[Code of Federal Regulations]
[Title 29, Volume 9]
[Revised as of July 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 29CFR4041.42]

[Page 751-752]
 
                             TITLE 29--LABOR
 
                          GUARANTY CORPORATION
 
PART 4041--TERMINATION OF SINGLE-EMPLOYER PLANS--Table of Contents
 
                 Subpart C--Distress Termination Process
 
Sec. 4041.42  Administration of plan during termination process.

    (a) General rule. Except to the extent specifically prohibited by 
this section, during the pendency of termination proceedings the plan 
administrator must continue to carry out the normal operations of the 
plan, such as putting participants into pay status, collecting 
contributions due the plan, and investing plan assets.
    (b) Prohibitions after issuing notice of intent to terminate. The 
plan administrator may not make loans to plan participants beginning on 
the first day he or she issues a notice of intent to terminate, and from 
that date until a distribution is permitted pursuant to Sec. 4041.50, 
the plan administrator may not--

[[Page 752]]

    (1) Distribute plan assets pursuant to, or (except as required by 
this part) take any other actions to implement, the termination of the 
plan;
    (2) Pay benefits attributable to employer contributions, other than 
death benefits, in any form other than as an annuity; or
    (3) Purchase irrevocable commitments to provide benefits from an 
insurer.
    (c) Limitation on benefit payments on or after proposed termination 
date. Beginning on the proposed termination date, the plan administrator 
must reduce benefits to the level determined under part 4022, subpart D, 
of this chapter.
    (d) Failure to qualify for distress termination. In any case where 
the PBGC determines, pursuant to Sec. 4041.44(c) or Sec. 4041.46(c)(1), 
that the requirements for a distress termination are not satisfied--
    (1) The prohibitions in paragraph (b) of this section, other than 
those in paragraph (b)(1), will cease to apply--
    (i) Upon expiration of the period during which reconsideration may 
be requested under Secs. 4041.44(e) and 4041.46(e) or, if earlier, at 
the time the plan administrator decides not to request reconsideration; 
or
    (ii) If reconsideration is requested, upon PBGC issuance of its 
decision on reconsideration.
    (2) Any benefits that were not paid pursuant to paragraph (c) of 
this section will be due and payable as of the effective date of the 
PBGC's determination, together with interest from the date (or dates) on 
which the unpaid amounts were originally due until the date on which 
they are paid in full at the rate or rates prescribed under 
Sec. 4022.81(c)(3) of this chapter.
    (e) Effect of subsequent insufficiency. If the plan administrator 
makes a finding of subsequent insufficiency for guaranteed benefits 
pursuant to Sec. 4041.49(b), or the PBGC notifies the plan administrator 
that it has made a finding of subsequent insufficiency for guaranteed 
benefits pursuant to Sec. 4041.40(d), the prohibitions in paragraph (b) 
of this section will apply in accordance with Sec. 4041.49(e).

[62 FR 60428, Nov. 7, 1997, as amended at 63 FR 29355, May 29, 1998]