§1202 Procedures with respect to continued compliance with Internal Revenue requirements relating to participation, vesting, and funding standards

Summary

When the Treasury Department reviews whether a pension plan meets the tax rules about who can join and how benefits vest (sections 410(a) and 411 of the tax code), it must tell the Labor Department when it starts that review or sends a preliminary notice that the plan might be disqualified. Unless collecting a tax is in danger, Treasury must wait 60 days after telling Labor before it makes a final decision that the plan fails. Treasury can extend those 60 days to give Labor time to help the plan come into compliance. Labor generally should not use its own planwide enforcement process for these kinds of participation or vesting problems and should send general violations to Treasury, though claims about an individual’s benefits are handled separately. For the tax on failing minimum funding (section 4971), Treasury must notify Labor before sending a notice of deficiency and must give Labor a chance to comment. Treasury may waive that tax in appropriate cases. If Labor or the Pension Benefit Guaranty Corporation (PBGC) asks in writing, Treasury must quickly investigate whether the tax should apply to an employer. Treasury and Labor must consult about funding rules (including section 412) to coordinate. Treasury’s rules for the tax-code participation, vesting, and funding standards also apply to the similar ERISA rules, and Labor should not make conflicting rules. Before Labor or PBGC file briefs in court about these standards, they must let Treasury review them, and Treasury may join the case. Treasury must also consult PBGC before publishing certain tax-related regulations.