ERISA § 204(h) Notice on Plan Termination

Summary

Use this template in connection with the termination of a qualified defined benefit, money purchase, or target benefit pension plan. It complies with Section 4980F of the Internal Revenue Code and Section 204(h) of the Employee Retirement Income Security Act of 1974 (ERISA). The template includes practical guidance, drafting notes, and alternate and optional clauses. In addition, this template can double as a summary of material modifications pursuant to 29 C.F.R. § 2520.104b-3. See, e.g. Summary of Material Modification (Employee Benefit Plan). If you wish to use a Section 204(h) notice that is not connected to a plan termination, see ERISA § 204(h) Notice of Benefit Accrual Reduction or Cessation. An amendment providing for the cessation of benefit accruals to a pension plan on a specified future date or for the termination of the plan is subject to I.R.C. § 4980F and ERISA § 204(h) (29 U.S.C. § 1054(h)) which sets forth notice requirements. See Treas. Reg. § 54.4980F-1 Q&A 17. In addition, plans terminating under Title IV of ERISA are subject to the rules under 29 C.F.R. §§ 4041.23(b)(4) and 4041.43(b)(5). For rules regarding the notice requirements on a cessation of future benefit accruals, often called a "freeze," see Freezing Defined Benefit Plan Benefits and ERISA 204(h) Notice Requirements. For the termination of Title IV plans, see Retirement Plan Terminations and Suspensions Resource Kit. I.R.C. § 4980F and ERISA § 204(h) each require participant notice of an amendment to an applicable pension plan that either provides for a significant reduction in the rate of future benefit accrual or that eliminates or significantly reduces an early retirement benefit or retirement-type subsidy. Treas. Reg. § 54.4980F-1 Q&A 3. The notice must be provided to plan participants and alternate payees who are applicable individuals, to certain employee organizations, and to contributing employers under a multiemployer plan. See Treas. Reg. § 54.4980F-1 Q&A 10. The notice is not required for a plan that has no active employees and fewer than 100 participants. Treas. Reg. § 54.4980F-1 Q&A-3(b). Generally, the ERISA 204(h) notice must be distributed at least 45 days before the effective date of the plan amendment, however a special rule (generally decreasing the period to 15 days) may apply for (1) small plans with fewer than 100 participants with accrued benefits under the plan, (2) multiemployer plans as defined in I.R.C. § 414(f), and (3) section 204(h) amendments adopted in connection with an acquisition or disposition of a business. For this purpose, the effective date is the earlier of the applicable amendment date or, in the case of an amendment that is permitted to be adopted retroactively, the first date on which the plan is operated as if the amendment were in effect. See Treas. Reg. § 54.4980F-1 Q&A9. For greater detail regarding these rules, see ERISA 204(h) Notice Requirements. COVID-19 Timing Relief. Note that EBSA Disaster Relief Notice 2020-01 provides, subject to a one-year limitation in ERISA § 518 (29 U.S.C. § 1148)), that an employee benefit plan and the responsible plan fiduciary will not violate ERISA for failing to timely furnish a notice, disclosure, or document that must be furnished between March 1, 2020, and 60 days after the announced end of the COVID-19 National Emergency, if the plan and responsible fiduciary act in good faith and furnish the notice, disclosure, or document as soon as administratively practicable under the circumstances. EBSA Disaster Relief Notice 2020-01 was updated by EBSA Disaster Relief Notice 2021-01. The COVID-19 national emergency period ended on May 11, 2023, which resulted in the outbreak period expiring on July 10, 2023. Executive Office of the President, Statement of Administration Policy and HHS, Fact Sheet: COVID-19 Public Health Emergency Transition Roadmap. For more information about ERISA 204(h) notices see ERISA 204(h) Notice Requirements.