[Code of Federal Regulations]
[Title 29, Volume 9]
[Revised as of July 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 29CFR4022.81]

[Page 789-790]
 
                             TITLE 29--LABOR
 
            CHAPTER XL--PENSION BENEFIT GUARANTY CORPORATION
 
PART 4022_BENEFITS PAYABLE IN TERMINATED SINGLE-EMPLOYER PLANS
--Table of Contents
 
Subpart E_PBGC Recoupment and Reimbursement of Benefit Overpayments and 
                              Underpayments
 
Sec. 4022.81  General rules.


    (a) Recoupment of benefit overpayments. If at any time the PBGC 
determines that net benefits paid with respect to any participant in a 
PBGC-trusteed plan exceed the total amount to which the participant (and 
any beneficiary) is entitled up to that time under title IV of ERISA, 
and the participant (or beneficiary) is, as of the termination date, 
entitled to receive future benefit payments, the PBGC will recoup the 
net overpayment in accordance with paragraph (c) of this section and 
Sec. 4022.82. Notwithstanding the previous sentence, the PBGC may, in 
its discretion, recover overpayments by methods other than recouping in 
accordance with the rules in this subpart. The PBGC will not normally do 
so unless net benefits paid after the termination date exceed those to 
which a participant (and any beneficiary) is entitled under the terms of 
the plan before any reductions under subpart D.
    (b) Reimbursement of benefit underpayments. If at any time the PBGC 
determines that net benefits paid with respect to a participant in a 
PBGC-trusteed plan are less than the amount to which the participant 
(and any beneficiary) is entitled up to that time under title IV of 
ERISA, the PBGC will reimburse the participant or beneficiary for the 
net underpayment in accordance with paragraph (c) of this section and 
Sec. 4022.83.
    (c) Amount to be recouped or reimbursed. In order to determine the 
amount to be recouped from, or reimbursed to, a participant (or 
beneficiary), the PBGC will calculate a monthly account balance for each 
month ending after the termination date. The PBGC will start with a 
balance of zero as of the end of the calendar month ending immediately 
prior to the termination date and determine the account balance as of 
the end of each month thereafter as follows:
    (1) Debit for overpayments. The PBGC will subtract from the account 
balance the amount of overpayments made in that month. Only overpayments 
made on or after the latest of the proposed termination date, the 
termination date, or, if no notice of intent to terminate was issued, 
the date on which proceedings to terminate the plan are instituted 
pursuant to section 4042 of ERISA will be included.
    (2) Credit for underpayments. The PBGC will add to the account 
balance the amount of underpayments made in that month. Only 
underpayments made on or after the termination date will be included.
    (3) Credit for interest on net underpayments. If at the end of a 
month there is a positive account balance (a net underpayment), the PBGC 
will add to the account balance interest thereon for that month using--
    (i) For months after May 1998, the applicable federal mid-term rate 
(as determined by the Secretary of the Treasury pursuant to section 
1274(d)(1)(C)(ii) of the Code) for that month (or, where the rate for a 
month is not available at the time the PBGC calculates the amount to be 
recouped or reimbursed, the most recent month for which the rate is 
available) based on monthly compounding; and

[[Page 790]]

    (ii) For May 1998 and earlier months, the immediate annuity rate 
established for lump sum valuations as set forth in Table II of Appendix 
B of part 4044 of this chapter.
    (4) No interest on net overpayments. If at the end of a month, there 
is a negative account balance (a net overpayment), there will be no 
interest adjustment for that month.
    (d) Death of participant. (1) Benefit overpayments. If the PBGC 
determines that, at the time of a participant's death, there was a net 
overpayment to the participant--
    (i) Future annuity payments. If the participant was entitled to 
future annuity payments as of the plan's termination date, the PBGC will 
(except as provided in paragraph (a) of this section) recoup the 
overpayment from the person (if any) who is receiving survivor benefits 
under the annuity.
    (ii) No future annuity payments. If the participant was not entitled 
to future annuity benefits as of the plan's termination date, the PBGC 
may seek repayment of the overpayment from the participant's estate.
    (2) Benefit underpayments. If the PBGC determines that, at the time 
of a participant's death, there was a net underpayment to the 
participant--
    (i) Future annuity payments. If the benefit is in the form of a 
joint-and-survivor or other annuity under which payments may continue 
after the participant's death, the PBGC will pay the underpayment to the 
person who is receiving survivor benefits; for this purpose, if the 
person receiving survivor benefits is an alternate payee under a 
qualified domestic relations order, the PBGC will treat the benefit as 
if payments do not continue after the participant's death (see paragraph 
(d)(2)(ii) of this section).
    (ii) No future annuity payments. If the benefit is not in the form 
of a joint-and-survivor or other annuity (e.g., a certain-and-continuous 
annuity) under which payments may continue after the participant's death 
or although the benefit is in such a form payments do not continue after 
the participant's death (i.e., in the case of a joint-and-survivor 
annuity, the person designated to receive survivor benefits predeceased 
the participant or, in the case of another annuity under which payments 
may continue after the participant's death the participant died with no 
payments owed for future periods), the PBGC will pay the underpayment to 
the person determined under the rules in Sec. Sec. 4022.91 through 
4022.95.

[63 FR 29354, May 29, 1998, as amended at 67 FR 16956, Apr. 8, 2002]