Justification Non-Material Change Distress Termination Instructions

Justification for No Material or Nonsubstantive Change to Currently-Approved Collection

AGENCY: Pension Benefit Guaranty Corporation (PBGC)

TITLE: Termination of Single Employer Plans (29 CFR part 4041)

STATUS: OMB control number 1212‑0036; expires 03/31/2026

CONTACT: Hilary Duke (202-229-3839); Karen Levin (202-229-3559

The Pension Benefit Guaranty Corporation (PBGC) is making a change that is not substantive to the currently-approved information collection for termination of single-employer plans required under

section 4041 of the Employee Retirement Income Security Act of 1974 and part 4041 of PBGC’s regulations.

PBGC has issued instructions to inform plan administrators how to complete and file the distress termination forms under part 4041. Section 304 of the SECURE 2.0 Act of 2022, Division T of the Consolidated Appropriations Act, 2023, Pub. L. 117–328 (Dec. 29, 2022) modified section 411(a)(11) of the Internal Revenue Code (Code) to increase the limit for mandatory distributions from $5,000 to $7,000 for pension plan distributions made after December 31, 2023. Following this change, PBGC is updating references in these instructions to the value of the de minimis benefit amount that may be distributed by a plan in a form other than an annuity. This increased monetary limit and an example on PBGC’s maximum guaranteed benefit are reflected on pages 42 and 45 of the instructions. These changes will not increase burden and simply reflect the statutory change and an updated example.

The changes to the instructions are seen below in red.

Page 42.

• The maximum guaranteed benefit that PBGC can pay is set by law each year. For pension plans ending in 20112024, for example, the maximum guaranteed amount is $500777,107.95 per month ($54,00085,295 per year) for a worker who retires at age 65 with a straight life annuity.

Page 42.

• PBGC generally does not pay lump sums exceeding $5,000 for distribution dates before January 1, 2024, and $7,000 for later distribution dates.

Page 45.

Benefits may be distributed in a form other than an annuity (e.g., an immediate lump sum or direct transfer) 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-D), including amounts previously distributed, is at or below the plan’s de minimis cash out limit, which may not exceed the dollar limit under § 411(a)(11) of the Code (currently $5,000 for distribution dates before January 1, 2024, and $7,000 for later distribution dates).