Part IV. Items of General Interest

Notice of Proposed Rulemaking

Notice of Significant Reduction in the Rate of Future Benefit Accrual

EE–34–95

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking by cross-reference to temporary regulations.

SUMMARY: In *** [T.D. 8631, page 7, this Bulletin], the Federal Register, the IRS is issuing temporary regulations relating to the requirements of section 204(h) of the Employee Retirement Income Security Act of 1974, as amended (ERISA). Section 204(h) of ERISA applies to defined benefit plans and to individual account plans that are subject to the funding standards of section 302 of ERISA. It requires the plan administrator to give notice of certain plan amendments to participants in the plan and certain other parties. The text of those temporary regulations also serves as the text of these proposed regulations.

DATES: Written comments must be received by March 14, 1996.

ADDRESSES: Send submissions to CC:DOM:CORP:R (EE–34–95), Room 5228, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044. In the alternative, submissions may be hand delivered between the hours of 8 a.m. and 5 p.m. to CC:DOM:CORP:R (EE–34–95), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue NW., Washington DC.

FOR FURTHER INFORMATION CONTACT: Betty J. Clary, (202) 622-6070 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

The collection of information contained in this notice of proposed rulemaking has been submitted to the Office of Management and Budget for

review in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507).

Comments on the collection of information should be sent to the Office of Management and Budget, Attn: Desk Officer for the Department of Treasury, Office of Information and Regulatory Affairs, Washington DC 20503, with copies to the Internal Revenue Service, Attn: IRS Reports Clearance Officer, T:FP, Washington, DC 20224. Comments on the collection of information should be received by February 13, 1996. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number.

The collection of information is in § 1.411(d)–6T which implements the statutory requirement of section 204(h) of ERISA that a plan administrator provide notice to participants and certain other parties if certain pension plans are amended to provide for a significant reduction in the rate of future benefit accrual. This collection of information is required to assure that the rights of participants in plans subject to section 204(h) of ERISA are protected. The likely respondents are small businesses. Responses to this collection of information are required under section 204(h) of ERISA in order for certain amendments to qualified plans to become effective.

These regulations do not involve any issues of confidentiality. Estimated total annual reporting burden: 15,000 hours. The estimated annual burden per respondent varies from 1 hour to 40 hours, depending on individual circumstances, with an estimated average of 5 hours. Estimated number of respondents: 3,000. Estimated annual frequency of responses: Once.

Background

Temporary regulations in *** [T.D. 8631, page 7, this Bulletin] amend the Income Tax Regulations (26 CFR part

1. (relating to section 411(d)). The text of those temporary regulations also

serves as the text of these proposed regulations. The preamble to the temporary regulations explains the temporary regulations.

Special Analyses

It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in EO 12866. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) and the Regulatory Flexibility Act (5 U.S.C. chapter 6) do not apply to these regulations, and, therefore, a Regulatory Flexibility Analysis is not required. Pursuant to section 7805(f) of the Internal Revenue Code, the notice of proposed rulemaking will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small business.

Comments and Requests for a Public Hearing

Before these proposed regulations are adopted as final regulations, consideration will be given to any written comments (a signed original and eight (8) copies) that are submitted timely to the IRS. All comments will be available for public inspection and copying. A public hearing may be scheduled if requested in writing by a person that timely submits written comments. If a public hearing is scheduled, notice of the date, time, and place for the hearing will be published in the Federal Register.

Drafting Information

The principal author of these regulations is Betty J. Clary, Office of the Associate Chief Counsel (Employee Benefits and Exempt Organizations), IRS. However, other personnel from the IRS and Treasury Department participated in their development.

List of Subjects in 26 CFR Part 1

Income taxes, Reporting and recordkeeping requirements.

49 1996–24 I.R.B.

to benefits under the plan on account of disability, whose disabilities occur in plan years beginning after December 31, 1994. This mortality table may be used only for individuals who are disabled within the meaning of title II of the Social Security Act and the regulations thereunder. The mortality table takes into account the Social Security Administration’s experience for individuals who are receiving disability benefits under its program.

Rev. Rul. 96–7 is effective for plan years beginning after December 31, 1995. The Service plans to review the mortality tables set forth in Rev. Rul. 96–7 and, if appropriate, to issue new guidance for plan years beginning after December 31, 1996. Accordingly, the Service is soliciting public comment regarding the mortality tables in Rev. Rul. 96–7, as well as other aspects of Rev. Rul. 96–7, including the desirability of any adjustment to these aggregate mortality tables to reflect a select and ultimate pattern of mortality. Public comments should be submitted in writing on or before July 1, 1996. Comments should be sent to the following address:

DRAFTING INFORMATION

The principal author of this announcement is Edward Sypher of the Employee Plans Division. For further information regarding this announcement, please contact the Employee Plans Division’s taxpayer assistance telephone service at (202) 622-6076 between 2:30 and 4:00 Eastern time (not a toll-free number) Monday through Thursday. Mr. Sypher’s number is (202) 622-6245 (also not a tollfree number).

Proposed Amendments to the Regulations

Accordingly, 26 CFR part 1 is proposed to be amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation for part 1 continues to read, in part, as follows:

Authority: 26 U.S.C. 7805. * * * Section 1.411(d)–6 also issued under Reorganization Plan No. 4 of 1978, 29 U.S.C. 1001nt. * * *

Par. 2. Section 1.411(d)–6 is added to read as follows:

§ 1.411(d)–6 Section 204(h) notice .

[The text of this proposed section is the same as the text of § 1.411(d)–6T published elsewhere in *** [T.D. 8631, page 7, this Bulletin].]

Margaret Milner Richardson,

Commissioner of

Internal Revenue.

to benefits under the plan on account of disability. Section 412(l) provides additional funding requirements for certain underfunded defined benefit pension plans that have more than 100 participants and that are not multiemployer plans. In general, the additional funding requirements are determined based on a plan’s unfunded current liability. Rev. Rul. 95–28, 1995–1 C.B. 74, sets forth the mortality table that generally must be used to determine current liability under § 412(l). Section 412(l)(7)(C)(iii)(I) provides that the Secretary shall establish mortality tables that may be used, in lieu of the generally applicable mortality tables, to determine current liability under § 412(l) for individuals who are entitled to benefits under the plan on account of disability.

Rev. Rul. 96–7 provides two mortality tables that may be used in calculating current liability for individuals who are entitled to benefits under the plan on account of disability. Rev. Rul. 96–7 provides a mortality table that may be used for plan years beginning after December 31, 1995, in lieu of the mortality table required to be used under § 412(l)(7)(C)(ii), for purposes of determining current liability for individuals entitled to benefits under the plan on account of disability, whose disabilities occurred in plan years beginning before January 1, 1995. The mortality table takes into account the experience for individuals who are entitled to benefits on account of disability under the Railroad Retirement System and the Civil Service Retirement System. This experience covers a large workforce over a broad range of occupational categories and is the best available information.

Rev. Rul. 96–7 also provides a mortality table that may be used for plan years beginning after December 31, 1995, in lieu of the mortality table required to be used under § 412(l)(7)(C)(ii), for purposes of determining current liability for individuals entitled

(Filed by the Office of the Federal Register on

December 12, 1995, 1:23 p.m., and published in the issue of the Federal Register for December 15, 1995, 60 F.R. 64401)

Mortality Assumptions Used to Calculate an Underfunded Defined Benefit Pension Plan’s Current Liability for Individuals Entitled to Benefits on Account of Disability

Announcement 96–4

The Internal Revenue Service has issued Rev. Rul. 96–7, page 12, this Bulletin, to provide guidance regarding the mortality assumptions used under § 412(l)(7)(C)(iii) of the Internal Revenue Code for plans that are subject to the additional funding requirements of § 412(l), to calculate a plan’s current liability for individuals who are entitled

Internal Revenue Service 1111 Constitution Ave., NW Washington, DC 20224 Attn: Edward Sypher

CP:E:EP:A:1, Room 2548

1996–24 I.R.B. 50