(a) General rule. Except to the extent specifically prohibited by this section, during the pendency of termination proceedings the plan administrator shall continue to carry out the normal operations of the plan, such as putting participants into pay status, collecting contributions due the plan, investing plan assets, and, during the pendency of a standard termination, making loans to participants, in accordance with plan provisions and applicable law and regulations.
(b) Prohibitions after issuance of notice of intent to terminate in a standard termination. Except as provided in
paragraph (d) of this section, during the period beginning on the first day the plan administrator issues a notice of intent to terminate and ending on the last day of the PBGC's 60-day (or extended) review period, as described in
§ 4041.25(a), the plan administrator shall not—
(1) Distribute plan assets pursuant to or in furtherance of 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) Prohibitions after issuing notice of intent to terminate in a distress termination. The plan administrator shall 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
§ 4041.48, the plan administrator shall not—
(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.
(d) Exceptions in a standard termination. During the period set forth in paragraph (b) of this section, the plan administrator may pay benefits attributable to employer contributions either through the purchase of irrevocable commitments from an insurer or in a form other than an annuity if—
(1) The participant has separated from active employment;
(2) The distribution is consistent with prior plan practice; and
(3) The distribution is not reasonably expected to jeopardize the plan's sufficiency for benefit liabilities.
(e) Effect of notice of noncompliance in a standard termination. If the PBGC issues a notice of noncompliance pursuant to
§ 4041.26, the prohibitions described in paragraphs (b)(2) and (b)(3) of this section shall cease to apply—
(1) Upon expiration of the period during which reconsideration may be requested under
§ 4041.26(c) or, if earlier, at the time the plan administrator decides not to request reconsideration; or
(2) If reconsideration is requested, upon PBGC issuance of its decision on reconsideration.
(f) Limitation on benefit payments on or after proposed termination date in a distress termination. Beginning on the proposed termination date, the plan administrator shall reduce benefits to the level determined under part 4022, subpart D, of this chapter.
(g) Failure to qualify for distress termination. In any case where the PBGC determines, pursuant to
§ 4041.42(c) or
§ 4041.44(c)(1), that the requirements for a distress termination are not satisfied—
(i) Upon expiration of the period during which reconsideration may be requested under
§§ 4041.42(e) and 4041.44(d) 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 (f) of this section shall 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
§ 4022.81(d) of this chapter.
(h) Effect of subsequent insufficiency. If the plan administrator makes a finding of subsequent insufficiency for guaranteed benefits pursuant to
§ 4041.47(b), or the PBGC notifies the plan administrator that it has made a finding of subsequent insufficiency for guaranteed benefits pursuant to
§ 4041.47(d), the prohibitions in
paragraph (c) of this section shall apply in accordance with
§ 4041.47(e).
29 C.F.R. § 4041.4 — Disaster relief. · CFR 1997 annual edition (revised as of 1997-07-01) · https://pensionresource.website/EAMain?content=EAMain.Law&id=cfr29-4041.4&asof=1997-07-01 · printed Oct 16, 2026