§1345 — Title 29 Labor | U.S. Code

Summary

The trustee can take back certain payments a participant got from the plan if those payments began within the 3-year period before the plan ends. The amount the trustee can recover is the extra money the participant actually got in those three years above a calculated safe amount. That safe amount is what the participant would have received each year if they had chosen a monthly life annuity at the time of the first payment, plus for each 12-month period the smaller of (i) $10,000 minus the annuity amount or (ii) the extra actual payment over the annuity, and plus the present value of any future guaranteed benefits figured as if the annuity had started then. If a certain earlier distribution happened, the 3-year clock does not end until the corporation is told. The trustee cannot recover payments made because of the participant’s death or to a participant who is disabled. The corporation can also waive recovery if taking the money would cause serious financial hardship.

Title 29, §1345

Labor — Source: USLM XML via OLRC

(a)Except as provided in subsection (c), the trustee is authorized to recover for the benefit of a plan from a participant the recoverable amount (as defined in subsection (b)) of all payments from the plan to him which commenced within the 3-year period immediately preceding the time the plan is terminated.

(b)For purposes of subsection (a) the recoverable amount is the excess of the amount determined under paragraph (1) over the amount determined under paragraph (2).

(1)The amount determined under this paragraph is the sum of the amount of the actual payments received by the participant within the 3-year period.

(2)The amount determined under this paragraph is the sum of—

(A)the sum of the amount such participant would have received during each consecutive 12-month period within the 3 years if the participant received the benefit in the form described in paragraph (3),

(B)the sum for each of the consecutive 12-month periods of the lesser of—

(i)the excess, if any, of $10,000 over the benefit in the form described in paragraph (3), or

(ii)the excess of the actual payment, if any, over the benefit in the form described in paragraph (3), and

(C)the present value at the time of termination of the participant’s future benefits guaranteed under this subchapter as if the benefits commenced in the form described in paragraph (3).

(3)The form of benefit for purposes of this subsection shall be the monthly benefit the participant would have received during the consecutive 12-month period, if he had elected at the time of the first payment made during the 3-year period, to receive his interest in the plan as a monthly benefit in the form of a life annuity commencing at the time of such first payment.

(c)(1)In the event of a distribution described in section 1343(b)(7) 11 See References in Text note below. of this title the 3-year period referred to in subsection (b) shall not end sooner than the date on which the corporation is notified of the distribution.

(2)The trustee shall not recover any payment made from a plan after or on account of the death of a participant, or to a participant who is disabled (within the meaning of section 72(m)(7) of title 26).

(3)The corporation is authorized to waive, in whole or in part, the recovery of any amount which the trustee is authorized to recover for the benefit of a plan under this section in any case in which it determines that substantial economic hardship would result to the participant or his beneficiaries from whom such amount is recoverable.

Notes & Related Subsidiaries

Editorial Notes

References in Text

section 1343(b)(7) of this title, referred to in subsec. (c)(1), was redesignated section 1343(c)(7) of this title by Pub. L. 103–465, title VII, § 771(b), Dec. 8, 1994, 108 Stat. 5042.

Amendments

1989—Subsec. (c)(2). Pub. L. 101–239 substituted “Internal Revenue Code of 1986” for “Internal Revenue Code of 1954”, which for purposes of codification was translated as “title 26” thus requiring no change in text.

Statutory Notes and Related Subsidiaries

Effective Date

of 1989 AmendmentAmendment by Pub. L. 101–239 effective, 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.

§1345 Recapture of payments