§ 1056.
(a)
Commencement date for payment of benefits
Each pension plan shall provide that unless the participant otherwise elects, the payment of benefits under the plan to the participant shall begin not later than the 60th day after the latest of the close of the plan year in which—
(1)
occurs the date on which the participant attains the earlier of age 65 or the normal retirement age specified under the plan,
(2)
occurs the 10th anniversary of the year in which the participant commenced participation in the plan, or
(3)
the participant terminates his service with the employer.
In the case of a plan which provides for the payment of an early retirement benefit, such plan shall provide that a participant who satisfied the service requirements for such early retirement benefit, but separated from the service (with any nonforfeitable right to an accrued benefit) before satisfying the age requirement for such early retirement benefit, is entitled upon satisfaction of such age requirement to receive a benefit not less than the benefit to which he would be entitled at the normal retirement age, actuarially reduced under regulations prescribed by the Secretary of the Treasury.
(g)
Funding-based limits on benefits and benefit accruals under single-employer plans
(1)
Funding-based limitation on shutdown benefits and other unpredictable contingent event benefits under single-employer plans
(A)
In general
If a participant of a defined benefit plan which is a single-employer plan is entitled to an unpredictable contingent event benefit payable with respect to any event occurring during any plan year, the plan shall provide that such benefit may not be provided if the adjusted funding target attainment percentage for such plan year—
(i)
is less than 60 percent, or
(ii)
would be less than 60 percent taking into account such occurrence.
(B)
Exemption
Subparagraph (A) shall cease to apply with respect to any plan year, effective as of the first day of the plan year, upon payment by the plan sponsor of a contribution (in addition to any minimum required contribution under
section 1083 of this title) equal to—
(i)
in the case of subparagraph (A)(i), the amount of the increase in the funding target of the plan (under
section 1083 of this title) for the plan year attributable to the occurrence referred to in subparagraph (A), and
(ii)
in the case of subparagraph (A)(ii), the amount sufficient to result in an adjusted funding target attainment percentage of 60 percent.
(C)
Unpredictable contingent event benefit
For purposes of this paragraph, the term “unpredictable contingent event benefit” means any benefit payable solely by reason of—
(i)
a plant shutdown (or similar event, as determined by the Secretary of the Treasury), or
(ii)
an event other than the attainment of any age, performance of any service, receipt or derivation of any compensation, or occurrence of death or disability.
(2)
Limitations on plan amendments increasing liability for benefits
(A)
In general
No amendment to a defined benefit plan which is a single-employer plan which has the effect of increasing liabilities of the plan by reason of increases in benefits, establishment of new benefits, changing the rate of benefit accrual, or changing the rate at which benefits become nonforfeitable may take effect during any plan year if the adjusted funding target attainment percentage for such plan year is—
(i)
less than 80 percent, or
(ii)
would be less than 80 percent taking into account such amendment.
(B)
Exemption
Subparagraph (A) shall cease to apply with respect to any plan year, effective as of the first day of the plan year (or if later, the effective date of the amendment), upon payment by the plan sponsor of a contribution (in addition to any minimum required contribution under
section 1083 of this title) equal to—
(i)
in the case of subparagraph (A)(i), the amount of the increase in the funding target of the plan (under
section 1083 of this title) for the plan year attributable to the amendment, and
(ii)
in the case of subparagraph (A)(ii), the amount sufficient to result in an adjusted funding target attainment percentage of 80 percent.
(C)
Exception for certain benefit increases
Subparagraph (A) shall not apply to any amendment which provides for an increase in benefits under a formula which is not based on a participant’s compensation, but only if the rate of such increase is not in excess of the contemporaneous rate of increase in average wages of participants covered by the amendment.
(3)
Limitations on accelerated benefit distributions
(A)
Funding percentage less than 60 percent
A defined benefit plan which is a single-employer plan shall provide that, in any case in which the plan’s adjusted funding target attainment percentage for a plan year is less than 60 percent, the plan may not pay any prohibited payment after the valuation date for the plan year.
(B)
Bankruptcy
A defined benefit plan which is a single-employer plan shall provide that, during any period in which the plan sponsor is a debtor in a case under title 11 or similar Federal or State law, the plan may not pay any prohibited payment. The preceding sentence shall not apply on or after the date on which the enrolled actuary of the plan certifies that the adjusted funding target attainment percentage of such plan (determined by not taking into account any adjustment of segment rates under section 1083(h)(2)(C)(iv) of this title) is not less than 100 percent.
(C)
Limited payment if percentage at least 60 percent but less than 80 percent
(i)
In general
A defined benefit plan which is a single-employer plan shall provide that, in any case in which the plan’s adjusted funding target attainment percentage for a plan year is 60 percent or greater but less than 80 percent, the plan may not pay any prohibited payment after the valuation date for the plan year to the extent the amount of the payment exceeds the lesser of—
(I)
50 percent of the amount of the payment which could be made without regard to this subsection, or
(II)
the present value (determined under guidance prescribed by the Pension Benefit Guaranty Corporation, using the interest and mortality assumptions under
section 1055(g) of this title) of the maximum guarantee with respect to the participant under
section 1322 of this title.
(ii)
One-time application
(I)
In general
The plan shall also provide that only 1 prohibited payment meeting the requirements of clause (i) may be made with respect to any participant during any period of consecutive plan years to which the limitations under either subparagraph (A) or (B) or this subparagraph applies.
(II)
Treatment of beneficiaries
(D)
Exception
This paragraph shall not apply to any plan for any plan year if the terms of such plan (as in effect for the period beginning on September 1, 2005, and ending with such plan year) provide for no benefit accruals with respect to any participant during such period.
(E)
Prohibited payment
For purpose
2
So in original. Probably should be “purposes”.
of this paragraph, the term “prohibited payment” means—
(i)
any payment, in excess of the monthly amount paid under a single life annuity (plus any social security supplements described in the last sentence of
section 1054(b)(1)(G) of this title), to a participant or beneficiary whose annuity starting date (as defined in
section 1055(h)(2) of this title) occurs during any period a limitation under subparagraph (A) or (B) is in effect,
(ii)
any payment for the purchase of an irrevocable commitment from an insurer to pay benefits, and
(iii)
any other payment specified by the Secretary of the Treasury by regulations.
Such term shall not include the payment of a benefit which under
section 1053(e) of this title may be immediately distributed without the consent of the participant.
(4)
Limitation on benefit accruals for plans with severe funding shortfalls
(A)
In general
A defined benefit plan which is a single-employer plan shall provide that, in any case in which the plan’s adjusted funding target attainment percentage for a plan year is less than 60 percent, benefit accruals under the plan shall cease as of the valuation date for the plan year.
(B)
Exemption
Subparagraph (A) shall cease to apply with respect to any plan year, effective as of the first day of the plan year, upon payment by the plan sponsor of a contribution (in addition to any minimum required contribution under section 1083 of this title) equal to the amount sufficient to result in an adjusted funding target attainment percentage of 60 percent.
(5)
Rules relating to contributions required to avoid benefit limitations
(A)
Security may be provided
(i)
In general
For purposes of this subsection, the adjusted funding target attainment percentage shall be determined by treating as an asset of the plan any security provided by a plan sponsor in a form meeting the requirements of clause (ii).
(ii)
Form of security
The security required under clause (i) shall consist of—
(I)
a bond issued by a corporate surety company that is an acceptable surety for purposes of
section 1112 of this title,
(II)
cash, or United States obligations which mature in 3 years or less, held in escrow by a bank or similar financial institution, or
(III)
such other form of security as is satisfactory to the Secretary of the Treasury and the parties involved.
(iii)
Enforcement
Any security provided under clause (i) may be perfected and enforced at any time after the earlier of—
(I)
the date on which the plan terminates,
(II)
if there is a failure to make a payment of the minimum required contribution for any plan year beginning after the security is provided, the due date for the payment under
section 1083(j) of this title, or
(III)
if the adjusted funding target attainment percentage is less than 60 percent for a consecutive period of 7 years, the valuation date for the last year in the period.
(iv)
Release of security
The security shall be released (and any amounts thereunder shall be refunded together with any interest accrued thereon) at such time as the Secretary of the Treasury may prescribe in regulations, including regulations for partial releases of the security by reason of increases in the adjusted funding target attainment percentage.
(B)
Prefunding balance or funding standard carryover balance may not be used
No prefunding balance or funding standard carryover balance under section 1083(f) of this title may be used under paragraph (1), (2), or (4) to satisfy any payment an employer may make under any such paragraph to avoid or terminate the application of any limitation under such paragraph.
(C)
Deemed reduction of funding balances
(i)
In general
Subject to clause (iii), in any case in which a benefit limitation under paragraph (1), (2), (3), or (4) would (but for this subparagraph and determined without regard to paragraph (1)(B), (2)(B), or (4)(B)) apply to such plan for the plan year, the plan sponsor of such plan shall be treated for purposes of this chapter as having made an election under section 1083(f) of this title to reduce the prefunding balance or funding standard carryover balance by such amount as is necessary for such benefit limitation to not apply to the plan for such plan year.
(ii)
Exception for insufficient funding balances
Clause (i) shall not apply with respect to a benefit limitation for any plan year if the application of clause (i) would not result in the benefit limitation not applying for such plan year.
(iii)
Restrictions of certain rules to collectively bargained plans
With respect to any benefit limitation under paragraph (1), (2), or (4), clause (i) shall only apply in the case of a plan maintained pursuant to 1 or more collective bargaining agreements between employee representatives and 1 or more employers.
(6)
New plans
Paragraphs (1), (2), and (4) shall not apply to a plan for the first 5 plan years of the plan. For purposes of this paragraph, the reference in this paragraph to a plan shall include a reference to any predecessor plan.
(7)
Presumed underfunding for purposes of benefit limitations
(A)
Presumption of continued underfunding
In any case in which a benefit limitation under paragraph (1), (2), (3), or (4) has been applied to a plan with respect to the plan year preceding the current plan year, the adjusted funding target attainment percentage of the plan for the current plan year shall be presumed to be equal to the adjusted funding target attainment percentage of the plan for the preceding plan year until the enrolled actuary of the plan certifies the actual adjusted funding target attainment percentage of the plan for the current plan year.
(B)
Presumption of underfunding after 10th month
In any case in which no certification of the adjusted funding target attainment percentage for the current plan year is made with respect to the plan before the first day of the 10th month of such year, for purposes of paragraphs (1), (2), (3), and (4), such first day shall be deemed, for purposes of such paragraph, to be the valuation date of the plan for the current plan year and the plan’s adjusted funding target attainment percentage shall be conclusively presumed to be less than 60 percent as of such first day.
(C)
Presumption of underfunding after 4th month for nearly underfunded plans
In any case in which—
(i)
a benefit limitation under paragraph (1), (2), (3), or (4) did not apply to a plan with respect to the plan year preceding the current plan year, but the adjusted funding target attainment percentage of the plan for such preceding plan year was not more than 10 percentage points greater than the percentage which would have caused such paragraph to apply to the plan with respect to such preceding plan year, and
(ii)
as of the first day of the 4th month of the current plan year, the enrolled actuary of the plan has not certified the actual adjusted funding target attainment percentage of the plan for the current plan year,
until the enrolled actuary so certifies, such first day shall be deemed, for purposes of such paragraph, to be the valuation date of the plan for the current plan year and the adjusted funding target attainment percentage of the plan as of such first day shall, for purposes of such paragraph, be presumed to be equal to 10 percentage points less than the adjusted funding target attainment percentage of the plan for such preceding plan year.
(8)
Treatment of plan as of close of prohibited or cessation period
For purposes of applying this part—
(A)
Operation of plan after period
Unless the plan provides otherwise, payments and accruals will resume effective as of the day following the close of the period for which any limitation of payment or accrual of benefits under paragraph (3) or (4) applies.
(B)
Treatment of affected benefits
Nothing in this paragraph shall be construed as affecting the plan’s treatment of benefits which would have been paid or accrued but for this subsection.
(9)
Terms relating to funding target attainment percentage
For purposes of this subsection—
(B)
Adjusted funding target attainment percentage
The term “adjusted funding target attainment percentage” means the funding target attainment percentage which is determined under subparagraph (A) by increasing each of the amounts under subparagraphs (A) and (B) of section 1083(d)(2) of this title by the aggregate amount of purchases of annuities for employees other than highly compensated employees (as defined in section 414(q) of title 26) which were made by the plan during the preceding 2 plan years.
(C)
Application to plans which are fully funded without regard to reductions for funding balances
In the case of a plan for any plan year, if the funding target attainment percentage is 100 percent or more (determined without regard to the reduction in the value of assets under section 1083(f)(4) of this title), the funding target attainment percentage for purposes of subparagraphs (A) and (B) shall be determined without regard to such reduction.
(10)
Secretarial authority for plans with alternate valuation date
In the case of a plan which has designated a valuation date other than the first day of the plan year, the Secretary of the Treasury may prescribe rules for the application of this subsection which are necessary to reflect the alternate valuation date.
[(11)
Repealed. [Pub. L. 113–295, div. A, title II, § 221(a)(57)(G)(ii)], Dec. 19, 2014, [128 Stat. 4047]]
(h)
Special rules applicable to benefit overpayments
(1)
General rule
In the case of an inadvertent benefit overpayment by any pension plan, the responsible plan fiduciary shall not be considered to have failed to comply with the requirements of this subchapter merely because such fiduciary determines, in the exercise of its discretion, not to seek recovery of all or part of such overpayment from—
(A)
any participant or beneficiary,
(B)
any plan sponsor of, or contributing employer to—
(i)
an individual account plan, provided that the amount needed to prevent or restore any impermissible forfeiture from any participant’s or beneficiary’s account arising in connection with the overpayment is, separately from and independently of the overpayment, allocated to such account pursuant to the nonforfeitability requirements of
section 1053 of this title (for example, out of the plan’s forfeiture account, additional employer contributions, or recoveries from those responsible for the overpayment), or
(ii)
a defined benefit pension plan subject to the funding rules in part 3 of this subtitle B, unless the responsible plan fiduciary determines, in the exercise of its fiduciary discretion, that failure to recover all or part of the overpayment faster than required under such funding rules would materially affect the plan’s ability to pay benefits due to other participants and beneficiaries, or
(C)
any fiduciary of the plan, other than a fiduciary (including a plan sponsor or contributing employer acting in a fiduciary capacity) whose breach of its fiduciary duties resulted in such overpayment, provided that if the plan has established prudent procedures to prevent and minimize overpayment of benefits and the relevant plan fiduciaries have followed such procedures, an inadvertent benefit overpayment will not give rise to a breach of fiduciary duty.
(2)
Reduction in future benefit payments and recovery from responsible party
Paragraph (1) shall not fail to apply with respect to any inadvertent benefit overpayment merely because, after discovering such overpayment, the responsible plan fiduciary—
(A)
reduces future benefit payments to the correct amount provided for under the terms of the plan, or
(B)
seeks recovery from the person or persons responsible for the overpayment.
(3)
Employer funding obligations
Nothing in this subsection shall relieve an employer of any obligation imposed on it to make contributions to a plan to meet the minimum funding standards under part 3 of this subtitle B or to prevent or restore an impermissible forfeiture in accordance with section 1053 of this title.
(4)
Recoupment from participants and beneficiaries
If the responsible plan fiduciary, in the exercise of its fiduciary discretion, decides to seek recoupment from a participant or beneficiary of all or part of an inadvertent benefit overpayment made by the plan to such participant or beneficiary, it may do so, subject to the following conditions:
(A)
No interest or other additional amounts (such as collection costs or fees) are sought on overpaid amounts for any period.
(B)
If the plan seeks to recoup past overpayments of a non-decreasing annuity by reducing future benefit payments—
(i)
the reduction ceases after the plan has recovered the full dollar amount of the overpayment,
(ii)
the amount recouped each calendar year does not exceed 10 percent of the full dollar amount of the overpayment, and
(iii)
future benefit payments are not reduced to below 90 percent of the periodic amount otherwise payable under the terms of the plan.
Alternatively, if the plan seeks to recoup past overpayments of a non-decreasing annuity through one or more installment payments, the sum of such installment payments in any calendar year does not exceed the sum of the reductions that would be permitted in such year under the preceding sentence.
(C)
If the plan seeks to recoup past overpayments of a benefit other than a non-decreasing annuity, the plan satisfies requirements developed by the Secretary of Labor for purposes of this subparagraph.
(D)
Efforts to recoup overpayments are—
(i)
not accompanied by threats of litigation, unless the responsible plan fiduciary makes a determination that there is a reasonable likelihood of success to recover an amount greater than the cost of recovery, and
(ii)
not made through a collection agency or similar third party, unless the participant or beneficiary ignores or rejects efforts to recoup the overpayment following either a final judgment in Federal or State court or a settlement between the participant or beneficiary and the plan, in either case authorizing such recoupment.
(E)
Recoupment of past overpayments to a participant is not sought from any beneficiary of the participant, including a spouse, surviving spouse, former spouse, or other beneficiary.
(F)
Recoupment may not be sought if the first overpayment occurred more than 3 years before the participant or beneficiary is first notified in writing of the error, except in the case of fraud or misrepresentation by the participant.
(G)
A participant or beneficiary from whom recoupment is sought is entitled to contest all or part of the recoupment pursuant to the claims procedures of the plan that made the overpayment to the extent such procedures are consistent with
section 1133 of this title and in the case of an inadvertent benefit overpayment from a plan to which paragraph (1) applies that is transferred to an eligible retirement plan (as defined in
section 402(c)(8)(B) of title 26) by or on behalf of a participant or beneficiary—
(i)
such plan shall notify the plan receiving the rollover of such dispute,
(ii)
the plan receiving the rollover shall retain such overpayment on behalf of the participant or beneficiary (and shall be entitled to treat such overpayment as plan assets) pending the outcome of such procedures, and
(iii)
the portion of such overpayment with respect to which recoupment is sought on behalf of the plan shall be permitted to be returned to such plan if it is determined to be an overpayment (and the plans making and receiving such transfer shall be treated as permitting such transfer).
(H)
In determining the amount of recoupment to seek, the responsible plan fiduciary may take into account the hardship that recoupment likely would impose on the participant or beneficiary.
(5)
Effect of culpability
Subparagraphs (A) through (F) of paragraph (4) shall not apply to protect a participant or beneficiary who is culpable. For purposes of this paragraph, a participant or beneficiary is culpable if the individual bears responsibility for the overpayment (such as through misrepresentations or omissions that led to the overpayment), or if the individual knew that the benefit payment or payments were materially in excess of the correct amount. Notwithstanding the preceding sentence, an individual is not culpable merely because the individual believed the benefit payment or payments were or might be in excess of the correct amount, if the individual raised that question with an authorized plan representative and was told the payment or payments were not in excess of the correct amount.
([Pub. L. 93–406, title I, § 206], Sept. 2, 1974, [88 Stat. 864]; [Pub. L. 98–397, title I, § 104(a)], Aug. 23, 1984, [98 Stat. 1433]; [Pub. L. 99–514, title XVIII, § 1898(c)(2)(B)], (4)(B), (5), (6)(B), (7)(B), Oct. 22, 1986, [100 Stat. 2952–2954]; [Pub. L. 101–239, title VII], §§ 7891(a)(1), 7894(c)(8), (9)(A), Dec. 19, 1989, [103 Stat. 2445], 2449; [Pub. L. 103–465, title VII], §§ 761(a)(9)(B)(i), 776(c)(2), Dec. 8, 1994, [108 Stat. 5033], 5048; [Pub. L. 105–34, title XV, § 1502(a)], Aug. 5, 1997, [111 Stat. 1058]; [Pub. L. 109–280, title I], §§ 103(a), 108(a)(9), (10), formerly § 107(a)(9), (10), title IV, § 410(b), Aug. 17, 2006, [120 Stat. 809], 819, 935, renumbered [Pub. L. 111–192, title II, § 202(a)], June 25, 2010, [124 Stat. 1297]; [Pub. L. 110–458, title I, § 101(c)(1)(B)]–(G), Dec. 23, 2008, [122 Stat. 5097]; [Pub. L. 111–192, title II, § 203(a)(1)], June 25, 2010, [124 Stat. 1299]; [Pub. L. 113–97, title I, § 102(b)(3)], Apr. 7, 2014, [128 Stat. 1116]; [Pub. L. 113–159, title II, § 2003(c)(2)], Aug. 8, 2014, [128 Stat. 1850]; [Pub. L. 113–295, div. A, title II, § 221(a)(57)(E)(ii)], (F)(ii), (G)(ii), Dec. 19, 2014, [128 Stat. 4046], 4047; [Pub. L. 117–328, div. T, title III], §§ 301(a), 339(b), Dec. 29, 2022, [136 Stat. 5335], 5375.)
