29 U.S.C. § 1054 — Benefit accrual requirements

Page 414 TITLE 29—LABOR § 1054 104–188, set out as a note under section 401 of Title 26, Internal Revenue Code. PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989 For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Pub. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L. 99–514, as amended, set out as a note under section 401 of Title 26, Internal Revenue Code. § 1054. Benefit accrual requirements (a) Satisfaction of requirements by pension plans Each pension plan shall satisfy the require- ments of subsection (b)(3), and— (1) in the case of a defined benefit plan, shall satisfy the requirements of subsection (b)(1); and (2) in the case of a defined contribution plan, shall satisfy the requirements of subsection (b)(2). (b) Enumeration of plan requirements (1)(A) A defined benefit plan satisfies the re- quirements of this paragraph if the accrued ben- efit to which each participant is entitled upon his separation from the service is not less than— (i) 3 percent of the normal retirement ben- efit to which he would be entitled at the nor- mal retirement age if he commenced partici- pation at the earliest possible entry age under the plan and served continuously until the earlier of age 65 or the normal retirement age specified under the plan, multiplied by (ii) the number of years (not in excess of 331⁄3) of his participation in the plan. In the case of a plan providing retirement bene- fits based on compensation during any period, the normal retirement benefit to which a partic- ipant would be entitled shall be determined as if he continued to earn annually the average rate of compensation which he earned during con- secutive years of service, not in excess of 10, for which his compensation was the highest. For purposes of this subparagraph, social security benefits and all other relevant factors used to compute benefits shall be treated as remaining constant as of the current year for all years after such current year. (B) A defined benefit plan satisfies the require- ments of this paragraph of a particular plan year if under the plan the accrued benefit pay- able at the normal retirement age is equal to the normal retirement benefit and the annual rate at which any individual who is or could be a participant can accrue the retirement benefits payable at normal retirement age under the plan for any later plan year is not more than 1331⁄3 percent of the annual rate at which he can accrue benefits for any plan year beginning on or after such particular plan year and before such later plan year. For purposes of this sub- paragraph— (i) any amendment to the plan which is in effect for the current year shall be treated as in effect for all other plan years; (ii) any change in an accrual rate which does not apply to any individual who is or could be a participant in the current year shall be dis- regarded; (iii) the fact that benefits under the plan may be payable to certain employees before normal retirement age shall be disregarded; and (iv) social security benefits and all other rel- evant factors used to compute benefits shall be treated as remaining constant as of the cur- rent year for all years after the current year. (C) A defined benefit plan satisfies the require- ments of this paragraph if the accrued benefit to which any participant is entitled upon his sepa- ration from the service is not less than a frac- tion of the annual benefit commencing at nor- mal retirement age to which he would be enti- tled under the plan as in effect on the date of his separation if he continued to earn annually until normal retirement age the same rate of compensation upon which his normal retirement benefit would be computed under the plan, de- termined as if he had attained normal retire- ment age on the date any such determination is made (but taking into account no more than the 10 years of service immediately preceding his separation from service). Such fraction shall be a fraction, not exceeding 1, the numerator of which is the total number of his years of partici- pation in the plan (as of the date of his separa- tion from the service) and the denominator of which is the total number of years he would have participated in the plan if he separated from the service at the normal retirement age. For purposes of this subparagraph, social secu- rity benefits and all other relevant factors used to compute benefits shall be treated as remain- ing constant as of the current year for all years after such current year. (D) Subparagraphs (A), (B), and (C) shall not apply with respect to years of participation be- fore the first plan year to which this section ap- plies but a defined benefit plan satisfies the re- quirements of this subparagraph with respect to such years of participation only if the accrued benefit of any participant with respect to such years of participation is not less than the great- er of— (i) his accrued benefit determined under the plan, as in effect from time to time prior to September 2, 1974, or (ii) an accrued benefit which is not less than one-half of the accrued benefit to which such participant would have been entitled if sub- paragraph (A), (B), or (C) applied with respect to such years of participation. (E) Notwithstanding subparagraphs (A), (B), and (C) of this paragraph, a plan shall not be treated as not satisfying the requirements of this paragraph solely because the accrual of ben- efits under the plan does not become effective until the employee has two continuous years of service. For purposes of this subparagraph, the term ‘‘year of service’’ has the meaning provided by section 1052(a)(3)(A) of this title. (F) Notwithstanding subparagraphs (A), (B), and (C), a defined benefit plan satisfies the re- quirements of this paragraph if such plan (i) is funded exclusively by the purchase of insurance contracts, and Page 415 TITLE 29—LABOR § 1054 (ii) satisfies the requirements of paragraphs (2) and (3) of section 1081(b) of this title (relat- ing to certain insurance contract plans), but only if an employee’s accrued benefit as of any applicable date is not less than the cash sur- render value his insurance contracts would have on such applicable date if the requirements of paragraphs (4), (5), and (6) of section 1081(b) of this title were satisfied. (G) Notwithstanding the preceding subpara- graphs, a defined benefit plan shall be treated as not satisfying the requirements of this para- graph if the participant’s accrued benefit is re- duced on account of any increase in his age or service. The preceding sentence shall not apply to benefits under the plan commencing before benefits payable under title II of the Social Se- curity Act [42 U.S.C. 401 et seq.] which benefits under the plan— (i) do not exceed social security benefits, and (ii) terminate when such social security ben- efits commence. (H)(i) Notwithstanding the preceding subpara- graphs, a defined benefit plan shall be treated as not satisfying the requirements of this para- graph if, under the plan, an employee’s benefit accrual is ceased, or the rate of an employee’s benefit accrual is reduced, because of the attain- ment of any age. (ii) A plan shall not be treated as failing to meet the requirements of this subparagraph solely because the plan imposes (without regard to age) a limitation on the amount of benefits that the plan provides or a limitation on the number of years of service or years of participa- tion which are taken into account for purposes of determining benefit accrual under the plan. (iii) In the case of any employee who, as of the end of any plan year under a defined benefit plan, has attained normal retirement age under such plan— (I) if distribution of benefits under such plan with respect to such employee has commenced as of the end of such plan year, then any re- quirement of this subparagraph for continued accrual of benefits under such plan with re- spect to such employee during such plan year shall be treated as satisfied to the extent of the actuarial equivalent of in-service distribu- tion of benefits, and (II) if distribution of benefits under such plan with respect to such employee has not commenced as of the end of such year in ac- cordance with section 1056(a)(3) of this title, and the payment of benefits under such plan with respect to such employee is not sus- pended during such plan year pursuant to sec- tion 1053(a)(3)(B) of this title, then any re- quirement of this subparagraph for continued accrual of benefits under such plan with re- spect to such employee during such plan year shall be treated as satisfied to the extent of any adjustment in the benefit payable under the plan during such plan year attributable to the delay in the distribution of benefits after the attainment of normal retirement age. The preceding provisions of this clause shall apply in accordance with regulations of the Sec- retary of the Treasury. Such regulations may provide for the application of the preceding pro- visions of this clause, in the case of any such employee, with respect to any period of time within a plan year. (iv) Clause (i) shall not apply with respect to any employee who is a highly compensated em- ployee (within the meaning of section 414(q) of title 26) to the extent provided in regulations prescribed by the Secretary of the Treasury for purposes of precluding discrimination in favor of highly compensated employees within the mean- ing of subchapter D of chapter 1 of title 26. (v) A plan shall not be treated as failing to meet the requirements of clause (i) solely be- cause the subsidized portion of any early retire- ment benefit is disregarded in determining ben- efit accruals. (vi) Any regulations prescribed by the Sec- retary of the Treasury pursuant to clause (v) of section 411(b)(1)(H) of title 26 shall apply with respect to the requirements of this subpara- graph in the same manner and to the same ex- tent as such regulations apply with respect to the requirements of such section 411(b)(1)(H). (2)(A) A defined contribution plan satisfies the requirements of this paragraph if, under the plan, allocations to the employee’s account are not ceased, and the rate at which amounts are allocated to the employee’s account is not re- duced, because of the attainment of any age. (B) A plan shall not be treated as failing to meet the requirements of subparagraph (A) sole- ly because the subsidized portion of any early retirement benefit is disregarded in determining benefit accruals. (C) Any regulations prescribed by the Sec- retary of the Treasury pursuant to subpara- graphs (B) and (C) of section 411(b)(2) of title 26 shall apply with respect to the requirements of this paragraph in the same manner and to the same extent as such regulations apply with re- spect to the requirements of such section 411(b)(2). (3) A plan satisfies the requirements of this paragraph if— (A) in the case of a defined benefit plan, the plan requires separate accounting for the por- tion of each employee’s accrued benefit de- rived from any voluntary employee contribu- tions permitted under the plan; and (B) in the case of any plan which is not a de- fined benefit plan, the plan requires separate accounting for each employee’s accrued ben- efit. (4)(A) For purposes of determining an employ- ee’s accrued benefit, the term ‘‘year of partici- pation’’ means a period of service (beginning at the earliest date on which the employee is a par- ticipant in the plan and which is included in a period of service required to be taken into ac- count under section 1052(b) of this title, deter- mined without regard to section 1052(b)(5) of this title) as determined under regulations pre- scribed by the Secretary which provide for the calculation of such period on any reasonable and consistent basis. (B) For purposes of this paragraph, except as provided in subparagraph (C), in the case of any employee whose customary employment is less than full time, the calculation of such employ- ee’s service on any basis which provides less than a ratable portion of the accrued benefit to Page 416 TITLE 29—LABOR § 1054 1 So in original. Probably should be ‘‘similar account’’. which he would be entitled under the plan if his customary employment were full time shall not be treated as made on a reasonable and con- sistent basis. (C) For purposes of this paragraph, in the case of any employee whose service is less than 1,000 hours during any calendar year, plan year or other 12-consecutive-month period designated by the plan (and not prohibited under regulations prescribed by the Secretary) the calculation of his period of service shall not be treated as not made on a reasonable and consistent basis mere- ly because such service is not taken into ac- count. (D) In the case of any seasonal industry where the customary period of employment is less than 1,000 hours during a calendar year, the term ‘‘year of participation’’ shall be such pe- riod as determined under regulations prescribed by the Secretary. (E) For purposes of this subsection in the case of any maritime industry, 125 days of service shall be treated as a year of participation. The Secretary may prescribe regulations to carry out the purposes of this subparagraph. (5) SPECIAL RULES RELATING TO AGE.— (A) COMPARISON TO SIMILARLY SITUATED YOUNGER INDIVIDUAL.— (i) IN GENERAL.—A plan shall not be treat- ed as failing to meet the requirements of paragraph (1)(H)(i) if a participant’s accrued benefit, as determined as of any date under the terms of the plan, would be equal to or greater than that of any similarly situated, younger individual who is or could be a par- ticipant. (ii) SIMILARLY SITUATED.—For purposes of this subparagraph, a participant is similarly situated to any other individual if such par- ticipant is identical to such other individual in every respect (including period of service, compensation, position, date of hire, work history, and any other respect) except for age. (iii) DISREGARD OF SUBSIDIZED EARLY RE- TIREMENT BENEFITS.—In determining the ac- crued benefit as of any date for purposes of this subparagraph, the subsidized portion of any early retirement benefit or retirement- type subsidy shall be disregarded. (iv) ACCRUED BENEFIT.—For purposes of this subparagraph, the accrued benefit may, under the terms of the plan, be expressed as an annuity payable at normal retirement age, the balance of a hypothetical account, or the current value of the accumulated per- centage of the employee’s final average com- pensation. (B) APPLICABLE DEFINED BENEFIT PLANS.— (i) INTEREST CREDITS.— (I) IN GENERAL.—An applicable defined benefit plan shall be treated as failing to meet the requirements of paragraph (1)(H) unless the terms of the plan provide that any interest credit (or an equivalent amount) for any plan year shall be at a rate which is not greater than a market rate of return. A plan shall not be treated as failing to meet the requirements of this subclause merely because the plan pro- vides for a reasonable minimum guaran- teed rate of return or for a rate of return that is equal to the greater of a fixed or variable rate of return. (II) PRESERVATION OF CAPITAL.—An appli- cable defined benefit plan shall be treated as failing to meet the requirements of paragraph (1)(H) unless the plan provides that an interest credit (or equivalent amount) of less than zero shall in no event result in the account balance or similar amount being less than the aggregate amount of contributions credited to the account. (III) MARKET RATE OF RETURN.—The Sec- retary of the Treasury may provide by reg- ulation for rules governing the calculation of a market rate of return for purposes of subclause (I) and for permissible methods of crediting interest to the account (in- cluding fixed or variable interest rates) re- sulting in effective rates of return meeting the requirements of subclause (I). (ii) SPECIAL RULE FOR PLAN CONVERSIONS.— If, after June 29, 2005, an applicable plan amendment is adopted, the plan shall be treated as failing to meet the requirements of paragraph (1)(H) unless the requirements of clause (iii) are met with respect to each individual who was a participant in the plan immediately before the adoption of the amendment. (iii) RATE OF BENEFIT ACCRUAL.—Subject to clause (iv), the requirements of this clause are met with respect to any participant if the accrued benefit of the participant under the terms of the plan as in effect after the amendment is not less than the sum of— (I) the participant’s accrued benefit for years of service before the effective date of the amendment, determined under the terms of the plan as in effect before the amendment, plus (II) the participant’s accrued benefit for years of service after the effective date of the amendment, determined under the terms of the plan as in effect after the amendment. (iv) SPECIAL RULES FOR EARLY RETIREMENT SUBSIDIES.—For purposes of clause (iii)(I), the plan shall credit the accumulation ac- count or similar amount 1 with the amount of any early retirement benefit or retire- ment-type subsidy for the plan year in which the participant retires if, as of such time, the participant has met the age, years of service, and other requirements under the plan for entitlement to such benefit or sub- sidy. (v) APPLICABLE PLAN AMENDMENT.—For purposes of this subparagraph— (I) IN GENERAL.—The term ‘‘applicable plan amendment’’ means an amendment to a defined benefit plan which has the effect of converting the plan to an applicable de- fined benefit plan. (II) SPECIAL RULE FOR COORDINATED BENE- FITS.—If the benefits of 2 or more defined benefit plans established or maintained by Page 417 TITLE 29—LABOR § 1054 an employer are coordinated in such a manner as to have the effect of the adop- tion of an amendment described in sub- clause (I), the sponsor of the defined ben- efit plan or plans providing for such co- ordination shall be treated as having adopted such a plan amendment as of the date such coordination begins. (III) MULTIPLE AMENDMENTS.—The Sec- retary of the Treasury shall issue regula- tions to prevent the avoidance of the pur- poses of this subparagraph through the use of 2 or more plan amendments rather than a single amendment. (IV) APPLICABLE DEFINED BENEFIT PLAN.— For purposes of this subparagraph, the term ‘‘applicable defined benefit plan’’ has the meaning given such term by section 1053(f)(3) of this title. (vi) TERMINATION REQUIREMENTS.—An ap- plicable defined benefit plan shall not be treated as meeting the requirements of clause (i) unless the plan provides that, upon the termination of the plan— (I) if the interest credit rate (or an equivalent amount) under the plan is a variable rate, the rate of interest used to determine accrued benefits under the plan shall be equal to the average of the rates of interest used under the plan during the 5-year period ending on the termination date, and (II) the interest rate and mortality table used to determine the amount of any ben- efit under the plan payable in the form of an annuity payable at normal retirement age shall be the rate and table specified under the plan for such purpose as of the termination date, except that if such in- terest rate is a variable rate, the interest rate shall be determined under the rules of subclause (I). (C) CERTAIN OFFSETS PERMITTED.—A plan shall not be treated as failing to meet the re- quirements of paragraph (1)(H)(i) solely be- cause the plan provides offsets against bene- fits under the plan to the extent such offsets are otherwise allowable in applying the re- quirements of section 401(a) of title 26. (D) PERMITTED DISPARITIES IN PLAN CON- TRIBUTIONS OR BENEFITS.—A plan shall not be treated as failing to meet the requirements of paragraph (1)(H) solely because the plan pro- vides a disparity in contributions or benefits with respect to which the requirements of sec- tion 401(l) of title 26 are met. (E) INDEXING PERMITTED.— (i) IN GENERAL.—A plan shall not be treat- ed as failing to meet the requirements of paragraph (1)(H) solely because the plan pro- vides for indexing of accrued benefits under the plan. (ii) PROTECTION AGAINST LOSS.—Except in the case of any benefit provided in the form of a variable annuity, clause (i) shall not apply with respect to any indexing which re- sults in an accrued benefit less than the ac- crued benefit determined without regard to such indexing. (iii) INDEXING.—For purposes of this sub- paragraph, the term ‘‘indexing’’ means, in connection with an accrued benefit, the peri- odic adjustment of the accrued benefit by means of the application of a recognized in- vestment index or methodology. (F) EARLY RETIREMENT BENEFIT OR RETIRE- MENT-TYPE SUBSIDY.—For purposes of this paragraph, the terms ‘‘early retirement ben- efit’’ and ‘‘retirement-type subsidy’’ have the meaning given such terms in subsection (g)(2)(A). (G) BENEFIT ACCRUED TO DATE.—For purposes of this paragraph, any reference to the accrued benefit shall be a reference to such benefit ac- crued to date. (6) PROJECTED INTEREST CREDITING RATE.—For purposes of subparagraphs (A), (B), and (C) of paragraph (1), in the case of an applicable de- fined benefit plan (within the meaning of section 1053(f)(3) of this title) which provides variable interest crediting rates, the interest crediting rate which is treated as in effect and as the pro- jected interest crediting rate shall be a reason- able projection of such variable interest cred- iting rate, not to exceed 6 percent. (c) Employee’s accrued benefits derived from em- ployer and employee contributions (1) For purposes of this section and section 1053 of this title an employee’s accrued benefit derived from employer contributions as of any applicable date is the excess (if any) of the ac- crued benefit for such employee as of such appli- cable date over the accrued benefit derived from contributions made by such employee as of such date. (2)(A) In the case of a plan other than a de- fined benefit plan, the accrued benefit derived from contributions made by an employee as of any applicable date is— (i) except as provided in clause (ii), the bal- ance of the employee’s separate account con- sisting only of his contributions and the in- come, expenses, gains, and losses attributable thereto, or (ii) if a separate account is not maintained with respect to an employee’s contributions under such a plan, the amount which bears the same ratio to his total accrued benefit as the total amount of the employee’s contributions (less withdrawals) bears to the sum of such contributions and the contributions made on his behalf by the employer (less withdrawals). (B) DEFINED BENEFIT PLANS.—In the case of a defined benefit plan, the accrued benefit derived from contributions made by an employee as of any applicable date is the amount equal to the employee’s accumulated contributions expressed as an annual benefit commencing at normal re- tirement age, using an interest rate which would be used under the plan under section 1055(g)(3) of this title (as of the determination date). (C) For purposes of this subsection, the term ‘‘accumulated contributions’’ means the total of— (i) all mandatory contributions made by the employee, (ii) interest (if any) under the plan to the end of the last plan year to which section 1053(a)(2) of this title does not apply (by rea- son of the applicable effective date), and Page 418 TITLE 29—LABOR § 1054 (iii) interest on the sum of the amounts de- termined under clauses (i) and (ii) compounded annually— (I) at the rate of 120 percent of the Federal mid-term rate (as in effect under section 1274 of title 26 for the 1st month of a plan year for the period beginning with the 1st plan year to which subsection (a)(2) applies by reason of the applicable effective date) and ending with the date on which the deter- mination is being made, and (II) at the interest rate which would be used under the plan under section 1055(g)(3) of this title (as of the determination date) for the period beginning with the determina- tion date and ending on the date on which the employee attains normal retirement age. For purposes of this subparagraph, the term ‘‘mandatory contributions’’ means amounts con- tributed to the plan by the employee which are required as a condition of employment, as a con- dition of participation in such plan, or as a con- dition of obtaining benefits under the plan at- tributable to employer contributions. (D) The Secretary of the Treasury is author- ized to adjust by regulation the conversion fac- tor described in subparagraph (B) from time to time as he may deem necessary. No such adjust- ment shall be effective for a plan year beginning before the expiration of 1 year after such adjust- ment is determined and published. (3) For purposes of this section, in the case of any defined benefit plan, if an employee’s ac- crued benefit is to be determined as an amount other than an annual benefit commencing at normal retirement age, or if the accrued benefit derived from contributions made by an em- ployee is to be determined with respect to a ben- efit other than an annual benefit in the form of a single life annuity (without ancillary benefits) commencing at normal retirement age, the em- ployee’s accrued benefit, or the accrued benefits derived from contributions made by an em- ployee, as the case may be, shall be the actu- arial equivalent of such benefit or amount deter- mined under paragraph (1) or (2). (4) In the case of a defined benefit plan which permits voluntary employee contributions, the portion of an employee’s accrued benefit derived from such contributions shall be treated as an accrued benefit derived from employee contribu- tions under a plan other than a defined benefit plan. (d) Employee service which may be disregarded in determining employee’s accrued benefits under plan Notwithstanding section 1053(b)(1) of this title, for purposes of determining the employee’s ac- crued benefit under the plan, the plan may dis- regard service performed by the employee with respect to which he has received— (1) a distribution of the present value of his entire nonforfeitable benefit if such distribu- tion was in an amount (not more than the dol- lar limit under section 1053(e)(1) of this title) permitted under regulations prescribed by the Secretary of the Treasury, or (2) a distribution of the present value of his nonforfeitable benefit attributable to such service which he elected to receive. Paragraph (1) shall apply only if such distribu- tion was made on termination of the employee’s participation in the plan. Paragraph (2) shall apply only if such distribution was made on ter- mination of the employee’s participation in the plan or under such other circumstances as may be provided under regulations prescribed by the Secretary of the Treasury. (e) Opportunity to repay full amount of distribu- tions which have been reduced through dis- regarded employee service For purposes of determining the employee’s accrued benefit, the plan shall not disregard service as provided in subsection (d) unless the plan provides an opportunity for the participant to repay the full amount of a distribution de- scribed in subsection (d) with, in the case of a defined benefit plan, interest at the rate deter- mined for purposes of subsection (c)(2)(C) and provides that upon such repayment the employ- ee’s accrued benefit shall be recomputed by tak- ing into account service so disregarded. This subsection shall apply only in the case of a par- ticipant who— (1) received such a distribution in any plan year to which this section applies which dis- tribution was less than the present value of his accrued benefit, (2) resumes employment covered under the plan, and (3) repays the full amount of such distribu- tion with, in the case of a defined benefit plan, interest at the rate determined for purposes of subsection (c)(2)(C). The plan provision required under this sub- section may provide that such repayment must be made (A) in the case of a withdrawal on ac- count of separation from service, before the ear- lier of 5 years after the first date on which the participant is subsequently re-employed by the employer, or the close of the first period of 5 consecutive 1-year breaks in service com- mencing after the withdrawal; or (B) in the case of any other withdrawal, 5 years after the date of the withdrawal. (f) Employer treated as maintaining a plan For the purposes of this part, an employer shall be treated as maintaining a plan if any em- ployee of such employer accrues benefits under such plan by reason of service with such em- ployer. (g) Decrease of accrued benefits through amend- ment of plan (1) The accrued benefit of a participant under a plan may not be decreased by an amendment of the plan, other than an amendment described in section 1082(d)(2) or 1441 of this title. (2) For purposes of paragraph (1), a plan amendment which has the effect of— (A) eliminating or reducing an early retire- ment benefit or a retirement-type subsidy (as defined in regulations), or (B) eliminating an optional form of benefit, with respect to benefits attributable to service before the amendment shall be treated as reduc- ing accrued benefits. In the case of a retirement- type subsidy, the preceding sentence shall apply only with respect to a participant who satisfies Page 419 TITLE 29—LABOR § 1054 (either before or after the amendment) the preamendment conditions for the subsidy. The Secretary of the Treasury shall by regulations provide that this paragraph shall not apply to any plan amendment which reduces or elimi- nates benefits or subsidies which create signifi- cant burdens or complexities for the plan and plan participants, unless such amendment ad- versely affects the rights of any participant in a more than de minimis manner. The Secretary of the Treasury may by regulations provide that this subparagraph shall not apply to a plan amendment described in subparagraph (B) (other than a plan amendment having an effect de- scribed in subparagraph (A)). (3) For purposes of this subsection, any— (A) tax credit employee stock ownership plan (as defined in section 409(a) of title 26, or (B) employee stock ownership plan (as de- fined in section 4975(e)(7) of title 26), shall not be treated as failing to meet the re- quirements of this subsection merely because it modifies distribution options in a nondiscrim- inatory manner. (4)(A) A defined contribution plan (in this sub- paragraph referred to as the ‘‘transferee plan’’) shall not be treated as failing to meet the re- quirements of this subsection merely because the transferee plan does not provide some or all of the forms of distribution previously available under another defined contribution plan (in this subparagraph referred to as the ‘‘transferor plan’’) to the extent that— (i) the forms of distribution previously avail- able under the transferor plan applied to the account of a participant or beneficiary under the transferor plan that was transferred from the transferor plan to the transferee plan pur- suant to a direct transfer rather than pursu- ant to a distribution from the transferor plan; (ii) the terms of both the transferor plan and the transferee plan authorize the transfer de- scribed in clause (i); (iii) the transfer described in clause (i) was made pursuant to a voluntary election by the participant or beneficiary whose account was transferred to the transferee plan; (iv) the election described in clause (iii) was made after the participant or beneficiary re- ceived a notice describing the consequences of making the election; and (v) the transferee plan allows the participant or beneficiary described in clause (iii) to re- ceive any distribution to which the partici- pant or beneficiary is entitled under the trans- feree plan in the form of a single sum distribu- tion. (B) Subparagraph (A) shall apply to plan merg- ers and other transactions having the effect of a direct transfer, including consolidations of bene- fits attributable to different employers within a multiple employer plan. (5) Except to the extent provided in regula- tions promulgated by the Secretary of the Treasury, a defined contribution plan shall not be treated as failing to meet the requirements of this subsection merely because of the elimi- nation of a form of distribution previously avail- able thereunder. This paragraph shall not apply to the elimination of a form of distribution with respect to any participant unless— (A) a single sum payment is available to such participant at the same time or times as the form of distribution being eliminated; and (B) such single sum payment is based on the same or greater portion of the participant’s account as the form of distribution being eliminated. (h) Notice of significant reduction in benefit ac- cruals (1) An applicable pension plan may not be amended so as to provide for a significant reduc- tion in the rate of future benefit accrual unless the plan administrator provides the notice de- scribed in paragraph (2) to each applicable indi- vidual (and to each employee organization rep- resenting applicable individuals) and to each employer who has an obligation to contribute to the plan. (2) The notice required by paragraph (1) shall be written in a manner calculated to be under- stood by the average plan participant and shall provide sufficient information (as determined in accordance with regulations prescribed by the Secretary of the Treasury) to allow applicable individuals to understand the effect of the plan amendment. The Secretary of the Treasury may provide a simplified form of notice for, or ex- empt from any notice requirement, a plan— (A) which has fewer than 100 participants who have accrued a benefit under the plan, or (B) which offers participants the option to choose between the new benefit formula and the old benefit formula. (3) Except as provided in regulations pre- scribed by the Secretary of the Treasury, the no- tice required by paragraph (1) shall be provided within a reasonable time before the effective date of the plan amendment. (4) Any notice under paragraph (1) may be pro- vided to a person designated, in writing, by the person to which it would otherwise be provided. (5) A plan shall not be treated as failing to meet the requirements of paragraph (1) merely because notice is provided before the adoption of the plan amendment if no material modification of the amendment occurs before the amendment is adopted. (6)(A) In the case of any egregious failure to meet any requirement of this subsection with respect to any plan amendment, the provisions of the applicable pension plan shall be applied as if such plan amendment entitled all applicable individuals to the greater of— (i) the benefits to which they would have been entitled without regard to such amend- ment, or (ii) the benefits under the plan with regard to such amendment. (B) For purposes of subparagraph (A), there is an egregious failure to meet the requirements of this subsection if such failure is within the con- trol of the plan sponsor and is— (i) an intentional failure (including any fail- ure to promptly provide the required notice or information after the plan administrator dis- covers an unintentional failure to meet the re- quirements of this subsection), (ii) a failure to provide most of the individ- uals with most of the information they are en- titled to receive under this subsection, or Page 420 TITLE 29—LABOR § 1054 (iii) a failure which is determined to be egre- gious under regulations prescribed by the Sec- retary of the Treasury. (7) The Secretary of the Treasury may by reg- ulations allow any notice under this subsection to be provided by using new technologies. (8) For purposes of this subsection— (A) The term ‘‘applicable individual’’ means, with respect to any plan amendment— (i) each participant in the plan; and (ii) any beneficiary who is an alternate payee (within the meaning of section 1056(d)(3)(K) of this title) under an applicable qualified domestic relations order (within the meaning of section 1056(d)(3)(B)(i) of this title), whose rate of future benefit accrual under the plan may reasonably be expected to be signifi- cantly reduced by such plan amendment. (B) The term ‘‘applicable pension plan’’ means— (i) any defined benefit plan; or (ii) an individual account plan which is subject to the funding standards of section 412 of title 26. (9) For purposes of this subsection, a plan amendment which eliminates or reduces any early retirement benefit or retirement-type sub- sidy (within the meaning of subsection (g)(2)(A)) shall be treated as having the effect of reducing the rate of future benefit accrual. (i) Prohibition on benefit increases where plan sponsor is in bankruptcy (1) In the case of a plan described in paragraph (3) which is maintained by an employer that is a debtor in a case under title 11 or similar Fed- eral or State law, no amendment of the plan which increases the liabilities of the plan by reason of— (A) any increase in benefits, (B) any change in the accrual of benefits, or (C) any change in the rate at which benefits become nonforfeitable under the plan, with respect to employees of the debtor, shall be effective prior to the effective date of such em- ployer’s plan of reorganization. (2) Paragraph (1) shall not apply to any plan amendment that— (A) the Secretary of the Treasury deter- mines to be reasonable and that provides for only de minimis increases in the liabilities of the plan with respect to employees of the debtor, (B) only repeals an amendment described in section 1082(d)(2) of this title, (C) is required as a condition of qualification under part I of subchapter D of chapter 1 of title 26, or (D) was adopted prior to, or pursuant to a collective bargaining agreement entered into prior to, the date on which the employer be- came a debtor in a case under title 11 or simi- lar Federal or State law. (3) This subsection shall apply only to plans (other than multiemployer plans or CSEC plans) covered under section 1321 of this title for which the funding target attainment percentage (as defined in section 1083(d)(2) of this title) is less than 100 percent after taking into account the effect of the amendment. (4) For purposes of this subsection, the term ‘‘employer’’ has the meaning set forth in section 1082(b)(1) of this title, without regard to section 1082(b)(2) of this title. (j) Diversification requirements for certain indi- vidual account plans (1) In general An applicable individual account plan shall meet the diversification requirements of para- graphs (2), (3), and (4). (2) Employee contributions and elective defer- rals invested in employer securities In the case of the portion of an applicable in- dividual’s account attributable to employee contributions and elective deferrals which is invested in employer securities, a plan meets the requirements of this paragraph if the ap- plicable individual may elect to direct the plan to divest any such securities and to rein- vest an equivalent amount in other invest- ment options meeting the requirements of paragraph (4). (3) Employer contributions invested in em- ployer securities In the case of the portion of the account at- tributable to employer contributions other than elective deferrals which is invested in employer securities, a plan meets the require- ments of this paragraph if each applicable in- dividual who— (A) is a participant who has completed at least 3 years of service, or (B) is a beneficiary of a participant de- scribed in subparagraph (A) or of a deceased participant, may elect to direct the plan to divest any such securities and to reinvest an equivalent amount in other investment options meeting the requirements of paragraph (4). (4) Investment options (A) In general The requirements of this paragraph are met if the plan offers not less than 3 invest- ment options, other than employer securi- ties, to which an applicable individual may direct the proceeds from the divestment of employer securities pursuant to this sub- section, each of which is diversified and has materially different risk and return charac- teristics. (B) Treatment of certain restrictions and conditions (i) Time for making investment choices A plan shall not be treated as failing to meet the requirements of this paragraph merely because the plan limits the time for divestment and reinvestment to peri- odic, reasonable opportunities occurring no less frequently than quarterly. (ii) Certain restrictions and conditions not allowed Except as provided in regulations, a plan shall not meet the requirements of this paragraph if the plan imposes restrictions Page 421 TITLE 29—LABOR § 1054 or conditions with respect to the invest- ment of employer securities which are not imposed on the investment of other assets of the plan. This subparagraph shall not apply to any restrictions or conditions im- posed by reason of the application of secu- rities laws. (5) Applicable individual account plan For purposes of this subsection— (A) In general The term ‘‘applicable individual account plan’’ means any individual account plan (as defined in section 1002(34) of this title) which holds any publicly traded employer securi- ties. (B) Exception for certain ESOPS Such term does not include an employee stock ownership plan if— (i) there are no contributions to such plan (or earnings thereunder) which are held within such plan and are subject to subsection (k) or (m) of section 401 of title 26, and (ii) such plan is a separate plan (for pur- poses of section 414(l) of title 26) with re- spect to any other defined benefit plan or individual account plan maintained by the same employer or employers. (C) Exception for one participant plans Such term shall not include a one-partici- pant retirement plan (as defined in section 1021(i)(8)(B) of this title). (D) Certain plans treated as holding publicly traded employer securities (i) In general Except as provided in regulations or in clause (ii), a plan holding employer securi- ties which are not publicly traded em- ployer securities shall be treated as hold- ing publicly traded employer securities if any employer corporation, or any member of a controlled group of corporations which includes such employer corporation, has issued a class of stock which is a pub- licly traded employer security. (ii) Exception for certain controlled groups with publicly traded securities Clause (i) shall not apply to a plan if— (I) no employer corporation, or parent corporation of an employer corporation, has issued any publicly traded employer security, and (II) no employer corporation, or parent corporation of an employer corporation, has issued any special class of stock which grants particular rights to, or bears particular risks for, the holder or issuer with respect to any corporation described in clause (i) which has issued any publicly traded employer security. (iii) Definitions For purposes of this subparagraph, the term— (I) ‘‘controlled group of corporations’’ has the meaning given such term by sec- tion 1563(a) of title 26, except that ‘‘50 percent’’ shall be substituted for ‘‘80 per- cent’’ each place it appears, (II) ‘‘employer corporation’’ means a corporation which is an employer main- taining the plan, and (III) ‘‘parent corporation’’ has the meaning given such term by section 424(e) of title 26. (6) Other definitions For purposes of this paragraph— (A) Applicable individual The term ‘‘applicable individual’’ means— (i) any participant in the plan, and (ii) any beneficiary who has an account under the plan with respect to which the beneficiary is entitled to exercise the rights of a participant. (B) Elective deferral The term ‘‘elective deferral’’ means an em- ployer contribution described in section 402(g)(3)(A) of title 26. (C) Employer security The term ‘‘employer security’’ has the meaning given such term by section 1107(d)(1) of this title. (D) Employee stock ownership plan The term ‘‘employee stock ownership plan’’ has the meaning given such term by section 4975(e)(7) of title 26. (E) Publicly traded employer securities The term ‘‘publicly traded employer secu- rities’’ means employer securities which are readily tradable on an established securities market. (F) Year of service The term ‘‘year of service’’ has the mean- ing given such term by section 1053(b)(2) of this title. (7) Transition rule for securities attributable to employer contributions (A) Rules phased in over 3 years (i) In general In the case of the portion of an account to which paragraph (3) applies and which consists of employer securities acquired in a plan year beginning before January 1, 2007, paragraph (3) shall only apply to the applicable percentage of such securities. This subparagraph shall be applied sepa- rately with respect to each class of securi- ties. (ii) Exception for certain participants aged 55 or over Clause (i) shall not apply to an applica- ble individual who is a participant who has attained age 55 and completed at least 3 years of service before the first plan year beginning after December 31, 2005. (B) Applicable percentage For purposes of subparagraph (A), the ap- plicable percentage shall be determined as follows: Plan year to which paragraph (3) applies: The applicable percentage is: 1st .............................................. 33 Page 422 TITLE 29—LABOR § 1054 Plan year to which paragraph (3) applies: The applicable percentage is: 2d ............................................... 66 3d ............................................... 100. (k) Special rule for determining normal retire- ment age for certain existing defined benefit plans (1) In general Notwithstanding section 1002(24) of this title, an applicable plan shall not be treated as failing to meet any requirement of this sub- chapter, or as failing to have a uniform nor- mal retirement age for purposes of this sub- chapter, solely because the plan provides for a normal retirement age described in paragraph (2). (2) Applicable plan For purposes of this subsection— (A) In general The term ‘‘applicable plan’’ means a de- fined benefit plan the terms of which, on or before December 8, 2014, provided for a nor- mal retirement age which is the earlier of— (i) an age otherwise permitted under sec- tion 1002(24) of this title, or (ii) the age at which a participant com- pletes the number of years (not less than 30 years) of benefit accrual service speci- fied by the plan. A plan shall not fail to be treated as an ap- plicable plan solely because the normal re- tirement age described in the preceding sen- tence only applied to certain participants or only applied to employees of certain employ- ers in the case of a plan maintained by more than 1 employer. (B) Expanded application Subject to subparagraph (C), if, after De- cember 8, 2014, an applicable plan is amended to expand the application of the normal re- tirement age described in subparagraph (A) to additional participants or to employees of additional employers maintaining the plan, such plan shall also be treated as an applica- ble plan with respect to such participants or employees. (C) Limitation on expanded application A defined benefit plan shall be an applica- ble plan only with respect to an individual who— (i) is a participant in the plan on or be- fore January 1, 2017, or (ii) is an employee at any time on or be- fore January 1, 2017, of any employer maintaining the plan, and who becomes a participant in such plan after such date. (l) Cross reference For special rules relating to plan provisions adopted to preclude discrimination, see section 1053(c)(2) of this title. (Pub. L. 93–406, title I, § 204, Sept. 2, 1974, 88 Stat. 858; Pub. L. 98–397, title I, §§ 102(e)(3), (f), 105(b), title III, § 301(a)(2), Aug. 23, 1984, 98 Stat. 1429, 1436, 1451; Pub. L. 99–272, title XI, § 11006(a), Apr. 7, 1986, 100 Stat. 243; Pub. L. 99–509, title IX, § 9202(a), Oct. 21, 1986, 100 Stat. 1975; Pub. L. 99–514, title XI, § 1113(e)(4)(B), title XVIII, §§ 1879(u)(1), 1898(a)(4)(B)(ii), (f)(1)(B), (2), Oct. 22, 1986, 100 Stat. 2448, 2913, 2944, 2956; Pub. L. 100–203, title IX, § 9346(a), Dec. 22, 1987, 101 Stat. 1330–374; Pub. L. 101–239, title VII, §§ 7862(b)(1)(A), (2), 7871(a)(1), (3), 7881(m)(2)(A)–(C), 7891(a)(1), 7894(c)(4)–(6), Dec. 19, 1989, 103 Stat. 2432, 2434, 2435, 2444, 2445, 2449; Pub. L. 103–465, title VII, § 766(a), Dec. 8, 1994, 108 Stat. 5036; Pub. L. 105–34, title X, § 1071(b)(2), Aug. 5, 1997, 111 Stat. 948; Pub. L. 107–16, title VI, §§ 645(a)(2), (b)(2), 659(b), June 7, 2001, 115 Stat. 124, 125, 139; Pub. L. 107–147, title IV, § 411(u)(2), Mar. 9, 2002, 116 Stat. 52; Pub. L. 109–280, title I, § 108(a)(5)–(8), formerly § 107(a)(5)–(8), title V, § 502(c)(1), title VII, § 701(a)(1), title IX, § 901(b)(1), Aug. 17, 2006, 120 Stat. 819, 941, 981, 1029, renumbered Pub. L. 111–192, title II, § 202(a), June 25, 2010, 124 Stat. 1297; Pub. L. 110–458, title I, § 107(a)(2), (3), Dec. 23, 2008, 122 Stat. 5107; Pub. L. 113–97, title I, § 102(b)(4), Apr. 7, 2014, 128 Stat. 1116; Pub. L. 113–235, div. P, § 2(a), Dec. 16, 2014, 128 Stat. 2827; Pub. L. 117–328, div. T, title III, § 348(b), Dec. 29, 2022, 136 Stat. 5385.) Editorial Notes REFERENCES IN TEXT The Social Security Act, referred to in subsec. (b)(1)(G), is act Aug. 14, 1935, ch. 531, 49 Stat. 620. Title II of the Social Security Act is classified generally to subchapter II (§ 401 et seq.) of chapter 7 of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see section 1305 of Title 42 and Tables. AMENDMENTS 2022—Subsec. (b)(6). Pub. L. 117–328 added par. (6). 2014—Subsec. (i)(3). Pub. L. 113–97 substituted ‘‘multi- employer plans or CSEC plans’’ for ‘‘multiemployer plans’’. Subsecs. (k), (l). Pub. L. 113–235 added subsec. (k) and redesignated former subsec. (k) as (l). 2008—Subsec. (b)(5)(A)(iii). Pub. L. 110–458, § 107(a)(2)(A), substituted ‘‘subparagraph’’ for ‘‘clause’’. Subsec. (b)(5)(B)(i)(II). Pub. L. 110–458, § 107(a)(3), amended subcl. (II) generally. Prior to amendment, text read as follows: ‘‘An interest credit (or an equiva- lent amount) of less than zero shall in no event result in the account balance or similar amount being less than the aggregate amount of contributions credited to the account.’’ Subsec. (b)(5)(C). Pub. L. 110–458, § 107(a)(2)(B), in- serted ‘‘otherwise’’ before ‘‘allowable’’. 2006—Subsec. (b)(5). Pub. L. 109–280, § 701(a)(1), added par. (5). Subsec. (g)(1). Pub. L. 109–280, § 108(a)(5), formerly § 107(a)(5), as renumbered by Pub. L. 111–192, substituted ‘‘1082(d)(2)’’ for ‘‘1082(c)(8)’’. Subsec. (h)(1). Pub. L. 109–280, § 502(c)(1), inserted be- fore period at end ‘‘and to each employer who has an obligation to contribute to the plan’’. Subsec. (i)(2)(B). Pub. L. 109–280, § 108(a)(6), formerly § 107(a)(6), as renumbered by Pub. L. 111–192, substituted ‘‘1082(d)(2)’’ for ‘‘1082(c)(8)’’. Subsec. (i)(3). Pub. L. 109–280, § 108(a)(7), formerly § 107(a)(7), as renumbered by Pub. L. 111–192, substituted ‘‘funding target attainment percentage (as defined in section 1083(d)(2) of this title)’’ for ‘‘funded current li- ability percentage (within the meaning of section 1082(d)(8) of this title)’’. Subsec. (i)(4). Pub. L. 109–280, § 108(a)(8), formerly § 107(a)(8), as renumbered by Pub. L. 111–192, substituted ‘‘section 1082(b)(1) of this title, without regard to sec- tion 1082(b)(2) of this title’’ for ‘‘section 1082(c)(11)(A) of Page 423 TITLE 29—LABOR § 1054 this title, without regard to section 1082(c)(11)(B) of this title’’. Subsecs. (j), (k). Pub. L. 109–280, § 901(b)(1), added sub- sec. (j) and redesignated former subsec. (j) as (k). 2002—Subsec. (h)(9). Pub. L. 107–147 struck out ‘‘sig- nificantly’’ before ‘‘reduces’’ and before ‘‘reducing’’. 2001—Subsec. (g)(2). Pub. L. 107–16, § 645(b)(2), inserted after second sentence ‘‘The Secretary of the Treasury shall by regulations provide that this paragraph shall not apply to any plan amendment which reduces or eliminates benefits or subsidies which create signifi- cant burdens or complexities for the plan and plan par- ticipants, unless such amendment adversely affects the rights of any participant in a more than de minimis manner.’’ Subsec. (g)(4), (5). Pub. L. 107–16, § 645(a)(2), added pars. (4) and (5). Subsec. (h). Pub. L. 107–16, § 659(b), amended subsec. (h) generally. Prior to amendment, subsec. (h) read as follows: ‘‘(1) A plan described in paragraph (2) may not be amended so as to provide for a significant reduction in the rate of future benefit accrual, unless, after adop- tion of the plan amendment and not less than 15 days before the effective date of the plan amendment, the plan administrator provides a written notice, setting forth the plan amendment and its effective date, to— ‘‘(A) each participant in the plan, ‘‘(B) each beneficiary who is an alternate payee (within the meaning of section 1056(d)(3)(K) of this title) under an applicable qualified domestic relations order (within the meaning of section 1056(d)(3)(B)(i) of this title), and ‘‘(C) each employee organization representing par- ticipants in the plan, except that such notice shall instead be provided to a person designated, in writing, to receive such notice on behalf of any person referred to in subparagraph (A), (B), or (C). ‘‘(2) A plan is described in this paragraph if such plan is— ‘‘(A) a defined benefit plan, or ‘‘(B) an individual account plan which is subject to the funding standards of section 1082 of this title.’’ 1997—Subsec. (d)(1). Pub. L. 105–34 substituted ‘‘the dollar limit under section 1053(e)(1) of this title’’ for ‘‘$3,500’’. 1994—Subsecs. (i), (j). Pub. L. 103–465 added subsec. (i) and redesignated former subsec. (i) as (j). 1989—Subsec. (b)(1)(A). Pub. L. 101–239, § 7894(c)(4), substituted ‘‘subparagraph’’ for ‘‘suparagraph’’ in last sentence. Subsec. (b)(1)(E). Pub. L. 101–239, § 7894(c)(5), sub- stituted ‘‘term ‘year of service’ ’’ for ‘‘term ‘years of service’ ’’. Subsec. (b)(2)(B). Pub. L. 101–239, § 7871(a)(1), redesig- nated subpar. (C) as (B) and struck out former subpar. (B) which read as follows: ‘‘Subparagraph (A) shall not apply with respect to any employee who is a highly compensated employee (within the meaning of section 414(q) of title 26) to the extent provided in regulations prescribed by the Secretary of the Treasury for pur- poses of precluding discrimination in favor of highly compensated employees within the meaning of sub- chapter D of chapter 1 of title 26.’’ Subsec. (b)(2)(C). Pub. L. 101–239, § 7871(a)(3), sub- stituted ‘‘subparagraphs (B) and (C)’’ for ‘‘subpara- graphs (C) and (D)’’. Pub. L. 101–239, § 7871(a)(1), redesignated subpar. (D) as (C). Former subpar. (C) redesignated (B). Subsec. (b)(2)(D). Pub. L. 101–239, § 7871(a)(1), redesig- nated subpar. (D) as (C). Subsec. (c)(2)(B). Pub. L. 101–239, § 7881(m)(2)(B), in- serted heading and amended text generally. Prior to amendment, text read as follows: ‘‘(i) In the case of a defined benefit plan providing an annual benefit in the form of a single life annuity (without ancillary benefits) commencing at normal re- tirement age, the accrued benefit derived from con- tributions made by an employee as of any applicable date is the annual benefit equal to the employee’s accu- mulated contributions multiplied by the appropriate conversion factor. ‘‘(ii) For purposes of clause (i), the term ‘appropriate conversion factor’ means the factor necessary to con- vert an amount equal to the accumulated contributions to a single life annuity (without ancillary benefits) commencing at normal retirement age and shall be 10 percent for a normal retirement age of 65 years. For other normal retirement ages the conversion factor shall be determined in accordance with regulations pre- scribed by the Secretary of the Treasury or his dele- gate.’’ Subsec. (c)(2)(C)(iii). Pub. L. 101–239, § 7881(m)(2)(A), amended cl. (iii) generally. Prior to amendment, cl. (iii) read as follows: ‘‘interest on the sum of the amounts determined under clauses (i) and (ii) com- pounded annually at the rate of 120 percent of the Fed- eral mid-term rate (as in effect under section 1274 of title 26 for the 1st month of a plan year) from the be- ginning of the first plan year to which section 1053(a)(2) of this title applies (by reason of the applicable effec- tive date) to the date upon which the employee would attain normal retirement age.’’ Subsec. (c)(2)(E). Pub. L. 101–239, § 7881(m)(2)(C), struck out subpar. (E) which read as follows: ‘‘The ac- crued benefit derived from employee contributions shall not exceed the greater of— ‘‘(i) the employee’s accrued benefit under the plan, or ‘‘(ii) the accrued benefit derived from employee contributions determined as though the amounts cal- culated under clauses (ii) and (iii) of subparagraph (C) were zero.’’ Subsec. (d). Pub. L. 101–239, § 7894(c)(6), removed the indentation of the term ‘‘Paragraph’’ where first ap- pearing in concluding provisions. Subsec. (g)(3)(A). Pub. L. 101–239, § 7891(a)(1), sub- stituted ‘‘Internal Revenue Code of 1986’’ for ‘‘Internal Revenue Code of 1954’’, which for purposes of codifica- tion was translated as ‘‘title 26’’ thus requiring no change in text. Subsec. (h). Pub. L. 101–239, § 7862(b)(1)(A), made tech- nical correction to directory language of Pub. L. 99–514, § 1879(u)(1), see 1986 Amendment note below. Subsec. (h)(2). Pub. L. 101–239, § 7862(b)(2), adjusted left-hand margin of introductory provisions to full measure. 1987—Subsec. (c)(2)(C)(iii). Pub. L. 100–203, § 9346(a)(1), substituted ‘‘120 percent of the Federal mid-term rate (as in effect under section 1274 of title 26 for the 1st month of a plan year)’’ for ‘‘5 percent per annum’’. Subsec. (c)(2)(D). Pub. L. 100–203, § 9346(a)(2), struck out ‘‘, the rate of interest described in clause (iii) of subparagraph (C), or both,’’ before ‘‘from time to time’’ in first sentence and struck out second sentence which read as follows: ‘‘The rate of interest shall bear the re- lationship to 5 percent which the Secretary of the Treasury determines to be comparable to the relation- ship which the long-term money rates and investment yields for the last period of 10 calendar years ending at least 12 months before the beginning of the plan year bear to the long-term money rates and investment yields for the 10-calendar year period 1964 through 1973.’’ 1986—Subsec. (a). Pub. L. 99–509, § 9202(a)(1), amended subsec. (a) generally. Prior to amendment, subsec. (a) read as follows: ‘‘Each pension plan shall satisfy the re- quirements of subsection (b)(2), and in the case of a de- fined benefit plan shall also satisfy the requirements of subsection (b)(1).’’ Subsec. (b)(1)(H). Pub. L. 99–509, § 9202(a)(2), added subpar. (H). Subsec. (b)(2) to (4). Pub. L. 99–509, § 9202(a)(3), added par. (2) and redesignated former pars. (2) and (3) as (3) and (4), respectively. Subsec. (e). Pub. L. 99–514, § 1898(a)(4)(B)(ii), inserted last sentence and struck out former last sentence which read as follows: ‘‘In the case of a defined con- tribution plan, the plan provision required under this Page 424 TITLE 29—LABOR § 1054 subsection may provide that such repayment must be made before the participant has 5 consecutive 1-year breaks in service commencing after such withdrawal’’. Subsec. (g)(1). Pub. L. 99–514, § 1898(f)(2), inserted ref- erence to section 1441. Subsec. (g)(3). Pub. L. 99–514, § 1898(f)(1)(B), added par. (3). Subsec. (h). Pub. L. 99–514, § 1879(u)(1), as amended by Pub. L. 101–239, § 7862(b)(1)(A), designated existing pro- visions as par. (1), substituted ‘‘plan described in para- graph (2)’’ for ‘‘single-employer plan’’, redesignated former pars. (1) to (3) as subpars. (A) to (C), respec- tively, substituted ‘‘subparagraph (A), (B), or (C)’’ for ‘‘paragraph (1), (2), or (3)’’ in concluding provisions, and added par. (2). Pub. L. 99–272 added subsec. (h). Former subsec. (h) redesignated (i). Subsec. (i). Pub. L. 99–514, § 1113(e)(4)(B), amended subsec. (i) generally, striking out reference to class year plans under section 1053(c)(3) of this title. Pub. L. 99–272 redesignated former subsec. (h) as (i). 1984—Subsec. (b)(3)(A). Pub. L. 98–397, § 102(e)(3), in- serted ‘‘, determined without regard to section 1052(b)(5) of this title’’ after ‘‘section 1052(b) of this title’’. Subsec. (d)(1). Pub. L. 98–397, § 105(b), substituted ‘‘$3,500’’ for ‘‘$1,750’’. Subsec. (e). Pub. L. 98–397, § 102(f), substituted ‘‘5 con- secutive 1-year breaks in service’’ for ‘‘any 1-year break in service’’. Subsec. (g). Pub. L. 98–397, § 301(a)(2), designated ex- isting provisions as par. (1) and added par. (2). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2022 AMENDMENT Amendment by Pub. L. 117–328 applicable with re- spect to plan years beginning after Dec. 29, 2022, see section 348(c) of Pub. L. 117–328, set out as a note under section 411 of Title 26, Internal Revenue Code. EFFECTIVE DATE OF 2014 AMENDMENT Amendment by Pub. L. 113–235 applicable to all peri- ods before, on, and after Dec. 16, 2014, see section 2(c) of div. P of Pub. L. 113–235, set out as a note under section 411 of Title 26, Internal Revenue Code. Amendment by Pub. L. 113–97 applicable to years be- ginning after Dec. 31, 2013, see section 3 of Pub. L. 113–97, set out as a note under section 401 of Title 26, In- ternal Revenue Code. EFFECTIVE DATE OF 2008 AMENDMENT Amendment by Pub. L. 110–458 effective as if included in the provisions of Pub. L. 109–280 to which the amend- ment relates, except as otherwise provided, see section 112 of Pub. L. 110–458, set out as a note under section 72 of Title 26, Internal Revenue Code. EFFECTIVE DATE OF 2006 AMENDMENT Amendment by section 108(a)(5) to (8) of Pub. L. 109–280 applicable to plan years beginning after 2007, see section 108(e) of Pub. L. 109–280, set out as a note under section 1021 of this title. Amendment by section 502(c)(1) of Pub. L. 109–280 ap- plicable to plan years beginning after Dec. 31, 2007, see section 502(d) of Pub. L. 109–280, set out as a note under section 4980F of Title 26, Internal Revenue Code. Amendment by section 701(a)(1) of Pub. L. 109–280 ap- plicable to periods beginning on or after June 29, 2005, with provisions relating to vesting and interest credit requirements for plans in existence on June 29, 2005, special rule for collectively bargained plans, and provi- sions relating to conversions of plan amendments adopted after, and taking effect after, June 29, 2005, see section 701(e) of Pub. L. 109–280, set out as a note under section 411 of Title 26, Internal Revenue Code. Amendment by section 901(b)(1) of Pub. L. 109–280 ap- plicable to plan years beginning after Dec. 31, 2006, with special rules for collectively bargained agreements and certain employer securities held in an ESOP, see sec- tion 901(c) of Pub. L. 109–280, set out as a note under section 401 of Title 26, Internal Revenue Code. EFFECTIVE DATE OF 2002 AMENDMENT Amendment by Pub. L. 107–147 effective as if included in the provisions of the Economic Growth and Tax Re- lief Reconciliation Act of 2001, Pub. L. 107–16, to which such amendment relates, see section 411(x) of Pub. L. 107–147, set out as a note under section 25B of Title 26, Internal Revenue Code. EFFECTIVE DATE OF 2001 AMENDMENT Amendment by section 645(a)(2) of Pub. L. 107–16 ap- plicable to years beginning after Dec. 31, 2001, see sec- tion 645(a)(3) of Pub. L. 107–16, set out as a note under section 411 of Title 26, Internal Revenue Code. Amendment by section 659(b) of Pub. L. 107–16 appli- cable to plan amendments taking effect on or after June 7, 2001, with transition provisions and special no- tice rule, see section 659(c) of Pub. L. 107–16, set out as an Effective Date note under section 4980F of Title 26, Internal Revenue Code. EFFECTIVE DATE OF 1997 AMENDMENT Amendment by Pub. L. 105–34 applicable to plan years beginning after Aug. 5, 1997, see section 1071(c) of Pub. L. 105–34, set out as a note under section 411 of Title 26, Internal Revenue Code. EFFECTIVE DATE OF 1994 AMENDMENT Amendment by Pub. L. 103–465 applicable to plan amendments adopted on or after Dec. 8, 1994, see sec- tion 766(d) of Pub. L. 103–465, set out as a note under section 401 of Title 26, Internal Revenue Code. EFFECTIVE DATE OF 1989 AMENDMENT Amendment by section 7862(b)(1)(A), (2) of Pub. L. 101–239 effective as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 7863 of Pub. L. 101–239, set out as a note under section 106 of Title 26, Internal Revenue Code. Amendment by section 7871(a)(1), (3) of Pub. L. 101–239 effective as if included in the amendments made by sec- tion 9202 of the Omnibus Budget Reconciliation Act of 1986, Pub. L. 99–509, see section 7871(a)(4) of Pub. L. 101–239, set out as a note under section 411 of Title 26. Amendment by section 7881(m)(2)(A)–(C) of Pub. L. 101–239 effective, except as otherwise provided, as if in- cluded in the provision of the Pension Protection Act, Pub. L. 100–203, §§ 9302–9346, to which such amendment relates, see section 7882 of Pub. L. 101–239, set out as a note under section 401 of Title 26. Amendment by section 7891(a)(1) of Pub. L. 101–239 ef- fective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 7891(f) of Pub. L. 101–239, set out as a note under section 1002 of this title. Amendment by section 7894(c)(4)–(6) of Pub. L. 101–239 effective, except as otherwise provided, as if originally included in the provision of the Employee Retirement Income Security Act of 1974, Pub. L. 93–406, to which such amendment relates, see section 7894(i) of Pub. L. 101–239, set out as a note under section 1002 of this title. EFFECTIVE DATE OF 1987 AMENDMENT Pub. L. 100–203, title IX, § 9346(c), Dec. 22, 1987, 101 Stat. 1330–374, provided that: ‘‘(1) IN GENERAL.—The amendments made by this sec- tion [amending this section and section 411 of Title 26, Internal Revenue Code] shall apply to plan years begin- ning after December 31, 1987. ‘‘(2) PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989.—If any amendment made by this section requires an amendment to any plan, such plan amendment shall not be required to be made before the first plan year be- ginning on or after January 1, 1989, if— Page 425 TITLE 29—LABOR § 1055 ‘‘(A) during the period after such amendments made by this section take effect and before such first plan year, the plan is operated in accordance with the re- quirements of such amendments or in accordance with an amendment prescribed by the Secretary of the Treasury and adopted by the plan, and ‘‘(B) such plan amendment applies retroactively to the period after such amendments take effect and such first plan year. A plan shall not be treated as failing to provide defi- nitely determinable benefits or contributions, or to be operated in accordance with the provisions of the plan, merely because it operates in accordance with this sub- section.’’ EFFECTIVE DATE OF 1986 AMENDMENTS Amendment by section 1113(e)(4)(B) of Pub. L. 99–514 applicable to plan years beginning after Dec. 31, 1988, with special rule for plans maintained pursuant to col- lective bargaining agreements ratified before Mar. 1, 1986, and not applicable to employees who do not have 1 hour of service in any plan year to which the amend- ment applies, see section 1113(f) of Pub. L. 99–514, as amended, set out as a note under section 411 of Title 26, Internal Revenue Code. Pub. L. 99–514, title XVIII, § 1879(u)(5), formerly § 1879(u)(4), Oct. 22, 1986, 100 Stat. 2913, as redesignated and amended by Pub. L. 101–239, title VII, § 7862(b)(1)(A), (B), Dec. 19, 1989, 103 Stat. 2432, provided that: ‘‘(A) GENERAL RULE.—Except as provided in subpara- graph (B), the preceding provisions of this subsection [amending this section and sections 1002 and 1349 of this title] shall be effective as if such provisions were in- cluded in the enactment of the Single-Employer Pen- sion Plan Amendments Act of 1986 [Pub. L. 99–272, title XI]. ‘‘(B) SPECIAL RULE.—Subparagraph (B) of section 204(h)(2) of the Employee Retirement Income Security Act of 1974 (as amended by paragraph (1)) [29 U.S.C. 1054(h)(2)(B)] shall apply only with respect to plan amendments adopted on or after the date of the enact- ment of this Act [Oct. 22, 1986].’’ Amendment by section 1898(a)(4)(B)(ii), (f)(1)(B), (2) of Pub. L. 99–514 effective as if included in the provision of the Retirement Equity Act of 1984, Pub. L. 98–397, to which such amendment relates, except as otherwise provided, see section 1898(j) of Pub. L. 99–514, set out as a note under section 401 of this title. Amendment by Pub. L. 99–509 applicable only with re- spect to plan years beginning on or after Jan. 1, 1988, and only to employees who have 1 hour of service in any plan year to which amendment applies, with spe- cial rule for collectively bargained plans, see section 9204 of Pub. L. 99–509, set out as an Effective and Termi- nation Dates of 1986 Amendments note under section 623 of this title. Pub. L. 99–272, title XI, § 11006(b), Apr. 7, 1986, 100 Stat. 243, provided that: ‘‘The amendments made by sub- section (a) [amending this section] shall apply with re- spect to plan amendments adopted on or after January 1, 1986, except that, in the case of plan amendments adopted on or after January 1, 1986, and on or before the date of the enactment of this Act [Apr. 7, 1986], the re- quirements of section 204(h) of the Employee Retire- ment Income Security Act of 1974 [subsec. (h) of this section] (as added by this section) shall be treated as met if the written notice required under such section 204(h) is provided before 60 days after the date of the enactment of this Act.’’ EFFECTIVE DATE OF 1984 AMENDMENT Amendment by sections 102(e)(3), (f), and 105(b) of Pub. L. 98–397 applicable to plan years beginning after Dec. 31, 1984, except as otherwise provided, see sections 302 and 303 of Pub. L. 98–397, set out as a note under sec- tion 1001 of this title. Amendment by section 301(a)(2) of Pub. L. 98–397 not applicable to the termination of a certain defined ben- efit plan, see section 303(f) of Pub. L. 98–397. REGULATIONS Secretary of Labor, Secretary of the Treasury, and Equal Employment Opportunity Commission each to issue before Feb. 1, 1988, final regulations to carry out amendments made by Pub. L. 99–509, see section 9204 of Pub. L. 99–509, set out as an Effective and Termination Dates of 1986 Amendment note under section 623 of this title. Secretary authorized, effective Sept. 2, 1974, to pro- mulgate regulations wherever provisions of this sub- chapter call for the promulgation of regulations, see section 1031 of this title. APPLICABILITY OF AMENDMENTS BY SUBTITLES A AND B OF TITLE I OF PUB. L. 109–280 For special rules on applicability of amendments by subtitles A (§§ 101–108) and B (§§ 111–116) of title I of Pub. L. 109–280 to certain eligible cooperative plans, PBGC settlement plans, and eligible government contractor plans, see sections 104, 105, and 106 of Pub. L. 109–280, set out as notes under section 401 of Title 26, Internal Revenue Code. PLAN AMENDMENTS REFLECTING AMENDMENTS BY SEC- TION 7881(m) OF PUB. L. 101–239 NOT TREATED AS REDUCING ACCRUED BENEFIT Pub. L. 101–239, title VII, § 7881(m)(3), Dec. 19, 1989, 103 Stat. 2444, provided that:‘‘If— ‘‘(A) during the period beginning December 22, 1987, and ending June 21, 1988, a plan was amended to re- flect the amendments made by section 9346 of the Pension Protection Act [Pub. L. 100–203, amending this section and section 411 of Title 26, Internal Rev- enue Code], and ‘‘(B) such plan is amended to reflect the amend- ments made by this subsection [amending this sec- tion, section 1002 of this title, and section 411 of Title 26], any plan amendment described in subparagraph (B) shall not be treated as reducing accrued benefits for purposes of section 411(d)(6) of the Internal Revenue Code of 1986 [section 411(d)(6) of Title 26] or section 204(g) of ERISA [subsec. (g) of this section].’’ PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989 For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Pub. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L. 99–514, as amended, set out as a note under section 401 of Title 26, Internal Revenue Code. For provisions directing that if any amendments made by Pub. L. 99–509 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 9204 of Pub. L. 99–509, set out as an Effective and Termination Dates of 1986 Amendment note under section 623 of this title. § 1055. Requirement of joint and survivor annu- ity and preretirement survivor annuity (a) Required contents for applicable plans Each pension plan to which this section ap- plies shall provide that— (1) in the case of a vested participant who does not die before the annuity starting date, the accrued benefit payable to such partici- pant shall be provided in the form of a quali- fied joint and survivor annuity, and (2) in the case of a vested participant who dies before the annuity starting date and who has a surviving spouse, a qualified preretire-