88 STAT. 1014 26 USC 6601. 29 USC 1308. Ante, p. 1009. 29 USC 1309. Ante, p. 958. 29 USC 1321. Ante, p. 833. from the timely payment of the premium. The corporation is authorized to grant a waiver under this subsection upon application made by the plan administrator, but the corporation may not grant a waiver if it appears that the plan administrator will be unable to pay the premium within 60 days after the date on which it is due. If any premium is not paid by the last date prescribed for a payment, interest on the amount of such premium at the rate imposed under section 6601 (a) of the Internal Revenue Code of 1954 (relating to interest on underpayment, nonpayment, or extensions of time for payment of tax) shall be paid for the period from such last date to the date paid. (c) If any plan administrator fails to pay a premium when due, the corporation is authorized to bring a civil action in any district court of the United States within the jurisdiction of which the plan assets are located, the plan is administered, or in which a defendant resides or is found for the recovery of the amount of the premium penalty, and interest, and process may be served in any other district. The district courts of the United States shall have jurisdiction over actions brought under this subsection by the corporation without regard to the amount in controversy. (d) The corporation shall not cease to guarantee basic benefits on account of the failure of a plan administrator to pay any premium when due. REPORT BY THE CORPORATION SEC. 4008. As soon as practicable after the close of each fiscal year the corporation shall transmit to the President and the Congress a report relative to the conduct of its business under this title for that fiscal year. The report shall include financial statements setting forth the finances of the corporation at the end of such fiscal year and the result of its operations (including the source and application of its funds) for the fiscal year and shall include an actuarial evaluation of the expected operations and status of the funds established under section 4005 for the next five years (including a detailed statement of the actuarial assumptions and methods used in making such evaluation). PORTABILITY ASSISTANCE SEC. 4009. The corporation shall provide advice and assistance to individuals with respect to evaluating the economic desirability of establishing individual retirement accounts or other forms of individual retirement savings for which a deduction is allowable under section 219 of the Internal Revenue Code of 1954 and with respect to evaluating the desirability, in particular cases, of transferring amounts representing an employee's interest in a qualified plan to such an account upon the employee's separation from service with an employer. Subtitle B-Coverage PLANS COVERED SEC. 4021. (a) Except as provided in subsection (b), this section applies to any plan (including a successor plan) which, for a plan year (1) is an employee pension benefit plan (as defined in paragraph (2) of section 3 of this Act) established or maintained (A) by an employer engaged in commerce or in any industry or activity affecting commerce, or September 2, 1974 - 187 Pub. Law 93-406 88 STAT. 1015 (B) by any employee organization, or organization representing employees, engaged in commerce or in any industry or activity affecting commerce, or (C) by both, which has, in practice, met the requirements of part I of subchapter D of chapter 1 of the Internal Revenue Code of 1954 (as in effect for the preceding 5 plan years of the plan) applicable to plans described in paragraph (2) for the preceding 5 plan years; or (2) is, or has been determined by the Secretary of the Treasury to be, a plan described in section 401 (a) of the Internal Revenue Code of 1954, or which meets, or has been determined by the Secretary of the Treasury to meet, the requirements of section 404 (a) (2) of such Code. For purposes of this title, a successor plan is considered to be a con- (1) which is an individual account plan, as defined in paragraph (34) of section 3 of this Act, (2) established and maintained for its employees by the Government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing, or to which the Railroad Retirement Act of 1935 or 1937 applies and which is financed by contributions required under that Act, (3) which is a church plan as defined in section 414 (e) of the Internal Revenue Code of 1954, unless that plan has made an election under section 410 (d) of such Code, and has notified the corporation in accordance with procedures prescribed by the corporation, that it wishes to have the provisions of this part apply to it, (4) (A) established and maintained by a society, order, or association described in section 501(c) (8) or (9) of the Internal Revenue Code of 1954, if no part of the contributions to or under the plan is made by employers of participants in the plan, or (B) of which a trust described in section 501 (c) (18) of such Code is a part; (5) which has not at any time after the date of enactment of this Act provided for employer contributions; (6) which is unfunded and which is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees; (7) which is established and maintained outside of the United States primarily for the benefit of individuals substantially all of whom are nonresident aliens; 26 USC 401. Ante, p. 838. 45 USC 215-228 notes, 2288 2289-2. Ante, p. 925. 26 USC 501. (8) which is maintained by an employer solely for the purpose of providing benefits for certain employees in excess of the limitations on contributions and benefits imposed by section 415 of the Internal Revenue Code of 1954 on plans to which that section Ante, p. 979. applies, without regard to whether the plan is funded, and, to the extent that a separable part of a plan (as determined by the corporation) maintained by an employer is maintained for such purpose, that part shall be treated for purposes of this title, as a separate plan which is an excess benefit plan; 88 STAT. 1016 Post, p. 1017. 22 USC 288 note. Ante, p. 838. 29 USC 1322. Pub. Law 93-406 188 September 2, 1974 (9) which is established and maintained exclusively for substantial owners as defined in section 4022 (b) (6); (10) of an international organization which is exempt from taxation under the International Organizations Immunities Act; (11) maintained solely for the purpose of complying with applicable workmen's compensation laws or unemployment compensation or disability insurance laws; (12) which is a defined benefit plan, to the extent that it is treated as an individual account plan under paragraph (35) (B) of section 3 of this Act; or (13) established and maintained by a professional service employer which does not at any time after the date of enactment of this Act have more than 25 active participants in the plan. (c) (1) For purposes of subsection (b)(1), the term "individual account plan" does not include a plan under which a fixed benefit is promised if the employer or his representative participated in the determination of that benefit. (2) For purposes of this paragraph and for purposes of subsection (b) (13) (A) the term "professional service employer" means any proprietorship, partnership, corporation, or other association or organization (i) owned or controlled by professional individuals or by executors or administrators of professional individuals, (ii) the principal business of which is the performance of professional services, and (B) the term "professional individuals” includes but is not limited to, physicians, dentists, chiropractors, osteopaths, optometrists, other licensed practitioners of the healing arts, attorneys at law, public accountants, public engineers, architects, draftsmen, actuaries, psychologists, social or physical scientists, and performing artists. (3) In the case of a plan established and maintained by more than one professional service employer, the plan shall not be treated as a plan described in subsection (b) (13) if, at any time after the date of enactment of this Act the plan has more than 25 active participants. BENEFITS GUARANTEED SEC. 4022. (a) Subject to the limitations contained in subsection (b), the corporation shall guarantee the payment of all nonforfeitable benefits (other than benefits becoming non forfeitable solely on account of the termination of a plan) under the terms of a plan which terminates at a time when section 4021 applies to it. (b) (1) Except to the extent provided in paragraph (8)— (A) no benefits provided by a plan which has been in effect for less than 60 months at the time the plan terminates shall be guaranteed under this section, and (B) any increase in the amount of benefits under a plan resulting from a plan amendment which was made, or became effective, whichever is later, within 60 months before the date on which the plan terminates shall be disregarded. (2) For purposes of this subsection, the time a successor plan (within the meaning of section 4021 (a)) has been in effect includes the time a previously established plan (within the meaning of section 4021 (a)) was in effect. For purposes of determining what benefits are guaranteed under this section in the case of a plan to which section 4021 does not apply on the day after the date of enactment of this Act, the 60 month period referred to in paragraph (1) shall be computed September 2, 1974 - 189 Pub. Law 93-406 beginning on the first date on which such section does apply to the plan. (3) The amount of monthly benefits described in subsection (a) provided by a plan, which are guaranteed under this section with respect to a participant, shall not have an actuarial value which exceeds the actuarial value of a monthly benefit in the form of a life annuity commencing at age 65 equal to the lesser of (A) his average monthly gross income from his employer during the 5 consecutive calendar year period (or, if less, during the number of calendar years in such period in which he actively participates in the plan) during which his gross income from that employer was greater than during any other such period with that employer determined by dividing 1/12 of the sum of all such gross income by the number of such calendar years in which he had such gross income, or (B) $750 multiplied by a fraction, the numerator of which is the contribution and benefit base (determined under section 230 88 STAT. 1017 of the Social Security Act) in effect at the time the plan termi- 42 USC 1305. nates and the denominator of which is such contribution and bene fit base in effect in calendar year 1974. The provisions of this paragraph do not apply to non-basic benefits. (4) (A) The actuarial value of a benefit, for purposes of this subsection, shall be determined in accordance with regulations prescribed by the corporation. (B) For purposes of paragraph (3)— (i) the term "gross income" means "earned income" within the meaning of section 911(b) of the Internal Revenue Code of 1954 26 USC 911. (determined without regard to any community property laws), (ii) in the case of a participant in a plan under which contributions are made by more than one employer, amounts received as gross income from any employer under that plan shall be aggregated with amounts received from any other employer under that plan during the same period, and (ii) any non-basic benefit shall be disregarded. (5) Notwithstanding paragraph (3), no person shall receive from the corporation for basic benefits with respect to a participant an amount, or amounts, with an actuarial value which exceeds a monthly benefit in the form of a life annuity commencing at age 65 equal to the amount determined under paragraph (3)(B) at the time of the last plan termination. (6) (A) For purposes of this title, the term "substantial owner" means an individual who (i) owns the entire interest in an unincorporated trade or business, (ii) in the case of a partnership, is a partner who owns, directly or indirectly, more than 10 percent of either the capital interest or the profits interest in such partnership, or (iii) in the case of a corporation, owns, directly or indirectly, more than 10 percent in value of either the voting stock of that corporation or all the stock of that corporation. For purposes of clause (iii) the constructive ownership rules of section 1563 (e) of the Internal Revenue Code of 1954 shall apply (determined 26 USC 1563. without regard to section 1563 (e)(3)(C)). For purposes of this title an individual is also treated as a substantial owner with respect to a plan if, at any time within the 60 months preceding the date on which the determination is made, he was a substantial owner under the plan. 88 STAT. 1018 26 USC 401. 26 USC 404. Pub. Law 93-406 - 190 September 2, 1974 (B) In the case of a participant in a plan under which benefits have not been increased by reason of any plan amendments and who is covered by the plan as a substantial owner, the amount of benefits guaranteed under this section shall not exceed the product of (i) a fraction (not to exceed 1) the numerator of which is the number of years the substantial owner was an active participant in the plan, and the denominator of which is 30, and (ii) the amount of the substantial owner's monthly benefits guaranteed under subsection (a) (as limited under paragraph (3) of this subsection). (C) In the case of a participant in a plan, other than a plan described in subparagraph (B), who is covered by the plan as a substantial owner, the amount of the benefit guaranteed under this section shall, under regulations prescribed by the corporation, treat each benefit increase attributable to a plan amendment as if it were provided under a new plan. The benefits guaranteed under this section with respect to all such amendments shall not exceed the amount which would be determined under subparagraph (B) if subparagraph (B) applied. (7) (A) No benefits accrued under a plan after the date on which the Secretary of the Treasury issues notice that he has determined that any trust which is a part of a plan does not meet the requirements of section 401(a) of the Internal Revenue Code of 1954, or that the plan does not meet the requirements of section 404(a) (2) of such Code, are guaranteed under this section unless such determination is erroneous. This subparagraph does not apply if the Secretary subsequently issues a notice that such trust meets the requirements of section 401(a) of such Code or that the plan meets the requirements of section 404 (a) (2) of such Code and if the Secretary determines that the trust or plan has taken action necessary to meet such requirements during the period between the issuance of the notice referred to in the preceding sentence and the issuance of the notice referred to in this sentence. (B) No benefits accrued under a plan after the date on which an amendment of the plan is adopted which causes the Secretary of the Treasury to determine that any trust under the plan has ceased to meet the requirements of section 401(a) of the Internal Revenue Code of 1954 or that the plan has ceased to meet the requirements of section 404 (a) (2) of such Code, are guaranteed under this section unless such determination is erroneous. This subparagraph shall not apply if the amendment is revoked as of the date it was first effective or amended to comply with such requirements. (8) Benefits described in paragraph (1) are guaranteed only to the extent of the greater of— (A) 20 percent of the amount which, but for the fact that the plan or amendment has not been in effect for 60 months or more, would be guaranteed under this section, or (B) $20 per month, multiplied by the number of years (but not more than 5) the plan or amendment, as the case may be, has been in effect. In determining how many years a plan or amendment has been in effect for purposes of this paragraph, the first 12 months following the date on which the plan or amendment is made or first becomes effective (whichever is later) constitutes one year, and each consecutive period of 12 months thereafter constitutes an additional year. This paragraph does not apply to benefits payable under a plan unless the corporation finds substantial evidence that the plan was terminated for a reasonable business purpose and not for the purpose of obtaining the payment of benefits by the corporation under this title. |