Allocation of assets

Addresses the meaning of “total amount contributed” for the purpose of the denominators in PBGC’s interim regulation on withdrawal liability alternative allocation methods.

An annuity contract owned by a pension plan is the plan asset, not the assets held by the insurer under the contract. Because benefits payable under the annuity contract are revocable upon termination, assets held under the contract are included in the value of the contract.

A proposed plan distribution must be in compliance with § 4044 regardless of whether the IRS has issued a determination letter regarding a plan termination. IRS cannot issue an exception to section 4044.

Termination is not subject to the spin-off/termination requirements of the implementation guidelines involving asset reversions since no assets will revert to the plan sponsor.

How to determine eligibility for a “Category 3 Benefit,” which is a benefit of a participant who retired, or could have retired, 3 years or more before the plan terminated.

A plan document’s provision allowing for reversion of residual plan assets to the plan sponsor was invalid and therefore residual assets were required to be distributed to participants.

Addresses the transfer of surplus assets to another trust after plan termination.

Allocation of assets of terminating plan otherwise than in accordance with section 4044 is not allowed. Transfer of asset to a defined contribution plan requires that all participants be offered option for immediate receipt of their benefits.

Plan administrator must allocate assets to participant receiving early retirement benefits and may not allocate assets to participants whose benefit claims had been fully satisfied prior to termination of plan.

Section 4044 asset allocation rules take precedence over any contrary plan provisions.