Reportable events

Pension Benefit Guaranty Corporation 76-11 Janua ry 20, 1976 RE FERENCE: [*1] 404 3(b)(8) Reportable Events. Mergers, Consolidations & other Transfers of Plan Assets OP INION: This is in r esponse to your inquiry as t o whether the * * * may transfer a portion of the assets in a certain pensionfund to the new retirement plan established by the * * * I wish to confirm what * * * an attorney in this office, told yo u in a rec ent telephone conversation. The transfer ofassets from one plan to another does not requi re the advanc e approval of the Pension Benefit Guaranty Corporation("P BGC"). However, such a transf er is a reportable event under Section 4043(b) (8) of the Employee Retirement Income Sec urity Act of 1974 ("E RISA") unless your plan is a "church plan", which is not covered by Title IV, see Section4021(b) (3) o f ERISA. While a literal reading of Section 4043(b) (8) would appear to apply to all plans, it is the opini onof this office that only plans covere d by Section 4021 must com ply with the notice requirements of Section 4043. Thisoffi ce is still working on the definition of a "chu rch plan" and resolution of that problem is not required to answer yourque stion regarding the proposed transfer. Secti on 4043(b) (8) r equires the plan administrator of a covered [*2] plan to notify us within 30 days af ter he knowsor has reason to know that a t ransfer of assets has occurred. Therefore, although you need no advance ap proval of thetrans fer from PBGC, if your plan is a covered plan, the plan a dministrator should give PBGC notice of the transfer within30 d ays of its occurrence. I trust this answ ers your inquiry. Henry Rose Ge neral Counsel

Pension Benefit Guaranty Corporation 76-46 April 2, 1976 RE FERENCE: [*1] 2 08 Mergers, Consolidations and other Transfers of Plan Assets404 3(b)(8) Reportable Events. Mergers, Consolidations & other Transfers of Plan Assets OP INION: Th is has reference to your March 5, 1976 letter. You state that you r client proposes to transfer the funding of apensi on plan from a deposit administrat ion group annuity to a trust fund administered by a bank. Neither the bene fitsnor contributions are to be curtailed. You contemplate alternative dispositions of the funds now on deposit with aninsurer. W e understand that the first alternative would channel future contr ibutions to a trust fund, thereby allowing thefun ds now o n deposit to remain with t he insurer until exhausted by payment of annuities under the Plan. The secondalterna tive would transfer all funding from the insurer to the bank holding the trust fund. You have asked whether either of these alternative dispositions constitutes a reportable e vent un der Section4043(b)( 8) of th e Employee Retirement Income Security Act of 1974, which states that a reportable event occurs, aspro vided in Se ction 208, wh en a plan merges, consolidates, or transfers its assets or liabilities to another plan. Yousuggest tha t these alternatives [*2] would not constitute transfers from one p lan to another and, therefors, Sect ion 208does not apply . We concur. Section 208 does not apply when a plan chang es its funding mechanism. It applies onlyto transa ctions between or among plans. Henry Rose Ge neral Counsel

Pension Benefit Guaranty Corporation 76-90 July 9, 1976 RE FERENCE: [*1] 404 4 Allocation of Assets OP INION: This i s in response to your letter asking what distribution options must be offered to pa rticipants upon the termin ation of the * * * Retirement Plan (the "Plan"). As I unde rstand the pertinent facts, * * * (the "Company") has ado pted an amendment to the Plan whi ch changesit to a profit- sharing plan. Because the adoption of such a plan amendment constitutes a termination under sec tion 404 1(f) of the Employee Retirement Income Security Act of 1974 (the "Act"), a terminati on notice was submitted to thePBGC. Th e Plan has sufficient assets to pay at least all non-forfeitable benefits under the Plan. The Company does notwant to offer each parti cipant the op tion of receiving a paid-up annuity or a lump-sum payment. Rather, t he Companyint ends to amend the profit-s haring plan, effective April 1, 1976, to provide for the trans fer of all of the Plan assets intothe pro fit-sharing trust, with each participant 's benefit under the Plan segregated into an annuity contract or a fixedincom e account. The all ocation requirements of section 4044 are compli ed with in a situation wherein there is a proposed trans ferof the as sets of a covered plan to an individual [*2] account plan, (such as a profit- sharing plan), if each p articipant isgiven the option of receiving the allocab le share of the plan assets to which he or she is entitled as a paid-up annuity or, if provided for in the plan, in a l ump-sum payment, instead of having those assets transferred to the individual account plan. Accordi ngly, the Company's prospective amendment will not satisfy the allo cation requirements of s ection 4044.Ad ditionally, in order to insure that the righ ts and/or obligations of Plan participants and th e PBGC have been clearlydeli neated, prior t o the distribution of the Plan assets, the plan admin

Pension Benefit Guaranty Corporation 76-121 December 22, 1976 RE FERENCE: [*1] 404 3(b)(3) Reportable Events. Decrease in Participants OP INION: Th is is in response to your letter of * * * referred to this Corporation by * * * * * * You ask whether the above- referenced plan has experienced a reportable event under Section 4043(b)(3) ofthe Employee Retirement Income Security Act of 1974 (the Act) due to reductions in parti cipation during the previoustwo p lan years. We understand that great er than 20% of the Plan's participants during the current plan year have been separated fromemployment and th at the number of employed plan participants is more t han 25% lower than the total p lan participantsemployed at the be ginning of the immediate preceding plan year. For pur poses of Section 4043(b)(3) of the Act, acti vepartic ipants are those employed by an employer maintaining the Plan. Where such a participant is separated fromemp loyment or laid-off, he is no longer an active participant. Assuming that t he Plan is covered by Section 4021 of the Act, Section 4043(b)(3) prescribes that a reportable event has occu rred under these circumstances. The plan administrator must notify the Pension Benefit Guaranty Corporation, Divisio n of Plan Review, of the occurrence of such [*2] event as soon as possible. If you ha ve any questions please contact * * * of my staff at * * * Henry Rose Ge neral Counsel

Pension Benefit Guaranty Corporation 76-114 October 1, 1976 RE FERENCE: [*1] 404 3(b)(2) Reportable Events. Amendment Decreasing Benefits OP INION: This is in r esponse to your letter dated * * * concerning the applicability of Section 4043(b)(2) of the Employee Retirement Income Security Act of 1974 (the "Act") to the adoption of an amendment to a covered plan under which the life insuran ce benefit under the plan is eliminated. As I unders tand the facts, the employer mainta ins a covered plan which currently is funded by a group whole lifeinsur ance poli cy and an unallocated group pension contract. The employer intends to amend th e plan so as to elimin atethe deat h benefits provided under the life insurance policy. Life insurance would continue to be pro vided to plan partic ipants under a separate group life insurance policy. In your opin ion, the term "benefit payable" in Section 4043(b)(2) should be construed to mean retirement anddisab ility bene fits but not life insurance benefits. We disagree. In our opinion, the el imination of the death benef it underthe pla n as a result of a plan amendment is a reportable event under Section 4043(b)(2) of the Act. Sec tion 4043(b)(2) provides: For purpos es of this section a reportable event occurs . . . when an amendment [*2] of th e plan is adopted if underthe amendment, the benefit payable with respect to any participant may be decreased. (Emphasis added.) There is no rea son to believe that Congress intended the term "benefit payabl e" in Section 4043(b)(2) not to i ncludelife insuran ce benefits. In view of the fact that Title IV is re plete with distinctions among classes of be nefits, (e.g., basicand non-basi c benefits, accrued and vest ed benefits, disability and retirement ben efits) we believe that had Congressintend ed to exempt life insurance benefits from Section 4043(b)(2) it would have specifically done so. Ad ditionally, we believe that our i

Pension Benefit Guaranty Corporation 81-20 July 15, 1981 RE FERENCE: [*1] 4 043. Reportable Events29 C FR 2617 Determination of Plan Sufficiency & Termination of Sufficient Plans OP INION: This i s in response to your inquiry as to w hether a reportable event occurs under the Pension Benefit GuarantyC orporation's regu lation on Repo rting and Notification Requirements for Reportable Events, 29 C.F.R. Part 2617, when a parent c orporation with a division that maintains a pension plan covered under Title IV sells an incorporated subsidiary that has assets equal t o approximately 1/2 of 1% of the parent corporation's assets. You also ask whether the ans wer wou ld be the s ame if the corporation sells a division (other than the division covered by the plan) that is the same sizeas the inc orporated subsidiary. Sec tion 2617.23(a) of the PBGC's reportable events regulation provides in pertinent part that: . . . a reportable event occurs with respect to a si ngle employer plan o f a contributing sponsor with nonforfeitableben efits which are not funded of $1 million or more when-- (1) As a result of a transaction invo lving a transfer of assets of or an ownership interest in a contrib uting sponsor--(i) There is or will be a new con tributing sponsor that is not a member of the [*2] controlled group of the previous con tributing sponsor; (ii) The contributi ng sponsor leaves or will leave the controlled group; or (iii) The cont ributing sponsor becomes or wil l become a member of a different controlled group, except where the new cont rolled group is or will be the same, but for the addition of another trade or busin ess, as th e contributing sponsor'scontrolled group before the transact ion; or (2) As a result of a transaction involving a transfer by a contributing spo nsor of assets of or an ownership interestin anot her trade or bus iness, the sponsor and that trade or busines s are or will be no longer part of the same con

Pension Benefit Guaranty Corporation 75-7 May 9, 1975 RE FERENCE: [*1] 2 08 Mergers, Consolidations and other Transfers of Plan Assets101 5(l). (IRC § 414) Definitions and Special Rules. Mergers, Consolidations and Other Transfers of Plan Assets404 3(b)(8) Reportable Events. Mergers, Consolidations & other Transfers of Plan Assets OP INION: Th is is in res ponse to your letter to us concerning the merger of the * * * and * * * into the * * * This will also serveto co nfirm your recent telephone conversation with * * * of our office. The merg er of a single em ployer plan into a multiemployer plan does not require the approval of the Pension BenefitGu aranty Corporat ion ("PB GC"), though it is a report able event under Section 4043(b)(8) of the Act. It is so, as youhave been informed, that it is the posit ion of the PBGC that until the PBGC issues regulations relating to Section 208and Section 1015 of the Act, the constrai nts of those sections do not apply to the merg er of a single em ployer plan intoa multie mployer plan. However, I cal l your attention to the fact that Section 208 is in Title I of the Ac t, which is the responsibil ity of theDepartment of Labor to administer and its coun terpart, Section 1015, is in Title II of the Act, which is the responsibility[*2] of th e Internal Revenue Service to administer. Accordingly , any doubts you may hve relating to their portions ofthe Ac t should be addressed to them. Your lett er states that the * * * Fund is sponsored by the * * *, is a multiem ployer plan to which the Act refers inSecti on 208 and is contemplating a merg er with the * * * Pension Fund. As you can see f rom the above, that merger maymay be accompl ished without regard to the substantive limitation contained in Section 208. You have the obligati on,however, to notify this Corporation of the merger within 30 days after it has occurred. See Section 4043(b)(8) of theAct. W e trust this answers your inquir

Pension Benefit Guaranty Corporation 85-8 April 2, 1985 REFERENCE: [*1] 4043(b) Reportable Event. Definition of Reportable Event 4043(b)(8) Reportable Events. Mergers, Consolidations & other Transfers of Plan Assets 29 CFR 2615 Reporting & Notification Requirements for Reportable Events 4062(b) Liability of Employer in Single Employer Plans. Amount of Employer Liability 4062(e). Liability of Employer in Single Employer Plans. Closing of Facility Affecting More Than 20% of Plan Participants 4064 Liability of Employers in Multiple Employer and Multiemployer Plans OPINION: This is in response to your inquiry concerning the effect of certain provisions of the Employee Retirement Income Security Act ("ERISA") as applied to the transactions described below. As you have represented the facts, upon receipt of Internal Revenue Service approval, * * * Corporation * * * will spin-off its manufacturing subsidiaries, so that they will no longer be a part of the * * * controlled group. This will be done by creating a new corporation ("New Corporation"), which will act as a holding company for the stock of the spun-off * * * subsidiaries. * * * is a publicly owned corporation whose stock is widely held. * * * stockholders will receive shares in New Corporation equal to [*2] the number of * * * shares they own. * * * sponsors a defined benefit pension plan ("* * * Plan") for most of the salaried employees and a number of hourly employees in the controlled group comprised of * * *, its manufacturing subs idiaries, and certain other subsidiaries. * * * Plan will have approximately 2,150 participants immediately prior to the spin-o ff, and approximately 1,984 immediately after the spin-off. The employees of the spun-off subsidiaries who participated in the * * * Plan will enter the New Corporation Plan, a plan newly established by New Corporation, which will assume the accrued liability to such employees under the * * * Plan. T

Pension Benefit Guaranty Corporation 76-52 April 14, 1976 RE FERENCE: [*1] 4 043(b)(3) Reportable Events. Decrease in Participants404 3(b)(8) Reportable Events. Mergers, Consolidations & other Transfers of Plan Assets OP INION: This is in response to your request for a rul ing regarding the effect under Title IV of the Employee RetirementInc ome Secu rity Act of 1974 (the Act) of the pending sale of three commonly located divisions of * * * (the Company). Th is response is based upon all submissi ons made to the Pension Benefit Guaranty Corporation (the PB GC) on bahalfof th e Company. The Company ma intains two plans, the Retirement Income Plan, and the * * * Retirement Plan forSalari ed Employees, each of which will experience a reduction in the number of part icipants as a result of the sale. The facility being sold accounted for greater than 20% of the active participants in each plan. As we understand the facts , substantially all of the Company employees at the facili ty, who were parti cipants underthe Reti rement Income Plan, will become employees of the Buyer of the three divisions, * * * now know n as * * * (t heBuyer). Th e Buyer is adopting a substantially identical plan for all of these former * * * employees and is continuing the ope rations at the facility. [*2] Plan assets allocable to the participants of the sold facil ity will be transferred to theplan c ontinued by the Buyer. As to the * * * Reti rement Plan for Salaried Employees, more than 20% of the total number of its active participantswill no lon ger be active participants under the plan as a consequence of the sale. Th e Buyer is adopting a similar planfor these employees and substantially all of them will be employed by the Buyer, who is continuing operation of the facility. Assuming that each plan is covered by Section 4021 of t he Act, the following are the Title IV consequences: (1)As to th e Retirement Income Plan there occur reportable e