PART 4062—LIABILITY FOR TERMINATION OF SINGLE-EMPLOYER PLANS Authority: 29 U.S.C. 1302(b)(3), 1362-1364, 1367, 1368. Source: 61 FR 34079, July 1, 1996, unless otherwise noted. § 4062.1 Purpose and scope. The purpose of this part is to set forth rules for determination and payment of the liability incurred, under section 4062(b) of ERISA, upon termination of any single-employer plan and, to the extent appropriate, determination of the liability incurred with respect to multiple employer plans under sections 4063 and 4064 of ERISA. This part also sets forth rules for determining the amount of liability incurred under section 4063 of ERISA pursuant to the occurrence of a cessation of operations as described by section 4062(e) of ERISA. The provisions of this part regarding the amount of liability to the PBGC that is incurred upon termination of a single-employer plan apply with respect to a plan for which a notice of intent to terminate under section 4041(c) of ERISA is issued or proceedings to terminate under section 4042 of ERISA are instituted after December 17, 1987. Those provisions also apply, to the extent described in paragraph (a) of this section, to the amount of liability for withdrawal from a multiple employer plan after that date. [61 FR 34079, July 1, 1996, as amended at 71 FR 34822, June 16, 2006] § 4062.2 Definitions. The following terms are defined in § 4001.2 of this chapter: benefit liabilities, Code, contributing sponsor, controlled group, ERISA, fair market value, guaranteed benefit, multiple employer plan, notice of intent to terminate, PBGC, person, plan, plan administrator, proposed termination date, single-employer plan, and termination date. In addition, for purposes of this part, the term collective net worth of persons subject to liability in connection with a plan termination § 4062.3 Amount and payment of section 4062(b) liability. (a) Amount of liability General rule. (2) Special rule in case of subsequent finding of inability to pay guaranteed benefits. (b) Payment of liability. [61 FR 34079, July 1, 1996, as amended at 71 FR 34822, June 16, 2006] § 4062.4 Determinations of net worth and collective net worth. (a) General rules. (b) Partnerships and sole proprietorships. (c) Factors for determining net worth. (1) A bona fide sale of, agreement to sell, or offer to purchase or sell the business of the person made on or about the net worth record date. (2) A bona fide sale of, agreement to sell, or offer to purchase or sell stock or a partnership interest in the person, made on or about the net worth record date. (3) If stock in the person is publicly traded, the price of such stock on or about the net worth record date. (4) The price/earnings ratios and prices of stocks of similar trades or businesses on or about the net worth record date. (5) The person's economic outlook, as reflected by its earnings and dividend projections, current financial condition, and business history. (6) The economic outlook for the person's industry and the market it serves. (7) The appraised value, including the liquidating value, of the person's tangible and intangible assets. (8) The value of the equity assumed in a plan of reorganization of a person in a case under title 11, United States Code, or any similar law of a state or political subdivision thereof. (9) Any other factor relevant in determining the person's net worth. (d) Improper transfers. transfer [61 FR 34079, July 1, 1996, as amended at 88 FR 44052, July 11, 2023] § 4062.5 Net worth record date. (a) General. (b) Establishment of an earlier net worth record date. (c) Notification. § 4062.6 Net worth notification and information. (a) General. (i) So notify the PBGC by the 90th day after the notice of intent to terminate is filed with the PBGC or, if no notice of intent to terminate is filed with the PBGC and the PBGC institutes proceedings under section 4042 of ERISA, within 30 days after the establishment of the plan's termination date in such proceedings; and (ii) Submit to the PBGC the information specified in paragraph (b) of this section with respect to the contributing sponsor and each member of the contributing sponsor's controlled group (if any)— (A) By the 120th day after the proposed termination date, or (B) If no notice of intent to terminate is filed with the PBGC and the PBGC institutes proceedings under section 4042 of ERISA, within 120 days after the establishment of the plan's termination date in such proceedings. (2) If a contributing sponsor or a member of its controlled group complies with the requirements of paragraph (a)(1) of this section, the PBGC will consider the requirements to be satisfied by all members of that controlled group. (3) The PBGC may require any person subject to liability— (i) To submit the information specified in paragraph (b) of this section within a shorter period whenever the PBGC believes that its ability to obtain information or payment of liability is in jeopardy, and (ii) To submit additional information within 30 days, or a different specified time, after the PBGC's written notification that it needs such information to make net worth determinations. (4) If a provision of paragraph (b) of this section or a PBGC notice specifies information previously submitted to the PBGC, a person may respond by identifying the previous submission in which the response was provided. (b) Net worth information. (1) An estimate, made in accordance with § 4062.4, of the person's net worth on the net worth record date and a statement, with supporting evidence, of the basis for the estimate. (2) A copy of the person's audited (or if not available, unaudited) financial statements for the 5 full fiscal years plus any partial fiscal year preceding the net worth record date. The statements must include balance sheets, income statements, and statements of changes in financial position and must be accompanied by the annual reports, if available. (3) A statement of all sales and copies of all offers or agreements to buy or sell at least 25 percent of the person's assets or at least 5 percent of the person's stock or partnership interest, made on or about the net worth record date. (4) A statement of the person's current financial condition and business history. (5) A statement of the person's business plans, including projected earnings and, if available, dividend projections. (6) Any appraisal of the person's fixed and intangible assets made on or about the net worth record date. (7) A copy of any plan of reorganization, whether or not confirmed, with respect to a case under title 11, United States Code, or any similar law of a state or political subdivision thereof, involving the person and occurring within 5 calendar years prior to or any time after the net worth record date. (c) Incomplete submission. § 4062.7 Calculating interest on liability and refunds of overpayments. (a) Interest. (b) Refunds. (c) Interest rate. [61 FR 34079, July 1, 1996, as amended at 71 FR 34822, June 16, 2006] § 4062.8 Liability pursuant to section 4062(e). (a) Liability amount. (1) The numerator of which is the number of the employer's employees who are participants under the plan and are separated from employment as a result of the cessation of operations; and (2) The denominator of which is the total number of the employer's current employees, as determined immediately before the cessation of operations, who are participants under the plan. (b) Example. [71 FR 34822, June 16, 2006] § 4062.9 Arrangements for satisfying liability. (a) General. (1) As provided in paragraph (b) of this section, the PBGC determines that such action is necessary to avoid the imposition of a severe hardship and that there is a reasonable possibility that the terms so prescribed will be met and the entire liability paid; or (2) As provided in paragraph (c) of this section, the PBGC determines that section 4062(b) liability exceeds 30 percent of the collective net worth of persons subject to liability in connection with a plan termination. (b) Upon request. (1) In determining what, if any, terms to grant, the PBGC shall examine the following factors: (i) The ratio of the liability to the net worth of the person making the request and (if different) to the collective net worth of persons subject to liability in connection with a plan termination. (ii) The overall financial condition of persons that are or may become liable, including, with respect to each such person— (A) The amounts and terms of existing debts; (B) The amount and availability of liquid assets; (C) Current and past cash flow; and (D) Projected cash flow, including a projection of the impact on operations that would be caused by the immediate full payment of the liability. (iii) The availability of credit from private sector sources to the person making the request and to other liable persons. (2) A contributing sponsor or member of a contributing sponsor's controlled group may request deferred payment or other terms for the satisfaction of any portion of the liability under section 4062, 4063, or 4064 of ERISA at any time by filing a written request. The request must include the information specified in § 4062.6(b), except that— (i) If the request is filed one year or more after the net worth record date, references to “the net worth record date” in § 4062.6(b) shall be replaced by “the most recent annual anniversary of the net worth record date”; and (ii) Information that already has been submitted to the PBGC need not be submitted again. (c) Liability exceeding 30 percent of collective net worth. (d) Interest. (e) Security during period of deferred payment. [61 FR 34079, July 1, 1996. Redesignated at 71 FR 34822, June 16, 2006] § 4062.10 Method and date of filing; where to file. (a) Method of filing. (b) Filing date. (c) Where to file. [68 FR 61354, Oct. 28, 2003. Redesignated at 71 FR 34822, June 16, 2006] § 4062.11 Computation of time. The PBGC applies the rules in subpart D of part 4000 of this chapter to compute any time period under this part. However, for purposes of determining the amount of an interest charge under § 4062.7, the rule in § 4000.43(a) of this chapter governing periods ending on weekends or Federal holidays does not apply. [68 FR 61354, Oct. 28, 2003. Redesignated at 71 FR 34822, June 16, 2006]