, Nov. 25, 2014; 88 FR 44052, July 11, 2023] § 4022.9 Time of payment; benefit applications and corrections. (a) Time of payment. (b) Elections and consents. (c) Benefit applications. (d) Benefit corrections. (e) Filing with the PBGC Method and date of filing. (2) Where to file. (3) Computation of time. [67 FR 16955, Apr. 8, 2002, as amended at 68 FR 61353, Oct. 28, 2003; 88 FR 44052, July 11, 2023] § 4022.10 Earliest PBGC Retirement Date. The Earliest PBGC Retirement Date for a participant is the earliest date on which the participant could retire under plan provisions for purposes of section 4044(a)(3)(B) of ERISA. The Earliest PBGC Retirement Date is determined in accordance with this § 4022.10. For purposes of this § 4022.10, “age” means the participant's age as of his or her last birthday (unless otherwise required by the context). (a) Immediate annuity at or after age 55. (b) Immediate annuity before age 55. (c) Facts and circumstances. (d) Examples. (1) Normal retirement age. (2) Early retirement age. (3) Separation at any age. (4) Age 50 retirement common. (5) “30-and-out” benefit. (6) Typical airline pilots' plan. (e) Special rule for “window” provisions. (1) Eligibility for that immediate annuity continues through the earlier of— (i) The plan's termination date; or (ii) The date the participant actually separates from service with the right to receive an immediate annuity; and (2) The participant satisfies the conditions for eligibility for that immediate annuity on or before the plan's termination date. [67 FR 16955, Apr. 8, 2002] § 4022.11 Guarantee of benefits relating to uniformed service. This section applies to a benefit of a participant who becomes reemployed after service in the uniformed services that is covered by the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). (a) A benefit described in paragraph (b) of this section that would satisfy the requirements of § 4022.3(a) and (c) (together with any benefit earned for the period preceding military service) except for the fact that the participant was not reemployed on or before the termination date will be deemed to satisfy those requirements if PBGC determines, based upon a demonstration by the participant or otherwise, that he or she became reemployed after the termination date and entitled to the benefit under USERRA. (b) A benefit described in this paragraph (b) is a benefit attributable to a period of service commencing before the termination date and ending on the termination date during which the participant was serving in the uniformed services as defined in 38 U.S.C. 4303(13) (or was in a subsequent reemployment eligibility period) and to which the participant is entitled under USERRA. (c) Example: (d) In the case of a PPA 2006 bankruptcy termination, “bankruptcy filing date” is substituted for “termination date” each place that “termination date” appears in this section. [74 FR 59096, Nov. 17, 2009] Subpart B—Limitations on Guaranteed Benefits § 4022.21 Limitations; in general. (a)(1) Subject to paragraphs (b), (c), (d), and (e) of this section, the PBGC will not guarantee that part of an installment payment that exceeds the dollar amount payable as a straight life annuity commencing at normal retirement age, or thereafter, to which a participant would have been entitled under the provisions of the plan in effect on the termination date, on the basis of his credited service to such date. If the plan does not provide a straight life annuity either as its normal form of retirement benefit or as an option to the normal form, the PBGC will for purposes of this paragraph convert the plan's normal form benefit to a straight life annuity of equal actuarial value as determined by the PBGC. (2) The limitation of paragraph (a)(1) of this section shall not apply to: (i) A survivor's benefit payable as an annuity on account of the death of a participant that occurred on or before the plan's termination date and before the participant retired; (ii) A disability pension described in § 4022.6 of this part; or (iii) A benefit payable in non-level installments that in combination with Social Security, Railroad Retirement, or workman's compensation benefits yields a substantially level income if the projected income from the plan benefit over the expected life of the recipient does not exceed the value of the straight life annuity described in paragraph (a)(1) of this section. (b) The PBGC will not guarantee the payment of that part of any benefit that exceeds the limitations in section 4022(b) of ERISA and this subpart B. (c)(1) Except as provided in paragraph (c)(2) of this section, the PBGC does not guarantee a benefit payable in a lump sum (or substantially so) upon the death of a participant or his surviving beneficiary unless that benefit is substantially derived from a reduction in the pension benefit payable to the participant or surviving beneficiary. (2) Paragraphs (a) and (c)(1) of this section do not apply to that portion of accumulated mandatory employee contributions payable under a plan upon the death of a participant, and such a benefit is a pension benefit for purposes of this part. (d) The PBGC will not guarantee a joint-life annuity benefit payable to other than— (1) Natural persons; or (2) A trust or estate for the benefit of one or more natural persons. (e) PPA 2006 bankruptcy termination Substitution of bankruptcy filing date. (2) Examples Straight-life annuity. (ii) Joint-and-survivor annuity. [61 FR 34028, July 1, 1996, as amended at 67 FR 16956, Apr. 8, 2002; 76 FR 34602, June 14, 2011; 88 FR 44052, July 11, 2023] § 4022.22 Maximum guaranteeable benefit. (a) In general. (1) One-twelfth of the participant's average annual gross income from his employer during either his highest-paid five consecutive calendar years in which he was an active participant under the plan, or if he was not an active participant throughout the entire such period, the lesser number of calendar years within that period in which he was an active participant under the plan; or (2) $750 multiplied by the fraction x/$13,200 where “x” is the Social Security contribution and benefit base determined under section 230 of the Social Security Act in effect at the termination date of the plan. (b) PPA 2006 bankruptcy termination. (1) The five-year period described in paragraph (a)(1) of this section shall not include any calendar years that end after the bankruptcy filing date. (2) “Bankruptcy filing date” is substituted for “termination date of the plan” in paragraph (a)(2) of this section. Example: A contributing sponsor files a bankruptcy petition in 2007. The sponsor's plan terminates in a distress termination with a termination date in 2008. PBGC will compute participants' maximum guaranteeable benefits based on the amount determined under paragraph (a)(2) for 2007 ($4,125.00 as a straight-life annuity starting at age 65). (c) Gross income. (1) Gross income means “earned income” as defined in section 911(d)(2) of the Code, determined without regard to any community property laws. (2) If the plan is one to which more than one employer contributes, and during any calendar year the participant received gross income from more than one such contributing employer, then the amounts so received shall be aggregated in determining the participant's gross income for the calendar year. (d) Rollover amounts. [76 FR 34602, June 14, 2011, as amended at 79 FR 70095, Nov. 25, 2014] § 4022.23 Computation of maximum guaranteeable benefits. (a) General. (b) Application of adjustment factors to monthly amount computed under § 4022.22. (2) The monthly amount computed under § 4022.22 shall be multiplied by the product computed pursuant to paragraph (b)(1) of this section in order to determine the participant's and/or beneficiary's maximum benefit guaranteeable. (c) Annuitant's age factor. 7/12 4/12 2/12 1/2 (d) Factor for benefit payable in a form other than as a life annuity. (1) Period certain and continuous annuity. For each month up to 60 months deduct 1/24 For each month beyond 60 months deduct 1/12 (i) A cash refund annuity means an annuity under which if the participant dies prior to the time when he has received pension payments equal to a fixed sum specified in the plan, then the balance is paid as a lump-sum death benefit. A cash refund annuity shall be treated as a benefit payable for a period certain and continuous. The period of certainty shall be computed by dividing the amount of the lump-sum refund by the monthly amount to which the participant is entitled under the terms of the plan. (ii) An installment refund annuity means an annuity under which if the participant dies prior to the time he has received pension payments equal to a fixed sum specified in the plan, then the balance is paid as a death benefit in periodic installments equal in amount to the participant's periodic benefit. An installment refund annuity shall be treated as a benefit payable for a period certain and continuous. The period of certainty shall be computed by dividing the amount of the remaining refund by the monthly amount to which the participant is entitled under the terms of the plan. (2) Joint and survivor annuity (contingent basis). 2/10 (3) Joint and survivor annuity (joint basis). 4/10 (e) When a benefit is payable in a form described in paragraph (d)(2) or (3) of this section, and the beneficiary's age is different from the participant's age, by 15 years or less, the monthly amount computed under § 4022.22 shall be adjusted by the following amounts: If the beneficiary is younger than the participant, deduct 1% for each year of the age difference; If the beneficiary is older than the participant, add 1/2 (f) Step-down life annuity. (1) The temporary additional amount payable under a step-down life annuity shall be converted to a life annuity payable in monthly installments by multiplying the appropriate factor based on the participant's age and the number of remaining years of the temporary additional benefit by the amount of the temporary additional benefit. The factors to be used are set forth in the table below. The amount of the monthly benefit so calculated shall be added to the level amount of the monthly benefit payable for life to determine the level-life annuity that is equivalent to the step-down life annuity. Factors for Converting Temporary Additional Benefit Under Step-Down Life Annuity Age of participant 1 Number of years temporary additional benefit is payable under the plan as of the date of plan termination 2 1 2 3 4 5 6 7 8 9 10 45 0.060 0.117 0.170 0.220 0.268 0.315 0.355 0.395 0.435 0.475 46 .061 .119 .173 .224 .273 .321 .362 .403 .444 .485 47 .062 .121 .176 .228 .278 .327 .369 .411 .453 .495 48 .063 .123 .179 .232 .283 .333 .376 .419 .462 .505 49 .064 .125 .182 .236 .288 .339 .383 .427 .471 .515 50 .065 .127 .185 .240 .293 .345 .390 .435 .480 .525 51 .066 .129 .188 .244 .298 .351 .397 .443 .489 .535 52 .067 .131 .191 .248 .303 .357 .404 .451 .498 .545 53 .068 .133 .194 .252 .308 .363 .411 .459 .507 .555 54 .069 .135 .197 .256 .313 .369 .418 .467 .516 .565 55 .070 .137 .200 .260 .318 .375 .425 .475 .525 .575 56 .072 .141 .206 .268 .328 .387 .439 .491 .543 57 .074 .145 .212 .276 .338 .399 .453 .507 58 .076 .149 .218 .284 .348 .411 .467 59 .078 153 .224 .292 .358 .423 60 .080 .157 .230 .300 .368 61 .082 .161 .236 .308 62 .084 .165 .242 63 .086 .169 64 .088 1 2 (2) If a participant is entitled to and chooses to receive a step-down life annuity at an age younger than 65, the monthly amount computed under § 4022.22 shall be adjusted by applying the factors set forth in paragraph (c) of this section in the manner described in paragraph (b) of this section. (3) If the level-life monthly benefit calculated pursuant to paragraph (f)(1) of this section exceeds the monthly amount calculated pursuant to paragraph (f)(2) of this section, then the monthly maximum benefit guaranteeable shall be a step-down life annuity under which the monthly amount of the temporary additional benefit and the amount of the monthly benefit payable for life, respectively, shall bear the same ratio to the monthly amount of the temporary additional benefit and the monthly benefit payable for life provided under the plan, respectively, as the monthly benefit calculated pursuant to paragraph (f)(2) of this section bears to the monthly benefit calculated pursuant to paragraph (f)(1) of this section. (g) PPA 2006 bankruptcy termination. (2) Example Facts. (A) Participant A was age 64 and receiving a benefit from the plan in the form of a 10-year certain-and-continuous annuity, with 4 years remaining in the certain period. (B) Participant B was age 60 and 6 months and was still working. She began receiving a benefit from the plan in the form of a 50% joint-and-survivor annuity when she turned 61 in January 2008. Her spouse was the same age as she. (C) Participant C was age 60 and was receiving a $3,000/month benefit from the plan in the form of a 50% joint-and-survivor annuity, with his spouse, age 58, as his beneficiary. Participant C he died in February 2008 and in March 2008 his spouse began receiving a 50% survivor annuity of $1,500/month. (D) Participant D was age 59 and was still working; he began receiving a straight-life annuity from the PBGC in July 2010 when he was 62 years old. (ii) Conclusions. (A) Participant A's maximum guaranteeable monthly benefit is $3,759.53 [$4,125.00 × .93 (7% reduction for a benefit starting at age 64) × .98 (2% reduction for a certain-and-continuous annuity with 4 years remaining in the certain period)]. (B) Participant B's maximum guaranteeable monthly benefit is $2,673.00 [$4,125.00 × .72 (28% reduction for a benefit starting at age 61) × .90 (10% reduction due to the 50% joint-and-survivor feature)]. (C) Participant C's spouse's maximum guaranteeable monthly benefit is $2,351.25 [$4,125.00 × .57 (43% reduction for a benefit starting at age 58; no reduction for the form of benefit because the spouse's survivor benefit is a straight-life annuity)]. Because that amount exceeds the spouse's $1,500 monthly survivor benefit, the spouse's benefit is not reduced by the maximum guaranteeable benefit limitation. (D) Participant D's maximum guaranteeable monthly benefit is $3,258.75 [$4,125.00 × .79 (21% reduction for a benefit starting at age 62)]. [61 FR 34028, July 1, 1996; 61 FR 36626, July 12, 1996; 76 FR 34603, June 14, 2011] § 4022.24 Benefit increases. (a) Scope. (b) General rule. (c) Computation of guaranteeable benefit increases. (1) Determine the amount of the monthly benefit payable on the termination date (or, in the case of a deferred benefit, the monthly benefit which will become payable thereafter) under the terms of the plan subsequent to the increase, using service credited to the participant as of the termination date, that is guaranteeable pursuant to § 4022.22; (2) Determine, as of the date of the benefit increase, in accordance with the provisions of § 4022.23, the factors which would be used to calculate the monthly maximum benefit guaranteeable (i) under the terms of the plan prior to the increase and (ii) under the terms of the plan subsequent to the increase. However, when the benefit referred to in paragraph (c)(2)(ii) of this section is a joint and survivor benefit deferred as of the termination date and there is no beneficiary on that date, the factors computed in paragraph (c)(2)(ii) of this section shall be determined as if the benefit were payable only to the participant. Each set of factors determined under this paragraph shall be stated in the manner set forth in § 4022.23(b)(1); (3) Multiply the monthly benefit which would have been payable (or, in the case of a deferred benefit, would have become payable) under the terms of the plan prior to the increase based on service credited to the participant as of the termination date by a fraction, the numerator of which is the product of the factors computed pursuant to paragraph (c)(2)(ii) of this section and the denominator of which is the product of the factors computed pursuant to paragraph (c)(2)(i) of this section. (4) Calculate the amount of the monthly benefit which would be payable on the termination date if the monthly benefit computed in paragraph (c)(3) of this section had been payable commencing on the date of the benefit increase (or, in the case of a deferred benefit, would have become payable thereafter). In the case of a benefit which does not become payable until subsequent to the termination date, the amount of the monthly benefit determined pursuant to this paragraph is the same as the amount of the monthly benefit calculated pursuant to paragraph (c)(3) of this section. (d) Multiple benefit increases. (2) Each benefit increase shall be treated separately for the purposes of § 4022.25, except as otherwise provided in paragraph (d) of that section, and for the purposes of § 4022.26, as appropriate. (e) Except as provided in § 4022.27(c), for the purposes of §§ 4022.22 through 4022.28, a benefit increase is deemed to be in effect commencing on the later of its adoption date or its effective date. (f) PPA 2006 bankruptcy termination. (g) Rollover amounts. [61 FR 34028, July 1, 1996; 61 FR 36626, July 12, 1996, as amended at 62 FR 67728, Dec. 30, 1997; 76 FR 34603, June 14, 2011; 79 FR 25672, May 6, 2014; 79 FR 70095, Nov. 25, 2014; 83 FR 49803, Oct. 3, 2018] § 4022.25 Five-year phase-in of benefit guarantee. (a) Scope. (b) Phase-in formula. (c) Computation of years. (d) Multiple benefit increases. (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. (f) PPA 2006 bankruptcy termination. [61 FR 34028, July 1, 1996, as amended at 67 FR 16956, Apr. 8, 2002; 76 FR 34603, June 14, 2011; 83 FR 49804, Oct. 3, 2018] § 4022.26 Benefit guarantee for participants who are majority owners. (a) Scope. (b) Formula. (c) PPA 2006 bankruptcy termination. [83 FR 49804, Oct. 3, 2018] § 4022.27 Phase-in of guarantee of unpredictable contingent event benefits. (a) Scope. (1) Examples of benefit increases within the scope of this section include unreduced early retirement benefits or other early retirement subsidies, or other benefits to the extent that such benefits would not be payable but for the occurrence of one or more UCEs. (2) Examples of UCEs within the scope of this section include full and partial closings of plants or other facilities, and permanent workforce reductions, such as permanent layoffs. Permanent layoffs include layoffs during which an idled employee continues to earn credited service (creep-type layoff) for a period of time at the end of which the layoff is deemed to be permanent. Permanent layoffs also include layoffs that become permanent upon the occurrence of an additional event such as a declaration by the employer that the participant's return to work is unlikely or a failure by the employer to offer the employee suitable work in a specified area. (3) The examples in this section are not an exclusive list of UCEs or UCEBs and are not intended to narrow the statutory definitions, as further delineated in Treasury Regulations. (b) Facts and circumstances. (c) Date phase-in begins. (i) The adoption date of the plan provision that provides for the UCEB, (ii) The effective date of the UCEB, or (iii) The date the UCE occurs. (2) The date the phase-in of PBGC's guarantee of a UCEB begins is not affected by any delay that may occur in placing participants in pay status due to removal of a restriction under section 436(b) of the Code. See the example in paragraph (e)(8) of this section. (d) Date UCE occurs. (1) The date a UCE occurs is determined on a participant-by-participant basis, or on a different basis, such as a facility-wide or company-wide basis, depending upon plan provisions and the facts and circumstances. For example, a benefit triggered by a permanent layoff of a participant would be determined with respect to each participant, and thus layoffs that occur on different dates would generally be distinct UCEs. In contrast, a benefit payable only upon a complete plant shutdown would apply facility-wide, and generally the shutdown date would be the date of the UCE for all participants who work at that plant. Similarly, a benefit payable only upon the complete shutdown of the employer's entire operations would apply plan-wide, and thus the shutdown date of company operations generally would be the date of the UCE for all participants. (2) For purposes of paragraph (c)(1)(iii) of this section, if a benefit is contingent upon more than one UCE, PBGC will apply the rule under Treas. Reg. § 1.436-1(b)(3)(ii) (26 CFR 1.436-1(b)(3)(ii)) (i.e., the date the UCE occurs is the date of the latest UCE). (e) Examples. Example 1. Date of UCE. Facts: et seq., (ii) Conclusion: Example 2. Sequential layoffs. Facts: (ii) Conclusion: Example 3. Skeleton shutdown crews. Facts: (ii) Conclusion: Example 4. Creep-type layoff benefit/bankruptcy of contributing sponsor. Facts: (ii) Conclusion: Example 5. Creep-type layoff benefit with provision for declaration that return to work unlikely. Facts: (ii) Conclusion: Example 6. Shutdown benefit with special post-employment eligibility provision. Facts: (ii) Conclusion: Example 7. Phase-in of retroactive UCEB. Facts: (ii) Conclusion: Example 8. Removal of IRC section 436 restriction. Facts: (B) Under the rules of Code section 436 (ERISA section 206(g)) and Treasury regulations thereunder, a plan cannot provide a UCEB payable with respect to an unpredictable contingent event, if the event occurs during a plan year in which the plan's adjusted funding target attainment percentage is less than 60%. On March 17, 2014, the plan's enrolled actuary issued a certification stating that the plan's adjusted funding target attainment percentage for 2014 is 58%. Therefore, the plan restricts payment of the unreduced early retirement benefit payable with respect to the shutdown on April 15, 2014. (C) On August 15, 2014, the plan sponsor makes an additional contribution to the plan that is designated as a contribution under Code section 436(b)(2) to eliminate the restriction on payment of the shutdown benefits. On September 15, 2014, the plan's enrolled actuary issues a certification stating that, due to the additional section 436(b)(2) contribution, the plan's adjusted funding target attainment percentage for 2014 is 60%. On October 1, 2014, Participant A is placed in pay status for the unreduced early retirement benefit and, as required under Code section 436 and Treasury regulations thereunder, is in addition paid retroactively the unreduced benefit for the period May 1, 2014 (the date the unreduced early retirements would have become payable) through September 1, 2014. The plan terminates as of September 1, 2016. (ii) Conclusion: [79 FR 25672, May 6, 2014] § 4022.28 Effect of tax disqualification. (a) General rule. (b) Exceptions. (1) The Secretary of the Treasury or his delegate issues a notice stating that the original notice referred to in paragraph (a) of this section was erroneous; (2) The Secretary of the Treasury or his delegate finds that, subsequent to the issuance of the notice referred to in paragraph (a) of this section, appropriate action has been taken with respect to the trust or plan to cause it to meet the requirements of sections 401(a) or 404(a)(2) of the Code, respectively, and issues a subsequent notice stating that the trust or plan meets such requirements; or (3) The plan amendment is revoked retroactively to its original effective date. Subpart C—Section 4022(c) Benefits § 4022.51 Determination of section 4022(c) benefits in a PPA 2006 bankruptcy termination. (a) Amount of unfunded nonguaranteed benefits. (b) Benefits included in unfunded nonguaranteed benefits. (c) Determination of recovery ratio. [76 FR 34603, June 14, 2011] Subpart D—Benefit Reductions in Terminating Plans § 4022.61 Limitations on benefit payments by plan administrator. (a) General. (b) Accrued benefit at normal retirement. (c) Maximum guaranteeable benefit. (d) Estimated benefit payments. (e) PBGC authority to modify procedures. (f) Examples. Example 1. Facts. On October 10, 1992, a plan administrator files with the PBGC a notice of intent to terminate in a distress termination that includes December 31, 1992, as the proposed termination date. A participant who is in pay status on December 31, 1992, has been receiving his accrued benefit of $2,500 per month under the plan. The benefit is in the form of a joint and survivor annuity (contingent basis) that will pay 50 percent of the participant's benefit amount ( i.e. Benefit reductions. Paragraph (c) of this section requires the plan administrator to cease paying benefits in excess of the maximum guaranteeable benefit, adjusted for age and benefit form in accordance with the provisions of subpart B. The maximum guaranteeable benefit for plans terminating in 1992, the year of the proposed termination date, is $2,352.27 per month, payable in the form of a single life annuity at age 65. Because the participant is older than age 65, no adjustment is required under § 4022.23(c) based on the annuitant's age factor. The benefit form is a joint and survivor annuity (contingent basis), as defined in § 4022.23(d)(2). The required benefit reduction for this benefit form under § 4022.23(d) is 10 percent. The corresponding adjustment factor is 0.90 (1.00-0.10). The benefit reduction factor to adjust for the age difference between the participant and the beneficiary is computed under § 4022.23(e). In computing the difference in ages, years over 65 years of age are not taken into account. Therefore, the age difference is 9 years (65-56). The required percentage reduction when the beneficiary is 9 years younger than the participant is 9 percent. The corresponding adjustment factor is 0.91 (1.00-0.09). The maximum guaranteeable benefit adjusted for age and benefit form is $1,926.51 ($2,352.27 × 0.90 × 0.91) per month. Therefore, the plan administrator must reduce the participant's benefit payment from $2,500 to $1,926.51. If the participant dies after December 31, 1992, the plan administrator will pay his spouse $963.26 (0.50 × $1,926.51) per month. Example 2. Facts. The benefit of a participant who retired under a plan at age 60 is a reduced single life annuity of $400 per month plus a temporary supplement of $400 per month payable until age 62 ( i.e., The maximum guaranteeable benefit adjusted for age under § 4022.23(c) of this chapter is $1,693.63 ($2,352.27 × 0.72) per month. Since the benefit is payable as a single life annuity, no adjustment is required under § 4022.23(d) for benefit form. Benefit reductions. Example 3. Facts. A retired participant is receiving a reduced early retirement benefit of $1,100 per month plus a temporary supplement of $700 per month payable until age 62. The benefit is in the form of a single life annuity. On the proposed termination date, November 30, 1992, the participant is 56 years old. The participant's accrued benefit at normal retirement age under the plan is $1,200 per month. The maximum guaranteeable benefit adjusted for age is $1,152.61 ($2,352.27 × 0.49) per month. A form adjustment is not required. Benefit reductions. For the purpose of determining whether the reduced benefit, i.e., The plan administrator next would determine the participant's estimated benefit under paragraph (d). Assume that the estimated benefit under paragraph (d) is $780 per month until age 62 and $715 per month thereafter. The plan administrator would pay the participant $780 per month, reduced to $715 per month at age 62, subject to the final benefit determination made under title IV. Example 4. Facts. A retired participant is receiving a reduced early retirement benefit of $2,650 per month plus a temporary supplement of $800 per month payable until age 62. The benefit is in the form of a joint and survivor annuity (contingent basis) that will pay 50 percent of the participant's benefit amount to his surviving spouse following the death of the participant. On the proposed termination date, December 20, 1992, the participant and his spouse are each 56 years old. The participant's accrued benefit at normal retirement age under the plan is $3,000 per month. The maximum guaranteeable benefit adjusted for age and the joint and survivor annuity (contingent basis) annuity form is $1,037.35 per month. An adjustment for age difference is not required because the participant and his spouse are the same age. Benefit reductions. The level-life equivalent of the participant's reduced benefit, determined using the § 4022.23(f) adjustment factor, is $2,785.45 (($350 × 0.387) + $2,650) per month. Since this benefit exceeds the participant's maximum guaranteeable benefit of $1,037.35 per month, the plan administrator must reduce the participant's benefit payment so that it does not exceed the maximum guaranteeable benefit. The ratio of (i) the participant's maximum guaranteeable benefit to (ii) the level-life equivalent of the participant's reduced benefit (computed under the “accrued for normal retirement age” limitation) is used in converting the level-life maximum guaranteeable benefit to the step-down benefit form. The level-life equivalent of the reduced benefit computed under the “accrued for normal retirement age” limitation is 37.24 percent ($1,037.35/$2,785.45). Thus, the plan administrator must reduce the participant's level-life benefit of $2,650 per month to $986.86 ($2,650 × 0.3724) and must further reduce the reduced temporary benefit of $350 per month to $130.34 ($350 × 0.3724). Under paragraph (c) of this section, therefore, the participant's maximum guaranteeable benefit is $1,117.20 ($986.86 + $130.34) per month to age 62 and $986.86 per month thereafter, subject to any adjustment under paragraph (d) of this section. Assume that the estimated benefit under paragraph (d) is $1,005.48 per month to age 62 and $888.17 per month thereafter. The plan administrator would reduce the participant's benefit from $3,450 per month to $1,005.48 per month and pay this amount until age 62, at which time the benefit payment would be reduced to $888.17 per month, subject to the final benefit determination made under title IV. [61 FR 34028, July 1, 1996, as amended at 62 FR 60428, Nov. 7, 1997; 76 FR 34604, June 14, 2011] § 4022.62 Estimated guaranteed benefit. (a) General. (b) Rules for determining benefits. (1) Non-PPA 2006 bankruptcy termination. (i) For benefits payable with respect to a participant who is in pay status on or before the proposed termination date, the plan administrator shall use the participant's age and benefit payable under the plan as of the proposed termination date. (ii) For benefits payable with respect to a participant who enters pay status after the proposed termination date, the plan administrator shall use the participant's age as of the benefit commencement date and his service and compensation as of the proposed termination date. (2) PPA 2006 bankruptcy termination. (i) For benefits payable with respect to a participant who is in pay status on or before the bankruptcy filing date, the plan administrator shall use the participant's age and benefit payable under the plan as of the bankruptcy filing date. (ii) For benefits payable with respect to a participant who enters pay status after the bankruptcy filing date, the plan administrator shall use the participant's age as of the benefit commencement date and his service and compensation as of the bankruptcy filing date. (3) Participants with new benefits or benefit improvements. (4) Limitations on estimated guaranteed benefits. (5) Nothing in this paragraph (b) overrides the provisions of subparts A and B of part 4022 with respect to the requirements necessary for a benefit to be guaranteed by PBGC. (c) Estimated guaranteed benefit payable with respect to a participant who is not a majority owner. (1) Participants with no benefits subject to phase-in. (2) Participants with benefits subject to phase-in. (i) From column (a) of Table I, select the line that applies according to the number of full years before the proposed termination date since the plan was last amended to provide for a new benefit (or the number of full years since the plan was established, if it has never been amended to provide for a new benefit). “New benefit” means a change in the terms of the plan that results in (a) a participant's or a beneficiary's eligibility for a benefit that was not previously available or to which he or she was not entitled (excluding a benefit that is actuarially equivalent to the normal retirement benefit to which the participant was previously entitled) or (b) an increase of more than twenty percent in the benefit to which a participant is entitled upon entering pay status before his or her normal retirement age under the plan. “New benefits” result from liberalized participation or vesting requirements, reductions in the age or service requirements for receiving unreduced benefits, additions of actuarially subsidized benefits, and increases in actuarial subsidies. “New benefits” also result from increases that become payable by reason of the occurrence of an unpredictable contingent event (provided the event occurred after July 26, 2005), to the extent the increase would not be payable but for the occurrence of the event; in the case of such new benefits, the date of the occurrence of the unpredictable contingent event is treated as the amendment date for purposes of Table I. The establishment of a plan creates a new benefit as of the effective date of the plan. A change in the amount of a benefit is not deemed to be a “new benefit” if it results solely from a benefit improvement. “New benefit” and “benefit improvement” are mutually exclusive terms. (ii) If there was no benefit improvement under the plan during the one-year period ending on the proposed termination date, use the multiplier set forth in column (b) of Table I on the line selected from column (a). “Benefit improvement” means a change in the terms of the plan that results in (a) an increase in the benefit to which a participant is entitled at his or her normal retirement age under the plan or (b) an increase in the benefit to which a participant or beneficiary in pay status is entitled. (iii) If there was any benefit improvement during the one-year period ending on the proposed termination date, use the multiplier set forth in column (c) of Table I on the line selected from column (a). Table I—Applicable Multiplier If— Full years since last new benefit No benefit improvement during last year Benefit improvement during last year Five or more .90 .80 Four .80 .70 Three .65 .55 Two .50 .45 Fewer than two .35 .30 Note: (d) Estimated guaranteed benefit payable with respect to a majority owner. (e) PPA 2006 bankruptcy termination. (f) Examples. (1) Example 1 Facts. 1/15 (ii) Estimated guaranteed benefit. (B) The amendment as of January 1, 2009, resulted in a “new benefit” because the reduction in the age at which the participant could receive unreduced benefits increased the participant's benefit entitlement at actual retirement age by 5 15 (C) The multiplier for computing the amount of the estimated guaranteed benefit is taken from the third row of Table I of this section (because the last new benefit had been in effect for three full years as of the proposed termination date) and column (c) (because there was a benefit improvement within the one-year period preceding the proposed termination date). This multiplier is 0.55. Therefore, the amount of the participant's estimated guaranteed benefit is $412.50 (0.55 × $750) per month. (2) Example 2 Facts. (ii) Estimated guaranteed benefit. (3) Example 3 Facts. (ii) Estimated guaranteed benefit. 7/10 (4) Example 4 Facts. (ii) Estimated guaranteed benefit. [61 FR 34028, July 1, 1996; 61 FR 36626, July 12, 1996; 76 FR 34604, June 14, 2011; 79 FR 25674, May 6, 2014; 83 FR 49804, Oct. 3, 2018] § 4022.63 Estimated asset-funded benefit. (a) General. (b) Conditions for use of this section. (1) An actuarial valuation of the plan has been performed for a plan year beginning not more than eighteen months before the proposed termination date. If the interest rate used to value plan liabilities in this valuation exceeded the applicable valuation interest rates and factors under § 4044.54 of this chapter in effect on the proposed termination date, the value of benefits in pay status and the value of vested benefits not in pay status on the valuation date must be converted to PBGC's valuation rates and factors. (2) The plan has been in effect for at least five full years before the proposed termination date, and the most recent actuarial valuation demonstrates that the value of plan assets, reduced by employee contributions remaining in the plan and interest credited thereon under the terms of the plan, exceeds the present value, adjusted as required under paragraph (b)(1), of all plan benefits in pay status on the valuation date. (3) PPA 2006 bankruptcy termination. (c) In general Estimated asset-funded benefit payable with respect to a participant who is not a majority owner. (i) The numerator of which is the benefit that would be payable with respect to the participant at normal retirement age under the provisions of the plan in effect on the date five full years before the proposed termination date, based on the participant's age, service, and compensation as of the earlier of the participant's benefit commencement date or the proposed termination date, and (ii) The denominator of which is the benefit that would be payable with respect to the participant at normal retirement age under the provisions of the plan in effect on the proposed termination date, based on the participant's age, service, and compensation as of the earlier of the participant's benefit commencement date or the proposed termination date. (2) PPA 2006 bankruptcy termination. (d) Estimated asset-funded benefit payable with respect to a majority owner. (1) The plan administrator shall first calculate the estimated guaranteed benefit payable with respect to the majority owner as if he or she were not a majority owner, using the method set forth in § 4022.62(c). (2) The benefit computed under paragraph (d)(1) shall be multiplied by the priority category 4 funding ratio. The category 4 funding ratio is the ratio of x to y, not to exceed one, where— (i) In a plan with priority category 3 benefits, x equals plan assets minus employee contributions remaining in the plan on the valuation date, with interest credited thereon under the terms of the plan, and the present value of benefits in pay status, and y equals the present value of all vested benefits not in pay status minus such employee contributions and interest; or (ii) In a plan with no priority category 3 benefits, x equals plan assets minus employee contributions remaining in the plan on the valuation date, with interest credited thereon under the terms of the plan, and y equals the present value of all vested benefits minus such employee contributions and interest. (e) Examples. (1) Example 1 Facts. (B) On the participant's benefit commencement date, the plan provided for a normal retirement benefit of 2 percent of the final five years' salary times the number of years of service. Five years before the proposed termination date, the percentage was 1.5 percent. The amendments improving benefits were put into effect 3.5 years before the proposed termination date. There were no other amendments during the five-year period. (C) The participant's estimated guaranteed benefit computed under § 4022.62(c) is $1,500 per month times 0.90 (the factor from column (b) of Table I in § 4022.62(c)(2)), or $1,350 per month. It is assumed that the plan meets the conditions set forth in paragraph (b) of this section, and the plan administrator is therefore required to estimate the asset-funded benefit. (ii) Estimated asset-funded benefit. (B) Thus, the numerator of the ratio is the benefit that would be payable to the participant under the normal retirement provisions of the plan five years before the proposed termination date, based on her age, service, and compensation on her benefit commencement date. The denominator of the ratio is the benefit that would be payable to the participant under the normal retirement provisions of the plan in effect on the proposed termination date, based on her age, service, and compensation as of the earlier of her benefit commencement date or the proposed termination date. Since the only different factor in the numerator and denominator is the salary percentage, the amount of the estimated asset-funded benefit is $1,125 (0.015/0.020 × $1,500) per month. This amount is less than the estimated guaranteed benefit of $1,350 per month. Therefore, in accordance with § 4022.61(d), the benefit payable to the participant is $1,350 per month. (iii) PPA 2006 bankruptcy termination. (2) Example 2 Facts. (B) The participant's estimated guaranteed benefit computed under § 4022.62(d) is $455 per month ($1,000 × 0.65 × 7/10 (C) It is assumed that all of the conditions in paragraph (b) of this section have been met. Plan assets equal $2 million. The present value of all benefits in pay status is $1.5 million based on applicable PBGC interest rates. There are no employee contributions and the present value of all vested benefits that are not in pay status is $0.75 million based on applicable PBGC interest rates. (ii) Estimated asset-funded benefit. (B) Under paragraph (c) of this section, the participant's estimated priority category 3 benefit is $500 ($1,000 × $500/$1,000) per month. (C) Under paragraph (d) of this section, the participant's estimated priority category 4 benefit is the estimated guaranteed benefit computed under § 4022.62(c) ( i.e., 2/3 (D) Because the estimated category 4 benefit so computed is less than the estimated category 3 benefit so computed, the estimated category 3 benefit is the estimated asset-funded benefit. Because the estimated category 3 benefit so computed is greater than the estimated guaranteed benefit of $455 per month, in accordance with § 4022.61(d), the benefit payable to the participant is the estimated priority category 3 benefit of $500 per month. [61 FR 34028, July 1, 1996; 61 FR 36626, July 12, 1996, as amended at 76 FR 34604, June 14, 2011; 83 FR 49805, Oct. 3, 2018; 89 FR 48299, June 6, 2024] Subpart E—PBGC Recoupment and Reimbursement of Benefit Overpayments and Underpayments § 4022.81 General rules. (a) Recoupment of benefit overpayments. (b) Reimbursement of benefit underpayments. (c) Amount to be recouped or reimbursed. (1) Debit for overpayments. (2) Credit for underpayments. (3) PPA 2006 bankruptcy termination. (4) Credit for interest on net underpayments. (i) For months after May 1998, 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 (or, where the rate for a month is not available at the time the PBGC calculates the amount to be recouped or reimbursed, the most recent month for which the rate is available) based on monthly compounding; and (ii) For May 1998 and earlier months, the immediate annuity rate established for lump sum valuations as set forth in Table II of appendix B of part 4044 of this chapter. (5) No interest on net overpayments. (d) Death of participant Benefit overpayments. (i) Future annuity payments. (ii) No future annuity payments. (2) Benefit underpayments. (i) Future annuity payments. (ii) No future annuity payments. i.e., [63 FR 29354, May 29, 1998, as amended at 67 FR 16956, Apr. 8, 2002; 76 FR 34604, June 14, 2011] § 4022.82 Method of recoupment. (a) Future benefit reduction. (1) Computation. (i) Non-PPA 2006 bankruptcy termination. (ii) PPA 2006 bankruptcy termination. (iii) Facts and circumstances. (2) Limitation on benefit reduction. (i) Ten percent per month; or (ii) The amount of benefit per month in excess of the maximum guaranteeable benefit payable under section 4022(b)(3)(B) of ERISA, determined without adjustment for age and benefit form. (3) PBGC notice to participant or beneficiary. (4) Waiver of de minimis amounts. de minimis. (5) Final installment. (b) Full repayment through recoupment. [63 FR 29354, May 29, 1998, as amended at 76 FR 34604, June 14, 2011] § 4022.83 PBGC reimbursement of benefit underpayments. When the PBGC determines that there has been a net benefit underpayment made with respect to a participant, it shall pay the participant or beneficiary the amount of the net underpayment, determined in accordance with § 4022.81(c), in a single payment. [61 FR 34028, July 1, 1996, as amended at 63 FR 29355, May 29, 1998] Subpart F—Certain Payments Owed Upon Death Source: 67 FR 16957, Apr. 8, 2002, unless otherwise noted. § 4022.91 When do these rules apply? (a) Types of benefits. (1) You are a participant in a terminated plan; (2) You are a beneficiary (including an alternate payee) of a participant; or (3) You are a designee or other payee (e.g., a participant's next of kin) under these rules, as explained in § 4022.93. (b) Payments do not continue after death. (1) Your benefit is not in the form of a joint-and-survivor or other annuity under which payments may continue after your death (e.g., a certain-and-continuous annuity); (2) Your benefit is in the form of a joint-and-survivor annuity and the person designated to receive survivor benefits died before you; or (3) Your benefit is in the form of another type of annuity under which payments may continue after your death (e.g., a certain-and-continuous annuity) but you die with no payments owed for future periods. (c) Time of death. (1) On or after the date we take over your plan (as trustee); or (2) Before the date we take over your plan, to the extent that, by that date, the plan administrator has not paid all benefits owed to you at the time of your death. (d) Effect of plan or will. § 4022.92 What definitions do I need to know for these rules? You need to know three definitions from § 4001.2 of this chapter (PBGC, person, and plan) and the following definitions: “We” means the PBGC. “You” means the person to whom we may owe benefits at the time of death. § 4022.93 Who will get benefits PBGC may owe me at the time of my death? (a) In general. (1) Designee with the PBGC. (2) Spouse. (3) Children. (i) Adopted children. (ii) Child dies before parent. (4) Parents. (5) Estate. (6) Next of kin. (b) Pre-trusteeship deaths. (c) Deaths shortly after trusteeship. (d) Lump-sum payments to surviving spouses. [67 FR 16957, Apr. 8, 2002, as amended at 88 FR 44052, July 11, 2023] § 4022.94 What are the PBGC's rules on designating a person to get benefits the PBGC may owe me at the time of my death? (a) When you may designate. (b) Change of designee. (c) If your designee dies before you In general. (2) Simultaneous deaths. § 4022.95 Examples. The following examples show how the rules in §§ 4022.91 through 4022.94 apply. For examples on how these rules apply in the case of a certain-and-continuous annuity, see § 4022.104. At the time of his death, Charlie was receiving payments under a joint-and-survivor annuity. Charlie designated Ellen to receive survivor benefits under his joint-and-survivor annuity. We underpaid Charlie for periods before his death. At the time of his death, we owed Charlie a back payment to reimburse him for those underpayments. (a) Example 1: where surviving beneficiary is alive at participant's death. (b) Example 2: where surviving beneficiary predeceases participant. Subpart G—Certain-and-Continuous and Similar Annuity Payments Owed for Future Periods After Death Source: 67 FR 16958, Apr. 8, 2002, unless otherwise noted. § 4022.101 When do these rules apply? (a) In general. (1) Required payments for future periods. (2) No surviving beneficiary. (3) Time of death. (ii) Before the date we take over your plan, to the extent that, by that date, the plan administrator has not paid any required payments for future periods. (b) Effect of plan or will. (c) Payments owed at time of death. § 4022.102 What definitions do I need to know for these rules? You need to know three definitions from § 4001.2 of this chapter (PBGC, person, and plan) and the following definitions: “We” means the PBGC. “You” means the person who might die— (1) Without having received all required payments for future periods under a form of annuity promising that, regardless of a participant's death, there will be annuity payments for a certain period of time (e.g., a certain-and-continuous annuity) or until a certain amount is paid (e.g., a cash-refund annuity or installment-refund annuity); and (2) Without a surviving beneficiary designated to receive the payments described in paragraph (1) of this definition. § 4022.103 Who will get benefits if I die when payments for future periods under a certain-and-continuous or similar annuity are owed upon my death? If you die at a time when payments are owed for future periods under a form of annuity promising that, regardless of a participant's death, there will be annuity payments for a certain period of time (e.g., a certain-and-continuous annuity) or until a certain amount is paid (e.g., a cash-refund annuity or installment-refund annuity), and there is no surviving beneficiary designated to receive such payments, we will pay the remaining payments to the person determined under the rules in § 4022.93. § 4022.104 Examples. The following examples show how the rules in §§ 4022.101 through 4022.103 and 4022.91 through 4022.94 apply in the case of a certain-and-continuous annuity. (a) C&C annuity with no underpayment. (1) Example 1: where surviving beneficiary predeceases participant. (2) Example 2: where surviving beneficiary dies during certain period. (b) C&C annuity with underpayment. (1) Example 3: where participant dies during certain period. (2) Example 4: where participant and surviving beneficiary die during certain period. (3) Example 5: where participant dies after certain period. Appendixes A and B to Part 4022 [Reserved] Appendix C to Part 4022—Lump Sum Interest Rates for Private-Sector Payments [In using this table: (1) To determine the applicable rate set for any given month (month x), use the applicable 12-year rate for the second preceding month (month x−2) to find the corresponding rate set. The applicable 12-year rate for the second preceding month is the 12-year rate from the corporate bond yield curve described in section 430(h)(2)(D)(ii) of the Code determined without regard to 24-month averaging for the second month preceding the month of the desired applicable rate set. (2) For benefits for which the participant or beneficiary is entitled to be in pay status on the valuation date, the immediate annuity rate shall apply. (3) For benefits for which the deferral period is y years (where y is an integer and 0 < y ≤ 7), interest rate i 1 (4) For benefits for which the deferral period is y years (where y is an integer and 7 < y ≤ 15), interest rate i 2 1 (5) For benefits for which the deferral period is y years (where y is an integer and y > 15), interest rate i 3 2 1 For Plans With a Valuation Date On or After January 1, 2021 Applicable 12-year rate for month x−2 Applicable rate set for month x Immediate Deferred annuity rates i 1 i 2 i 3 Below 3.18 0.00 4.00 4.00 4.00 3.18 to 3.40 0.25 4.00 4.00 4.00 3.41 to 3.63 0.50 4.00 4.00 4.00 3.64 to 3.87 0.75 4.00 4.00 4.00 3.88 to 4.10 1.00 4.00 4.00 4.00 4.11 to 4.34 1.25 4.00 4.00 4.00 4.35 to 4.57 1.50 4.00 4.00 4.00 4.58 to 4.81 1.75 4.00 4.00 4.00 4.82 to 5.04 2.00 4.00 4.00 4.00 5.05 to 5.28 2.25 4.00 4.00 4.00 5.29 to 5.51 2.50 4.00 4.00 4.00 5.52 to 5.75 2.75 4.00 4.00 4.00 5.76 to 5.98 3.00 4.00 4.00 4.00 5.99 to 6.22 3.25 4.00 4.00 4.00 6.23 to 6.46 3.50 4.00 4.00 4.00 6.47 to 6.69 3.75 4.00 4.00 4.00 6.70 to 6.93 4.00 4.00 4.00 4.00 6.94 to 7.16 4.25 4.00 4.00 4.00 7.17 to 7.40 4.50 4.00 4.00 4.00 7.41 to 7.64 4.75 4.00 4.00 4.00 7.65 to 7.87 5.00 4.25 4.00 4.00 7.88 to 8.11 5.25 4.50 4.00 4.00 8.12 to 8.35 5.50 4.75 4.00 4.00 8.36 to 8.58 5.75 5.00 4.00 4.00 8.59 to 8.82 6.00 5.25 4.00 4.00 8.83 to 9.06 6.25 5.50 4.25 4.00 9.07 to 9.30 6.50 5.75 4.50 4.00 9.31 to 9.53 6.75 6.00 4.75 4.00 9.54 to 9.78 7.00 6.25 5.00 4.00 9.79 to 10.02 7.25 6.50 5.25 4.00 Above 10.02 7.50 6.75 5.50 4.00 [85 FR 55591, Sept. 9, 2020]