Termination of Single Employer Plans

IRS Determination Letter. Plan administrators who want to defer the final distribution of plan assets until 120 days after
receipt of a favorable tax qualification (on termination) determination letter from the IRS must submit a valid request for the
determination to the IRS by the time the standard termination notice is filed with PBGC.
Voluntary Termination of an Insufficient Plan. A single-employer plan covered by PBGC's termination insurance
program that does not have sufficient assets to satisfy all plan benefits can terminate voluntarily only if the contributing
sponsor(s) and each member of the contributing sponsor's controlled group satisfy the requirements for a distress termination
pursuant to ERISA section 4041(c) and 29 CFR Part 4041, Subpart C. The distress termination rules are described in detail
in a separate PBGC distress termination package, which also contains the necessary forms and instructions.
Payment of PBGC Premiums. Premiums must be paid for a terminating plan through the plan year in which the plan
administrator completes the distribution of plan assets pursuant to the standard termination. Interest and penalties accrue if
premiums are not timely paid, and PBGC may initiate collection actions to obtain payment. To avoid the possibility that
the employer will be out of business or plan records and personnel will not be available by the normal premium due date,
the due date for a terminating plan's final premium is the earlier of:
•
•

The date premiums would have been due had the plan not been terminated, or
The date the post-distribution certification (i.e., Form 501) is filed.

Questions regarding premiums may be submitted by emailing [email protected] or by phoning (800) 736- 2444 (select
the "premium" option).

A.

Computation of Time; Filing and Issuance Rules (see 29 CFR § 4041.3 and 29 CFR Part 4000, Subpart D)

In computing any period of time, if you are counting forward, begin counting on the day after the event occurs and count the
last day of the period. If you are counting backwards, begin counting on the day before the event occurs and count the first
day of the period. If you counted forward and the last day of the period is a weekend or Federal holiday, then the period runs
until the next regular business day after the last day of the period. If an event cannot be more than a certain number of days
before a certain date and the last day of the period is a weekend or Federal holiday, then the period runs until the next regular
business day before the last day of the period.
Note: A proposed termination date may be any day, including a Saturday, Sunday or Federal holiday.
Example: Suppose you are issuing a notice of intent to terminate. The notice must be issued at least 60 days, but not more
than 90 days, before the proposed termination date. Suppose the 60th day before the proposed termination date is a
Saturday. Your notice is timely ifyou issue it on the following Monday even though that is only 58 days before the proposed
termination date. Similarly, ifthe 90th day before the proposed termination date is Monday, September 4, 2017 (a Federal
holiday), your notice is timely if you issue it on Friday, September I, even though that is 93 days before the proposed
termination date.

1. Filing with PBGC
Filing Methods. You may file PBGC Form 500 (including Schedules EA-S and REP-S) and Form 501 by hand, mail, fax,
commercial delivery service, email to [email protected].
Note: Current information on how tofile, including permittedfiling methods, fax numbers, and mail and email addresses
is on PBGC's website at https://www.pbgc.gov. Under all filing methods, the Form 500 (including Schedule EA-S,
REP-S, and notices) must be submitted together.
Filing Date. Your filing date will be the date you send your filing (the "send date"), provided you meet certain requirements
that are summarized below. If you do not meet these requirements, your filing date is the date the PBGC receives your
submission. (If you file your submission by hand, your filing date is the date of receipt of your hand-delivered submission at
the proper address.)
If PBGC receives your submission after 5:00 p.m. (Washington, D.C. time) on a business day, or anytime on a weekend or
Federal holiday, PBGC treats it as received on the next business day.
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Filings by mail. If you file your submission using the U.S. Postal Service, your filing date is the date you mail your
submission by the last collection of the day, provided that the submission: (1) meets the applicable postal requirements; (2)
is properly addressed; and (3) is sent by First-Class Mail (or another class that is at least equivalent). If you mail the sub­
mission after the last collection of the day, or if there is no scheduled collection that day, your filing date is the date of the
next scheduled collection. If you meet these requirements, the PBGC makes the following presumptions:
Legible postmark date. Ifyour submission has a legible U.S. Postal Service postmark, the PBGC presumes that the postmark
date is the filing date.
Legible private meter date. If your submission has a legible postmark made by a private postage meter (but no legible U.S.
Postal Service postmark) and arrives at the proper address by the time reasonably expected, the PBGC presumes that the
metered postmark date is your filing date.
You may prove an earlier send date.
Filings using a commercial delivery service. If you file your submission using a commercial delivery service, your
filing date is the date you deposit your submission by the last scheduled collection ofthe day for the type ofdelivery you use
(such as two-day delivery or overnight delivery) with the commercial delivery service, provided that the submission meets
the applicable requirements ofthe commercial delivery service and is properly addressed, and the delivery service meets one
ofthe requirements listed below. Ifyou deposit it later than that last scheduled collection ofthe day, or ifthere is no scheduled
collection that day, your filing date is the date of the next scheduled collection. The delivery service must meet one of the
following requirements:
Delivery within two days. It must be reasonable to expect your submission will arrive at the proper address by 5:00 p.m. on
the second business day after the next scheduled collection; or
Designated private delivery service. You must use a "designated private delivery service" within the meaning of section
7502(t) ofthe Code. PBGC's website, www.pbgc.gov, lists those designated private delivery services. You should make sure
that both the provider and the particular type ofdelivery (such as two-day delivery) are designated.
Where to file. PBGC Forms 500 (including schedules and notices) and 501 (including supporting documentation) may be
filed by hand, mail, fax, commercial delivery service, email (see "Filing Methods" at section II.A. I above) to:
Pension Benefit Guaranty Corporation
Standard Termination Compliance Division
Processing and Technical Assistance Branch
445 12th Street, SW
Washington, DC 20024-2101
By email: [email protected]
By fax: (202) 326-4001 or (202) 326-4260

2.

Issuance to Affected Parties Other Than PBGC (29 CFR § 4041.3 and 29 CFR Part 4000)

All notices must be readable and written in a manner calculated to be understood by the average plan participant. Additional
information may be provided with a notice only if the information is not misleading.
Issuance Methods. Notices may be issued by any method that is reasonably calculated to ensure actual receipt of the
material by the intended recipient. Permissible methods of issuance include hand delivery, first class mail, electronic
delivery by electronic media, and commercial delivery service to the affected party's last known address.
NOTE: Posting is not a permissible method.

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the plan administrator in writing of the date it receives the request.
Extensions of Distribution Deadline. The 180-day distribution deadline or the IRS determination letter distribution
deadline described above may be extended only under the circumstances described below. (If more than one extension ap­
plies, the deadline is extended to the latest applicable date.)
A. Revocation of Notice of Noncompliance. If PBGC revokes a NONC, the distribution deadline is extended until the
180th day after the date of revocation.
B. PBGC Discretion. PBGC may extend the distribution deadline to a later date in accordance with the rules described in
section 11.J of these instructions and 29 CFR§ 4041.30.
Note: If, late in the distribution process, the plan administrator (1) locates a participant or beneficiary who was thought
to be missing or (2) learns that a participant or beneficiary whom the plan administrator thought was located is, in fact,
missing, the plan administrator should request a discretionary extension of the distribution deadline.

2. Distributing Plan Benefits
Except for missing participants (see section 11.H.5), each participant must be offered all optional forms of benefits for which
he or she is eligible under the terms of the plan. Plan benefits may be distributed in a form other than an annuity (e.g., an
immediate lump sum) only if the plan provides for such a distribution and (1) the participant elects the alternative form in
writing, with the written consent of his or her spouse, or (2) for participants not already in pay status, the present value of the
participant's benefit (valued in accordance with the rules described under "Valuation of Other Benefits" in the instructions
to item 6 of Schedule EA-S), is at or below the plan's cash out limit for de minimis benefit amounts, which may not exceed
the dollar limit under§ 41 l(a)(l 1) of the Code ($5,000 for distribution dates before January 1, 2024, and $7,000 for later
distribution dates).
Note: For an election of a lump sum to be valid, the participant must have the opportunity to commence an annuity
immediately (see Treas. Reg.§ 1.417(e)-l(b)(l)).
If plan benefits are not payable in an optional form under the conditions described above, plan benefits must be distributed
by the purchase from an insurer of an annuity contract that is an irrevocable commitment. The plan administrator must select
the insurer in accordance with the fiduciary standards of Title I of ERISA. Unless the participant is already in pay status, or
has both elected to retire and elected a particular benefit form, the irrevocable commitment (annuity contract) must preserve
all benefit options under the plan in accordance with Code§ 411 and related regulations.
Note: Spousal consent is required for married participants for all options (other than a qualified joint and survivor
annuity) ifthe present value of the participant's plan benefit is more than the plan's cash out limit for de minimis benefit
amounts.
Participating Annuities. A participating annuity contract may be purchased to provide plan benefits if all plan benefits
will be guaranteed under the annuity contract as the unconditional, irrevocable, and noncancelable obligation of the insurer.
For a plan in which any residual assets will be distributed to participants: (1) the additional premium for the participation
feature must not be paid from the residual assets allocable to participants, and (2) the amount of residual assets must be
determined using the price of the annuities for all plan benefits without the participation feature. If these requirements are not
satisfied, a nonparticipating annuity contract must be purchased to close out the plan.

3. Post-Termination Amendments (see 29 CFR § 4041.8)
Plan Benefits. A participant's or beneficiary's plan benefits are determined under the plan's provisions in effect on the
plan's termination date. However, an amendment that is adopted after the plan's termination date is taken into account with
respect to a participant's or beneficiary's plan benefits to the extent the amendment (1) does not decrease the value of the
participant's or beneficiary's plan benefits under the plan's provisions in effect on the termination date; and (2) does not
eliminate or restrict an optional form of benefit available to the participant or beneficiary on the termination date. Thus, for
example, a post-termination amendment that eliminates an ancillary benefit, or that increases the dollar limit (subject to the
dollar limit under§ 41l(a)(l1) of the Code) for nonconsensual lump sums, would not be taken into account in determining

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