(a) General. Section 203(a)(3)(B) of the Act provides that the right
to the employer-derived portion of an accrued pension benefit shall not
be treated as forfeitable solely because an employee pension benefit
plan provides that the payment of benefits is suspended during certain
periods of reemployment which occur subsequent to the commencement of
payment of such benefits. This section sets forth the circumstances and
conditions under which such benefit payments may be suspended. A plan
may provide for the suspension of pension benefits which commence prior
to the attainment of normal retirement age, or for the suspension of
that portion of pension benefits which exceeds the normal retirement
benefit, or both, for any reemployment and without regard to the
provisions of section 203(a)(3)(B) and this regulation to the extent
(but only to the extent) that suspension of such benefits does not
affect a retiree's entitlement to normal retirement benefits payable
after attainment of normal retirement age, or the actuarial equivalent
thereof.
(b) Suspension rules--(1) General rule. A plan may provide for the
permanent withholding of an amount which does not exceed the suspendible
amount of an employee's accrued benefit for each calendar month, or for
each four or five week payroll period ending in a calendar month, during
which an employee is employed in ``section 203(a)(3)(B) service'' as
described in Sec. 2530.203-3(c).
(2) Resumption of payments. If benefit payments have been suspended
pursuant to paragraph (b)(1) of this section, payments shall resume no
later than the first day of the third calendar month after the calendar
month in which the employee ceases to be employed in section
203(a)(3)(B) service: Provided, That the employee has complied with any
reasonable procedure
adopted by the plan for notifying the plan that he has ceased such
employment. The initial payment upon resumption shall include the
payment scheduled to occur in the calendar month when payments resume
and any amounts withheld during the period between the cessation of
employment and the resumption of payments, less any amounts which are
subject to offset.
(3) Offset rules. A plan which provides for the permanent
withholding of benefits may deduct from benefit payments to be made by
the plan payments previously made by the plan during those calendar
months or pay periods in which the employee was employed in section
203(a)(3)(B) service, Provided, That such deduction or offset does not
exceed in any one month 25 percent of that month's total benefit payment
which would have been due but for the offset (excluding the initial
payment described in paragraph (b)(2) of this section, which may be
subject to offset without limitation).
(4) Notification. No payment shall be withheld by a plan pursuant to
this section unless the plan notifies the employee by personal delivery
or first class mail during the first calendar month or payroll period in
which the plan withholds payments that his benefits are suspended. Such
notification shall contain a description of the specific reasons why
benefit payments are being suspended, a general description of the plan
provisions relating to the suspension of payments, a copy of such
provisions, and a statement to the effect that applicable Department of
Labor regulations may be found in Sec. 2530.203-3 of the Code of Federal
Regulations. In addition, the suspension notification shall inform the
employee of the plan's procedure for affording a review of the
suspension of benefits. Requests for such reviews may be considered in
accordance with the claims procedure adopted by the plan pursuant to
section 503 of the Act and applicable regulations. In the case of a plan
which requires the filing of a benefit resumption notice as a condition
precedent to the resumption of benefits, the suspension notification
shall also describe the procedure for filing such notice and include the
forms (if any) which must be filed. Furthermore, if a plan intends to
offset any suspendible amounts actually paid during the periods of
employment in section 203(a)(3)(B) service, the notification shall
identify specifically the periods of employment, the suspendible amounts
which are subject to offset, and the manner in which the plan intends to
offset such suspendible amounts. Where the plan's summary plan
description (SPD) contains information which is substantially the same
as information required by this paragraph (b)(4), the suspension
notification may refer the employee to relevant pages of the SPD for
information as to a particular item, provided the employee is informed
how to obtain a copy of the SPD, or relevant pages thereof, and provided
requests for referenced information are honored within a reasonable
period of time, not to exceed 30 days.
(5) Verification. A plan may provide that an employee must notify
the plan of any employment. A plan may request from an employee access
to reasonable information for the purpose of verifying such employment.
Furthermore, a plan may provide that an employee must, at such time and
with such frequency as may be reasonable, as a condition to receiving
future benefit payments, either certify that he is unemployed or provide
factual information sufficient to establish that any employment does not
constitute section 203(a)(3)(B) service if specifically requested by the
plan administrator. Once an employee has furnished the required
certification or information, the plan must forward, at the next
regularly scheduled time for payment of benefits, all payments which had
been withheld pursuant to this paragraph (b)(5) except to the extent
that payments may be withheld and offset pursuant to other provisions of
this regulation.
(6) Status determination. If a plan provides for benefits
suspension, the plan shall adopt a procedure, and so inform employees,
whereunder an employee may request, and the plan administrator in a
reasonable amount of time will render, a determination of whether
specific contemplated employment will be section 203(a)(3)(B) service
for purposes of plan provisions concerning suspension of benefits.
Requests for
status determinations may be considered in accordance with the claims
procedure adopted by the plan pursuant to section 503 of the Act and
applicable regulations.
(7) Presumptions. (i) A plan which has adopted verification
requirements described in paragraph (b)(5) of this section, and which
complies with the notice requirements set forth in paragraph (b)(7)(ii)
of this section may provide that whenever the plan fiduciaries become
aware that a retiree is employed in section 203(a)(3)(B) service and the
retiree has not complied with the plan's reporting requirements with
regard to that employment, the plan fiduciaries may, unless it is
unreasonable under the circumstances to do so, act on the basis of a
rebuttable presumption that the retiree had worked a period exceeding
the plan's minimum number of hours for that month. In addition, a plan
covering persons employed in the building trades which has adopted
verification requirements described in paragraph (b)(5) of this section
and which complies with the notice requirements set forth in paragraph
(b)(7)(ii) of this section may provide that whenever the plan
fiduciaries become aware that a retiree is employed in section
203(a)(3)(B) service at a construction site and the retiree has not
complied with the plan's reporting requirements with regard to that
employment, then the plan fiduciaries may, unless it is unreasonable
under the circumstances to do so, act on the basis of a rebuttable
presumption that the retiree engaged in such employment for the same
employer in work at that site for so long before the work in question as
that same employer performed that work at that construction site.
(ii) A plan which provides for a presumption described in paragraph
(b)(7)(i) of this section may employ such presumption only if the
following requirements are met. The plan must describe its employment
verification requirements and the nature and effect of such presumption
in the plan's summary plan description and in any communication to plan
participants which relates to such verification requirements (for
example, employment reporting reminders or forms), and retirees must be
furnished such disclosure, whether through receipt of the above
communications or by special distribution, at least once every 12
months.
(c) Section 202(a)(3)(B) service--(1) Plans other than multiemployer
plans. In the case of a plan other than a multi-employer plan, as
defined in section 3(37) of the Act, the employment of an employee,
subsequent to the time the payment of benefits commenced or would have
commenced if the employee had not remained in or returned to employment,
results in section 203(a)(3)(B) service during a calendar month, or
during a four or five week payroll period ending in a calendar month, if
the employee, in such month or payroll period,
(i) Completes 40 or more hours of service (as defined in 29 CFR
2530.200b-2(a)(1) and (2)) for an employer which maintains the plan,
including employers described in Sec. 2530.210 (d) and (e), as of the
time that the payment of benefits commenced or would have commenced if
the employee had not remained in or returned to employment; or
(ii) Receives from such employer payment for any such hours of
service performed on each of 8 or more days (or separate work shifts) in
such month or payroll period, Provided, That the plan has not for any
purpose determined or used the actual number of hours of service which
would be required to be credited to the employee under Sec. 2530.200b-
(2)(a).
(2) Multiemployer plans. In the case of a multiemployer plan, as
defined in section 3(37) of the Act, the employment of an employee
subsequent to the time the payment of benefits commenced or would have
commenced if the employee had not remained in or returned to employment
results in section 203(a)(3)(B) service during a calendar month, or
during a four or five week payroll period ending in a calendar month, if
the employee, in such month or payroll period:
--Completes 40 or more hours of service (as defined in Sec. 2530.200b-
2(a)(1) and (2)) or
--Receives payment for any such hours of service performed on each of 8
or more days (or separate work shifts) in such month or payroll period,
Provided, That the plan has not for any purpose determined or used the
actual number of hours of service
which would be required to be credited to the employee under
Sec. 2530.200(b)-(2)(a); in
--An industry in which employees covered by the plan were employed and
accrued benefits under the plan as a result of such employment at the
time that the payment of benefits commenced or would have commenced if
the employee had not remained in or returned to employment, and
--A trade or craft in which the employee was employed at any time under
the plan, and
--The geographic area covered by the plan at the time that the payment
of benefits commenced or would have commenced if the employee had not
remained in or returned to employment.
(i) Industry. The term ``industry'' means the business activities of
the types engaged in by any employers maintaining the plan.
Example. One of the employers contributing to a multiemployer plan
engages in heavy construction, another in textile manufacturing, and
another in communications. Employee E began his career as an employee of
an employer engaged in heavy construction. Later E was employed by an
employer in communications. With both employers, E accrued benefits
under the plan. If E retires and then becomes reemployed in the same
trade or craft and in the same geographic area, employment by E in
either heavy construction, communications or textile manufacturing,
whether or not with an employer who contributes to the plan or in a
self-employed capacity, may be considered by the plan to be employment
in the same industry, assuming that employees covered by the plan were
accruing benefits as a result of employment in these industries at the
time E commenced receiving benefits. This is true even though E did not
previously accrue benefits as a result of employment with an employer
engaged in textile manufacturing because other employees covered by the
plan were employed in that industry and were accruing benefits under the
plan as a result of such employment at the time when benefit payments to
E commenced or would have commenced if E had not returned to employment.
(ii) Trade or craft. A trade or craft is (A) a skill or skills,
learned during a significant period of training or practice, which is
applicable in occupations in some industry, (B) a skill or skills
relating to selling, retailing, managerial, clerical or professional
occupations, or (C) supervisory activities relating to a skill or skills
described in (A) or (B) of this paragraph (c)(2)(ii). For purposes of
this paragraph (c)(2)(ii), the determination whether a particular job
classification, job description or industrial occupation constitutes or
is included in a trade or craft shall be based upon the facts and
circumstances of each case. Factors which may be examined include
whether there is a customary and substantial period of practical, on-
the-job training or a period of related supplementary instruction.
Notwithstanding any other factor, the registration of an apprenticeship
program with the Bureau of Apprenticeship and Training of the Employment
Training Administration of the U.S. Department of Labor is sufficient
for the conclusion that a skill or skills which is the subject of the
apprenticeship program constitutes a trade or craft.
Example. Participation in a multiemployer plan is limited solely to
electricians. Electrician E retired and then became reemployed as a
foreman of electricians. Because a ``trade or craft'' includes related
supervisory activities, E remains within his trade or craft for purposes
of this section.
(iii) Geographic area covered by the plan. (A) With the exception of
a plan covering employees in a maritime industry, the ``geographic area
covered by the plan'' consists of any state or any province of Canada in
which contributions were made or were required to be made by or on
behalf of an employer and the remainder of any Standard Metropolitan
Statistical Area (SMSA) which falls in part within such state,
determined as of the time that the payment of benefits commenced or
would have commenced if the employee had not returned to employment.
Example. A multiemployer plan covers plumbers in Pennsylvania. All
contributing employers have always been located within Pennsylvania.
Accordingly, the ``geographic area covered by the plan'' consists of
Pennsylvania and any SMSAs which fall in part within Pennsylvania. Thus,
for example, in the case of the Philadelphia SMSA, Burlington, Camden
and Gloucester Counties in New Jersey are within the ``geographic area
covered by the plan''.
(B) [Reserved--for definition of the geographic area covered by a
plan that covers employees in a maritime industry.]
For purposes of this paragraph (c)(2)(iii), contributions shall not
include amounts contributed: After December 31, 1978 by or on hehalf of
an employer where no contributions were made by or on behalf of that
employer before that date, if the primary purpose of such contribution
is to allow for the suspension of plan benefits in a geographic area not
otherwise covered by the plan; or with respect to isolated projects
performed in states where plan participants were not otherwise employed.
(3) Employment in a maritime industry. For plans covering employees
employed in a maritime industry, as defined in Sec. 2530.200b-6, the
standard of ``five or more days of service, as defined in
Sec. 2530.200b-7(a)(1)'' shall be used in lieu of the standard ``40 or
more hours of service'', for purposes of determining whether an employee
is employed in section 203(a)(3)(B) service.
(d) Suspendable amount--(1) Life annuity. In the case of benefits
payable periodically on a monthly basis for as long as a life (or lives)
continues, such as a straight life annuity or a qualified joint and
survivor annuity, a plan may provide that an amount not greater than the
portion of a monthly benefit payment derived from employer contributions
may be withheld permanently for a calendar month, or for a four or five
week payroll period ending in a calendar month, in which the employee is
employed in section 203(a)(3)(B) service.
(2) Other benefit forms. In the case of benefits payable in a form
other than the form described in paragraph (d)(1) of this section, a
plan may provide for the permanent withholding of an amount of the
employer-derived portion of benefit payments for a calendar month, or
for a four or five week payroll period ending in a calendar month, in
which the employee is employed in section 203(a)(3)(B) service, not
exceeding the lesser of--
(i) The amount of benefits which would have been payable to the
employee if he had been receiving monthly benefits under the plan since
actual retirement based on a single life annuity commencing at actual
retirement age; or
(ii) The actual amount paid or scheduled to be paid to the employee
for such month. Payments which are scheduled to be paid less frequently
than monthly may be converted to monthly payments for purposes of this
paragraph (d)(2)(ii).
(Approved by the Office of Management and Budget under control number
1210-0048)
[46 FR 8903, Jan. 27, 1981, as amended at 46 FR 59245, Dec. 4, 1981; 46
FR 60572, Dec. 11, 1981; 49 FR 18295, Apr. 30, 1984]
