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Federal Register / Vol. 86, No. 130 / Monday, July 12, 2021 / Rules and Regulations 4262.2

Definitions.

The following terms are defined in 4001.2 of this chapter: Code, ERISA, fair market value, IRS, multiemployer plan, PBGC, plan, and plan sponsor. In addition, for purposes of this part:
Form 5500 means the Annual Return/
Report of Employee Benefit Plan required to be filed for employee benefit plans under sections 104 and 4065 of ERISA and sections 6057b and 6058a of the Code.
Merger means merger as defined in 4231.2 of this chapter.
SFA coverage period means the period beginning on the plans SFA
measurement date and ending on the last day of the last plan year ending in 2051.
SFA measurement date means the last day of the calendar quarter immediately preceding the date the plans application was filed.
Special financial assistance or SFA
means special financial assistance from PBGC under section 4262 of ERISA.
Transfer and transfer of assets or liabilities means transfer and transfer of assets or liabilities as defined in 4231.2 of this chapter.

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4262.3 Eligibility for special financial assistance.

a In general. Subject to all the provisions of this section, a multiemployer plan is eligible for special financial assistance in any of the following cases:
1 Critical and declining status plans.
The plan is in critical and declining status within the meaning of section 305b6 of ERISA for the specified year; or 2 Plans with a suspension of benefits. A suspension of benefits has been approved with respect to the plan under section 305e9 of ERISA as of March 11, 2021; or 3 Critical status plans. The plan:
i Is certified to be in critical status within the meaning of section 305b2
of ERISA for a specified year; and ii The percentage calculated under paragraph c2 of this section was less than 40 percent; and iii The ratio of the total number of active participants at the end of the plan year required to be entered on the Form 5500 that was required to be filed for a specified year to the sum of inactive participants retired or separated participants receiving benefits, other retired or separated participants entitled to future benefits, and deceased participants whose beneficiaries are receiving or are entitled to receive benefits required to be entered on such Form 5500 was less than 2 to 3.
4 Insolvent plans. The plan became insolvent for purposes of section 418E

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of the Code after December 16, 2014, has remained insolvent, and has not terminated under section 4041A of ERISA as of March 11, 2021.
b Specified year. For purposes of this section, the term specified year means a plan year specified by the plan sponsor beginning in 2020, 2021, or 2022. The specified years for paragraphs a3i, ii, and iii of this section need not be the same.
c Additional rules for critical status plans1 Elected status. Election of critical status under section 305b4 of ERISA does not satisfy the requirement for the certification of critical status by the plans actuary under paragraph a3i of this section.
2 Percentage. The percentage calculated as i The current value of net assets as of the first day of the plan year that was required to be entered on the Form 5500
Schedule MB that was required to be filed for a specified year; plus ii The current value of withdrawal liability due to be received by the plan on an accrual basis, reflecting a reasonable allowance for amounts considered uncollectible, as of the first day of the plan year for the specified year in paragraph c2i of this section if not already included in the current value of net assets in paragraph c2i of this section; divided by iii The current liability attributable to all benefits as of the first day of the plan year required to be entered on the Form 5500 Schedule MB specified in paragraph c2i of this section.
d Actuarial assumptions.
Determinations of eligibility under paragraph a1 or 3 of this section must be made in accordance with the provisions in this paragraph d.
1 Certifications completed before January 1, 2021. For certifications of plan status completed before January 1, 2021, PBGC will accept assumptions incorporated in the determination of whether a plan is in critical status or critical and declining status as described in section 305b of ERISA
unless such assumptions are clearly erroneous.
2 Certifications completed after December 31, 2020. For certifications of plan status completed after December 31, 2020, the determination of whether a plan is in critical status or critical and declining status for purposes of eligibility for special financial assistance must be made using the assumptions that the plan used in its most recently completed certification of plan status before January 1, 2021, unless such assumptions excluding the plans interest rate assumption are unreasonable.

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3 Changes in assumptions. If a plan determines that use of the assumptions under paragraph d2 of this section is unreasonable, the plans application may include a proposed change in the assumptions excluding the plans interest rate assumption, as described in 4262.5.
4262.4 Amount of special financial assistance.

a In general. Subject to paragraph f of this section, the amount of special financial assistance for a plan is the amount if any, subject to adjustment for the date of payment as described in 4262.12, by which 1 The value, as of the plans SFA
measurement date, of all SFA-eligible plan obligations; exceeds 2 The value, as of the plans SFA
measurement date, of all SFA-eligible plan resources.
b SFA-eligible plan obligations. The value of SFA-eligible plan obligations as of the plans SFA measurement date, is the sum of 1 The present value of benefits expected to be paid by the plan during the SFA coverage period including any reinstatement of benefits attributable to the elimination of reductions in a participants or beneficiarys benefit due to a suspension of benefits under sections 305e9 or 4245a of ERISA as required under 4262.15 and any restoration of benefits under 26 CFR
1.432e91e3, and assuming such reinstatements are paid beginning as of the SFA measurement date; and 2 The present value of administrative expenses expected to be paid by the plan using plan assets during the SFA coverage period, excluding the amount owed to PBGC
under section 4261 of ERISA which is added to the amount of special financial assistance in 4262.12 determined as of the date special financial assistance is paid.
c SFA-eligible plan resources. The value of SFA-eligible plan resources as of the plans SFA measurement date, is the sum of 1 The fair market value of plan assets on the SFA measurement date;
and 2 The present value of future contributions, withdrawal liability payments, and other payments expected to be made to the plan excluding the amount of financial assistance under section 4261 of ERISA and special financial assistance to be received by the plan during the SFA coverage period.
d Deterministic basis. The projections in paragraphs b1 and 2
and c2 of this section must be
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