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Federal Register / Vol. 86, No. 5 / Friday, January 8, 2021 / Rules and Regulations 4207.2

Definitions.

Unfunded vested benefits means, as described in section 4213c of ERISA, the amount by which the value of nonforfeitable benefits under the plan exceeds the value of the assets of the plan.
PART 4211ALLOCATING UNFUNDED
VESTED BENEFITS TO WITHDRAWING
EMPLOYERS
10. The authority citation for part 4211 continues to read as follows:

Authority: 29 U.S.C. 1302b3; 1391c1, c2D, c5A, c5B, c5D, and f.

11. In 4211.1, amend paragraph a by removing the sixth, seventh, and eighth sentences and adding two sentences in their place to read as follows:

4211.1

Purpose and scope.

Definitions.

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Unfunded vested benefits means, as described in section 4213c of ERISA, the amount by which the value of nonforfeitable benefits under the plan exceeds the value of the assets of the plan.

13. Revise 4211.3 to read as follows:

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a Construction plans. A plan that primarily covers employees in the building and construction industry must use the presumptive method for allocating unfunded vested benefits, except as provided in 4211.11b and 4211.21b.
b Code section 404c plans. A plan described in section 404c of the Code or a continuation of such a plan must use the rolling-5 method for allocating unfunded vested benefits unless the plan sponsor, by amendment, adopts an alternative method or modification.
14. Revise 4211.4 to read as follows:
4211.4 Contributions for purposes of the numerator and denominator of the allocation fractions.

a Section 4211c5 of ERISA
also permits certain modifications to the statutory allocation methods that PBGC
may prescribe in a regulation. Subpart B
of this part contains the permissible modifications to the statutory methods that plan sponsors may adopt without PBGC approval.

12. In 4211.2:
a. Amend the introductory text by removing multiemployer plan, and adding in its place multiemployer plan, nonforfeitable benefit,;
b. Amend the definition of Initial plan year by removing establishment and adding in its place effective date;
c. Remove the definition of Nonforfeitable benefit;
d. Revise the definition of Unfunded vested benefits;
e. Amend the definition of Withdrawing employer by removing for whom and adding in its place for which;
f. Amend the definition of Withdrawn employer by removing who, prior to the withdrawing employer, and adding in its place that, in a plan year before the withdrawing employer withdraws,;
The revision reads as follows:
4211.2

4211.3 Special rules for construction industry and Code section 404c plans.

a In general. Subject to paragraph b of this section, each of the allocation fractions used in the presumptive, modified presumptive and rolling-5
methods is based on contributions that certain employers have made to the plan for a 5-year period.
1 The numerator of the allocation fraction, with respect to a withdrawing employer, is based on the sum of the contributions required to be made or the total amount required to be contributed by the employer for the specified period.
2 The denominator of the allocation fraction is based on contributions that certain employers have made to the plan for a specified period.
b Disregarding surcharges and contribution increases. For each of the allocation fractions used in the presumptive, modified presumptive and rolling-5 methods in determining the allocation of unfunded vested benefits to an employer, a plan in endangered or critical status must disregard:
1 Surcharge. Any surcharge under section 305e7 of ERISA and section 432e7 of the Code.
2 Contribution increase. Any increase in the contribution rate or other increase in contribution requirements that goes into effect during plan years beginning after December 31, 2014, so that a plan may meet the requirements of a funding improvement plan under section 305c of ERISA and section 432c of the Code or a rehabilitation plan under section 305e of ERISA and 432e of the Code, except to the extent that one of the following exceptions applies pursuant to section 305g3 or 4 of ERISA and section 432g3 or 4
of the Code:
i The increases in contribution requirements are due to increased levels of work, employment, or periods for which compensation is provided.

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ii The additional contributions are used to provide an increase in benefits, including an increase in future benefit accruals, permitted by section 305d1B or f1B of ERISA and section 432d1B or f1B of the Code.
iii The withdrawal occurs on or after the expiration date of the employers collective bargaining agreement in effect in the plan year the plan is no longer in endangered or critical status, or, if earlier, the date as of which the employer renegotiates a contribution rate effective after the plan year the plan is no longer in endangered or critical status.
c Simplified methods. See 4211.14 and 4211.15 for simplified methods of meeting the requirements of this section.
15. Add 4211.6 to read as follows:
4211.6 Disregarding benefit reductions and benefit suspensions.

a In general. A plan must disregard the following nonforfeitable benefit reductions and benefit suspensions in determining a plans nonforfeitable benefits for purposes of determining an employers withdrawal liability under section 4201 of ERISA:
1 Adjustable benefit. A reduction to adjustable benefits under section 305e8 of ERISA and section 432e8
of the Code.
2 Lump sum. A benefit reduction arising from a restriction on lump sums or other benefits under section 305f of ERISA and section 432f of the Code.
3 Benefit suspension. A benefit suspension under section 305e9 of ERISA and section 432e9 of the Code, but only for withdrawals not more than 10 years after the end of the plan year in which the benefit suspension takes effect.
b Simplified methods. See 4211.16
for simplified methods for meeting the requirements of this section.
16. Revise 4211.11 to read as follows:
4211.11 Plan sponsor adoption of modifications and simplified methods.

a General rule. A plan sponsor, other than the sponsor of a plan that primarily covers employees in the building and construction industry, may adopt by amendment, without the approval of PBGC, any of the statutory allocation methods and any of the modifications and simplified methods set forth in 4211.12 through 4211.16.
b Building and construction industry plans. The plan sponsor of a plan that primarily covers employees in the building and construction industry may adopt by amendment, without the
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