Tap any paragraph to write a margin note. Your notes collect in the Desk below the text and file under cases with @. The side-by-side margin rail opens on a larger screen.

§
Marginalia
Code · REGISTER · 2007-08-31 · Office of Special Education and Rehabilitative Services, Department of Education · Rules and Regulations

Rules and Regulations. Notice of proposed priorities for DRRPs, RRTCs, and RERCs

67,780 words·~308 min read·/register/2007/08/31/07-4262

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

BILLING CODE 4120-01-P 72 169 Friday, August 31, 2007 Notices Part IV Department of Education Funding Priorities for the Disability and Rehabilitation Research Projects and Centers Program; Notice DEPARTMENT OF EDUCATION National Institute on Disability and Rehabilitation Research—Disability and Rehabilitation Research Projects and Centers Program—Disability Rehabilitation Research Projects (DRRPs), Rehabilitation Research and Training Centers (RRTCs), and Rehabilitation Engineering Research Centers (RERCs) AGENCY:
Office of Special Education and Rehabilitative Services, Department of Education. ACTION: Notice of proposed priorities for DRRPs, RRTCs, and RERCs. SUMMARY: The Assistant Secretary for Special Education and Rehabilitative Services proposes certain funding priorities for the Disability and Rehabilitation Research Projects and Centers Program administered by the National Institute on Disability and Rehabilitation Research (NIDRR). Specifically, this notice proposes 10 priorities for DRRPs, 11 priorities for RRTCs, and 6 priorities for RERCs.
The Assistant Secretary may use these priorities for competitions in fiscal year
(FY)2008 and later years. We take this action to focus research attention on areas of national need. We intend these priorities to improve rehabilitation services and outcomes for individuals with disabilities. DATES: We must receive your comments on or before October 1, 2007. ADDRESSES: Address all comments about these proposed priorities to Donna Nangle, U.S. Department of Education, 400 Maryland Avenue, SW., Room 6029, Potomac Center Plaza, Washington, DC 20204-2700. If you prefer to send your comments through the Internet, use the following address: *donna.nangle@ed.gov.* You must include the term “Proposed Priorities for DRRPs, RRTCs, and RERCs” and the priority title in the subject line of your electronic message. FOR FURTHER INFORMATION CONTACT: Donna Nangle. Telephone:
(202)245-7462. If you use a telecommunications device for the deaf (TDD), you may call the Federal Relay Service
(FRS)at 1-800-877-8339. Individuals with disabilities may obtain this document in an alternative format (e.g., Braille, large print, audiotape, or computer diskette) on request to the contact person listed under FOR FURTHER INFORMATION CONTACT . SUPPLEMENTARY INFORMATION: This notice of proposed priorities is in concert with President George W. Bush's New Freedom Initiative
(NFI)and NIDRR's Final Long-Range Plan for FY 2005-2009 (Plan). The NFI can be accessed on the Internet at the following site: *http://www.whitehouse.gov/infocus/newfreedom.* The Plan, which was published in the **Federal Register** on February 15, 2006 (71 FR 8165), can be accessed on the Internet at the following site: *http://www.ed.gov/about/offices/list/osers/nidrr/policy.html.* Through the implementation of the NFI and the Plan, NIDRR seeks to:
(1)Improve the quality and utility of disability and rehabilitation research;
(2)foster an exchange of expertise, information, and training to facilitate the advancement of knowledge and understanding of the unique needs of traditionally underserved populations;
(3)determine best strategies and programs to improve rehabilitation outcomes for underserved populations;
(4)identify research gaps;
(5)identify mechanisms of integrating research and practice; and
(6)disseminate findings. One of the specific goals established in the Plan is for NIDRR to publish all of its proposed priorities, and following public comment, final priorities, annually, on a combined basis. Under this approach, NIDRR's constituents can submit comments at one time rather than at different times throughout the year, and NIDRR can move toward a fixed schedule for competitions and more efficient grant-making operations. This notice proposes priorities that NIDRR intends to use for DRRP, RRTC, and RERC competitions in FY 2008 and possibly later years. However, nothing precludes NIDRR from publishing additional priorities, if needed. Furthermore, NIDRR is under no obligation to make an award for each of these priorities. The decision to make an award will be based on the quality of applications received and available funding. NIDRR also intends to publish at least one additional separate notice of proposed priority for an additional DRRP that would focus on traditionally underserved populations, as required under section 21 of the Rehabilitation Act of 1973, as amended. Moreover, for FY 2008 competitions using priorities that already have been established and for which publication of a notice of proposed priority is unnecessary (e.g., competitions for Field-Initiated Projects, Advanced Rehabilitation Research Training Projects, Fellowships, and Small Business Innovation Research Projects), NIDRR has published or will publish notices inviting applications. More information on these other projects and programs that NIDRR intends to fund in FY 2008 can be found on the Internet at the following site: *http://www.ed.gov/fund/grant/apply/nidrr/priority-matrix.html.* Invitation To Comment We invite you to submit comments regarding these proposed priorities. To ensure that your comments have maximum effect in developing the notice of final priorities, we urge you to identify clearly the specific proposed priority or topic that each comment addresses. We invite you to assist us in complying with the specific requirements of Executive Order 12866 and its overall requirement of reducing regulatory burden that might result from these proposed priorities. Please let us know of any further opportunities we should take to reduce potential costs or increase potential benefits while preserving the effective and efficient administration of the program. During and after the comment period, you may inspect all public comments about these proposed priorities in room 6030, 550 12th Street, SW., Potomac Center Plaza, Washington, DC, between the hours of 8:30 a.m. and 4 p.m., Eastern time, Monday through Friday of each week except Federal holidays. Assistance to Individuals With Disabilities in Reviewing the Rulemaking Record On request, we will supply an appropriate aid, such as a reader or print magnifier, to an individual with a disability who needs assistance to review the comments or other documents in the public rulemaking record for these proposed priorities. If you want to schedule an appointment for this type of aid, please contact the person listed under FOR FURTHER INFORMATION CONTACT . We will announce the final priorities in one or more notices in the **Federal Register** . We will determine the final priorities after considering responses to this notice and other information available to the Department. This notice does not preclude us from proposing or using additional priorities, subject to meeting applicable rulemaking requirements. Note: This notice does *not* solicit applications. In any year in which we choose to use these proposed priorities, we invite applications through a notice in the **Federal Register** . When inviting applications we designate the priorities as absolute, competitive preference, or invitational. The effect of each type of priority follows: *Absolute priority:* Under an absolute priority, we consider only applications that meet the priority (34 CFR 75.105(c)(3)). *Competitive preference priority:* Under a competitive preference priority, we give competitive preference to an application by either
(1)Awarding additional points, depending on how well or the extent to which the application meets the competitive preference priority (34 CFR 75.105(c)(2)(i)); or
(2)selecting an application that meets the competitive preference priority over an application of comparable merit that does not meet the priority (34 CFR 75.105(c)(2)(ii)). *Invitational priority:* Under an invitational priority, we are particularly interested in applications that meet the invitational priority. However, we do not give an application that meets the invitational priority a competitive or absolute preference over other applications (34 CFR 75.105(c)(1)). Priorities In this notice, we are proposing 10 priorities for DRRPs, 11 priorities for RRTCs, and 6 priorities for RERCs. For DRRPs, the proposed priorities are: • Priority 1—Health Care Coordination for Individuals with Physical Disabilities. • Priority 2—Assistive Technology
(AT)Reuse. • Priority 3—Health and Health Care Disparities Among Individuals with Disabilities. • Priority 4—Traumatic Brain Injury Model Systems (TBIMS) Centers Collaborative Research Projects. • Priority 5—Classification and Measurement of Medical Rehabilitation Interventions. • Priority 6—Vocational Rehabilitation Service Models for Individuals with Autism Spectrum Disorders. • Priority 7—Center on Knowledge Translation for Assistive Technology Transfer. • Priority 8—Asset Accumulation and Economic Self-Sufficiency for Individuals with Disabilities. • Priority 9—Technology Transfer in Resource-Limited Environments. • Priority 10—Research and Knowledge Translation Center for Individuals with Disabilities and Their Families. For RRTCs, the proposed priorities are: • Priority 11—General Rehabilitation Research and Training Center
(RRTC)Requirements. • Priority 12—Enhancing the Health and Wellness of Individuals with Neuromuscular Diseases. • Priority 13—Enhancing the Health and Wellness of Persons with Arthritis. • Priority 14—Stroke Rehabilitation. • Priority 15—Personal Assistance Services
(PAS)in the 21st Century. • Priority 16—Participation and Community Living for Individuals with Psychiatric Disabilities. • Priority 17—Multiple Sclerosis: Interventions to Maximize Health, Well-Being, and Participation. • Priority 18—Aging with Physical Disability: Reducing Secondary Conditions and Enhancing Health and Participation. • Priority 19—Disability Statistics and Demographics. • Priority 20—Health and Function Across the Lifespan of Individuals with Intellectual and Developmental Disabilities. • Priority 21—Participation and Community Living for Individuals with Intellectual and Developmental Disabilities. For RERCs, the proposed priorities are: • Priority 22—RERC for Hearing Enhancement. • Priority 23—RERC for Accessible Public Transportation. • Priority 24—RERC for Prosthetics and Orthotics. • Priority 25—RERC for Communication Enhancement. • Priority 26—RERC for Universal Interface and Information Technology Access. • Priority 27—RERC for Wheeled Mobility. Disability and Rehabilitation Research Projects
(DRRP)Program The purpose of the DRRP program is to plan and conduct research, demonstration projects, training, and related activities to develop methods, procedures, and rehabilitation technologies that maximize the full inclusion and integration into society, employment, independent living, family support, and economic and social self-sufficiency of individuals with disabilities, especially individuals with the most severe disabilities, and to improve the effectiveness of services authorized under the Rehabilitation Act of 1973, as amended. DRRPs carry out one or more of the following types of activities, as specified and defined in 34 CFR 350.13 through 350.19: research, development, demonstration, training, dissemination, utilization, and technical assistance. An applicant for assistance under this program must demonstrate in its application how it will address, in whole or in part, the needs of individuals with disabilities from minority backgrounds (34 CFR 350.40(a)). The approaches an applicant may take to meet this requirement are found in 34 CFR 350.40(b). In addition, NIDRR intends to require all DRRP applicants to meet the requirements of the *General Disability and Rehabilitation Research Projects
(DRRP)Requirements* priority that it published in a notice of final priorities in the **Federal Register** on April 28, 2006 (71 FR 25472). Additional information on the DRRP program can be found at: *http://www.ed.gov/rschstat/research/pubs/res-program.html#DRRP.* Proposed Priorities Priority 1—Health Care Coordination for Individuals With Physical Disabilities Background Individuals with disabilities use a disproportional share of health care services in the United States (DeJong *et al.* , 2002). The Centers for Medicare and Medicaid Services
(CMS)programs recognize this trend and try to control its economic consequences by enrolling individuals with disabilities in managed care programs in increasing numbers (Palsbo & Mastal, 2006). A small but growing number of Medicaid managed care plans are designed specifically for individuals with disabilities. These plans feature intensive care coordination services that integrate the complex health and long-term care needs of individuals with disabilities (Palsbo & Mastal, 2006; Master, 2003). Pursuant to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, CMS also contracts with a growing number of Medicare health plans to provide health care coordination and services for Medicare beneficiaries who have severe or disabling chronic conditions (Peters, 2005). Health care coordination is an increasingly important component of high-quality health care for individuals with disabilities (Cheng *et al.* , 2004; Lawthers *et al.* , 2003; Kroll, 2003). On average, individuals with disabilities have more complex and multi-faceted health care needs than individuals without disabilities. For example, individuals with disabilities often require the involvement of multiple medical and ancillary providers, including long-term care providers (DeJong *et al.* , 2002). Individuals with disabilities also often find it difficult to navigate the complex, fragmented health and long-term care service systems that are critical to maintaining their health, functional abilities, and independence in the community. Recognizing the importance of integration and coordination of health and long-term care services, NIDRR states that “individuals with disabilities should have access to an integrated continuum of health care services, including primary care and health maintenance services, specialty care, medical rehabilitation, long-term care, and health promotion programs” (NIDRR Long-Range Plan, 2005-2009). Toward this goal, NIDRR seeks to sponsor rigorous research to assess the outcomes associated with managed health care coordination programs for individuals with disabilities. A number of small pilot studies suggest an association between enrollment in managed health care coordination programs for individuals with disabilities and positive outcomes such as increased satisfaction with health care services, greater access to a wide variety of health and long-term care services, and decreased utilization of costly emergency and hospital-based services (Surpin, 2007; Palsbo, Mastal, & O'Donnell, 2006; Master, 2003). More systematic, peer-reviewed research is required to determine the extent to which these health care coordination programs for individuals with disabilities relate to improvements in both the health and health care experiences of their clients and to cost savings for public financing mechanisms. References Cheng, E., Siderow, A., Swarztrauber, K., Eisa, M., Lee, M., & Vickrey, B. (2004). Development of Quality of Care Indicators for Parkinson's Disease. Movement Disorders. 19(2): 136-150. DeJong, G., Palsbo, S., Beatty, P., Jones, G., Kroll, T., & Neri, M. (2002). The Organization and Financing of Health Services for People With Disabilities. Milbank Quarterly. 80(2): 261-301. Kroll, T. (2003). Towards Improving Health Care Delivery for People With Physical Disabilities: Findings From Focus Groups with Health Care Consumers in Minnesota. Managed Care Quarterly. 11(4): 8-14. Lawthers, A., Pransky, G., Peterson, L., & Himmelstein, J. (2003). Rethinking Quality in the Context of Persons With Disability. International Journal for Quality in Health Care. 15(4): 279-281. Master, R., Simon, L., & Goldfield, N. (2003). Commonwealth Care Alliance. A New Approach to Coordinated Care for the Chronically Ill and Frail Elderly That Organizationally Integrates Consumer Involvement. Journal of Ambulatory Care Management. 26(4): 355-361. National Institute on Disability and Rehabilitation Research. Notice of Final Long Range Plan for Fiscal Years 2005-2009. Pages: 8166-8200. *http://www.ed.gov/about/offices/list/osers/nidrr/policy.html.* Palsbo, S. & Mastal, M. (2006). Disability Care Coordination Care Organizations: The Experience of Medicaid Managed Care Programs for People With Disabilities. Center for Health Care Strategies. Resource Paper. *http://www.chcs.org/usr_doc/DCCOs.pdf.* Palsbo, S., Mastal, M., & O'Donnell, L. (2006). Disability Care Coordination Organizations: Improving Health and Function in People With Disabilities. Lippincotts Case Management. 11(5): 255-264. Peters, C.P. (2005). Medicare Advantage SNPs: A New Opportunity for Integrated Care? Washington DC: National Health Policy Forum. Issue Brief # 808. Surpin, R. (2007). Independence Care System: A Disability Care Coordination Organization in New York City. Journal of Ambulatory Care Management. 30(1): 52-63. Proposed Priority The Assistant Secretary for Special Education and Rehabilitative Services proposes a priority for a Disability Rehabilitation Research Project
(DRRP)on Health Care Coordination for Individuals with Disabilities. The purpose of this priority is to conduct research on the outcomes of Medicare or Medicaid managed health care coordination programs for individuals with disabilities. Under this priority, the DRRP must be designed to contribute to the following outcomes:
(a)New knowledge about the extent to which enrollment in health care coordination programs enhances access to health care for individuals with disabilities. The DRRP must contribute to this outcome by conducting research on, and evaluating, one or more existing Medicaid- or Medicare-funded health care coordination programs for individuals with disabilities.
(b)New knowledge about the health outcomes associated with participation in health care coordination programs for individuals with disabilities. The DRRP must contribute to this outcome by conducting research on, and evaluating, one or more existing Medicaid- or Medicare-funded health care coordination programs for individuals with disabilities.
(c)New knowledge about potential Medicaid or Medicare cost savings that are associated with health care coordination efforts for individuals with disabilities. The DRRP must contribute to this outcome by conducting research on, and evaluating, one or more existing Medicaid- or Medicare-funded health care coordination programs for individuals with disabilities. In addition, the DRRP must work with the NIDRR Project Officer to coordinate its research efforts with the Centers for Medicare and Medicaid Services—Office of Research, Development, and Information. Priority 2—Assistive Technology
(AT)Reuse Background Reuse programs are emerging as one potential solution to providing more assistive technology
(AT)to individuals with disabilities at lower costs (Pass It On Center). For example, the Rehabilitation Services Administration
(RSA)of the U.S. Department of Education has funded model demonstration projects to establish or expand statewide AT device reutilization programs. Device reuse programs, such as exchange programs and reassignment programs, facilitate the transfer of previously-used AT from one consumer to another. Each of these programs has distinct features and benefits. An exchange program assists in connecting users to transfer AT directly among themselves. Reassignment programs, on the other hand, accept used AT, sanitize it, identify appropriate users, and redistribute the AT following sanitization and matching. One advantage of reuse programs, in general, is that they provide consumers with access to AT devices at reasonably lower costs. AT equipment provided through these programs also leads to an increased capacity for community living and participation by individuals with disabilities. AT reuse programs meet varied needs and circumstances surrounding consumer access to AT, such as access on a temporary basis, or access for trial purposes to assess the benefit and effectiveness of a device for a consumer's use. A number of barriers and obstacles limit the utility of AT reuse programs. A recent study found that individuals with disabilities or other family members, not third parties, most frequently pay for commonly used AT devices, special adaptations, and environmental accommodations (Carlson & Ehrlich, 2006). Consumer access to AT and compensation for AT is often limited by conflicting eligibility requirements of current policies regulating the provision of AT. In addition, third-party payment restrictions frequently minimize the extent to which Medicare, Medicaid, private insurance, and vocational rehabilitation can assist with AT costs. Increased awareness of the potential costs and benefits associated with AT reuse programs can positively impact their use, and in addition, has implications for third-party payment coverage for reused AT. Furthermore, AT reuse programs do not have the benefit of a national coordinated system to assist in sustaining or expanding programs. Nor do AT reuse programs have the benefit of research that has identified methods, models, and measures for enhancing program effectiveness and improving consumer outcomes. At the present time, there is little data available to guide the management, enhancement, or expansion of these programs. Few research studies have been conducted to inform the AT reuse field of validated methods, models, and measures that lead to improved program and consumer outcomes. This field needs new knowledge regarding factors that influence success of AT reutilization programs, *e.g.* , program design, staffing, training, funding sources, and use of collaborative partnerships in operating AT reuse programs. Specifically, more research is needed to examine how these and other factors affect program outcomes and to identify the most effective measures available to assess program quality as well as the costs and benefits of the program. Numerous reuse programs in the United States could benefit from research in this area. References Carlson, D. & Ehrlich, N. (2006). Sources of payment for assistive technology: Findings from a national survey of persons with disabilities. Assistive Technology, 18(1), 77-86. Pass It On Center. *Http://www.passitoncenter.org.* Proposed Priority The Assistant Secretary for Special Education and Rehabilitative Services proposes a priority for a Disability Rehabilitation Research Project
(DRRP)on Assistive Technology
(AT)Reuse for individuals with disabilities. The purpose of this priority is to support research that will identify methods, systems, policies, and collaborative strategies to improve reutilization and recycling of AT. Under this priority, the DRRP must be designed to contribute to the following outcomes:
(a)Enhanced understanding of how third-party payments for purchases of AT affect AT reuse programs. The DRRP must contribute to this outcome by conducting an analysis of current policy and consumer eligibility requirements and by generating relevant recommendations related to AT reuse.
(b)New knowledge that positively affects the establishment, expansion, and maintenance of AT reuse programs. The DRRP must contribute to this outcome by conducting research studies validating effective methods and models for conducting AT reutilization activities ( *e.g.* , program design; alternative recycling methods; partnerships; program marketing strategies; and recruitment, retention, and training of AT reuse staff).
(c)Improved methods and strategies for assessing the costs and benefits, including cost-savings, of AT reuse programs. The DRRP must contribute to this outcome by identifying, developing, and testing appropriate models to be used at the program level that can help inform third-party payers of the costs and benefits associated with AT reuse programs.
(d)Improved understanding of AT reuse outcomes for individuals with disabilities. The DRRP must contribute to this outcome by conducting studies that assess and inform the AT field about the impact of acquiring AT through reuse programs.
(e)Improved collaboration and use of research findings through effective coordination within the network of relevant NIDRR RRTCs, Rehabilitation Engineering Research Centers, DRRPs, and federally funded programs, such as the Rehabilitation Services Administration
(RSA)AT State grants, the National AT Device Reutilization Coordination and Technical Assistance Center, and grantees under RSA's Model Demonstrations for AT Device Reutilization program. Priority 3—Health and Health Care Disparities Among Individuals With Disabilities Background In 2005, the U.S. Surgeon General released a “Call to Action to Improve the Health and Wellness of Persons With Disabilities” that delineated a series of strategies to optimize the health and wellness of individuals with disabilities, (U.S. Department of Health and Human Services (HHS), 2005). The Surgeon General proposed these strategies in light of the growing body of research literature indicating that individuals with disabilities are, on average, less likely than those without disabilities to report positive health (Krahn, Hammond, & Turner, 2006; Hough, 1999) and less likely to receive recommended health care services (Kroll *et al.* , 2006; McCarthy *et al.* , 2006; Jones & Beatty, 2003). While the body of research that examines health disparities between individuals with and without disabilities is expanding, few studies have examined the health and health care disparities within the diverse population of individuals with disabilities in the United States. Health disparities recently have been defined as “observed clinically and statistically significant differences in health outcomes or health care use between socially distinct vulnerable and less vulnerable populations” (Kilbourne *et al.* , 2006). The broad population of 52 million individuals with disabilities (HHS, 2005) is heterogeneous in terms of a number of factors that may be related to increased vulnerability for poor health care access and poor health. These factors include, but are not limited to, disabling condition category ( *i.e.* , mental illness, sensory, physical, cognitive, or combinations thereof), disability severity, age, gender, race, ethnicity, socioeconomic status, education level, urban/rural status, health insurance payer type (Medicare, Medicaid, private insurance), provider type, and other social, personal, and environmental characteristics. NIDRR recognizes that “while health services researchers are increasingly attuned to racial and ethnic disparities in health care, less attention and fewer resources are devoted to disability-related disparities and the innovations in policy and practice that might reduce them” (NIDRR Long Range Plan, 2005). The Health and Function chapter of the NIDRR Long Range Plan promotes research on the health and health care experiences of the wide diversity of individuals with disabilities (NIDRR Long Range Plan, 2005). Given the wide diversity of individuals with disabilities and the limited information available about existing health care access and outcome disparities that exist within this population, research is needed to improve our understanding about the factors that contribute to health disparities. New knowledge about these factors can be used to create targeted policies, programs, and interventions that promote health and wellness among the individuals with disabilities who are most vulnerable and most likely to demonstrate health outcomes traditionally attributed to disparate treatment or health care access difficulties. References Hough, J. (1999). Disability and Health: A National Public Health Agenda. In Simeonsson, R.J., McDevitt, L.N. (Eds.). Issues in Disability and Health. The Role of Secondary Conditions and Quality of Life. Chapel Hill NC: University of North Carolina Press. Jones, G. & Beatty, P. (2003). Disparities in Preventive Service Use Amongst Working-Age Adults With Mobility Limitations. In Altman, B., Barnartt, S., Hendershot, G., & Larson, S. (Eds.) Research in Social Science and Disability 1 Volume 3: Using Survey Data To Study Disability: Results From the National Health Interview Survey on Disability. Pages: 109-130. Oxford, UK: Elsevier. Kilbourne, A., Switzer, G., Hyman, K., Crowley-Matoka, M., & Fine, M. (2006). Advancing Health Disparities Research Within the Health Care System: A Conceptual Framework. American Journal of Public Health. 96(12): 2113-2121. Krahn, G., Hammond, L., & Turner, A. (2006). A Cascade of Disparities: Health and Health Care Access for People With Intellectual Disabilities. Mental Retardation and Developmental Disabilities Research Reviews. 12(1): 70-82. Kroll, T., Jones, G., Kehn, M., & Neri, M. (2006). Barriers and Strategies Affecting the Utilization of Primary Preventive Services for People With Physical Disabilities: A Qualitative Inquiry. Health and Social Care in the Community. 14(4): 284-293. McCarthy, E., Ngo, L., Roetzheim, R., Chirikos, T., Li, D., Drews, R., & Iezzoni, L. (2006). Disparities in Breast Cancer Treatment and Survival for Women With Disabilities. Annals of Internal Medicine. 145(9): 637-645. National Institute on Disability and Rehabilitation Research. Notice of Final Long Range Plan for Fiscal Years 2005-2009. Pages: 8166-8200. *http://www.ed.gov/about/offices/list/osers/nidrr/policy.html.* U.S. Department of Health and Human Services (2005). The Surgeon General's Call to Action To Improve the Health and Wellness of Persons With Disabilities. U.S. Department of Health and Human Services, Office of the Surgeon General. Proposed Priority The Assistant Secretary for Special Education and Rehabilitative Services proposes a priority for a Disability Rehabilitation Research Project
(DRRP)on Health and Health Care Disparities Among Individuals With Disabilities. The purpose of this priority is to build a knowledge base about health care access and health outcomes among the diverse population of individuals with disabilities. Under this priority, the DRRP must be designed to contribute to the following outcomes:
(a)A foundation of available knowledge about health disparities among subpopulations of individuals with disabilities. The DRRP must contribute to this outcome by conducting a review and synthesis of existing research on health and health care access among individuals with disabilities or subgroups of individuals with disabilities. The DRRP must then use this review and synthesis to inform the subsequent research and evaluation efforts of the DRRP.
(b)New knowledge about system-level factors that are associated with the health and health care access of individuals with disabilities. The DRRP must contribute to this outcome by conducting research on the extent to which the health and health care access of individuals with disabilities are related to system-level factors that include, but are not limited to, rural or urban status, as well as characteristics of their health care insurance or health care providers.
(c)New knowledge about the individual-level characteristics of individuals with disabilities that are associated with their health and access to health care. The DRRP must contribute to this outcome by conducting research on the extent to which the health and health care access of individuals with disabilities are related to their disabling condition categories (mental illness, sensory, physical, cognitive, or combinations thereof), disability severity, age, gender, race, ethnicity, socioeconomic status, education level, or other individual-level characteristics.
(d)Improved policies, programs, or interventions that promote the health and health care access of the subpopulations of individuals with disabilities who are least likely to receive recommended health care services. The DRRP must contribute to this outcome by applying knowledge derived from research conducted under paragraphs (a), (b), and
(c)of this priority. In addition, the DRRP must collaborate with the Rehabilitation Research and Training Center on Health and Wellness, and other projects as identified through consultation with the NIDRR project officer. Priority 4—Traumatic Brain Injury Model Systems (TBIMS) Centers Collaborative Research Projects Background The Centers for Disease Control and Prevention
(CDC)report that at least 1.4 million individuals sustain a traumatic brain injury
(TBI)in the United States each year (Langlois, Rutland-Brown, & Thomas, 2004). Of these, approximately 50,000 die, 235,000 are hospitalized, and 1.1 million are treated and released from emergency departments. These estimates do not include those individuals who sustained a TBI and did not seek medical care, or who were seen only in private doctors' offices. The three leading causes of TBI are motor vehicle/traffic collisions, falls, and assaults. CDC reports that each year an estimated 80,000 to 90,000 Americans sustain TBI resulting in permanent disability. At least 5.3 million Americans have a long-term or lifelong need for help to perform activities of daily living as a result of TBI (Thurman *et al.,* 1999). The nature and extent of disability resulting from TBI depend on several factors, such as the severity and location of the injury, the length of impaired consciousness, the age and general health of the patient, and the intensity of rehabilitation services (Cifu *et al.,* 2003; Dikmen *et al.,* 2003; Sarajuuri *et al.,* 2005). Common clinical sequelae of TBI include problems with cognition, sensory processing, communication, and behavioral or mental health. Some TBI survivors also can develop long-term medical complications, such as Parkinson's disease and other motor problems, Alzheimer's disease, and post-traumatic dementia (National Institute of Neurological Disorders and Stroke, 2002). NIDRR created the TBI Model Systems (TBIMS) program in 1987 to demonstrate the benefits of a coordinated system of neurotrauma and rehabilitation care and to conduct innovative research on all aspects of care for those who sustain TBI. The mission of the TBIMS program is to improve the lives of persons who experience TBI and their families by creating and disseminating new knowledge about the natural course of TBI and rehabilitation treatment and outcomes for individuals who sustain TBI. NIDRR currently funds 14 TBIMS centers throughout the United States. (Additional information on the TBIMS centers can be found at *http://www.naric.com* ). These centers provide comprehensive systems of brain injury care to individuals who sustain TBI. They also conduct TBI research, including clinical research and the analyses of standardized data in collaboration with other related projects. The research activities of the TBIMS centers include participation in joint research module projects, which range from pilot research to more extensive studies. TBIMS centers also are required to contribute information on common data elements to a centralized TBIMS database. (Additional information on the TBIMS database can be found at *http://www.tbindsc.org.* ) To date, TBIMS centers have contributed 6157 cases to the TBIMS database, with followup data extending to 15 years post injury. In 2003 NIDRR leveraged the capacity of the TBIMS program by funding large-scale collaborative research projects. These collaborative projects included a randomized controlled trial of the effectiveness of amantadine hydrochloride in promoting recovery of functioning following TBI, and a study of the effect of scheduled telephone intervention on outcomes after TBI. Through the funding of this priority, the TBIMS program will continue to serve as a platform for multi-site research that contributes to evidence-based rehabilitation interventions and improves the lives of individuals with TBI. References Cifu, D.X., Kreutzer, J.S., Kolakowsky-Hayner, S.A., Marwitz, J.H., & Englander, J. (2003). The Relationship Between Therapy Intensity and Rehabilitative Outcomes After Traumatic Brain Injury: A Multicenter Analysis. Archives of Physical Medicine and Rehabilitation, 84(10): 1441-8. Dikmen, S.S., Machamer, J.E., Powell, J.M., & Temkin, N.R. (2003). Outcome 3 to 5 Years After Moderate to Severe Traumatic Brain Injury. Archives of Physical Medicine and Rehabilitation, 84(10): 1449-57. Langlois, J.A., Rutland-Brown, W., & Thomas, K.E. (2004). Traumatic Brain Injury in the United States: Emergency Department Visits, Hospitalizations, and Deaths. Atlanta, GA: Centers for Disease Control and Prevention, National Center for Injury Prevention and Control. National Institute of Neurological Disorders and Stroke (NINDS). (2002, February). Traumatic Brain Injury: Hope Through Research. Bethesda, MD: National Institute of Health. NIH Publication No. 02-2478. See: *http://www.ninds.nih.gov/disorders/tbi/detail_tbi.htm. * Sarajuuri, J.M., Kaipio, M.L., Koskinen, S.K., Niemela, M.R., Servo, A.R., & Vilkki, J.S. (2005). Outcome of a Comprehensive Neurorehabilitation Program for Patients with Traumatic Brain Injury. Archives of Physical Medicine and Rehabilitation, 86(12): 2296-302. Thurman, D.J., Alverson, C.A., Dunn, K.A., Guerrero, J., & Sniezek, J.E. (1999). Traumatic Brain Injury in the United States: A Public Health Perspective. Journal of Head Trauma Rehabilitation, 14(6): 602-615. Proposed Priority The Assistant Secretary proposes a priority for Disability and Rehabilitation Research Projects (DRRPs) on Traumatic Brain Injury Model Systems (TBIMS) Collaborative Projects. Each DRRP under this priority must conduct research that contributes to evidence-based rehabilitation interventions, including, but not limited to, medical, psychological, vocational, and social interventions for the purpose of improving the lives of individuals with traumatic brain injury (TBI). To be eligible under this priority, an applicant must be currently funded under NIDRR's TBIMS program. Under this priority, each DRRP must be designed to contribute to the following outcomes:
(a)Increased utilization of the TBIMS capacity. The DRRP must contribute to this outcome by collaborating with three or more of the NIDRR-funded TBIMS centers (for a minimum of four TBIMS sites). Note: Applicants under this priority may propose to include other TBI research sites that are not participating in a NIDRR-funded TBIMS program in their collaborative research projects.
(b)Improved long-term outcomes of individuals with TBI. The DRRP must contribute to this outcome by using clearly identified research designs to conduct collaborative research on questions of significance to TBI rehabilitation. The DRRP's research must focus on one or more specific domains identified in NIDRR's Final Long-Range Plan for FY 2005-2009, including health and function, participation and community living, technology, and employment, and must be designed to ensure that the research study has appropriate research hypotheses and methods to generate reliable and valid findings. In addition, the DRRP must address the following requirements: • Demonstrate the capacity to carry out collaborative, multi-site research projects, including the ability to coordinate research among centers; maintain data quality; and adhere to research protocols, confidentiality requirements, and data safety requirements. • Coordinate with the NIDRR-funded Model Systems Knowledge Translation Center to provide scientific results and information for dissemination to clinical and consumer audiences. (Additional information on this center can be found at *http://uwctds.washington.edu/projects/msktc.asp* ). Priority 5—Classification and Measurement of Medical Rehabilitation Interventions Background One of the central objectives of NIDRR-funded medical rehabilitation research is to “increase the number of interventions demonstrated to be efficacious in improving health and function outcomes in targeted disability populations” (NIDRR Long Range Plan, 2005-2009). To demonstrate that a treatment is efficacious, both the intervention and the intended outcome must be operationally defined and measured in a rigorous way. NIDRR-sponsored researchers have been leaders in the development of widely used outcomes measures that are employed to help determine the impact of medical rehabilitation on the health and function of individuals with disabilities, as well as the impact of medical rehabilitation on the participation of these individuals in society. While the ability to measure outcomes of medical rehabilitation continues to mature through recent and ongoing NIDRR-sponsored research, the ability to classify, measure, and replicate specific interventions within the complex medical rehabilitation process is still in its infancy. A recent analysis of published research on medical rehabilitation interventions indicates that nearly two-thirds of articles fail to describe adequately the rehabilitative treatment being evaluated (Dijkers *et al.,* 2002). Medical rehabilitation has been referred to as a “black box” because the wide-range of interventions that take place within rehabilitation settings have not been classified or measured in a systematic way (DeJong *et al.,* 2004). Determining the components of the medical rehabilitation process that positively impact outcome (i.e., the “active ingredients”) is challenging. This is due to the simultaneous delivery of inter-related treatments by a variety of allied health professionals to individuals with unique needs. Development of a treatment taxonomy (i.e., a systematic method for classifying and measuring rehabilitation interventions) will promote the quality and rigor of rehabilitation research and will foster the transfer of evidence-based treatments into clinical practice (Whyte, 2003). In the past, NIDRR has sponsored rehabilitation outcomes research that can serve as a basis for future efforts to develop a taxonomy of medical rehabilitation interventions. For instance, a recent NIDRR-funded stroke outcomes research project involved the creation of point-of-contact forms for recording the delivery of rehabilitation interventions provided by physical therapists (Latham *et al.,* 2005), occupational therapists (Richards *et al.,* 2005), speech-language pathologists (Hatfield *et al.,* 2005), and other allied health professionals. A major strength of this project was that it relied upon the rich experiences and expertise of front-line rehabilitation clinicians to create detailed forms for collecting data about specific interventions. A limitation of this bottom-up, inductive approach to classifying and measuring rehabilitation interventions is its general lack of a theoretical foundation. A theoretical foundation would have the benefit of guiding the collection and analysis of treatment and outcomes data, and increase the field's ability to see how seemingly disparate treatments fit together into a coherent framework for rehabilitation practice and functional recovery (DeJong *et al.,* 2004). Efforts to develop rehabilitation intervention taxonomies must be guided by treatment theories in order to increase the likelihood that “active ingredients” of rehabilitative care can be isolated and replicated (Whyte, 2006). Other clinical fields, such as nursing (Dochterman & Bulechek, 2004), have been actively developing intervention taxonomies to guide clinical service delivery, rigorous clinical documentation, and effectiveness research in a wide range of nursing sub-fields. Literature describing intervention taxonomies and their development in other fields are likely to be instructive to those engaged in the development of a medical rehabilitation treatment classification system. References DeJong, G., Horn, S., Gassaway, J., Slavin, M., & Dijkers, M. (2004). Toward a Taxonomy of Rehabilitation Interventions: Using an Inductive Approach to Examine the “Black Box” of Rehabilitation. Archives of Physical Medicine and Rehabilitation. 85(4): 678-686. Dijkers, M., Kropp, G., Esper, R., Yavuzer, G., Cullen, N., & Bakdalieh, Y. (2002). Quality of Intervention Research Reporting in Medical Rehabilitation Journals. American Journal of Physical Medicine and Rehabilitation. 81(1): 21-33. Dochterman, J. & Bulechek, G. (Eds.). Nursing Interventions Classification
(NIC)(4th ed.). St. Louis, MO: Mosby. Hatfield, B., Millet, D., Coles, J., Gassaway, J., Conroy, B., & Smout, R. (2005). Characterizing Speech and Language Pathology Outcomes in Stroke Rehabilitation. Archives of Physical Medicine and Rehabilitation. 86(S2): S61-S72. Latham, K., Jette, D., Slavin, M., Richards, L., Procino, A., Smout, R., & Horn, S. (2005). Physical Therapy During Stroke Rehabilitation for People With Different Walking Abilities. Archives of Physical Medicine and Rehabilitation. 86(S2): S41--S50. National Institute on Disability and Rehabilitation Research (NIDRR) Final Long Range Plan, 2005-2009. Page 8187. *http://www.ed.gov/about/offices/list/osers/nidrr/policy. html.* Richards, L., Latham, N., Jette, D., Rosenberg, L., Smout, R., & DeJong, G. (2005). Characterizing Occupational Therapy in Stroke Rehabilitation. Archives of Physical Medicine and Rehabilitation. 86(S2): S51-S60. Whyte, J. (2006). Using Treatment Theories to Refine the Designs of Brain Injury Rehabilitation Treatment Effectiveness Studies. Journal of Head Trauma Rehabilitation. 21(2): 99-106. Whyte, J. (2003). It's More Than a Black Box; It's a Russian Doll: Defining Rehabilitation Treatments. American Journal of Physical Medicine and Rehabilitation. 82(8): 639-652. Proposed Priority The Assistant Secretary for Special Education and Rehabilitative Services proposes a priority for a Disability Rehabilitation Research Project
(DRRP)on Classification and Measurement of Medical Rehabilitation Interventions. This DRRP must conduct research and development toward the creation of a taxonomy of medical rehabilitation interventions. Under this priority, the DRRP must be designed to contribute to the following outcomes:
(a)Enhanced research capacity and improved clinical practice in the field of medical rehabilitation. The DRRP must contribute to this outcome by conducting research to develop validated methods for the systematic classification of the broad range of medical rehabilitation interventions delivered by rehabilitation physicians, physical therapists, occupational therapists, speech language pathologists, rehabilitation nurses, rehabilitation psychologists, and other allied health professionals.
(b)Enhanced research capacity and improved clinical practice in the field of medical rehabilitation through the application of one or more treatment theories to guide the development of a rehabilitation treatment taxonomy.
(c)Collaboration with relevant NIDRR-sponsored projects, such as the Rehabilitation Research Training Center on Measuring Rehabilitation Outcomes, and other projects as identified through consultation with the NIDRR project officer. Priority 6—Vocational Rehabilitation Service Models for Individuals With Autism Spectrum Disorders Background In recent years, policy makers, educators, and rehabilitation service providers have become increasingly aware of the critical shortage of services available to youth and young adults with Autism Spectrum Disorders (ASDs), including vocational rehabilitation services (Dew & Alan, 2007). ASDs are a group of lifelong developmental disabilities that include autistic disorder, pervasive developmental disorder-not otherwise specified, and Asperger disorder. ASDs are characterized by impairments in social interactions and verbal and nonverbal communication, as well as the presence of repetitive or unusual behaviors and interests (Centers for Disease Control and Prevention (CDC), 2006a). The severity of impairments can range from mild to severe. Recent prevalence estimates vary, indicating that ASD occurs in 2 to 6 individuals per 1000 individuals, that is, between 1 in 500 and 1 in 166 children have an ASD. ASDs are four times more likely to occur in boys than in girls. The CDC (2006b) reported that ASDs are more prevalent than certain other childhood disabilities, such as cerebral palsy (2.8 per 1000 children), hearing loss (1.1 per 1000 children), vision impairment (0.9 per 1000 children), and Downs syndrome (1.25 per 1000 children) (CDC, 2006b). ASDs usually are diagnosed before the age of three, and the effects are lifelong, although impairments may be attenuated with intervention. Like other transition-age youth with disabilities, students diagnosed with ASD who have turned 22 or graduated from high school with a regular diploma generally no longer have a legal right to appropriate transition services, such as life skills training, transportation, vocational training, and individual and family counseling, under the Individuals with Disabilities Education Act
(IDEA)(National Longitudinal Transition Study-2 (NLTS-2) 2005). Large proportions of youth with ASD rated low on self-care tasks, functional cognitive skills, social skills and communication when compared to the entire population of youth with disabilities served under IDEA (NLTS-2, 2005). Many families find that the services provided to individuals diagnosed with ASD are not tailored to the needs of the children and young adults in this population. Families also report that locating, accessing, and financing needed services for these young adults requires navigating complicated public and private medical, social, and vocational rehabilitation service systems (American Society of Autism, 2001). In 2005, fewer than 2,000 individuals with ASDs received vocational rehabilitation services. Of these individuals, only 1,200 were successfully employed (Dew & Alan, 2007). Of the youth with ASDs who were out of school one year or more, only 1 in 5 reported receiving services from a vocational rehabilitation State agency. These youth with ASDs also were less likely to be employed than youth with other disabilities, and the employed youth with ASDs worked fewer hours than employed youth with other disabilities (NLTS-2, 2005). Increased vocational and rehabilitation interventions are needed if these individuals are to experience vocational and economic success equal to the success of transition-age youth without ASD. References Autism Society of America. (2001). Position Paper on The National Crisis in Adult Services for Individuals with Autism A Call to Action. See: *http://www.autismservicescenter.org/articles2.htm.* Centers for Disease Control and Prevention. (2006a). Fact sheet: CDC Autism research. See: *http://www.cdc.gov/ncbddd/autism/index.htm.* Centers for Disease Control and Prevention. (2006b). How common are Autism Spectrum Disorders (ASD)? See: *http://www.cdc.gov/ncbddd/autism/asd_common.htm.* Dew, D. & Alan, G. (2007). Rehabilitation of Individuals With Autism Spectrum Disorders (Institute on Rehabilitation Issues Monograph No 32). Washington, DC: The George Washington University, Center for Rehabilitation Counseling Research and Education. U.S. Department of Education, Institute of Education Sciences, National Center for Special Education Research. (2005). National Longitudinal Transition Study-2 (NLTS2), Wave 3 parent interview and youth interview/survey. (This information has not yet been published on the NLTS-2 Web site. It will be published sometime early next year). \ Proposed Priority The Assistant Secretary for Special Education and Rehabilitative Services proposes a priority for a Disability Rehabilitation Research Project
(DRRP)on Vocational Rehabilitation Service Models for Individuals with Autism Spectrum Disorders (ASDs). This DRRP must conduct research on vocational rehabilitation
(VR)service models for individuals with ASDs that contributes to evidence-based rehabilitation interventions to improve the lives of individuals with ASDs. Under this priority, the DRRP must be designed to contribute to one or both of the following outcomes:
(a)Improved vocational and postsecondary education outcomes of individuals with ASDs. The DRRP must contribute to this outcome by developing or testing VR intervention strategies for individuals with ASDs, the measures needed to assess the effectiveness of VR intervention strategies for individuals with ASDs, or both.
(b)Improved long-term vocational and postsecondary education services for individuals with ASDs. The DRRP must contribute to this outcome by analyzing the factors affecting the organization and delivery of these services to individuals with ASDs and by recommending changes that could improve these service delivery mechanisms. Priority 7—Center on Knowledge Translation for Assistive Technology Transfer Background While billions of dollars are expended on technology-related research and development efforts in the United States each year (Association of University Technology Managers, 2005), very little of this funding is applied toward development of technology to improve the lives of individuals with disabilities (National Council on Disability, 2000). NIDRR addresses this critical niche with two grant programs that are dedicated to the application of technology and the development of products and devices that are intended to improve the lives of individuals with disabilities: The Rehabilitation Engineering Research Centers
(RERC)and Small Business Innovation Research
(SBIR)programs. For 30 years, the RERC program and its predecessor, the Rehabilitation Engineering Centers program, have been a major force in the development of technology to enhance independent function and societal participation for individuals with disabilities. For over a decade, NIDRR's SBIR program has encouraged small businesses to explore their technological potential by supporting proof of concept investigations of prototype devices intended to benefit individuals with disabilities. In addition to supporting the research and development of products and devices that are designed to improve the lives of individuals with disabilities through its RERC and SBIR programs, NIDRR is also expected, under section 200(3)(D) of the Rehabilitation Act of 1973, as amended, to promote the transfer of rehabilitation technology to individuals with disabilities through research and demonstration projects. The term “technology transfer” has been defined as the process by which university-developed technologies are commercialized (Powers, 2004) and, more specifically, as the “transmittal of developed ideas, products, and techniques from a research environment to one of practical application by consumers” (National Council on Disability, 2000). The processes involved in technology transfer are understood to be an important component of knowledge translation (KT), which refers to the steps between the generation of knowledge and its application to produce beneficial outcomes for society (Canadian Institutes for Health Research, 2005). Technology transfer for individuals with disabilities is a specific subset of the current technology transfer effort. Technology transfer for products intended for use by individuals with disabilities is often difficult because of the small markets served by any one particular assistive technology product or device. While several government and private agencies are working to promote technology transfer for larger and more lucrative markets, very few Federal efforts focus on the transfer of technology for use by individuals with disabilities (National Council on Disability, 2000). Not only is NIDRR mandated to fill this gap, but it is well positioned to do so, given the research and development work supported and the scientist-market networks established through its RERC and SBIR programs. Research from the broader technology transfer field provides limited guidance on how to improve technology transfer for individuals with disabilities. Although some researchers have examined the processes involved in technology transfer as well as methods for evaluating transfer efforts such as best practice analyses (e.g., Erich & Gutterman, 2003; Leahy, 2003; Tornatzky, 2001), research in this area is still limited. For example, best practices analyses have generally involved qualitative case descriptions rather than systematic tests of the models, methods, and measures used for successful technology transfer. A strong need remains for the systematic review of existing models, methods, and measures as well as for the identification of best practices in technology transfer. Once identified, best practices for technology transfer must be adopted by key stakeholders. Training and technical assistance have been named as important methods for promoting the adoption of best practices and, thus, for facilitating the success of the commercialization process (Canadian Institutes of Health Research, 2005). Current Federal investments are attempting to meet the need for technology transfer research generally, but little research has been devoted to examining the potential relevance, applicability, or usability of general technology transfer research within the specific subfield of assistive technology for individuals with disabilities (National Council on Disability, 2000). The need for further technology transfer research is especially acute among those who are developing and attempting to make technologies, products, and devices for individuals with disabilities. References Association of University Technology Managers (2005). AUTM U.S. Licensing Survey: FY 2005. Northbrook, IL. See: *http://www.autm.net/surveys/dsp.surveyDetail.cfm?pid=33.* Canadian Institutes of Health Research. (2005). CIHR's commercialization and innovation strategy. Ottawa, Canada. See: *http://www.cihr-irsc.gc.ca/e/30162.html.* Erlich, J.N. & Gutterman, A. (2003). A practical view of strategies for improving Federal technology transfer. Journal of Technology Transfer, 28, 215-226. Leahy, J.A. (2003). Paths to market for supply push technology transfer. Journal of Technology Transfer, 28, 305-317. National Council on Disability. (2000). Federal Policy Barriers to Assistive Technology. See: *http://www.ncd.gov/newsroom/publications/2000/assisttechnology.htm.* Powers, J.B. (2004). R&D funding sources and university technology transfer: What is stimulating universities to be more entrepreneurial? Research in Higher Education, 45(1), 1-23. Tornatzky, L.G. (2001). Benchmarking university-industry technology transfer: A six year retrospective. Journal of Technology Transfer, 26, 269-277. Proposed Priority The Assistant Secretary for Special Education and Rehabilitative Services proposes a priority for a Disability and Rehabilitation Research Project to serve as the Center on Knowledge Translation for Assistive Technology Transfer (Center). The Center must conduct rigorous research, development, technical assistance, dissemination, and utilization activities to increase successful knowledge translation
(KT)for technology transfer of products developed by NIDRR-funded technology grantees. The Center must partner with key stakeholders such as trade and professional associations, and relevant industry representatives, and focus on no more than three of the following technology areas, which are referenced in the NIDRR Long-Range Plan, 2005-2009: Sensory, Communication, Informational Technology and Telecommunications, and Environmental Access. Under this priority, the Center must be designed to contribute to the following outcomes:
(a)Improved understanding of barriers to and facilitators of successful KT for technology transfer in different industries related to NIDRR's technology portfolio. The Center must contribute to this outcome by—
(1)Identifying and compiling existing research-based knowledge about barriers to and facilitators of successful KT for technology transfer; and
(2)Conducting research on barriers to and facilitators of successful KT for technology transfer related to the technology areas on which the Center focuses.
(b)Advanced knowledge of best practices in KT for technology transfer. The Center must contribute to this outcome by—
(1)Identifying existing models, methods, or measures of KT for technology transfer in different industries related to NIDRR's technology portfolio;
(2)Further developing and testing models, methods, or measures in the technology areas on which the Center focuses; and
(3)Establishing best technology transfer practices that can be used to effectively implement and evaluate the success of technology transfer activities in the technology areas on which the Center focuses.
(c)Increased utilization of the validated best practices for KT for technology transfer. The Center must contribute to this outcome by providing training and technical assistance to NIDRR-funded technology grantees to implement and evaluate the success of such practices. Priority 8—Asset Accumulation and Economic Self-Sufficiency for Individuals With Disabilities Background The availability of savings and assets are important to all individuals because they promote and allow investment in long-term goals such as education and home ownership. Savings and assets are also associated with increased household stability, community involvement, political participation, and self-sufficiency in the general population (Abt Associates, 2000). For individuals with disabilities, the availability of financial savings and assets facilitates progress toward a wide range of community participation goals. Financial savings and assets can facilitate this progress in numerous ways, such as making it possible to purchase needed assistive technology (AT), make down payments on a home, modify one's home for greater accessibility, start a business, or pay for college (Putnam *et al.* , 2005). Little is known about asset accumulation patterns among individuals with disabilities. One of the few relevant studies comparing individuals with and without disabilities indicates that individuals with musculoskeletal conditions and related health difficulties have fewer assets than those without musculoskeletal conditions (Yelin, 1997). Because working-age adults with disabilities are more likely than their non-disabled counterparts to live in poverty (Weathers, 2005) and are less likely to be employed (U.S. Census Bureau, 2002), they have less opportunity to accumulate savings and other assets. However, being low-income does not preclude savings and asset accumulation (Beverly, 1997). Research is required to generate new knowledge about both the barriers to, and facilitators of, savings and asset accumulation for individuals with disabilities. These barriers and facilitators are likely to exist at both the individual and system levels. At the individual level, the following factors have been shown to be associated with asset levels in the general population: income level, education level, employment status, marital status, motivation to save, racial and ethnic status, age, financial literacy, and maintenance of a bank account, among others (Putnam *et al.* , 2005; Beverly, 1997) . In addition, factors associated with asset accumulation that are specific to individuals with disabilities may include type of disabling condition, disability severity, and age-of-onset. In addition to the individual-level factors described in the previous paragraph, there are also a number of barriers to, and facilitators of, asset accumulation at the system level. For example, individuals with disabilities who participate in Federal income support programs are placed under strict asset limits that preclude substantial accumulation of savings (Stapleton *et al.* , 2006) . Low employment rates among individuals with disabilities are associated with reduced access to institutionalized saving mechanisms such as pensions or payroll deductions for retirement savings accounts (Beverly, 1997) . Sub-optimal access to bank buildings and general financial services for individuals with disabilities may also reduce asset accumulation opportunities (Putnam *et al.* , 2005). New knowledge about both the barriers to, and facilitators of, asset accumulation must be applied to the development of targeted interventions or to tailoring currently existing asset accumulation interventions to the specific needs and circumstances of individuals with disabilities. Financial literacy education, for example, could be tailored to address the needs and circumstances of individuals with specific disabling conditions (Cook, 2007). Individual Development Accounts ( *i.e.* , special bank accounts that help individuals save money for a specific purpose such as their education or the purchase of a first home) could be established for savings goals that are particularly relevant to individuals with disabilities, such as offsetting out-of-pocket expenses for health care or personal assistance services, or purchasing AT or home modifications. References Abt Associates (2000). Evaluation of Asset Accumulation Initiatives: Final Report. See: *http://abtassociates.com/reports/9031.pdf.* Beverly, S. (1997). How Can The Poor Save? Theory and Evidence on Saving in Low Income Households. Center for Social Development. Washington University, St. Louis, MO. Working Paper # 97-3. See: *http://gwbweb.wustl.edu/csd/Publications/1997/wp97-3.pdf.* Cook, J. (2007). Asset Accumulation Through Individual Development Accounts in Chicago. E-Newsletter published by the National Rehabilitation Research and Training Center on Psychiatric Disability, at the University of Illinois at Chicago. See: *http://www.wid.org/publications/?page=equity_test&sub=200702&topic=pm.* Putnam, M., Sherraden, M., Edwards, K., Porterfield, S., Wittenburg, D., Holden, K., & Welch-Saleeby, P. (2005). Building Financial Bridges to Economic Development and Community Integration: Recommendations for a Research Agenda on Asset Development for People With Disabilities. Journal of Social Work in Disability & Rehabilitation. 4(3): 61-86. Stapleton, D., O'Day, B., Livermore, G., & Imparato, A. (2006). Dismantling the Poverty Trap. Disability Policy for the 21st Century. Milbank Quarterly. 84(4): 701-732. U.S. Census Bureau (2002). Survey of Income and Program Participation. Table 5: Disability Status, Employment, and Annual Earnings: Individuals 21 to 64 Years Old: 2002. See: *http://www.census.gov/hhes/www/disability/sipp/disable02.html.* Weathers, R. (2005). A Guide to Disability Statistics From The American Community Survey. Disability Statistics User Guide Series. Employment and Disability Institute. Cornell University. Yelin, E. (1997). The Earnings, Income, and Assets of Persons aged 51-61 With and Without Musculoskeletal Conditions. The Journal of Rheumatology. 24(10): 2024-2030. Proposed Priority The Assistant Secretary for Special Education and Rehabilitative Services proposes a priority for a Disability and Rehabilitation Research Project
(DRRP)on Asset Accumulation and Economic Self-Sufficiency for Individuals with Disabilities. This DRRP must create new research-based knowledge to promote asset accumulation among individuals with disabilities. Under this priority, the DRRP must be designed to contribute to the following outcomes:
(a)New knowledge of both the barriers to, and facilitators of, asset accumulation and economic self-sufficiency for low- to moderate-income individuals with disabilities and their families. This DRRP must contribute to this outcome by focusing on the individual-level characteristics that may affect savings and asset accumulation, as well as system-level factors that include policies or programs designed to create system-level incentives or disincentives to the accumulation of assets.
(b)Improved asset accumulation outcomes and economic self-sufficiency among individuals with disabilities. The DRRP must contribute to this outcome by developing and testing no more than two interventions that capitalize on the facilitators and address the barriers to asset accumulation described in paragraph
(a)of this priority. These interventions may include the tailoring of existing asset accumulation interventions to the specific needs and circumstances of individuals with disabilities. Priority 9—Technology Transfer in Resource-Limited Environments Background Growth in the number of older people in the populations of the United States, Europe, Asia, and elsewhere suggest that there will be a steady increase in demand over the next several decades for a broad spectrum of assistive technology
(AT)devices from hearing aids and canes to advanced wheelchairs, specially equipped automobiles, and personal communication devices. However, despite an increasing demand for AT, many individuals with disabilities still cannot access the AT devices they need (Bureau of Industry and Security, 2003). Moreover, in developing countries, environmental constraints often affect the usability of many AT products. For example, products that are developed to enhance mobility may be affected by the lack of paved roads. Lack of maintenance and repair facilities also may affect distribution to, and usability of, technology by individuals with disabilities in many parts of the world. Distance and limited distribution networks tend to inhibit access to AT equipment and services. These constraints are particularly significant in rural areas, where farm accidents account for many disabilities, and in countries where landmine injuries affect individuals whose primary occupation is farming (Swanson, 2007). In the United States, the U.S. Department of Agriculture has recognized the needs of farmers and ranchers with disabilities by funding the AgriAbility project, which provides training, technical assistance, and information about technology and other services through agricultural extension services. NIDRR has also funded research projects to examine service delivery needs for farmers with disabilities. While NIDRR and other Federal agencies have funded successful projects in this area, and although these projects have resulted in the development of low-tech products for use by individuals with disabilities in the United States and in international settings, there is still a persistent need to develop methods of moving new technologies into practice in settings where resources may be scarce. Many barriers to implementing knowledge translation
(KT)strategies for technology development also exist. The three major barriers to the acquisition of technology products in developing countries, and certain parts of the United States, are: lack of awareness of their existence or how to acquire them, lack of necessary materials to produce them, and lack of expertise needed to produce them locally (Jeserich, 2003a; Jeserich, 2003b; Ripat & Booth, 2005; Robitaille, 2003). Several models exist to guide the development, manufacture, and distribution of low-cost, high-quality products in developing countries or economically disadvantaged areas within the United States. Each of these models highlights different aspects of product development, manufacturing or distribution processes. For example, in the charitable model, it is common to use regional distribution points to make products available to those who need them. Likewise, the workshop model focuses on training individuals to construct products that are needed by individuals in their community by using locally available resources, and the manufacturing model requires teaching individuals to construct products by setting up local factories and distributing the products regionally or nationally. The globalization model requires that an established company expand into a region either by establishing a factory or importing products there (Pearlman *et al.* , 2006). None of these models, however, offers a universal solution to the challenge of designing, developing, manufacturing, and distributing low-cost, high-quality products to individuals in developing countries or in economically disadvantaged regions of the United States. Different aspects of these models work well under different environmental conditions. Research is needed to expand our understanding of how best to foster the transfer of technology in these settings. References Canadian Institutes of Health Research
(CIHR)(2005). CIHR IRSC Innovation in action: Knowledge translation strategy—2004-2009. Ottawa: See *http://www.cihr-irsc.gc.ca/e/documents/kt_strategy_2004-2009_e.pdf.* Jeserich, M. (2003a, January 15). Building Appropriate Chairs for the Developing World: Whirlwind Wheelchair International brings access to the third world. AT Journal, 65. See: *http://www.atnet.org/news/2003/jan03/011501.htm.* Jeserich, M. (2003b, February 1). Cubans make due with limited assistive technology: Even with a more independent culture, Cuba's streets and lack of resources provide barriers. AT Journal, 66. See: *http://www.atnet.org/news/2003/feb03/020101.htm.* National Institute on Disability and Rehabilitation Research. Notice of Final Long Range Plan for Fiscal Years 2005-2009. Pages: 8165-8200. *http://www.ed.gov/about/offices/list/osers/nidrr/policy.html.* Pearlman, J., Cooper, R.A., Zipfel, E., Cooper, R., & McCartney, M. (2006). Towards the development of an effective technology transfer model of wheelchairs to developing countries. Disability and Rehabilitation: Assistive Technology, 1 (1-2), 103-110. Ripat, J. & Booth, A. (2005). Characteristics of assistive technology service delivery models: Stakeholder perspectives and preferences. Disability and Rehabilitation, 27(24), 1461-1470. Robitaille, S. (2003, August 21). Assistive tech needs a hand in DC. Business Week Online. Swanson, L. (1997). Canadian farmers with disabilities. Abilities, 30, pages 50-51. U.S. Department of Commerce, Bureau of Industry and Security
(BIS)(2003). Technology Assessment of the U.S. Assistive Technology Industry. Washington, DC: See: *http://www.bis.doc.gov/DefenseIndustrialBasePrograms/OSIES/DefMarketResearchRpts/assisttechrept/index.htm.* Proposed Priority The Assistant Secretary for Special Education and Rehabilitative Services proposes a priority for a Disability Rehabilitation Research Project
(DRRP)on Technology Transfer in Resource-Limited Environments. Under this priority, the DRRP must be designed to contribute to the following outcomes:
(a)Increased access to, and acquisition of, high-quality, low-cost technology products by individuals with disabilities who need them. The DRRP must contribute to this outcome by conducting research to evaluate the application of various models of transferring technology products to individuals with disabilities in resource-limited environments, either in the United States or abroad. The DRRP's research must examine the relationship of factors such as type of technology, delivery system options, socio-economic conditions, and disability type, on successful transfer of needed technologies to individuals with disabilities. NIDRR is particularly concerned about providing technology to support individuals engaged in agricultural occupations due to a significant need for AT by this population.
(b)Increased awareness by individuals with disabilities of high-quality, low-cost technology products, already developed or in development, for use in resource-limited environments. The DRRP must contribute to this outcome by conducting research on methods of providing information on available products to individuals with disabilities and their caregivers in resource-limited environments in the United States, developing countries, or both. The DRRP's research must examine the relationship of factors, such as literacy rates and the availability of print, Internet, or other communication resources, as well as socioeconomic factors and disability type on effective strategies to increase awareness among individuals with disabilities in these areas. Priority 10—Research and Knowledge Translation Center for Individuals With Disabilities and Their Families Background In the United States, there are approximately 20.3 million households in which at least one individual has a disability. This includes households in which at least one child under the age of 18 has a disability and those in which at least one adult has a disability. NIDRR has funded research on children with disabilities and their families (e.g., the Rehabilitation Research and Training Center on Policies Affecting Families of Children With Disabilities), as well as on adults with disabilities who are parents of children under the age of 18 (e.g., the National Resource Center for Parents with Disabilities). The family is a critical unit of analysis in both of these important research areas. It is necessary to understand the experiences of individuals with disabilities and their families as they attempt to navigate programs and service delivery systems that are critical to their participation in society. The needs and experiences of individuals with disabilities and their families differ based on the underlying condition and age of the individual, as well as key sociodemographic characteristics and structure of the individual's family. High-quality, in-depth research on these heterogeneous needs and experiences must serve as an empirical basis for the ongoing development, delivery, and evaluation of targeted information resources for families that include an individual with a disability, whether that individual is a child or the parent of a child. Individuals with disabilities and their families could benefit from research-based training and technical assistance resources that are designed to help them navigate relevant programs and service delivery systems more effectively (Mitchell & Sloper, 2002). These programs and service delivery systems include, but are not limited to, childcare, family law, long-term care, and health care programs and services. Accordingly, NIDRR seeks to fund a center that will translate existing research-based knowledge about these complex programs and service delivery systems to ensure that such resources are available to individuals with disabilities and their families. Additional work in this area will help promote the achievement of one of NIDRR's primary goals, the successful dissemination of research-based knowledge and products for use by intended target audiences, including individuals with disabilities and their families and caregivers (NIDRR Long Range Plan, 2005-2009). Research has been conducted on the many programs and service delivery systems that individuals with disabilities and their families must navigate. There is a need for translation of this research into materials that can be used by individuals with disabilities and their families as they make critical decisions and choices about the services that are available to them. For example, the families of children with disabilities could benefit from translation and widespread dissemination of peer-reviewed research on child care services (Devore & Bowers, 2006), respite and related support services (McGill, Papachristoforou, & Cooper, 2006), and effectively meeting the complex health care needs of children with disabilities in the community (American Academy of Pediatrics, 2005). In addition, adults with disabilities who are parents may come into contact with components of the complex family law system that often assume that disability precludes effective parenting (Kirshbaum & Olkin, 2002). These components of the family law system include statutes and case law related to custody, adoption, and divorce. Translation of legal research on parenting with a disability (Odegard, 1993) may be useful to parents with disabilities and their families. Parents with physical disabilities also would benefit from translation of research on baby care adaptations (Tuleja & DeMoss, 1999), as well as research on the more general experiences of parents with disabilities (Wade, Mildon, & Matthews, 2007; Conley-Jung & Olkin, 2001). Families that include one or more individuals with disabilities must often make decisions about an array of options for providing and financing the long-term services and supports that are necessary to help the family member live and participate in the community. Research on the effectiveness of various service delivery models (Hagglund, Clark, Farmer, & Sherman, 2004; Benjamin, Matthias, & Franke, 2000) could be translated into information that helps individuals with disabilities and their families make critical long-term care decisions. Regardless of the age of the family member with a disability, working within the health care system to receive needed services is important to maintaining health, function, and high levels of participation in the community. The translation of peer-reviewed research on health promotion programs (Ravesloot, Seekins, Cahill, Lindgren, & Nary, 2006), health care coordination programs (Palsbo, Mastal, & O'Donnell, 2006), and preventive care (Smeltzer, 2006) are likely to be useful to individuals and their families as they make decisions about their health and well being. References American Academy of Pediatrics (2005). Clinical Report: Helping Families Raise Children with Special Health Care Needs at Home. Pediatrics. 115(2): 507-512. Benjamin, A., Matthias, R., & Franke, T. (2000). Comparing Consumer-Directed and Agency Models For Providing Supportive Services at Home. Health Services Research. 35(1): 351-366. Conley-Jung, C. & Olkin, R. (2001). Mothers With Visual Impairments or Blindness Raising Young Children. Journal of Visual Impairment and Blindness. 91(1): 14-29. Devore, S. & Bowers, B. (2006). Childcare for Children With Disabilities: Families Search for Specialized Care and Cooperative Childcare Partnerships. Infants & Young Children: An Interdisciplinary Journal of Special Care Practices. 19(3): 203-212. Hagglund, K., Clark, M., Farmer, J., & Sherman, A. (2004). A Comparison of Consumer-Directed and Agency-Directed Personal Assistance Services Programs. Disability and Rehabilitation. 26(9): 518-527. Kirshbaum, M. & Olkin, R. (2002). Parents With Physical, Systemic, or Visual Disabilities. Sexuality and Disability. 20(1): 65-80. Mcgill, P., Papachristoforou, E., & Cooper, V. (2006). Support for Family Carers of Children and Young People with Developmental Disabilities and Challenging Behavior. Child: Care, Health & Development. 32(2): 159-165. Mitchell, W. & Sloper, P. (2002). Information that Informs Rather Than Alienates Families With Disabled Children: Developing a Good Model of Practice. Health and Social Care in the Community. 10(2): 74-81. National Institute on Disability and Rehabilitation Research. Notice of Final Long Range Plan for Fiscal Years 2005-2009. Page: 8174. *http://www.ed.gov/about/offices/list/osers/nidrr/policy.html.* Odegard, J. (1993). The Americans With Disabilities Act: Creating “Family Values” for Physically Disabled Parents. Law and Inequality. 11: 533-653. Palsbo, S., Mastal, M., & O'Donnell, L. (2006). Disability Care Coordination Organizations: Improving Health and Function in People With Disabilities. Lippincott's Case Management. 11(5): 255-264. Ravesloot, C., Seekins, T., Cahill, T., Lindgren, S., & Nary, D. (2006). Health Promotion for People With Disabilities: Development and Evaluation of the Living Well With a Disability Program. Health Education Research Online. Published on October 10, 2006. See: *http://her.oxfordjournals.org/cgi/content/abstract/cyl114v1.* Smeltzer, S. (2006). Preventive Health Screening For Breast and Cervical Cancer and Osteoporosis in Women With Physical Disabilities. Family and Community Health. 29(1 Suppl): 35S-43S. Tuleja, C. & DeMoss, A. (1999). Baby Care Assistive Technology. Technology and Disability. 11(1,2): 71-78. Wade, C., Milton, R., & Matthews, J. (2007). Service Delivery to Parents With An Intellectual Disability: Family-Centered or Professionally Centered? Journal of Applied Research in Intellectual Disabilities. 20(2): 87-98. Proposed Priority The Assistant Secretary for Special Education and Rehabilitative Services proposes a priority for a Disability and Rehabilitation Research Project
(DRRP)to serve as the Research and Knowledge Translation Center for Individuals with Disabilities and Their Families (Center). The Center must conduct research on the experiences and knowledge needs of individuals with disabilities and their families, and translate these findings into training, technical assistance, and informational resources. The Center must focus on the knowledge needs of families that include a child with a disability, an adult with a disability who is a parent of at least one child under the age of eighteen, or both. Under this priority, the Center must be designed to contribute to the following outcomes:
(a)Increased knowledge about the experiences and information needs of individuals with disabilities and their families, and how those experiences and needs differ by variables such as condition type, severity, and age, as well as key characteristics of other family members and the overall structure of the family. The Center must contribute to this outcome by synthesizing existing research and advancing the knowledge base through the collection and analysis of data about the experiences and knowledge needs of families that include one or more individuals with a disability. Through this research and analysis, the Center must examine the extent to which the needs of individuals with disabilities and their families are being met by the programs and service systems that are critical to their community integration and participation (e.g., statutes and case law related to custody, adoption, and divorce; health care; long-term care; assistive technology provision programs; child care; transportation; and a wide variety of related social support services).
(b)Improved participation and community integration of individuals with disabilities. The Center must contribute to this outcome by developing, implementing, and evaluating research-based training, technical assistance, and informational resources that are targeted to the specific knowledge needs of individuals with disabilities and their families, as those needs are identified through the research activities described in paragraph
(a)of this priority, or other research-based knowledge. In addition, the Center must coordinate with relevant NIDRR Knowledge Translation grantees to develop and implement a method for identifying high-quality, research-based information for dissemination to individuals with disabilities and their families. Rehabilitation Research and Training Centers (RRTCs) RRTCs conduct coordinated and integrated advanced programs of research targeted toward the production of new knowledge to improve rehabilitation methodology and service delivery systems, alleviate or stabilize disability conditions, or promote maximum social and economic independence for individuals with disabilities. Additional information on the RRTC program can be found at: *http://www.ed.gov/rschstat/research/pubs/res-program.html#RRTC.* Statutory and Regulatory Requirements of RRTCs RRTCs must— • Carry out coordinated advanced programs of rehabilitation research; • Provide training, including graduate, pre-service, and in-service training, to help rehabilitation personnel more effectively provide rehabilitation services to individuals with disabilities; • Provide technical assistance to individuals with disabilities, their representatives, providers, and other interested parties; • Demonstrate in their applications how they will address, in whole or in part, the needs of individuals with disabilities from minority backgrounds; • Disseminate informational materials to individuals with disabilities, their representatives, providers, and other interested parties; and • Serve as centers of national excellence in rehabilitation research for individuals with disabilities, their representatives, providers, and other interested parties. Priority 11—General Rehabilitation Research and Training Center
(RRTC)Requirements Background NIDRR proposes the following *General RRTC Requirements* priority because it believes that the effectiveness of any RRTC depends on, among other things, how well the RRTC coordinates its research efforts with the research of other NIDRR-funded projects, involves individuals with disabilities in its activities, and identifies specific anticipated outcomes that are linked to its objectives in applying for RRTC funding. Accordingly, NIDRR intends to use proposed *Priority 11—General RRTC Requirements* in conjunction with each of the other RRTC priorities proposed in this notice (i.e., priorities 12 through 21). Proposed Priority To meet this priority, the Rehabilitation Research and Training Center
(RRTC)must—
(a)Conduct a state-of-the-science conference on its respective area of research by the fourth year of the grant cycle and publish a comprehensive report on the final outcomes of the conference by the end of the fourth year of the grant cycle. This conference must include materials from the experts internal and external to the RRTC;
(b)Coordinate on research projects of mutual interest with relevant NIDRR-funded projects as identified through consultation with the NIDRR project officer;
(c)Involve individuals with disabilities in planning and implementing its research, training, and dissemination activities, and in evaluating the RRTC; and
(d)Coordinate with the appropriate NIDRR-funded Knowledge Translation Centers and professional and consumer organizations, to provide scientific results and information for dissemination to policymakers, service providers, researchers, and others. Priority 12—Enhancing the Health and Wellness of Persons With Neuromuscular Diseases Background The term “muscular dystrophy” is used to refer to the more than 40 neuromuscular diseases (NMDs). The Muscular Dystrophies are currently classified in nine types (Myotonic, Duchenne, Becker, Limb-Girdle, Facioscapulohumeral, Congenital, Oculopharyngeal, Distal and Emery-Dreifuss), and some of these are categorized into further subtypes. NMDs affect individuals of both sexes at every stage of life: infancy, adolescence, adulthood, and old age. Their effects range from gradual loss of mobility and independence to severe disability and death. The most common NMD is Duchenne/Becker Muscular Dystrophy (DBMD). DBMD affects approximately 1 out of every 3,500 to 5,000 boys (Single Gene Disorders and Disability, 2006). Individuals with NMDs face health, psychosocial, and economic problems that negatively affect their overall health and well-being, as reported at the National Institutes of Health
(NIH)“Burden of Muscle Disease Workshop,” hosted by the National Institute of Arthritis and Musculoskeletal and Skin Diseases (NIAMS) and the NIH Office of Rare Diseases on January 26-27, 2005 (Burden of Muscle Disease Workshop, 2005). Neuromuscular diseases may contribute to significant health problems because of muscle weakness, difficulty with exercise, fatigue, poor endurance, weight problems (e.g., obesity), pulmonary complications and associated sleep disorders. Research is needed to generate new knowledge about secondary conditions of NMD that are not as well understood—such as pain, reduced bone content, and metabolic complications. Exercise and nutrition have been a focus of rehabilitation interventions because they are key factors in successful participation in health and wellness programs for individuals with NMDs (Kilmer, 2002). However, due to the loss of functional muscle tissue from NMDs, few studies have examined the response of individuals with NMDs to cardiopulmonary testing and aerobic exercise training (McDonald, 2005). In order to facilitate high-quality research in the areas of cardiopulmonary testing and aerobic exercise training, the capacity to measure physical, functional, and social participation outcomes must be enhanced (Muscular Dystrophy Coordinating Committee Report, 2005) through the development of new outcome measures, or validation of existing measures in populations of individuals with NMD. References Burden of Muscle Disease Workshop Report, January 26-27, 2005. See: *http://www.niams.nih.gov/ne/reports/sci_wrk/2005/muscle_dis_summ.htm* Kilmer, D.D. (2002). Response to Aerobic Exercise Training in Humans with Neuromuscular Disease. American Journal of Physical Medicine and Rehabilitation, 81(11 Suppl), S148-50. McDonald, C. (2005). Childhood Neurological Disorders: crosscutting breakout session. Neurorehabilitation and Neural Repair, 10(1), S91. Muscular Dystrophy Coordinating Committee Report Scientific Working Group, August 16-17, 2005. See: *http://www.ninds.nih.gov/find_people/groups/mdcc/MDCC_Action_Plan.doc* Single Gene Disorders and Disability
(SGDD)(2006). See: *http://www.cdc.gov/ncbddd/duchenne/who.htm.* Proposed Priority The Assistant Secretary for Special Education and Rehabilitative Services proposes a priority for a Rehabilitation Research and Training Center
(RRTC)on Enhancing the Health and Wellness of Persons with Neuromuscular Diseases (NMDs). This RRTC must conduct rigorous research, training, technical assistance, and dissemination activities to improve rehabilitation outcome measures and rehabilitation interventions that can be applied in clinical or community-based settings. In doing so, the RRTC must focus on no more than two of the following dimensions: Prevention or reduction of secondary conditions (e.g., pain, fatigue, muscle weakness, associated sleep disorders, metabolic complications); improved mobility; emotional well-being; and access to community-based health promotion services and programs (e.g., fitness, recreation, and nutrition). Under this priority, the RRTC must be designed to contribute to the following outcomes:
(a)Improved outcome measures for use with individuals with NMDs. The RRTC must contribute to this outcome by identifying or developing and testing methods and measures to assess health and rehabilitation outcomes, participation in community-based programs, or both.
(b)Improved medical rehabilitation or community-based rehabilitation interventions. The RRTC must contribute to this outcome by identifying or developing and testing new rehabilitation interventions, replicating promising practices or programs, or both. Priority 13—Enhancing the Health and Wellness of Individuals With Arthritis Background Approximately 60 million adults in United States will have arthritis by the year 2020. Currently, approximately 21 million individuals have osteoarthritis, and another 2.1 million have rheumatoid arthritis (National Arthritis Action Plan, 1999). Arthritis is the leading cause of disability in the United States for individuals 15 years of age and older, potentially limiting affected persons from walking a few blocks or climbing a flight of stairs (Centers for Disease Control and Prevention, Morbidity and Mortality Weekly Report, (2007)). Arthritis is also the second leading cause of work-related disability in the United States (Cakmak & Bolukbas, 2005). Arthritis impacts an individual physically, emotionally, and socially and is characterized by several factors such as pain, inflammation, damage to joint tissue, decreased mobility, fatigue, stress, and depression. Developing interventions to alleviate arthritis pain and functional limitations that are associated with arthritis are particularly important. Exercise is an essential tool in managing arthritis pain and stiffness and in improving mobility. Muscle strength training is considered to be an important cornerstone of non-pharmacological treatment for individuals with arthritis (Hakkinen, 2004). However, the rates of participation in regular exercise are lower among individuals with arthritis than those without arthritis (Barclay, 2006). Arthritis also can lead to diminished enjoyment of, and participation in, daily activities and community-based programs ( *e.g.* , going to church and socializing), which in turn can contribute to feelings of isolation and depression. A depression management program consisting of coordination of medications and counseling can reduce both depression and arthritis pain and disability in older adults (Lin *et al.* , 2003). Outcome measures are required to assess the effectiveness of specific interventions to reduce the physical, functional, emotional, and social sequelae of arthritis. While arthritis researchers have access to effective measures of disease status, physical and functional abilities, and quality of life, measures of social participation for this population are less well developed (Backman, 2006). Research is required to fill this gap in outcome measures through the development of arthritis-specific measures of participation, or the validation of existing measures of participation that have been developed for other subpopulations of individuals with disabilities (Whiteneck *et al.,* 1992). References Backman, C.L. (2006). Outcomes Measures for Arthritis Care Research: Recommendations from CARE III Conference. Journal of Rheumatology, 33, 1908-11. Barclay, L. (2006). Perceived barriers to exercise identified for patients with Arthritis. Arthritis Care Research 55:000-000. See: *http://www.medscape.com/viewarticle/541721.* Cakmak, A. & Bolukbas, N. (2005). Juvenile Rheumatoid Arthritis: Physical Therapy and Rehabilitation. Southern Medical Journal, 98(2), 212-216. Centers for Disease Control and Prevention, Morbidity and Mortality Weekly Report, (2007). National and State Medical Expenditures and Lost Earnings Attributable to Arthritis and Other Rheumatic Condition—United States, 2003. See: *http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5601a2.htm?s_cid=mm5601a2_e* Hakkinen, A. (2004). Effective and Safety of Strength Training in Rheumatoid Arthritis. Current Opinion in Rheumatology, 16(2), 132-137. Lin, E., Katon, W., Von Korff, M., Tang, L., Williams, J., Kroenke, K., Hunkeler, E., Harpole, L., Hegel, M., Arean, P., Hoffing, M., Della Penna, R., Langston, C. & Unutzer, J. (2003). Effect of Improving Depression Care on Pain and Functional Outcomes Among Older Adults With Arthritis: A Randomized Controlled Trial. Journal of the American Medical Association. 290(18): 2428-2429. National Arthritis Action Plan (1999): A Public Health Strategy. See: *http://www.arthritis.org/resources/about_naap.asp.* Whiteneck, G.G., Charlifue, S.W., Gerhart, K.A., Overholser, J.D., & Richardson, G.H. (1992). Quantifying handicap: a new measure of long-term rehabilitation outcomes. Archives of Physical Medicine and Rehabilitation, 73(6), 519-26. Proposed Priority The Assistant Secretary for Special Education and Rehabilitative Services proposes a priority for a Rehabilitation Research and Training Center
(RRTC)on Enhancing the Health and Wellness of Individuals with Arthritis. This RRTC must conduct rigorous research, training, technical assistance, and dissemination activities to improve rehabilitation outcome measures and rehabilitation interventions that can be applied in clinical or community-based settings. In doing so, the RRTC must focus on no more than two of the following dimensions: prevention or reduction of secondary conditions ( *e.g.* , pain, fatigue, depression); improved mobility; emotional well-being; and access to community-based health promotion services and programs ( *e.g.* , fitness, recreation, and nutrition). Under this priority, the RRTC must be designed to contribute to the following outcomes:
(a)Improved outcome measures for use with persons with arthritis. The RRTC must contribute to this outcome by identifying or developing and testing methods and measures to assess health and rehabilitation outcomes, participation in community-based programs, or both.
(b)Improved medical rehabilitation or community-based rehabilitation interventions. The RRTC must contribute to this outcome by identifying or developing and testing new rehabilitation interventions, replicating promising practices or programs, or both. Priority 14—Stroke Rehabilitation Background Approximately 730,000 individuals experience strokes in the United States each year. Nearly five million individuals in the United States today have survived a stroke. Stroke patients continue to be the largest diagnostic group in medical rehabilitation, and stroke is often associated with high levels of disability (American Heart Association, 2006). With the help of new technologies, significant progress has been made in the development of rehabilitation interventions and in the assessment of outcomes for those who have experienced a stroke. Examples of recent advances in rehabilitation interventions and outcomes assessment include the Extremity Constraint-Induced Therapy Evaluation (EXCITE), a repetitive training of upper extremities on task-oriented activities that enhances functional abilities of stroke survivors 3 to 9 months after stroke (Wolf *et al.* , 2006; Messe & Cucchiara, 2006). A novel and promising technology, the BION, is an implantable neuromuscular stimulation device to treat complications of paralysis and disuse atrophy, including shoulder subluxation, hand contractures, drop foot, and osteoarthritis (Loeb *et al.* , 2006). Given the large and growing incidence of stroke in the United States and the high levels of physical and cognitive disability often associated with stroke, there is a need for further research on promising new interventions, such as constraint-induced
(CI)therapy, bodyweight-supported treadmill training (BWS-TT), electrical stimulation, and robotic technology (Bassett, 2006). In addition, research is needed to develop more sensitive measures of neuro-recovery and post-stroke secondary health conditions, as well as to develop interventions to prevent a variety of post-stroke secondary health conditions such as fatigue (Gladstone *et al.* , 2002; Roth, 2005). References American Heart Association
(AHA)(2006). Heart Disease and Stroke Statistics—2006 Update: A report from the American Heart Association Statistics Subcommittee. See: *http://circ.ahajournals.org/cgi/content/short/113/6/e85.* Bassett, J. (2006). A Lifelong Journey. Advance for Directors in Rehabilitation, 15(10), 42-48. Gladstone, D.J., Danells, C.J., & Black, S.E. (2002). The fugl-meyer assessment of motor recovery after stroke: a critical review of its measurement properties. Neurorehabilitation and Neural Repairs, 16(3): 232-40. See: *http://www.medscape.com/medline/abstract/12234086.* Loeb, G.E., Richmond F.J.R., & Baker L.L. (2006). The BION Devices: Injectable interfaces with peripheral nerves and muscles. Neurosurgery Focus, 20(5). See: *http://www.medscape.com/viewarticle/542356.* Messe, S.R. & Cucchiara, B.L. (2006). Highlights of the International Stroke Conference 2006. Neurology and Neurosurgery, 8(1). See: *http://www.medscape.com/viewarticle/527458.* Roth, E. (2005). Aging Issues: Neurological Disorders: crosscutting breakout session. Neurorehabilitation and Neural Repair, 10(1), S70. Wolf, S.L., Weinstein, C.J., Miller, J.P., Taub, E., Uswatte, G., Morris, D., Giuliani, C., Light, K.E., & Nichols-Larsen, D. (2006). Effect of constraint-induced movement therapy on upper extremity function 3 to 9 months after stroke. Journal of the American Medical Association, 296(17), 2095-2104. Proposed Priority The Assistant Secretary for Special Education and Rehabilitative Services proposes a priority for a Rehabilitation Research and Training Center
(RRTC)on Stroke Rehabilitation. This RRTC must conduct rigorous research, training, technical assistance, and dissemination activities to improve rehabilitation outcome measures and rehabilitation interventions that can be applied in clinical or community-based settings. In doing so, the RRTC must focus on no more than two of the following dimensions: prevention or reduction of secondary conditions (e.g., pain, fatigue, depression); improved mobility; emotional well-being; and access to community-based health promotion services and programs (e.g., fitness, recreation, and nutrition). Under this priority, the RRTC must be designed to contribute to the following outcomes:
(a)Improved outcome measures for use with persons with stroke. The RRTC must contribute to this outcome by identifying or developing and testing methods and measures to assess health and rehabilitation outcomes, participation in community-based programs, or both.
(b)Improved medical rehabilitation or community-based rehabilitation interventions. The RRTC must contribute to this outcome by identifying or developing and testing new rehabilitation interventions, replicating promising practices or programs, or both. Priority 15—Personal Assistance Services
(PAS)in the 21st Century Background In 2005, health-related problems resulted in about 3.8 million adults needing help from another person with personal care activities, and about 7.8 million adults requiring help from another person with daily activities, such as household chores or shopping. Among adults ages 75 and over, a rapidly growing population, about 10 percent required help with personal care and 19 percent required help with daily activities (Adams, Dey, & Vickerie, 2005; Population Projections Branch, 2004). Most personal assistance services
(PAS)are provided by unpaid caregivers such as family members or friends; in 2004, over 44 million adults provided help with care to an adult family member or friend (Naiditch & Wasan, 2006). However, paid personal and home care aides held only about 701,000 jobs in 2004 (Bureau of Labor Statistics (BLS), U.S. Department of Labor (DOL), 2006). The demand for personal and home care aides is expected to increase greatly over the next 10 years because of the aging of the U.S. population (BLS, DOL, 2006). The expected increase in demand is especially troubling because a labor shortage crisis in the available pool of caregivers already exists. This labor shortage crisis has “potentially negative consequences for quality of care and quality of life” for individuals requiring personal and home care (Stone & Wiener, 2001). In addition, many unpaid caregivers themselves are aging and face their own “considerable personal toll—physically, mentally, emotionally, and financially, and in terms of retirement insecurity, lost jobs or other missed opportunities” (Miller & Mor, 2006). Finally, the need for an improved network of PAS providers extends beyond day-to-day activities; there is also an emerging need for PAS providers during emergencies and disaster situations (National Council on Disability, 2006). The cost of PAS can be covered by a variety of sources, depending on a person's income and the type of services provided. For example, individuals with disabilities who work and receive Supplemental Security Income
(SSI)benefits may deduct PAS performed in an employment setting or in preparing for, or traveling to or from, the workplace as an Impairment-Related Work Expense. This deduction is used to calculate available income and ultimately the amount of a person's SSI cash benefit (Social Security Administration, 2006). While the loss of such benefits has frequently been seen as a hindrance to securing or maintaining employment, there is little research on the economic impact of covering PAS costs for adults who are working and not eligible for public assistance. A study of elderly adults with disabilities also suggests that the use of assistive technology by an individual with disabilities reduces the number of PAS hours required for that individual (Hoenig, Taylor, & Sloan, 2003). However, there has been little research on the relationship between the use of AT by working-age adults with disabilities and the number of PAS hours required by those individuals. References Adams, P.F., Dey, A.N., & Vickerie, J.L. (2005). Summary Health Statistics for the U.S. Population: National Health Interview Survey, 2005. Series 10, No. 233 Provisional Report. Hyattsville, MD: National Center for Health Statistics. See: *http://www.cdc.gov/nchs/data/series/sr_10/sr10_233.pdf.* Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, 2006-07 Edition, Personal and Home Care Aides. Washington, DC: Bureau of Labor Statistics, U.S. Department of Labor. See: *http://www.bls.gov/oco/ocos173.htm.* Hoenig, H., Taylor, D.H., & Sloan, F.A. (2003). Does Assistive Technology Substitute for Personal Assistance Among the Elderly? American Journal of Public Health, 93(2), 330-337. Miller, E.A. & Mor, V. (2006). Out of the Shadows: Envisioning a Brighter Future for Long-Term Care in America. Providence, RI: Brown University Center for Gerontology and Health Care Research. See: *http://www/chcr.brown.edu/PDFS/BROWN_UNIVERSITY_LTC_REPORT_FINAL.PDF.* Naiditch, L. & Wasan, P. (2006). Evercare Study of Caregivers in Decline: Findings from a National Survey. Bethesda, MD: National Alliance for Caregiving. See: *http://www.caregiving.org/data/Caregivers%20in%20Decline%20Study-FINAL-lowres.pdf.* National Council on Disability (2006). The Impact Of Hurricanes Katrina And Rita On People With Disabilities: A Look Back And Remaining Challenges. Washington, DC: National Council on Disability. See: *http://www.ncd.gov/newsroom/publications/2006/hurricanes_impact.htm.* Population Projections Branch (2004). U.S. Interim Projections by Age, Sex, Race, and Hispanic origin. Washington, DC: U.S. Census Bureau. See: *http://www.census.gov/ipc/www/usinterimproj/.* Social Security Administration (2006). Understanding Supplemental Security Income (SSI). Washington, DC: U.S. Social Security Administration. See: *http://www.ssa.gov/notices/supplemental-security-income/ussi-2006.pdf.* Stone, R.I. & Wiener, J.M. (2001). Who Will Care For Us? Addressing the Long-Term Care Workforce Crisis. Washington DC: The Urban Institute. Proposed Priority The Assistant Secretary for Special Education and Rehabilitative Services proposes a priority for a Rehabilitation Research and Training Center
(RRTC)on Personal Assistance Services
(PAS)in the 21st Century. This RRTC must conduct rigorous research, develop interventions, and provide training that address future demands for PAS and caregiving. Under this priority, the RRTC must be designed to contribute to the following outcomes:
(a)Improved access to PAS by individuals with disabilities. The RRTC must contribute to this outcome by:
(1)Analyzing and describing trends and needs of the population of PAS consumers;
(2)identifying gaps in programs and services;
(3)developing effective evidence-based interventions to address unmet needs for PAS; and
(4)proposing strategies to coordinate and secure PAS services during emergencies.
(b)A larger and better prepared paid and unpaid PAS workforce. The RRTC must contribute to this outcome by:
(1)Developing tools and supports for unpaid caregivers that reflect the changing needs of caregivers as they age;
(2)developing strategies that lead to a PAS workforce that is geographically diverse and that maximizes workforce recruitment, retention, compensation and benefits, professional training, development, and networking; and
(3)identifying and evaluating interventions and labor resources, such as job training services, that help to improve workforce capacity of PAS providers.
(c)An understanding of the complexity of the economics of PAS. The RRTC must contribute to this outcome by:
(1)Analyzing the interrelationship between the use of assistive technology, employment supports, and PAS; and
(2)analyzing the role of tax laws that affect reimbursement for PAS. Priority 16—Participation and Community Living for Individuals With Psychiatric Disabilities Background Individuals with psychiatric disabilities have one of the lowest rates of employment of any disability group—only 1 in 3 individuals with psychiatric disabilities is employed (Kaye, 2002). They also comprise the largest diagnostic category of working-aged adults receiving Supplemental Security Income or Social Security Disability Insurance (McAlpine and Warner, 2001). In addition, individuals with psychiatric disabilities constitute a large proportion of the homeless population. Of 2 million adults experiencing an episode of homelessness, for example, 46 percent have a psychiatric disability (Burt, 2001). In April 2002, the President signed Executive Order 13263, establishing a New Freedom Commission on Mental Health, and charged the Commission with completing a comprehensive study of the mental health service delivery system in the United States. The Commission's report, *Achieving the Promise: Transforming Mental Health Care in America* , set the course for public and private efforts across the country to improve the state of mental health care (New Freedom Commission on Mental Health, 2003). The Commission calls for a transformation of the mental health service delivery system, focusing on recovery and resilience for individuals with psychiatric disabilities. Recovery is, in part, “the process in which people are able to live, work, learn, and participate fully in their communities,” while resilience indicates “the personal and community qualities that enable us to rebound from adversity, trauma, tragedy, threats, or other stresses—and to go on with life with a sense of mastery, competence, and hope” (New Freedom Commission on Mental Health, 2003). Being part of a community means being included, involved, and valued; it means holding social roles that are meaningful. Inclusion requires full access to opportunities and support in areas such as employment, housing, education, health and mental health care, recreation, social relationships, and other public and private sector activities. Research, including NIDRR-funded research, has advanced the knowledge base in these and other areas through a focus on recovery-oriented services, peer supports, supported education, psychiatric rehabilitation, and the avoidance of stigma. This research has led to advances in theory development, measurement tools, treatment options, and a variety of community-based supports. However, further research is needed in these areas to maximize participation and community living outcomes. In addition, there is a strong need for research on understudied aspects of participation and community living for individuals with psychiatric disabilities. Two examples among many are emergency preparedness and mental health disparities for traditionally underserved populations (e.g., individuals from diverse racial, ethnic, linguistic, and geographic backgrounds, and individuals with multiple disabilities) (National Council on Disability, 2006; New Freedom Commission on Mental Health, 2003; U.S. Public Health Service, Office of the Surgeon General, 2001). Finally, there is extensive documentation about the need to accelerate the incorporation of research findings in mental health service delivery so that individual lives can change as a result of the research. According to the Institute on Medicine report, *Crossing the Quality Chasm: A New Health System for the 21st Century* , the time lag between the discovery of effective medical treatments and the incorporation into practice is 15 to 20 years. The President's New Freedom Commission on Mental Health has called for a reduction in this delay as part of an overall transformation of mental health care in America (Substance Abuse and Mental Health Services Administration, 2005; New Freedom Commission on Mental Health, 2003; Institute of Medicine, 2001). References Burt, M.R. (2001). What will it take to end homelessness? Urban Institute Brief. Washington, DC: Urban Institute. Institute of Medicine (2001). Crossing the Quality Chasm: A New Health System for the 21st Century. Washington, DC: National Academy Press. Kaye, H.S. (2002). Employment and Social Participation Among People With Mental Health Disabilities. In San Francisco, CA: National Disability Statistics & Policy Forum. McAlpine, D.D. and Warner, L. (2001). Barriers to Employment Among Persons With Mental Illness: A Review of the Literature. New Brunswick, NJ: Institute for Health. National Council on Disability (July 7, 2006). The Needs of People With Psychiatric Disabilities During and After Hurricanes Katrina and Rita: Position Paper and Recommendations. *http://www.ncd.gov/newsroom/publications/2006/peopleneeds. htm.* New Freedom Commission on Mental Health, Achieving the Promise: Transforming Mental Health Care in America. Final Report. DHHS Pub. No. SMA-03-3832. Rockville, MD: 2003. Substance Abuse and Mental Health Services Administration, U.S. Department of Health and Human Services, Transforming Mental Health Care in America. Federal Action Agenda: First Steps. DHHS Pub. No. SMA-05-4060. Rockville, MD: 2005. U.S. General Accounting Office (1996, April). SSA disability: Program redesign necessary to encourage return to work. Report to the Chairman, Special Committee on Aging and the U.S. Senate. GAO/HEHS 96-62. Washington, DC: U.S. General Accounting Office. United States Public Health Service Office of the Surgeon General (2001). Mental Health: Culture, Race, and Ethnicity: A Supplement to Mental Health: A Report of the Surgeon General. Rockville, MD: Department of Health and Human Services, U.S. Public Health Service. Proposed Priority The Assistant Secretary for Special Education and Rehabilitative Services proposes a priority for a Rehabilitation Research and Training Center
(RRTC)on Participation and Community Living for Individuals with Psychiatric Disabilities. The RRTC must conduct rigorous research, training, technical assistance, and dissemination activities that contribute to improved participation and community living outcomes for individuals with psychiatric disabilities. Under this priority, the RRTC must be designed to contribute to the following outcomes:
(a)Improved individual and system capacity to maximize the meaningful involvement of individuals with psychiatric disabilities in community life. The RRTC must contribute to this outcome by:
(1)Advancing the knowledge base and application of theories, measures, methods, interventions, or a combination of those activities that facilitate participation and community living. This must include a focus on at least three of the following areas: employment, housing, education, health and mental health care, recreation, social relationships, or other public and private sector activities related to community living.
(2)Reducing disparities in service delivery and program development by including a focus on one or more of the following understudied areas:
(i)Emergency preparedness for individuals with psychiatric disabilities;
(ii)individuals with psychiatric disabilities from diverse racial, ethnic, linguistic, and geographic backgrounds; or
(iii)individuals with psychiatric disabilities who have co-occurring sensory or physical disabilities.
(b)Increased incorporation of mental health research findings into practice or policy. The RRTC must contribute to this outcome by coordinating with appropriate NIDRR-funded knowledge translation grantees to advance or add to their work in the following areas:
(1)Developing and implementing procedures to evaluate the readiness of mental health research findings for translation into practice.
(2)Collaborating with stakeholder groups to develop, evaluate, or implement strategies to increase utilization of mental health research findings.
(3)Conducting training, technical assistance, and dissemination activities to facilitate knowledge translation in the context of mental health research. Priority 17—Multiple Sclerosis: Interventions To Maximize Health, Well-Being, and Participation Background Approximately 400,000 Americans have multiple sclerosis (MS), and, each week, about 200 more individuals in the United States are diagnosed with MS (National Multiple Sclerosis Society, 2005). Individuals with MS may have symptoms such as fatigue, motor weakness, spasticity, poor balance, heat sensitivity, pain, cognitive impairment, and mood disorders (Wynn, 2006; Mikol, 2006). The impact of the variety of symptoms that an individual with MS may experience and the uncertain prognosis of a given course of MS can impair an individual's routine activities; vocational, social and interpersonal functioning; and quality of life (Kalb, 2004). Treatment of MS may include: medication, rehabilitation, integrative medicine, and other interventions (Yadav *et al.* , 2006). Surveys indicate that 50 to 75 percent of individuals with MS have tried dietary changes, nutritional or herbal supplements, mind-body therapies, and similar approaches to manage MS. Interestingly, patients seem unlikely to discuss these types of strategies with their neurologists (Yadav *et al.* , 2006). While some research has been conducted regarding the functional outcomes of individuals with MS, there is a significant need for further research in the areas of outcomes measurement and rehabilitation interventions to maximize the health, well-being, and participation of individuals with MS. Providers of care who treat individuals with MS have cited their own need for clinical consultation and continuing medical education
(CME)about treatment of MS-associated symptoms (Turner *et al.* , 2006). Fatigue, depression, cognitive impairment, and pain are among the most frequently cited areas for consult and CME (Mikol, 2006). Future research should address the frequent co-occurrence of these four symptoms as well as the impact of central-nervous-system-active medications used to treat them (Oken *et al.* , 2006). For individuals with MS, there is a “continued need for effective therapeutic approaches to symptom management” (Joy & Johnston, 2001). Recent research underscores the need for a continued focus on the role of environmental and lifestyle factors affecting individuals with MS, and also on the impact co-existing chronic health conditions have on an aging population of individuals with MS (Marrie, 2006; Buchanan *et al.* , 2006; Snook *et al.* , 2006). For example, treatment disparities and variations in disease characteristics have been found when comparing individuals with MS from rural versus urban environments (Buchanan *et al.* , 2006). There is also a strong relationship between physical inactivity and risk for obesity among individuals with MS (Snook *et al.* , 2006). In addition, a variety of autoimmune diseases “are reported to occur more frequently than expected in patients with MS” (Marrie, 2006). These findings support the need for further research on outcomes measurement and promotion of health and participation for individuals with MS. References Buchanan, R.J., Schiffer, R., Stuifbergen, A., Zhu, L., Wang, S., Chakravorty, B.J., & Kim, M. (2006). Demographic and Disease Characteristics of People with Multiple Sclerosis Living in Urban and Rural Areas. International Journal of MS Care, February 2006, vol. 8, Supplement 1. Joy, J.E. & Johnston, R.B. (Eds.) (2001). Multiple Sclerosis: Current Status and Strategies for the Future. Washington, D.C.: National Academy Press. Kalb, R.C. (2004). Multiple Sclerosis: The Questions You Have—The Answers You Need, 3rd Edition. New York: Demos Medical Publishing. Marrie, R.M. (2006). Multiple Sclerosis and Coexisting Health Conditions. Multiple Sclerosis Quarterly Report, Winter 2006, vol. 25, no. 4. Mikol, D. (2006). Management of Fatigue, Cognitive Dysfunction, and Mood Disorders. International Journal of MS Care, February 2006, vol. 8, Supplement 1. National Multiple Sclerosis Society (2005). Multiple Sclerosis Information Sourcebook. New York: National Multiple Sclerosis Society. See: *http://www.nationalmssociety.org/Sourcebook-Topic.asp.* Oken, B.S., Flegal, K., Zajdel, D., Kishiyama, S.S., Lovera, J., Bagert, B., & Bourdette, D.N. (2006). Cognition and Fatigue in Multiple Sclerosis: Potential Effects of Medications With Central Nervous System Activity. Journal of Rehabilitation Research & Development, January/February 2006, vol. 43, no. 1. Snook, E.N., Mojtahedi, M.C., Evans, E.M., McAuley, E., & Motl, R.W. (2005). Physical Activity and Body Composition Among Ambulatory Individuals with Multiple Sclerosis. International Journal of MS Care, Winter 2005/2006, vol. 7, no. 4. Turner, A.P., Martin, C., Williams, R.M., Goudreau, K., Bowen, J.D., Hatzakis, M., Whitham, R.H., Bourdette, D.N., Walker, L., & Haselkorn, J.K. (2006). Exploring Educational Needs of Multiple Sclerosis Care Providers: Results of a Care-Provider Survey. Journal of Rehabilitation Research & Development, January/February 2006, vol. 43, no. 1. Wynn, D.R. (2006). Management of Physical Symptoms. International Journal of MS Care, February 2006, vol. 8, Supplement 1. Yadav, V., Shinto, L., Morris, C., Senders, A., Baldauf-Wagner, S., & Bourdette, D. (2006). Use and Self-Reported Benefit of Complementary and Alternative Medicine Among Multiple Sclerosis. International Journal of MS Care, Spring 2006, vol. 8, no. 1. Proposed Priority The Assistant Secretary for Special Education and Rehabilitative Services proposes a priority for a Rehabilitation Research and Training Center
(RRTC)on Multiple Sclerosis: Interventions to Maximize Health, Well-Being, and Participation. This RRTC must conduct rigorous research, training, technical assistance, and dissemination activities to improve rehabilitation outcome measures and rehabilitation interventions that can be applied in clinical or community-based settings. In doing so, the RRTC must focus on no more than two of the following dimensions: prevention or reduction of secondary conditions (e.g., pain, fatigue, depression); improved mobility; emotional well-being; and access to community-based health promotion services and programs (e.g., fitness, recreation, and nutrition). Under this priority, the RRTC must be designed to contribute to the following outcomes:
(a)Improved outcome measures for use with persons with MS. The RRTC must contribute to this outcome by identifying or developing and testing methods and measures to assess health and rehabilitation outcomes, participation in community-based programs, or both.
(b)Improved medical rehabilitation or community-based rehabilitation interventions. The RRTC must contribute to this outcome by identifying or developing and testing new rehabilitation interventions for individuals with MS, replicating promising practices or programs for individuals with MS, or both. Priority 18—Aging With Physical Disability: Reducing Secondary Conditions and Enhancing Health and Participation Background With medical and technological advancements, many individuals with early onset physical disabilities, acquired at birth, in childhood or young adulthood, are surviving long enough to experience the rewards and challenges of aging (Campbell, Sheets & Strong, 1999). Determining the size of this emerging segment of the disabled population has been difficult due to the lack of sufficient population data on age of onset and duration of disability (Kemp, 2005). The only national estimate available to date comes from a secondary analysis of the 1990 U.S. Census data, which suggests that there may be as many as 25,000,000 Americans who are aging with various long-term disabilities (McNeil, 1994). As many researchers have documented, a primary challenge associated with increased longevity among this population is an increased risk of “secondary conditions.” The term secondary conditions, or secondary health conditions, is shorthand for the various types of medical and functional problems that individuals with long-term physical disabilities experience post-onset as they age (Kemp & Mosqueda, 2004). Although there is widespread agreement that secondary conditions can be debilitating, costly in terms of financial and social consequences, and potentially fatal in some circumstances, how to define secondary conditions remains an active debate within the disability community (Wilber *et al.* , 2002; Rimmer, 2005). While a precise definition of secondary conditions is still evolving, the emerging consensus is that secondary conditions often increase the severity of an individual's disability (Brandt & Pope, 1997). As individuals with long-term physical disabilities age into middle and later adulthood, there is an enormous physical and psychological burden associated with having to manage various secondary health conditions, in addition to managing the chronic health effects related to the aging process generally (Rimmer, 2005). There is, however, widespread agreement that certain secondary conditions are preventable, and that learning how to prevent the onset or reduce the severity and impact of these new or increased impairments, functional limitations, and age-related health problems is vital to enhancing the health and participation of individuals aging with long-term disabilities (Simeonsson *et al.* , 1999; Lollar, 2002; Wilber *et al.* , 2002). To date there are no national estimates of the number of individuals with long-term physical disabilities who are experiencing one or more types of secondary conditions. Most of what is known about the prevalence and consequences of secondary conditions for health and participation comes from clinical studies of patients, a handful of community-based studies and secondary analyses of population surveys, and the evolving theoretical understanding of the general aging process (Cristian, 2005; Kemp, 2005; Seekins *et al.* , 1994; Campbell, Sheets, & Strong, 1999; Wilber *et al.* , 2002; Verbrugge & Yang, 2002; Kinne *et al.* , 2004). Results of these studies underscore the importance of improving treatment options to prevent or reduce the consequences of secondary conditions. Exercise, lifestyle and behavioral changes, and psychosocial and environmental factors are acknowledged as mediators, or potential mediators, for the development of secondary health conditions (Seekins *et al.* , 1994; Wilber *et al.* , 2002; Kemp, 2005; Rimmer, 2005). However, research on these factors has been limited by the lack of measurement tools to characterize the types and severity of secondary conditions experienced by individuals aging with disabilities, and the lack of experimental and quasi-experimental studies to test the effectiveness of various intervention strategies (Wilber *et al.* ; Rimmer, 2005). References Brandt, E.N. & Pope, A.M. (1997). Enabling America: Assessing the Role of Rehabilitation Science and Engineering. Committee on Disability Research, Institute of Medicine, National Academy of Sciences. National Academies Press; pp. 25. Campbell, M.L., Sheets, D.S., & Strong, P.S. (1999). Secondary health conditions among middle-aged individuals with chronic physical disabilities: Implications for “unmet needs” for services. Assistive Technology, 11(2), 3-18. Cristian, A. (Ed.) (2005). Aging with a Disability: An Issue of Physical Medicine and Rehabilitation Clinics of North America, Volume 16. Oxford, UK: Elsevier. Kemp, B.J. (2005). What the rehabilitation professional and the consumer need to know. In Adrian Cristian (ED), Aging with a Disability: Physical Medicine and Rehabilitation Clinics of North America, Volume 16: Pages 1-18. Oxford, UK: Elsevier. Kemp, B.J. & Mosqueda, L. (Eds.) (2004). Aging with a Disability. Baltimore: The Johns Hopkins University Press. Kinne, S., Patrick, D.L., & Lochner, D.D. (2004). Prevalence of secondary conditions among people with disabilities. American Journal of Public Health. Vol 94(3): 443-445. Lollar D. (2002). Public health and disability: emerging trends. Public Health Report. Vol.117:131-136. McNeil, J. (1994). Americans with Disabilities, Bureau of the Census, Statistical Brief, SB/94-1. In LaPlante, M. Disability in the United States: Prevalence and Causes, 1992. Rimmer, J.L. (2005). Exercise and physical activity in persons aging with a physical disability. In Adrian Cristian (Ed), Aging with a Disability: Physical Medicine and Rehabilitation Clinics of North America, Volume 16: Pages 41-56. Oxford, UK: Elsevier. Seekins, T., Clay, J., & Ravesloot, C.H. (1994). A descriptive study of secondary conditions reported by a population of adults with physical disabilities served by 3 independent living centers in a rural state. Journal of Rehabilitation, Vol. 60:47-51. Simeonsson, R.J., Bailey, D.B., Scandlin, D., Huntington, G.S., & Roth, M. (1999). Disability, health, secondary conditions and quality of life: Emerging issues in public health. In: Simeonsson, RJ, McDevitt, LN (Eds.) Issues in Disability and Health: The Role of Secondary Conditions and Quality of Life. Chapel Hill: University of North Carolina Press; 51-72. Wilber, N., Mitra, M., Walker, D.K., Allen D., Meyers, A.R., & Tupper, P. (2002). Disability as a public health issue: findings and reflections from the Massachusetts Survey of Secondary Conditions. Milbank Quarterly; Vol. 80:393-421. Verbrugge, L.M. & Yang, L. (2002). Aging with Disability and Disability with Aging. Journal of Disability Policy Studies; Vol. 12(4):253-267. Proposed Priority The Assistant Secretary for Special Education and Rehabilitative Services proposes a priority for a Rehabilitation Research and Training Center
(RRTC)on Aging with Physical Disability: Reducing Secondary Conditions and Enhancing Health and Participation. This RRTC must conduct rigorous research, training, technical assistance, and dissemination activities to improve rehabilitation outcome measures and rehabilitation interventions that can be applied in clinical or community-based settings and used by other researchers. The intended outcome of the RRTC is to enhance the health and participation of individuals aging with long-term physical disabilities in work and the community by advancing knowledge about the identification, assessment, treatment and improved management of the secondary conditions likely experienced by this target population. In addressing this priority, the RRTC must propose no more than four synergistic, cross-disability research projects to address the secondary conditions that are most relevant to the health, employment, or community participation of individuals with disabilities. To ensure the feasibility of the RRTC's proposed activities and increase the likelihood of achieving planned outcomes, the RRTC must focus on no more than three discrete impairment groups, and must limit interventions strategies to no more than two of the following modalities: exercise, health promotion, psychological adaptation, life planning or self-management skills, and environmental or technological supports. Under this priority, the RRTC must be designed to contribute to the following outcomes:
(a)Enhanced understanding of the natural course of aging with physical disability. The RRTC must contribute to this outcome by documenting the life trajectories and average age of onset of the major types of secondary conditions experienced by individuals living with long-term physical disabilities, and examining the interrelationships among different types of secondary conditions and the consequences of variations in timing of onset for health and participation.
(b)Improved tools and measures for use with individuals aging with long-term physical disabilities. The RRTC must contribute to this outcome by identifying, developing or modifying, and testing new measurement tools that improve the identification and assessment of the major types of secondary conditions discussed in the literature, as well as the outcomes of interventions designed to prevent or reduce these conditions.
(c)Improved rehabilitation or community-based interventions that enhance the health and participation in work and the community of individuals aging with physical disabilities. The RRTC must contribute to this outcome by identifying, developing, or modifying, and testing new interventions that are effective in preventing the onset or improving the management and reducing the impact of secondary conditions, and replicating promising practices or programs that are effective in preventing the onset or improving the management and reducing the impact of secondary conditions, or both. Priority 19—Disability Statistics and Demographics Background A 2003 report from the Interagency Committee on Disability Research
(ICDR)identified 67 Federal statutory definitions of the term “disability.” These definitions directly influence the collection of national, State, administrative, and other data about individuals with disabilities (Cherry Engineering Support Services (CSSI), Inc., 2003). “Because surveys produce different types of information on disability, they can provide additional perspectives on the sources and effects of disabilities, but they can also cause confusion because of the differences in the way disability is being measured” (Government Accountability Office, 2006). As a result of such confusion, policymakers, service providers, individuals with disabilities, and others may not be able to identify the best available statistics to inform their efforts to enhance the well-being and participation of individuals with disabilities. An ongoing need exists to bridge the gap between producers and users of disability statistics, particularly as the population ages and injuries caused by such factors as war and environmental changes lead to growing numbers of individuals with disabilities (National Council on Disability (NCD), 2006). Policymakers cite the need for information about the indirect and direct costs of disability, unmet needs for services or technologies that facilitate environmental access and enhance participation, and individuals with disabilities living in institutional settings (Healthy People 2010, 2000; NCD, 2006). Though there are a number of useful sources of disability data, “controversy has been generated by variations in disability statistics achieved by different researchers, using varied data collection instruments, differing data sources and different data mining techniques” (NCD, 2006). Methodological research will improve the quality and consistency of data and increase confidence in the research findings (Stern, 2004; McMenamin, Miller, & Polivka, 2006). Improved questionnaire design and innovative data collection strategies can facilitate availability of valid and reliable data (NCD, 2006; Kroll *et al.* , in press). Research to evaluate best practices for conducting surveys of and about individuals with disabilities will improve our understanding of the needs of the population. Development of methodologies to improve collections or analyses of data about populations with low-incidence disabilities, or small demographic subgroups of individuals with disabilities, would advance knowledge about the population. A recent review indicates that “there is a solid base of theory on which to base research among low-incidence populations” but notes the lack of “a large body of work in which this theory has been applied to populations with disabilities” (CESSI, 2005). For these reasons, NIDRR seeks to fund an RRTC that improves the quality of disability statistics. References Cherry Engineering Support Services (CSSI), Inc. (2005). Research Methods for Low-Incidence Populations. Prepared for the Interagency Committee on Disability Research (ICDR). McLean, VA: CESSI. Cherry Engineering Support Services (CSSI), Inc. (2003). Federal Statutory Definitions of Disability. Prepared for the Interagency Committee on Disability Research (ICDR). McLean, VA: CESSI. See: *http://www.icdr.us/documents/definitions.htm. * Government Accountability Office
(GAO)(2006). Federal Information Collection: A Reexamination of the Portfolio of Major Federal Household Surveys is Needed, GAO-07-62. Washington, DC: GAO. Kroll, T., Keer, D., Placek, P., Cyril, J., & Hendershot, G. (in press). Towards Best Practices for Surveying People with Disabilities. Volume 1. New York: Nova Publishers, Inc. McMenamin, T., Miller, S., & Polivka, A. (2006). Discussion and Presentation of the Disability Test Results from the Current Population Survey. Washington, DC: Bureau of Labor Statistics. See: *http://econpapers.repec.org/paper/blswpaper/ec060080.htm.* National Council on Disability (2006). National Disability Policy: A Progress Report, December 2004—December 2005. Washington, DC: National Council on Disability. See: *http://www.ncd.gov/newsroom/publications/2006/progress_report.htm.* Stern, S. (2004). Counting People with Disabilities: How Survey Methodology Influences Estimates in Census 2000 and the Census 2000 Supplementary Survey. Washington, DC: U.S. Census Bureau. See: *http://www.census.gov/hhes/www/disability/finalstern.pdf.* U.S. Department of Health and Human Services (2000). Healthy People 2010. 2nd ed. With Understanding and Improving Health and Objectives for Improving Health. 2 vols. Washington, DC: U.S. Government Printing Office. Proposed Priority The Assistant Secretary for Special Education and Rehabilitative Services proposes a priority for a Rehabilitation Research and Training Center
(RRTC)on Disability Statistics and Demographics. This RRTC must conduct rigorous research, knowledge translation, training, dissemination, and technical assistance that advance the use of rigorous disability statistics and demographics to inform disability policy and service provision. Under this priority, the RRTC must be designed to contribute to the following outcomes:
(a)Rigorous and timely demographic research to inform the development of disability policy and programs. The RRTC must contribute to this outcome by:
(1)Producing meta-analyses of national, State, and administrative data that address critical program and service needs; and
(2)providing statistical consultation, including specialized analyses, to facilitate the use of survey and administrative data by policymakers and others.
(b)Improved disability data and statistics. The RRTC must conduct research about methodologies that advance the practice for
(1)Conducting surveys of individuals with disabilities, including individuals with low-prevalence disabilities;
(2)analyzing data about low-incidence populations of individuals with disabilities; and
(3)other issues related to survey or administrative data.
(c)Effective use of disability statistics and demographic information. The RRTC must contribute to this outcome by:
(1)Serving as a resource on disability statistics and demographics for Federal and other government agencies, policymakers, consumers, advocates, researchers, and others; and
(2)transferring research findings to enhance planning, policymaking, program administration, and delivery of services to individuals with disabilities. Priorities 20 and 21—Health and Function Across the Lifespan of Individuals With Intellectual and Developmental Disabilities (Priority 20) and Participation and Community Living for Individuals With Intellectual and Developmental Disabilities (Priority 21) Background For purposes of priorities 20 and 21, individuals with intellectual, developmental, mental, and cognitive disabilities, including individuals with cerebral palsy, Downs syndrome, autism, and related conditions, will be referred to as persons with intellectual disabilities or developmental disabilities (ID/DD). Individuals are considered to have an intellectual disability
(ID)when their intellectual functioning level
(IQ)is below 70-75; they have significant limitations in conceptual, social, and practical adaptive skills such as communication, self-care, home living, social skills, leisure, health and safety, self-direction, functional academics (reading, writing, basic math), and work; and the disability originated before the age of 18. Developmental disabilities
(DD)are defined as severe, chronic disabilities that first appear before age 22, are likely to continue indefinitely, and cause substantial limitations in three or more of the following areas: Self-care, language, learning, mobility, self-direction, and capacity for independent living. These definitions of ID and DD, however, may have limitations when applied in research or in the administration of public assistance programs because of diagnostic ambiguities, implementation and measurement problems, or the temporary nature of certain context-specific disabilities (Larson *et al.* , 2001). Individuals with ID/DD constitute a diverse group of underserved, underemployed or unemployed, and marginalized individuals. While estimates about the size and composition of this population in the United States range from 1.6 percent to nearly 3 percent of the population (between 4.5 million and 8 million), depending on the source of data and the types of diagnoses used, clear patterns of disadvantage are apparent in this population (Lakin & Turnbull, 2005; National Institute of Child Health and Human Development, 2002; U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, 2006). According to a 2004 report issued by the President's Committee for People with Intellectual Disabilities (2004), around 90 percent of adults with ID/DD were not employed. Among those individuals with ID/DD who were employed, over 365,000 attended sheltered workshops or were in day programs or prevocational services. Levels of educational attainment are quite low for individuals with ID/DD. According to the 2004 report, 26 percent of youth with ID/DD dropped out of school, and fewer than 15 percent participated in postsecondary education. Levels of income and wealth are also low among individuals with ID/DD. Supplemental Security Income
(SSI)or Social Security Disability Insurance
(SSDI)were a major source of income for individuals with ID/DD (in December 2001, there were almost 1.1 million adults and children receiving SSI payments based on ID/DD; there were almost 600,000 receiving SSDI benefits). Over 700,000 individuals with ID/DD lived with parents aged 60 or older. Less than one percent of individuals with ID/DD owned their own home (President's Committee for People with Intellectual Disabilities, 2004). These statistics provide a small glimpse into the everyday life experiences of individuals with ID/DD and their families and caregivers. Depending on the severity of their disability, individuals with ID/DD need assistance in most, if not all, activities of daily living (e.g., walking, dressing, bathing) and instrumental activities of daily living (e.g., shopping or managing money). Such assistance is time consuming and costly, particularly if skilled personal assistance services and professional rehabilitation services are needed. Besides needing significant amounts of care, many individuals with ID/DD are at an increased risk of being isolated from the community, particularly if they have been placed under institutional supervision or care. Limited educational attainment and job skills are key barriers to inclusion in communal activities. As a result, many individuals with ID/DD have difficulties developing independent living and social skills. They remain dependent on family, friends, and personal caregivers. Where such supports are not available, they must resort to institutional care. Individuals with ID/DD have been found to suffer from a wide range of illnesses and impairments (National Institute of Child Health and Human Development, 2002). The onset of many conditions is at birth or in infancy (for example, cerebral palsy). Moreover, many other conditions, such as obesity, diabetes, or Alzheimer's disease occur earlier in adulthood for individuals with ID/DD than most individuals in the general population. As a result, individuals with ID/DD have greater needs for health care services than members of the general population. To obtain the full benefits of these services, the individuals must have access to skilled staff at service facilities who are informed about, and equipped to respond to, the special needs of individuals with ID/DD. If skilled staff are not available, consumers and providers may consider the help of intermediaries, direct support providers, or other social service providers specializing in the care of individuals with ID/DD. For these reasons, NIDRR seeks to fund two RRTCs designed to increase the levels of health, function, and community living/participation of individuals with ID/DD by developing and applying scientifically validated procedures, treatments, and interventions. The goal of these procedures, treatments, and interventions is to create measurable benefits or outcomes for individuals with ID/DD and their families and caregivers. References Lakin, K. & Turnbull, A., Eds. (2005). National Goals and Research for People With Intellectual and Developmental Disabilities. Washington, DC: American Association on Mental Retardation. Larson, S.A., Lakin, C.K., Anderson, Lynda, K., Nohon, L., Jeoung, H., & Anderson, D. (2001). Prevalence of Mental Retardation and Developmental Disabilities: Estimates from the 1994/1995 National Health Interview Survey Disability Supplements. American Journal on Mental Retardation 106(3):231-252. National Institute of Child Health and Human Development (2002). Closing the Gap: A National Blueprint to Improve the Health of Persons with Mental Retardation. Report of the Surgeon General's Conference on Health Disparities and Mental Retardation. Washington, DC. President's Committee for People with Intellectual Disabilities (2004). A Charge We Have To Keep. A Road Map to Personal and Economic Freedom for People with Intellectual Disabilities in the 21st Century. Washington, DC: U.S. Department of Health and Human Services, Administration for Children and Families. U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation (2006). The Supply of Direct Support Professionals Serving Individuals with Intellectual Disabilities and Other Developmental Disabilities: Report to Congress. Washington, DC. Proposed Priority 20—Health and Function Across the Lifespan of Individuals With Intellectual and Developmental Disabilities The Assistant Secretary for Special Education and Rehabilitative Services proposes a priority for a Rehabilitation Research and Training Center
(RRTC)on Health and Function Across the Lifespan of Individuals with Intellectual and Developmental Disabilities (ID/DD). This RRTC must focus on rigorous research, training, technical assistance, and dissemination of strategies and interventions that improve the health and function of individuals with ID/DD, and access to community-based health and social services by individuals with ID/DD. The research conducted by this RRTC also must focus on improving the health and function of individuals with ID/DD and on promoting family and caregiver supports that enable persons with ID/DD to receive long-term care. When applying for a grant under this priority, an applicant must identify, in its application, the subjects of interest from the diverse population of individuals with ID/DD to be served by the proposed research and describe how the proposed research will benefit this group. Under this priority, the RRTC must be designed to contribute to the following outcomes:
(a)Conceptually sound theories and methodologies for research on community-based rehabilitation and health and social service provision, including research on long-term care or care provided by family members to individuals with ID/DD. The RRTC must contribute to this outcome by investigating existing theories that may help organize or frame research on ID/DD, including theories from fields such as long-term care, or frameworks related to delivery of rehabilitation or health services in the community.
(b)Improved instruments and measures that help to evaluate the suitability and quality of personal assistance services, and the effectiveness and efficiency of community-based health and social services for individuals with ID/DD. The RRTC must contribute to this outcome by assessing current measures and instruments, reporting on their validity and reliability, and then developing and testing improved measures as needed.
(c)Improved rehabilitation or community-based interventions that demonstrate measurable reductions in barriers to access and utilization of community-based services or community-based interventions that otherwise contribute to improved health and function of individuals with ID/DD. The RRTC must contribute to this outcome by identifying and testing potential interventions and providing a thorough assessment of the basis on which these interventions were selected, including any preliminary evidence of their usefulness and relevance to individuals with ID/DD and their families. Proposed Priority 21—Participation and Community Living for Individuals With Intellectual and Developmental Disabilities The Assistant Secretary for Special Education and Rehabilitative Services proposes a priority for a Rehabilitation Research and Training Center
(RRTC)for Participation and Community Living for Individuals with Intellectual and Developmental Disabilities (ID/DD). The RRTC must focus on rigorous research, training, technical assistance, and dissemination to enhance inclusion and self-determination of individuals with ID/DD. This RRTC also must focus on developing interventions that support self-determination, informed choice, consumer control, family involvement, and participation and community living of individuals with ID/DD. When applying for a grant under this priority, an applicant must identify, in its application, the subjects of interest from the diverse population of individuals with ID/DD to be served by the proposed research and describe how the proposed research will benefit this group. Under this priority, the RRTC must be designed to contribute to the following outcomes:
(a)Improved concepts and theories of societal participation and community living, and self-determination to guide the study of needs and abilities of individuals with ID/DD. The RRTC must contribute to this outcome by investigating existing theories of societal participation, community living, and self-determination to frame research on these topics for individuals with ID/DD.
(b)Improved instruments and measures of participation and community living to assess the type, frequency, and quality of activities that individuals with ID/DD wish to engage in, or are able to engage in outside the home or residential facility. The RRTC must contribute to this outcome by assessing current measures and instruments used to determine outcomes in the areas of access to community facilities, social participation, self advocacy, employment choice, and housing selection by individuals with ID/DD, reporting on the validity and reliability of these measures, and then developing and testing improved measures as needed.
(c)Improved rehabilitation or community-based interventions that demonstrate a measurable impact in areas such as access to communal facilities and events, social participation and interaction with members of the community, self-advocacy, employment opportunities, and housing choices. The RRTC must contribute to this outcome by identifying and testing potential interventions for individuals with ID/DD, providing a thorough assessment of the basis on which these interventions were selected, including any preliminary evidence of their usefulness and relevance to individuals with ID/DD and their families. Rehabilitation Engineering Research Centers Program General Requirements of Rehabilitation Engineering Research Centers (RERCs) RERCs carry out research or demonstration activities in support of the Rehabilitation Act of 1973, as amended, by— • Developing and disseminating innovative methods of applying advanced technology, scientific achievement, and psychological and social knowledge to:
(a)Solve rehabilitation problems and remove environmental barriers; and
(b)study and evaluate new or emerging technologies, products, or environments and their effectiveness and benefits; or • Demonstrating and disseminating:
(a)Innovative models for the delivery of cost-effective rehabilitation technology services to rural and urban areas; and
(b)other scientific research to assist in meeting the employment and independent living needs of individuals with severe disabilities; and • Facilitating service delivery systems change through:
(a)The development, evaluation, and dissemination of consumer-responsive and individual and family-centered innovative models for the delivery to both rural and urban areas of innovative cost-effective rehabilitation technology services; and
(b)other scientific research to assist in meeting the employment and independence needs of individuals with severe disabilities. Each RERC must be operated by or in collaboration with one or more institutions of higher education or one or more nonprofit organizations. Each RERC must provide training opportunities, in conjunction with institutions of higher education and nonprofit organizations, to assist individuals, including individuals with disabilities, to become rehabilitation technology researchers and practitioners. Additional information on the RERC program can be found at: *http://www.ed.gov/rschstat/research/pubs/index.html* . Priorities 22, 23, 24, 25, 26, and 27—Rehabilitation Engineering Research Centers (RERCs) for Hearing Enhancement (Priority 22), Accessible Public Transportation (Priority 23), Prosthetics and Orthotics (Priority 24), Communication Enhancement (Priority 25), Universal Interface and Information Technology Access (Priority 26), and Wheeled Mobility (Priority 27) Background Individuals with disabilities regularly use products that have been developed as the result of rehabilitation and biomedical research in order to achieve and maintain maximum physical function, live independently, study and learn, and attain gainful employment. Rehabilitation engineering research encompasses research on assistive technology, technology at the systems level ( *e.g.* , the built environment, transportation), and technology that allows individuals to interface with technology at the systems or environmental levels. Advancements in basic biomedical science and technology have resulted in new opportunities to enhance further the lives of individuals with disabilities. Specifically, recent advances in biomaterials research, composite technologies, information and telecommunication technologies, nanotechnologies, micro electro mechanical systems (MEMS), sensor technologies, and the neurosciences provide a wealth of opportunities for individuals with disabilities and could be incorporated into research focused on disability and rehabilitation. Through the following proposed priorities, NIDRR intends to fund RERCs that advance rehabilitation engineering research in the following priority research areas: Hearing Enhancement, Accessible Public Transportation, Prosthetics and Orthotics, Communication Enhancement, Universal Interface and Information Technology Access, and Wheeled Mobility. Priority 22—Hearing Enhancement Approximately 28.6 million Americans have an auditory disorder. In the United States, an estimated 1 to 6 in 1,000 newborns are born profoundly deaf, and another 2 to 3 out of 1,000 babies are born with partial hearing loss, making hearing loss the number one birth defect in America (Kochkin, 2001; Kemper & Downs, 2000; Cunningham & Cox, 2003). Despite advances in hearing assistive technologies such as digital hearing aids, cochlear implants, induction loop (IL), frequency modulation
(FM)and infrared
(IR)assistive listening systems, and video relay, many challenges and opportunities for future research and development exist (Stika, Ross, & Cuevas, 2002; Schow *et al.* , 1993). For example, there is a need for new fitting methods for hearing aids and cochlear implants that adaptively adjust signal processing parameters such as compression threshold, compression ratio, gain, and frequency to maximize performance goals for an individual, both in the clinic and in the field (Stika, Ross & Cuevas, 2002; Schow, Balsara, Smedley & Whitcomb, 1993). In addition, there is a need to explore how rehabilitation or training can be provided so that individual users of hearing enhancement technologies can readily adopt new technologies and adapt to the new stimulation and information being received (Schow *et al.* , 1993). Accordingly, NIDRR seeks to fund an RERC that researches and develops innovative models of aural rehabilitation tools, services, and training, in order to improve assessment and fitting of hearing enhancement technologies and to increase the availability, knowledge, and use of hearing enhancement devices and services. References Cunningham, M. & Cox, E.O. (2003). Hearing assessment in infants and children: Recommendations beyond neonatal screening. Pediatrics, 111(2): 436-440. Kemper, A.R. & Downs, S.M. (2000). A cost-effectiveness analysis of newborn hearing screening strategies. Archives of Pediatric and Adolescent Medicine, 154(5): 484-488. Kochkin, S. (2001). MarkeTrak VI: The VA and direct mail sales spark growth in hearing aid market. The Hearing Review, 8(12): 16-24, 63-65. Schow, R., Balsara, N., Smedley, T., & Whitcomb, C. (1993). Aural rehabilitation by ASHA audiologists: 1980-1990, American Journal of Audiology, 2(3): 28-37. Stika, C.J., Ross, M., & Cuevas, C. (2002). Hearing Aid Services and Satisfaction: The Consumer Viewpoint, Hearing Loss: the Journal of Self Help for Hard of Hearing People, 23(3): 25-31. Priority 23—Accessible Public Transportation Inaccessible transportation is a major barrier to independent living and limits the ability of individuals with disabilities to participate fully in their communities. One-third of individuals with disabilities report that inadequate transportation is a significant problem, and they are twice as likely to have inadequate transportation than individuals without disabilities (N.O.D./Harris Survey, 2004). Addressing the problems of accessibility of public transportation may help to provide the same degree of convenience, connection, and safety the general public enjoys when traveling via plane, train, or bus. Points of entry and exit, public rights-of-way, communications, and bus and rail stations and stops are just a few of the areas posing transportation accessibility problems for individuals with disabilities. The physical dimensions and space limitations of the transport vehicle may prohibit easy entry, transfer to vehicle seats, or use of the services and facilities available on a plane, train, or bus. In addition, costs, physical ability, and perceptions of safety are all considered barriers to public transportation (Peck & Hess, 2006). Accordingly, NIDRR seeks to fund an RERC on Accessible Public Transportation to address the need for improvements in the accessibility of public transportation, provide safe and dignified travel for individuals with disabilities, and increase community participation by individuals with disabilities. The focus of this RERC is on travel via air, rail, and bus. References N.O.D./Harris Survey of Americans with Disabilities (2004). Harris Interactive, 111 Fifth Avenue, New York, NY 10003. Peck, M. & Hess D. (2006). Barriers to Using Public Transit among Diverse Older Adults: Implications for Social Work. *http://sswr.confex.com/sswr/2007/techprogram/P7047.HTM* Priority 24—Prosthetics and Orthotics In the United States, it is estimated that there are 1.2 to 1.9 million individuals living with limb loss (Adams, Hendershot, & Marano, 1999). In addition, it is estimated that 75 percent of individuals with limb loss use a prosthetic device (Nielsen, 2002). The majority of amputations are generally the result of peripheral vascular disease. Cancer, congenital limb loss, and trauma are the other major causes of amputation. It is difficult to accurately estimate orthotic use in the United States, because orthotics are used by many different pathology populations (stroke, spinal cord injury, cerebral palsy, orthopedic impairment) and orthoses are not often used on a permanent basis. Increased knowledge and understanding about prosthetics and orthotics, and a greater emphasis on objective measures, such as performance, efficacy, and energy expenditures, that inform clinical practice should lead to the development of new concepts and devices to improve the quality, cost-effectiveness, and delivery of prosthetic and orthotic fittings. Accordingly, NIDRR seeks to fund an RERC that researches and develops innovative prosthetic and orthotic technologies and designs to enhance the ability of individuals with limb loss and impaired limb function to perform activities of daily living, to have expanded employment options, to participate in sports and leisure activities, and to improve their health and participation outcomes. References Adams, P.F., Hendershot, G.E., & Marano, M.A. (1999). Current estimates from the National Health Interview Survey, 1996. National Center for Health Statistics. Vital Health Stat 10(200). Nielsen, C. (2002). Issues Affecting The Future Demand for Orthotists and Prosthetists: Update 2002. A study updated for the National Commission on Orthotic and Prosthetic Education, May 2002. Priority 25—Communication Enhancement “Approximately 1.3 percent of all individuals [in the United States] ( *i.e.* , more than 3.5 million Americans) have such significant communication disabilities that they cannot rely on their natural speech to meet their daily communication needs.” (Beukelman, 2005). For these individuals, augmentative and alternative communication
(AAC)strategies would facilitate participation and independence. The number of individuals who may benefit from AAC will continue to grow as the American population ages and the associated prevalence of acquired communication disorders increases. Also, improvements in medical practices and technologies have resulted in increased survival rates among at risk infants and children, which, in turn, has led to an increase in the number of individuals with moderate to severe disabilities (Hack *et al.* , 2005). In addition, the prevalence of autism spectrum disorders
(ASD)has increased and more individuals with ASD and their caregivers are actively seeking, and expecting to find, intervention services that include AAC (Blackstone, 2005). Accordingly, NIDRR seeks to fund an RERC that enhances communication for individuals with communication disabilities, promotes greater participation of individuals with communication disabilities in employment and education, increases independence for these individuals, and researches and develops innovative technologies and techniques to improve the state of the science and usability of AAC technology. References Beukelman, D.R. & Mirenda, P. (2005). Augmentative and Alternative Communication: Supporting children and adults with complex communication needs. (3rd edition). Baltimore: Paul H. Brookes Publishing, p.3. Blackstone, S.W. (2003). Overview and Update. Augmentative Communication News. 15:4, 2-3. Hack, M., Taylor, H., Drotar, D., Schluchter, M., Cartar, L., Andreias, L., Wilson-Costello, D., & Klein, N. (2005). Chronic Conditions, Functional Limitations, and Special Health Care Needs of School-Aged Children Born with Extra Low Birth Weight in the 1990's. Journal of the American Medical Association (JAMA), 294(3), 318-325. Priority 26—Universal Interface and Information Technology Access Information technologies have the potential to provide or increase access to professional, educational, social, and economic resources among individuals with disabilities (Gorski & Clark, 2002). Unfortunately, large discrepancies in the rates of use of information technologies exist between individuals with and without disabilities. According to data collected by the Bureau of Labor Statistics and the U.S. Census, 57.6 percent and 54.4 percent of individuals without disabilities use a computer at home and access the Internet at home, respectively. These same data suggest that only 30.2 percent and 26.4 percent of individuals with disabilities use a computer at home and access the Internet at home, respectively. In addition, while 63.6 percent of individuals without disabilities access the Internet at some location, only 30.8 percent of individuals with disabilities do so (Dobransky & Hargittai, 2006). Information technology access development efforts are utilizing V2 Information Technology Access Interface standards to build and test new universally designed interfaces that accommodate individuals with and without disabilities (International Committee for Information Technology Standards, 2006). These “smart devices” would automatically offer the user the appropriate interface and adapt to the way in which the user interacts with it (Horn & West, 2005). Despite the promise of a universally designed information technology
(IT)interface or device, most currently existing IT devices still need to be retrofitted with customized input and output interfaces so individuals with disabilities can use them. Further research on the effectiveness of existing alternative input and output interfaces and the design specifications necessary to construct universally designed IT interfaces and devices of the future is needed. Accordingly, NIDRR seeks to fund an RERC that enhances the effectiveness of currently available input and output IT interfaces and devices used by individuals with varying disabilities to facilitate community participation and independent living. References Dobransky, K. & Hargittai, E. (2006). The disability divide in Internet access and use. Information, Communication & Society. 9(3), 313-334. Gorski, P. & Clark, C. (2002). Multicultural Education and the Digital Divide: Focus on Disability. Multicultural Perspectives. 4(4), 28-36. Horn, P. & West, F. (2005). Introduction. IBM systems Journal. 44(3), 1-2. International Committee for Information Technology Standards (2006). V2—Information Technology Access Interfaces. Gaithersburg, MD: National Institute of Standards and Technology. See: *http://v2.incits.org/* . Priority 27—Wheeled Mobility Among the United States population of individuals aged 15 years and older, 2.7 million individuals use a wheelchair or similar device (2002 SIPP data cited in Steinmetz, 2006). As more individuals with disabilities advance in age and as more aging individuals acquire disabilities, the number of wheeled-mobility device users will increase (White House Conference on Aging, 2005). Addressing the needs of this diverse population requires engineering and related fields to develop new solutions to existing problems and provide innovation and advancement in wheeled mobility. Despite advances in knowledge in wheelchair propulsion technique, secondary injury prevention, wheelchair-user interface, and wheelchair skills training, many challenges and opportunities for future research and development exist. For example, over-use injuries resulting from long-term wheelchair use are still a major problem (Arthanat & Strobel, 2006; Van der Woude, de Groot, & Janssen, 2006; Van der Woude, Janssen, & Vegger, 2005). In addition, there is a need for more information on the ergonomics of wheelchair and scooter design and use within and across different environments (e.g., work, home, school, and outdoors) (Arthanat & Strobel, 2006; Van der Woude, de Groot, & Janssen, 2006). Advances in wheelchair technology may provide users with greater functional potential, including increases in participation and activity, and decreases in secondary injuries, such as pressure sores and repetitive strain injuries. Accordingly, NIDRR seeks to fund an RERC that improves understanding of the ergonomics, design, development, testing, and use of wheelchairs and scooters within and across different environments. References Arthanat, S. & Strobel, W. (2006). Wheelchair ergonomics: Implications for vocational participation. Journal of Vocational Rehabilitation, 24, 97-109. Steinmetz, E. (2006). Current Population Reports: Americans with Disabilities 2002. Washington, DC: U.S. Department of Commerce, Economics and Statistics Administration, U.S. Census Bureau. See: *http://www.census.gov/prod/2006pubs/p70-107.pdf.* Van der Woude, L.H., de Groot, S., & Janssen, T.W.J. (2006). Manual wheelchairs: Research and innovation in rehabilitation, sports, daily life and health. Medical Engineering & Physics, 28(9), 905-915. Van der Woude, L.H., Janssen, T.W.J., & Vegger, D.J. (2005). 3rd International Congress “Restoration of wheeled mobility in SCI rehabilitation: State of the art III”: its background. Technology and Disability, 17, 55-61. White House Conference on Aging (2005). Final Report to the President and Congress: The Booming Dynamics of Aging: From awareness to action. See: *http://www.whcoa.gov/about/about.asp#report* . Proposed Priorities The Assistant Secretary for Special Education and Rehabilitative Services proposes the following six priorities for the establishment of
(a)An RERC for Hearing Enhancement (priority 22);
(b)an RERC for Accessible Public Transportation (priority 23);
(c)an RERC for Prosthetics and Orthotics (priority 24);
(d)an RERC for Communication Enhancement (priority 25);
(e)an RERC for Universal Interface and Information Technology Access (priority 26); and
(f)an RERC for Wheeled Mobility (priority 27). Within its designated priority research area, each RERC will focus on innovative technological solutions, new knowledge, and concepts that will improve the lives of individuals with disabilities.
(a)*RERC for Hearing Enhancement (Priority 22).* Under this priority, the RERC must research and develop methods, systems, and technologies that will assist hearing professionals with the process of matching hearing enhancement assistive technologies to individuals with hearing loss and associated conditions such as tinnitus. This includes improving the compatibility of hearing enhancement technologies with various environments such as school, work, recreation, and social settings.
(b)*RERC for Accessible Public Transportation (Priority 23).* Under this priority, the RERC must research and develop methods, systems, and devices that will promote and enhance the ability of individuals with disabilities to safely, comfortably, and efficiently identify destination information, board and disembark, and use services and facilities on various types of public transportation systems such as buses, passenger trains, and airplanes. This RERC must emphasize the principles of universal design in its product research and development.
(c)*RERC for Prosthetics and Orthotics (Priority 24).* Under this priority, the RERC must increase the understanding of the scientific and engineering principles pertaining to human locomotion, reaching, grasping, and manipulation, and incorporate those principles into the design and fitting of prosthetic and orthotic devices.
(d)*RERC for Communication Enhancement (Priority 25).* Under this priority, the RERC must research and develop augmentative and alternative communication technologies and strategies that will enhance the communicative capacity of individuals of all ages with significant communication disorders across environments (i.e., education, employment, recreation, social).
(e)*RERC for Universal Interface and Information Technology Access (Priority 26).* Under this priority, the RERC must research and develop innovative technological solutions for, and promote universal access to, current and emerging information technologies and technology interfaces that promote a seamless integration of the multiple technologies used by individuals with disabilities in the home, the community, and the workplace. This RERC must work collaboratively with the RERC on Telecommunication Access, the RERC on Mobile Wireless Technologies, and the NIDRR-funded Information Technology Technical Assistance and Training Center.
(f)*RERC for Wheeled Mobility (Priority 27).* Under this priority, the RERC must research and develop innovative technologies and strategies that will improve the current state of the science, design standards, and usability of wheeled mobility devices and wheelchair seating systems. Under each priority, the RERC must be designed to contribute to the following outcomes:
(1)Increased technical and scientific knowledge base relevant to its designated priority research area. The RERC must contribute to this outcome by conducting high-quality, rigorous research and development projects.
(2)Innovative technologies, products, environments, performance guidelines, and monitoring and assessment tools as applicable to its designated priority research area. The RERC must contribute to this outcome through the development and testing of these innovations.
(3)Improved research capacity in its designated priority research area. The RERC must contribute to this outcome by collaborating with the relevant industry, professional associations, and institutions of higher education.
(4)Improved focus on cutting edge developments in technologies within its designated priority research area. The RERC must contribute to this outcome by identifying and communicating with NIDRR and the field regarding trends and evolving product concepts related to its designated priority research area.
(5)Increased impact of research in the designated priority research area. The RERC must contribute to this outcome by providing technical assistance to public and private organizations, individuals with disabilities, and employers on policies, guidelines, and standards related to its designated priority research area.
(6)Increased transfer of RERC-developed technologies to the marketplace. The RERC must contribute to this outcome by developing and implementing a plan for ensuring that all technologies developed by the RERC are made available to the public. The technology transfer plan must be developed in the first year of the project period in consultation with the NIDRR-funded Disability Rehabilitation Research Project, Center on Knowledge Translation for Technology Transfer. In addition, under each priority, the RERC must— • Have the capability to design, build, and test prototype devices and assist in the transfer of successful solutions to relevant production and service delivery settings; • Evaluate the efficacy and safety of its new products, instrumentation, or assistive devices; • Provide as part of its proposal, and then implement, a plan that describes how it will include, as appropriate, individuals with disabilities or their representatives in all phases of its activities, including research, development, training, dissemination, and evaluation; • Provide as part of its proposal, and then implement, in consultation with the NIDRR-funded National Center for the Dissemination of Disability Research (NCDDR), a plan to disseminate its research results to individuals with disabilities, their representatives, disability organizations, service providers, professional journals, manufacturers, and other interested parties; • Conduct a state-of-the-science conference on its designated priority research area in the fourth year of the project period, and publish a comprehensive report on the final outcomes of the conference in the fifth year of the project period; and • Coordinate research projects of mutual interest with relevant NIDRR-funded projects, as identified through consultation with the NIDRR project officer. Executive Order 12866 This notice of proposed priorities has been reviewed in accordance with Executive Order 12866. Under the terms of the order, we have assessed the potential costs and benefits of this regulatory action. The potential costs associated with this notice of proposed priorities are those resulting from statutory requirements and those we have determined as necessary for administering this program effectively and efficiently. In assessing the potential costs and benefits—both quantitative and qualitative—of this notice of proposed priorities, we have determined that the benefits of the proposed priorities justify the costs. Summary of Potential Costs and Benefits The benefits of the Disability and Rehabilitation Research Projects and Centers Programs have been well established over the years in that similar projects have been completed successfully. These proposed priorities will generate new knowledge and technologies through research, development, dissemination, utilization, and technical assistance projects. Another benefit of these proposed priorities is that the establishment of new DRRPs, new RRTCs, and new RERCs will support the President's NFI and will improve the lives of individuals with disabilities. The new DRRPs, RRTCs, and RERCs will generate, disseminate, and promote the use of new information that will improve the options for individuals with disabilities to perform regular activities in the community. Intergovernmental Review This program is not subject to Executive Order 12372 and the regulations in 34 part 79. *Applicable Program Regulations:* 34 CFR part 350. Electronic Access to This Document You may view this document, as well as all other Department of Education documents published in the **Federal Register** , in text or Adobe Portable Document Format
(PDF)on the Internet at the following site: *http://www.ed.gov/news/fedregister.* To use PDF you must have Adobe Acrobat Reader, which is available free at this site. If you have questions about using PDF, call the U.S. Government Printing Office (GPO), toll free, at 1-888-293-6498; or in the Washington, DC, area at
(202)512-1530. Note: The official version of this document is the document published in the **Federal Register** . Free Internet access to the official edition of the **Federal Register** and the Code of Federal Regulations is available on GPO Access at: *http://www.gpoaccess.gov/nara/index.html.* (Catalog of Federal Domestic Assistance Numbers 84.133A Disability Rehabilitation Research Projects, 84.133B Rehabilitation Research and Training Centers and 84.133E Rehabilitation Engineering Research Centers Program) Program Authority: 29 U.S.C. 762(g), 764(a), 764(b)(2), and 764(b)(3). Dated: August 27, 2007. William W. Knudsen, Acting Deputy Assistant Secretary for Special Education and Rehabilitative Services. [FR Doc. E7-17199 Filed 8-30-07; 8:45 am] BILLING CODE 4000-01-P 72 169 Friday, August 31, 2007 Proposed Rules Part V Department of the Treasury Internal Revenue Service 26 CFR Part 1 Benefit Restrictions for Underfunded Pension Plans; Proposed Rule DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [REG-113891-07] RIN 1545-BG72 Benefit Restrictions for Underfunded Pension Plans AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Notice of proposed rulemaking. SUMMARY: This document contains proposed regulations providing guidance regarding the use of certain funding balances maintained for defined benefit pension plans and regarding benefit restrictions for certain underfunded defined benefit pension plans. The proposed regulations reflect changes made by the Pension Protection Act of 2006. These regulations affect sponsors, administrators, participants, and beneficiaries of single employer defined benefit pension plans. DATES: Written or electronic comments and requests for a public hearing must be received by November 29, 2007. ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-113891-07), room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered Monday through Friday between the hours of 8 a.m. to 4 p.m. to CC:PA:LPD:PR (REG-113891-07), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue, NW., Washington, DC, or sent electronically via the Federal eRulemaking Portal at *http://www.regulations.gov* (IRS REG-113891-07). FOR FURTHER INFORMATION CONTACT: Lauson C. Green or Linda S.F. Marshall at
(202)622-6090; concerning submissions and requests for a public hearing, contact Kelly Banks at
(202)622-7180 (not toll-free numbers). SUPPLEMENTARY INFORMATION: Paperwork Reduction Act The collections of information contained in this notice of proposed rulemaking have 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(d)). Comments on the collections of information should be sent to the Office of Management and Budget, Attn: Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Washington, DC 20503, with copies to the Internal Revenue Service, Attn: IRS Reports Clearance Officer, SE:W:CAR:MP:T:T:SP, Washington, DC 20224. Comments on the collection of information should be received by October 30, 2007. Comments are specifically requested concerning: Whether the proposed collection of information is necessary for the proper performance of the functions of the Internal Revenue Service, including whether the information will have practical utility; The accuracy of the estimated burden associated with the proposed collection of information; How the quality, utility, and clarity of the information to be collected may be enhanced; How the burden of complying with the proposed collections of information may be minimized, including through the application of automated collection techniques or other forms of information technology; and Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of service to provide information. The collection of information in this proposed regulation is in § 1.430(f)-1(f) and §§ 1.436-1(f) and 1.436-1(h). This information is required in order for a qualified defined benefit plan's enrolled actuary to provide a timely certification of the plan's AFTAP for each plan year to avoid certain benefit restrictions. In addition, these proposed regulations provide for several written elections to be made by the plan sponsor upon occasion. This information is voluntary to obtain a benefit. The likely respondents are qualified retirement plan sponsors and enrolled actuaries. *Estimated total annual reporting burden:* 60,000 hours. *Estimated average annual burden hours per respondent:* 0.75 hours. *Estimated number of respondents:* 80,000. *Estimated annual frequency of responses:* occasional. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by the Office of Management and Budget. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103. Background This document contains proposed Income Tax Regulations (26 CFR part 1) under sections 430(f) and 436, as added to the Code by the Pension Protection Act of 2006 (PPA '06), Public Law 109-280, 120 Stat. 780. Section 412 contains minimum funding rules that generally apply to defined benefit plans. 1 The minimum funding rules that apply specifically to single employer defined benefit plans (including multiple employer plans within the meaning of section 413(c)) are set forth in new section 430. 1 Section 302 of the Employee Retirement Income Security Act of 1974, as amended (ERISA) sets forth funding rules that are parallel to those in section 412 of the Code, section 303 of ERISA sets forth additional funding rules for defined benefit plans (other than multiemployer plans) that are parallel to those in section 430 of the Code, and section 206(g) of ERISA sets forth funding-based limitations for defined benefit plans (other than multiemployer plans) that are parallel to those in section 436 of the Code. Under section 101 of Reorganization Plan No. 4 of 1978 (43 FR 47713) and section 302 of ERISA, the Secretary of the Treasury has interpretive jurisdiction over the subject matter addressed in these proposed regulations for purposes of ERISA, as well as the Code. Thus, these proposed Treasury regulations issued under sections 430(f) and 436 of the Code apply as well for purposes of ERISA sections 303(f) and 206(g), respectively. Section 430 generally provides that the minimum required contribution for a year is the sum of the target normal cost for the year and the shortfall and waiver amortization charges. Under section 430(f)(3), certain funding balances referred to as the prefunding balance and the funding standard carryover balance are permitted to be used to reduce the otherwise applicable minimum required contribution for a plan year in certain situations. Under section 430(f)(7), the funding standard carryover balance is based on the funding standard account credit balance as determined under section 412 for a plan as of the last day of the last plan year beginning in 2007. Under section 430(f)(6), the prefunding balance represents the accumulation of the contributions that an employer makes for a plan year that exceed the minimum required contribution for the year. Thus, an employer that makes additional contributions for a plan year is permitted in certain circumstances to use those excess contributions in order to satisfy the minimum funding requirement in a subsequent plan year. The treatment of these balances under section 430 reflects congressional concern with the treatment of a funding standard account credit balance under the section 412 rules in effect prior to PPA '06. Accordingly, section 430(f)(3) sets forth new limits on the ability of a poorly funded plan to use the prefunding balance and the funding standard carryover balance for a plan year. In addition, section 430(f)(4) requires that the prefunding balance and the funding standard carryover balance be subtracted from the value of plan assets for certain purposes (including the determination of the plan's funding target attainment percentage (FTAP), as defined under section 430(d)(2)) and section 430(f)(8) requires that the prefunding balance and the funding standard carryover balance be adjusted for actual investment return on the plan assets. In order to give employers the opportunity to minimize the impact of the requirement to subtract the prefunding balance and funding standard carryover balance from the plan assets, section 430(f)(5) permits an employer to elect to reduce the balances. Section 401(a)(29) requires that a defined benefit plan (other than a multiemployer plan) satisfy the requirements of section 436. Section 436 sets forth a series of limitations on the accrual and payment of benefits under an underfunded plan. Under section 436(g), these limitations (other than the limitations on accelerated benefit payments under section 436(d)) do not apply to a plan for the first 5 plan years of the plan, taking into account any predecessor plan. Section 436(b) sets forth a limitation on plant shutdown and other unpredictable contingent event benefits in situations where the plan's adjusted funding target attainment percentage (AFTAP) for the plan year is less than 60 percent or would be less than 60 percent taking into account the occurrence of the event. For this purpose, an “unpredictable contingent event benefit” means any benefit payable solely by reason of
(1)a plant shutdown (or a similar event) or
(2)an event other than attainment of age, performance of service, receipt or derivation of compensation, or the occurrence of death or disability. Under section 436(b)(2), the limitation does not apply for a plan year if the plan sponsor makes a specified contribution (in addition to any minimum required contribution). If the AFTAP for a plan year is less than 60 percent, then the specified contribution is equal to the amount of the increase in the plan's funding target for the plan year attributable to the occurrence of the event. If the AFTAP for a plan year is 60 percent or more but would be less than 60 percent taking into account the occurrence of the event, then the specified contribution is the amount sufficient to result in an AFTAP of 60 percent taking into account the occurrence of the event. Under section 436(c), a plan amendment that has the effect of increasing the liabilities of the plan by reason of any increase in benefits (including changes in vesting) may not take effect if the plan's AFTAP for the plan year is less than 80 percent or would be less than 80 percent taking into account the amendment. Under section 436(c)(2), the limitation does not apply for a plan year if the plan sponsor makes a specified contribution (in addition to any minimum required contribution). If the plan's AFTAP for the plan year is less than 80 percent, then the specified contribution is equal to the amount of the increase in the plan's funding target for the plan year attributable to the amendment. If the plan's AFTAP for the plan year is 80 percent or more but would be less than 80 percent taking into account the amendment, then the specified contribution is the amount sufficient to result in an AFTAP of 80 percent taking into account the amendment. In addition, under section 436(c)(3), the limitation does not apply to an amendment that provides for a benefit increase under a formula not based on compensation, but only if the rate of increase does not exceed the contemporaneous rate of increase in average wages of the participants covered by the amendment. Under section 436(d), a plan is required to set forth certain limitations on accelerated benefit distributions. If the plan's AFTAP for a plan year is less than 60 percent, the plan must not make any prohibited payments after the valuation date for the plan year. If the plan's AFTAP for a plan year is at least 60 percent but is less than 80 percent, the plan must not pay any prohibited payment to the extent the payment exceeds the lesser of
(1)50 percent of the amount otherwise payable under the plan and
(2)the present value of the maximum PBGC guarantee with respect to a participant. In addition, if the plan sponsor is in bankruptcy proceedings, the plan may not pay any prohibited payment unless the plan's enrolled actuary certifies that the AFTAP of the plan is at least 100 percent. However, section 436(d) does not apply to a plan for a plan year if the terms of the plan provide for no benefit accruals with respect to any participant for the period beginning on September 1, 2005, and extending throughout the plan year. Under section 436(d)(5), a “prohibited payment” is
(1)any payment, in excess of the monthly amount paid under a single life annuity (plus any social security supplements that are provided under the plan), to a participant or beneficiary,
(2)any payment for the purchase of an irrevocable commitment from an insurer to pay benefits (an annuity contract), or
(3)any other payment specified by the Secretary by regulations. Under section 436(e), a plan is required to provide that if the plan's AFTAP is less than 60 percent for a plan year, all future benefit accruals under the plan must cease as of the valuation date for the plan year. Under section 436(e)(2), the limitation ceases to apply with respect to any plan year, effective as of the first day of the plan year, if the plan sponsor makes a contribution (in addition to any minimum required contribution for the plan year) equal to the amount sufficient to result in an AFTAP of 60 percent. Section 436(f) sets forth a series of rules under which the limitations of section 436 will not apply to a plan. Under section 436(f)(1), an employer is permitted to provide security to the plan (in the form of a surety bond, cash, or other forms satisfactory to the Treasury Department and the parties involved) that is treated as an asset of the plan for purposes of determining the plan's AFTAP. Under section 436(f)(2), if an employer uses the option in section 436(b)(2), 436(c)(2), or 436(e)(2) to make the specified contribution that would avoid a limitation under section 436, the specified contribution must be an actual contribution and the employer may not use a prefunding balance or funding standard carryover balance in lieu of making the specified contribution. In addition, a contribution to avoid a benefit limitation is disregarded in determining whether the minimum required contribution under section 430 has been made and in determining the plan's prefunding balance. Section 436(f)(3) describes certain situations in which an employer is deemed to have made the election in section 430(f)(5) to reduce the plan's funding standard carryover balance or prefunding balance. Such an election has the effect of increasing the plan's FTAP (because the result of the election is a higher asset value used to determine the FTAP) and could lead to the plan not being subject to a benefit limitation under section 436. In particular, if the limitation under section 436(d) would otherwise apply to a plan, the plan sponsor is treated as having made an election (a deemed election) to reduce any prefunding balance or funding standard carryover balance by the amount necessary to prevent the benefit limitation from applying. A comparable rule applies to the other benefit limitations under sections 436(b), 436(c), and 436(e), but only in the case of a plan maintained pursuant to a collective bargaining agreement. In either case, this deeming rule applies only if the prefunding balance and funding standard carryover balances are large enough to avoid the application of a section 436 limitation. Section 436(h) sets forth a series of presumptions that apply during the portion of the plan year that is before the plan's enrolled actuary has certified the plan's AFTAP for the year. Under section 436(h)(1), if a plan was subject to a limitation under section 436(b), 436(c), 436(d), or 436(e) for the plan year preceding the current plan year, the plan's AFTAP for the current year is presumed to be the same as for the preceding year until the plan's enrolled actuary certifies the plan's AFTAP for the current year. Under section 436(h)(3), if any of these limitations did not apply to the plan for the preceding year, but the plan's AFTAP for the preceding year was within 10 percentage points of the limitation's threshold, the plan's AFTAP is presumed to be reduced by 10 percentage points as of the first day of the 4th month of the current plan year, unless the plan's enrolled actuary has certified the plan's AFTAP for the current year by that day (and that day is deemed to be the plan's valuation date for purposes of applying the benefit limitations). If the plan's enrolled actuary has not certified the plan's AFTAP by the first day of the 10th month of the current plan year, section 436(h)(2) provides that the plan's AFTAP is conclusively presumed to be less than 60 percent as of that day (and that day is deemed to be the valuation date for purposes of applying the benefit limitations). Under section 436(i), unless the plan provides otherwise, if a limitation on prohibited payments or future benefit accruals under section 436(d) or
(e)ceases to apply to a plan, all such payments and benefit accruals resume, effective as of the day following the close of the limitation period. Section 436(j) provides definitions that are used under section 436, including the plan's AFTAP. In general, the plan's AFTAP is based on the plan's FTAP for the plan year. However, the plan's AFTAP is determined by adding the aggregate amount of purchases of annuities for employees other than highly compensated employees (within the meaning of section 414(q)) made by the plan during the two preceding plan years to the numerator and the denominator of the fraction used to determine the FTAP. In addition, section 436(j)(3) provides a special rule which applies to certain well-funded plans under which the plan's FTAP for purposes of section 436 (and hence the plan's AFTAP) is determined by using the plan's assets without reduction for the prefunding balance and the funding standard carryover balance. Section 436(j)(3)(B) sets forth a transition rule for determining eligibility for this special rule. Section 436(k) provides that, for plan years that begin in 2008, the determination of the plan's FTAP for the preceding year is to be made pursuant to guidance issued by the Secretary. Explanation of Provisions I. Section 430(f)—Effect of Prefunding Balance and Funding Standard Carryover Balance A. Overview 1. *In general.* The proposed regulations would be the second in a series of proposed regulations under new section 430. 2 These regulations would provide guidance on the application of section 430(f), relating to the establishment and maintenance of a funding standard carryover balance and a prefunding balance for purposes of sections 430 and 436. The Treasury Department and the IRS intend to issue additional proposed regulations relating to other portions of the rules under section 430 later in 2007. 2 Proposed regulation §§ 1.430(h)(3)-1 and 1.430(h)(3)-2, relating to the mortality tables used to determine liabilities under section 430(h)(3), were issued May 29, 2007 (REG-143601-06, 72 FR 29456). 2. *Multiple employer plans.* The proposed regulations under section 430(f) apply to plans subject to section 412 that are maintained by one employer or a controlled group of employers and to multiple employer plans within the meaning of section 413(c). In the case of a multiple employer plan to which section 413(c)(4)(A) applies, the rules under the proposed regulations would be applied separately for each employer under the plan, as if each employer maintained a separate plan. Thus, each employer under such a multiple employer plan may have a separate funding standard carryover balance and a prefunding balance for the plan. In the case of a multiple employer plan to which section 413(c)(4)(A) does not apply (that is, a plan described in section 413(c)(4)(B) that has not made the election for section 413(c)(4)(A) to apply), the proposed regulations under section 430(f) would apply as if all participants in the plan were employed by a single employer. B. Establishment of Prefunding Balance and Funding Standard Carryover Balance The proposed regulations would provide that an employer is permitted to establish a prefunding balance for a plan that represents the accumulation of contributions made for plan years beginning on or after the effective date of section 430 with respect to the plan (the first effective plan year) that are in excess of the minimum required contributions (determined without regard to the prefunding balance and funding standard carryover balance) for those plan years. Specifically, for the first effective plan year of a plan, the prefunding balance is initialized at zero dollars and an employer is permitted to elect to add some or all of the excess contributions made to a plan for each plan year to the prefunding balance as of the first day of the next plan year. For this purpose, the excess contributions are generally determined as the amount by which the employer contributions to the plan for the plan year exceed the minimum required contribution for the plan year, with appropriate adjustments for interest determined at the effective interest rate under section 430(h)(2)(A). However, the proposed regulations would provide that any contribution that is made to avoid the application of a benefit limitation under section 436 is not taken into account in determining the amount of excess contributions. The proposed regulations would also provide that the minimum required contribution for purposes of determining the amount of excess contributions for the year is determined without regard to any offset of the minimum required contribution for the year as a result of the use of the prefunding or funding standard carryover balances. Accordingly, an employer would not be permitted to add to the prefunding balance any amount of contributions that are “excess” by reason of an offset of the minimum required contribution for the year through the use of the prefunding balance or funding standard carryover balance. This prohibition precludes an employer from avoiding the requirement to adjust the prefunding balance and funding standard carryover balance by the actual rate of return on plan assets in the situation where the plan assets have experienced a loss (or a rate of return that is lower than the effective interest rate that is used for interest adjustments with respect to minimum required contributions for the plan year). The proposed regulations would provide that the funding standard carryover balance is initialized as the balance in the funding standard account as of the last day of the last plan year before section 430 applies to a plan (the pre-effective plan year). This is generally the last plan year beginning in 2007, but could be a later year in the case of a plan to which a delayed effective date applies under the rules of sections 104 through 106 of PPA '06. C. Maintenance of Prefunding Balance and Funding Standard Carryover Balance The proposed regulations would provide that a plan's prefunding balance and funding standard carryover balance as of the beginning of a plan year are adjusted to reflect the actual rate of return on plan assets for the plan year. This calculation of the actual rate of return on plan assets for the plan year is determined on the basis of fair market value and must take into account the amount and timing of all contributions, distributions, and other plan payments made during the year. The adjustment for investment return is applied to the prefunding balance and funding standard carryover balance after any reductions to those balances as described under the following two headings in this preamble. In addition, the proposed regulations would provide special rules in the case of a plan with a valuation date that is not the first day of the plan year. D. Use of Prefunding Balance and Funding Standard Carryover Balance To Offset Minimum Funding Requirements for a Year The proposed regulations would provide that the employer may elect to use some or all of the prefunding balance or funding standard carryover balance to offset the otherwise applicable minimum required contribution for a plan year, provided that the plan met a funding percentage threshold for the preceding plan year. Specifically, an employer is permitted to make such an election only if the plan's prior year funding ratio was at least 80 percent. For this purpose, the plan's prior year funding ratio generally is a fraction (expressed as a percentage), the numerator of which is the value of plan assets on the valuation date for the preceding plan year, reduced by the amount of any prefunding balance (but not the amount of any funding standard carryover balance), and the denominator of which is the funding target of the plan for the preceding plan year (determined without regard to the at-risk rules of section 430(i)(1)). The proposed regulations would provide a transition rule to determine a plan's prior year funding ratio for the first effective plan year. Under this transition rule, the current liability for the plan for the pre-effective plan year is substituted for the funding target of the plan for that plan year. In addition, the transition rule provides that the value of plan assets is determined under section 412(c)(2) as in effect for that pre-effective plan year, except that the value of plan assets must be limited so that it is not less than 90 percent and not more than 110 percent of the fair market value of plan assets. The proposed regulations would reflect the rule in section 430(f)(3)(B) that requires the plan sponsor to have reduced the funding standard carryover balance in full (either by using the funding standard carryover balance to offset the minimum required contribution for a year or through a voluntary reduction under section 430(f)(5)) before the prefunding balance is permitted to be used to offset a current year minimum funding requirement. E. Subtraction From Plan Assets and Employer Election To Reduce Balances The proposed regulations would reflect the rules under section 430(f)(4) which provide that the prefunding balance and funding standard carryover balance are subtracted from the plan assets for certain purposes. These include the determination of the FTAP, which is also relevant for purposes of applying the benefit limitations of section 436. In accordance with section 430(f)(4)(A), the proposed regulations would provide that the amount of the prefunding balance is subtracted from the value of plan assets for purposes of determining whether a plan is exempt from the requirement to establish a new shortfall amortization base under section 430(c)(5) only if an election to use the prefunding balance to offset the minimum required contribution is made for the plan year. In addition, pursuant to section 430(f)(4)(B)(ii), the proposed regulations would provide that the prefunding balance and funding standard carryover balance are not subtracted from plan assets for purposes of determining the funding shortfall under section 430(c)(4) to the extent that there is a binding written agreement with the Pension Benefit Guaranty Corporation
(PBGC)which provides that all or a portion of those balances cannot be used to offset the minimum required contribution for a plan year. For this purpose, an agreement with the PBGC is taken into account with respect to a plan year only if the agreement was executed prior to the valuation date for the plan year. In addition, section 436(j) sets forth an exception from the requirement to subtract the plan's prefunding balance and funding standard carryover balance from the value of plan assets in determining a plan's FTAP for purposes of the benefit limitation rules of section 436 provided that the plan's FTAP would meet certain standards if it were calculated without subtracting the balances from plan assets. Section 430(f)(5) provides that an employer may elect to reduce the amount of the prefunding balance and the funding standard carryover balance. This will have the effect of increasing the plan assets for various purposes. For example, the increase in plan assets will increase the FTAP, which may allow the plan to avoid the application of section 436 limitations. The proposed regulations would reflect the rule in section 430(f)(5)(B) that requires the employer to reduce the funding standard carryover balance in full (either by using the funding standard carryover balance to offset the minimum required contribution for a year or through a voluntary reduction under section 430(f)(5)) before any reduction is permitted for the prefunding balance. F. Elections Under Section 430(f) The proposed regulations would provide that an election under section 430(f) is made by the plan sponsor by providing written notification of the election to the plan's enrolled actuary and the plan administrator, must be irrevocable when made, and must satisfy certain timing rules. The written notification must set forth the relevant details of the election, including the specific amounts involved in the election with respect to the prefunding balance and funding standard carryover balance. An election under section 430(f) generally must be made on or before the due date (with extensions) for the filing of the plan's Form 5500 “Annual Return/Report of Employee Benefit Plan” for the plan year to which the election relates (or, in the case of a plan not required to file a Form 5500 for the plan year, before the last day of the seventh month after the end of the plan year to which the election relates). For this purpose, an election to add to the prefunding balance relates to the plan year for which excess contributions were made. However, the proposed regulations would require any section 430(f)(5) election to reduce a portion of the prefunding balance or funding standard carryover balance for a plan year to be made by the end of the plan year to which the election relates. For example, in the case of a calendar year plan required to file Form 5500, an election to add to the prefunding balance as of the first day of the 2010 plan year (in an amount not in excess of the 2009 interest-adjusted excess contributions), must be made no later than the due date for filing the 2009 Form 5500 (with extensions) while an election to reduce the prefunding balance as of the first day of the 2010 plan year must be made by the end of the 2010 plan year. In both cases, the election would be reported on the 2010 Form 5500 (Schedule SB) that would be filed in 2011. The proposed regulations would provide that, for purposes of elections under section 430(f), any reference in the proposed regulations to the plan sponsor generally means the employer or employers responsible for making contributions to the plan. However, in the case of elections under section 430(f) for multiple employer plans to which section 413(c)(4)(A) does not apply, any reference in the proposed regulations to the plan sponsor means the plan administrator within the meaning of section 414(g). II. Section 436—Limits on Benefits and Benefit Accruals Under Single Employer Defined Benefit Plans A. Overview and General Rules 1. *In general.* The proposed regulations would set forth the rules that a defined benefit pension plan that is subject to section 412 and that is not a multiemployer plan must satisfy in order to comply with the requirement in section 401(a)(29) that the plan meet the requirements of section 436. This requirement is a qualification requirement. A plan satisfies the requirements of section 436 only if the plan meets the requirements of these regulations. 2. *New plans.* In accordance with section 436(g), the proposed regulations would provide that the limitations described in sections 436(b), 436(c), and 436(e) do not apply to a plan for the first five plan years of the plan. For purposes of applying this new plan rule, plan years under a plan are aggregated with plan years under a predecessor plan. Thus, the only benefit limitation that could apply under a plan that is not a successor plan during the first five years of its existence is the section 436(d) limitation applicable to accelerated benefit payments (such as single sum distributions). 3. *Multiple employer plans.* The proposed regulations under section 436 apply to plans maintained by one employer (including a controlled group of employers) and to multiple employer plans (within the meaning of section 413(c)). In the case of a multiple employer plan to which section 413(c)(4)(A) applies, the rules under the proposed regulations would be applied separately for each employer under the plan, as if each employer maintained a separate plan. Thus, the benefit limitations under section 436 could apply differently to employees of different employers under such a multiple employer plan. In the case of a multiple employer plan to which section 413(c)(4)(A) does not apply (that is, a plan described in section 413(c)(4)(B) that has not made the election for section 413(c)(4)(A) to apply), the proposed regulations under section 436 would apply as if all participants in the plan were employed by a single employer. 4. *Treatment of plan as of close of prohibited or cessation period.* The proposed regulations would provide that, if a limitation on accelerated benefit payments under section 436(d) (such as single sum distributions) applies to a plan as of a section 436 measurement date, but that limit subsequently ceases to apply to the plan as of a later section 436 measurement date, then the limitation does not apply to benefits with annuity starting dates that are on or after that later section 436 measurement date. In addition, the proposed regulations would provide that, if a limitation on benefit accruals under section 436(e) applies to a plan, unless the plan provides otherwise, benefit accruals under the plan will resume effective as of the section 436 measurement date as of which benefit accruals are no longer restricted. With respect to a participant who had an annuity starting date within a period during which the accelerated benefit payment limitation rules of section 436(d) applied to the plan, once the limitation ceases to apply, the participant's benefits will continue to be paid in the form previously elected unless the plan permits the participant to be offered a new election which would modify the prior election. The proposed regulations would permit a plan to provide that the participant will be offered the opportunity to have a new election under which the form of benefit previously elected may be modified, subject to applicable qualification requirements, and that new election will constitute a new annuity starting date for purposes of section 417. Similarly, a plan is permitted to be amended to provide that any benefit accruals that were limited under the rules of section 436(e) will be credited under the plan once the limitation no longer applies, subject to applicable qualification requirements. If a plan provides for the restoration of benefit accruals for the period of the limitation under preexisting plan terms, the plan is treated as having adopted an amendment that has the effect of increasing liabilities under the plan if the period of the limitation exceeded 12 months. Whether a plan is amended or is treated as having been amended as described above, the amendment or pre-existing plan provision is subject to the limitations of section 436(c). 3 3 The PBGC has informed the IRS and the Treasury Department that it expects similarly to treat such an automatic restoration of missed benefit accruals as a plan amendment. In addition, the proposed regulations would provide that a plan is permitted to be amended to provide that any unpredictable contingent event benefits that were limited under the rules of section 436(b) will be paid or reinstated when the limitation no longer applies, subject to applicable qualification requirements. Any such amendment is subject to the limitations of section 436(c). A plan is not permitted to provide for restoration of any such unpredictable contingent event benefits without an amendment that complies with section 436(c). 5. *Deemed election to reduce prefunding and funding standard carryover balances.* The proposed regulations would provide that, if a limitation on accelerated benefit payments under section 436(d) would otherwise apply to a plan, the plan sponsor is treated as having made an election under section 430(f) to reduce the prefunding balance or funding standard carryover balance by such amount as is necessary for the AFTAP to be at or above the applicable threshold (60, 80, or 100 percent, as the case may be) in order for the benefit limitation not to apply to the plan. In such a case, the plan sponsor is treated as having made that election on the section 436 measurement date as of which the benefit limitation would otherwise apply. This deemed election applies if the plan provides for accelerated distributions that would be limited in a plan year, regardless of whether a plan participant is eligible or elects to receive such a distribution during the plan year (but does not apply if the plan does not provide for any accelerated distributions that are subject to the benefit limitation). However, the deemed reduction applies with respect to this limitation only if the prefunding and funding standard carryover balances to be reduced are large enough to avoid the application of the limitation. Thus, no reduction of prefunding and funding standard carryover balances is required if the limitation would still apply for a year even if those balances were reduced to zero. In addition, the proposed regulations would provide that, in the case of a plan maintained pursuant to one or more collective bargaining agreements between an employee representative and one or more employers in which a benefit limitation under section 436(b), 436(c), or 436(e) would otherwise apply to the plan, the employer is treated for purposes of section 436 as having made an election under section 430(f) to reduce the prefunding balance or funding standard carryover balance by such amount as is necessary for the AFTAP to be at or above the applicable threshold for the benefit limitation not to apply to the plan, taking into account the unpredictable contingent event benefits or plan amendment, as applicable. The proposed regulations would provide that, in the case of a plan with respect to which collective bargaining agreements apply to some, but not all, of the plan participants, the plan is considered a collectively bargained plan for purposes of this provision if at least 25 percent of the participants in the plan are members of the collective bargaining units for whom the benefit levels under the plan are specified under the collective bargaining agreements. As in the case of the deemed reduction in funding balances for the accelerated benefit distributions under section 436(d), the deemed reduction applies only if the prefunding and funding standard carryover balances to be reduced are large enough to avoid the application of the limitation under section 436(b), 436(c), or 436(e), as applicable. If the mandatory reduction of funding balances applies to a plan, the employer is treated as having made that election on the date as of which the applicable benefit restriction would otherwise apply. In addition, the proposed regulations would provide that, if a plan (whether or not collectively bargained) is presumed to have an AFTAP of less than 60 percent under the section 436(h) presumption rules, then the plan is treated as if the plan's funding standard carryover balance and prefunding balance are insufficient to increase the plan's AFTAP to the threshold percentage. 6. *Section 436 measurement date.* The “section 436 measurement date” is a defined term under the proposed regulations that is used to describe the date that stops or starts the application of the limitations of sections 436(d) and 436(e) and is also used for calculations with respect to applying the limitations of sections 436(b) and 436(c). The regulations would provide that the date of the enrolled actuary's certification of the AFTAP for the plan year is a section 436 measurement date if it occurs within the first nine months of the plan year. If the date of an enrolled actuary's certification of the AFTAP is between the first day of the 10th month of a plan year and the last day of that plan year, that date is not a section 436 measurement date for purposes of the limitations of section 436(d) or 436(e) because, in that case, the plan's AFTAP is presumed to be under 60 percent (however, receipt of the enrolled actuary's certification during that period impacts the plan's presumed “carryover” AFTAP for the following year). The proposed regulations would provide that a section 436 measurement date occurs where there is a change in the plan's AFTAP under the presumption rules of section 436(h). In addition, the proposed regulations would provide a series of rules in cases where the enrolled actuary's certification of the AFTAP for a plan year is made after the end of the plan year, as described below under the heading “Presumed underfunding for purposes of benefit limitations.” B. Limitation on Plant Shutdown and Other Unpredictable Contingent Event Benefits In accordance with section 436(b), the proposed regulations would provide that a plan that provides for any unpredictable contingent event benefit 4 must provide that the benefit will not be paid to a plan participant during a plan year if the AFTAP for the plan year is less than 60 percent (or is 60 percent or more but would be less than 60 percent if the benefits attributable to the unpredictable contingent event were taken into account in determining the AFTAP). However, this prohibition on payment of unpredictable contingent event benefits no longer applies for a plan year, effective as of the first day of the plan year, if the employer makes the contribution specified in section 436(b)(2), as described in paragraph F in this preamble. 4 See also Notice 2007-14, IRB 501, (see § 601.601(d)(2) of this chapter) requesting comments on the types of benefits that are permitted to be provided in a qualified defined benefit plan, including benefits payable in the event of a plant shutdown or similar event. For this purpose, the proposed regulations would provide that an “unpredictable contingent event benefit” means any benefit or increase in benefits to the extent the benefit or increase would not be payable but for the occurrence of an unpredictable contingent event, and an “unpredictable contingent event” means a plant shutdown (whether full or partial) or similar event, or an event other than the attainment of any age, performance of any service, receipt or derivation of any compensation, or the occurrence of death or disability. Thus, for example, if a plan provides for an unreduced early retirement benefit upon the occurrence of an event other than the attainment of any age, performance of any service, receipt or derivation of any compensation, or the occurrence of death or disability, then that unreduced early retirement benefit is an unpredictable contingent event benefit to the extent of any portion of the benefit that would not be payable but for the occurrence of the event, even if the remainder of the benefit is payable without regard to the occurrence of the event. Similarly, an unpredictable contingent event benefit under the proposed regulations includes a benefit payable upon the presence of circumstances specified in the plan (other than the attainment of any age, performance of any service, receipt or derivation of any compensation, or the occurrence of death or disability), so that a plan that provides those benefits upon a participant's severance from employment in those circumstances, but not upon a severance from employment that does not involve those circumstances, is providing an unpredictable contingent event benefit. Unpredictable contingent event benefits attributable to a plant shutdown or other unpredictable contingent event that occurred within a period during which no limitation under section 436(b) applied to the plan are not affected by the limitation as it applies in a subsequent period. For example, if a plant shutdown occurs in 2010 and a plan's funded status is such that its shutdown benefits are not subject to the limitation for that plan year, benefits paid pursuant to that shutdown are permitted to be paid in a later plan year even if the plan's AFTAP for the subsequent year is less than 60 percent. Conversely, if a plant shutdown occurs in 2010 and a plan's funded status is such that its shutdown benefits are subject to the limitation under section 436(b) for that plan year and cannot be paid, those shutdown benefits related to the 2010 plant shutdown are not permitted to be paid in a later year even if the plan's AFTAP for the later year is at or above the 60 percent threshold for the section 436(b) limitation (subject to the rules permitting plan amendments to reinstate previously restricted benefits, including unpredictable contingent event benefits, as described in paragraph II.A.4 of this preamble). C. Limitations on Plan Amendments Increasing Liability for Benefits In accordance with section 436(c), the proposed regulations would provide that a plan satisfies the limitation on plan amendments increasing liability for benefits only if the plan provides that no amendment to the plan that has the effect of increasing liabilities of the plan by reason of increases in benefits, establishment of new benefits, changing the rate of benefit accrual, or changing the rate at which benefits become nonforfeitable is permitted to take effect if the AFTAP for the plan year is less than 80 percent (or is 80 percent or more but would be less than 80 percent if the benefits attributable to the amendment were taken into account in determining the AFTAP). However, this prohibition on plan amendments no longer applies for a plan year if the employer makes the contribution specified in section 436(c)(2), as described in paragraph F of this preamble. In accordance with section 436(c)(3), the limitation on amendments increasing liabilities does not apply to any amendment that provides for an increase in benefits under a formula that is not based on a participant's compensation, but only if the rate of increase in benefits does not exceed the contemporaneous rate of increase in average wages of participants covered by the amendment. The proposed regulations would provide that the determination of the rate of increase in average wages is made by taking into consideration the net increase in average wages during the period beginning with the effective date of the most recent benefit increase applicable to all of those participants who are covered by the current amendment and ending on the effective date of the current amendment. If the participants covered by an amendment include both currently employed participants and terminated participants (who will have no increase or decrease in wages for this purpose after severance from employment), all covered participants must be included in determining the increase in average wages of the participants covered by the amendment. Alternatively, the employer could adopt two amendments—one that increases benefits for currently employed participants and another one that increases benefits for the terminated participants. In that case, this exception from application of the section 436(c) limitation generally would apply to the amendment that increases benefits for currently employed participants (based solely on the wages of those current employees), but the amendment that applies only to terminated participants (who received no increase in wages from the employer during the period over which the increase in average wages is determined) would not be eligible for the exception. In addition, the proposed regulations would provide that, to the extent that any amendment results in (or is made pursuant to) a mandatory increase in the vesting of benefits under the Code or ERISA (such as vesting rate increases pursuant to statute and plan termination amendments under section 411(d)(3)), that amendment does not constitute an amendment that changes the rate at which benefits become nonforfeitable for purposes of section 436(c). D. Limitations on Accelerated Benefit Distributions 1. *Funding percentage less than 60 percent.* In accordance with section 436(d)(1), under the proposed regulations, a plan must provide that, if the plan's AFTAP for a plan year is less than 60 percent, the plan will not pay any prohibited payment with an annuity starting date that is on or after the applicable section 436 measurement date. However, if a participant requests such a prohibited distribution, the plan must permit the participant to elect another form of benefit available under the plan or to defer payment to a later date to the extent permitted under applicable qualification requirements. Similar rules apply in any case in which a beneficiary is entitled to a prohibited payment (for example, where a qualified pre-retirement survivor annuity is offered in an alternative single sum payment). 2. *Bankruptcy.* In accordance with section 436(d)(2), under the proposed regulations, a plan must provide that the plan will not pay any prohibited payment with an annuity starting date that is during any period during a plan year in which the plan sponsor is a debtor in a case under title 11, United States Code, or similar Federal or State law, until the date on which the enrolled actuary of the plan certifies that the plan's AFTAP is not less than 100 percent. 3. *Limited payment if percentage at least 60 percent but less than 80 percent.* In accordance with section 436(d)(3), under the proposed regulations, a plan must provide that, in any case in which the plan's AFTAP for a plan year is 60 percent or more but is less than 80 percent, a participant is permitted to elect a prohibited payment only if the present value of the portion of the payment that is greater than the amount of the monthly straight life annuity under the plan (and any social security supplement, if applicable) does not exceed 50 percent of the present value of the participant's benefits (or if less, 100 percent of the present value of the maximum guarantee with respect to the participant under section 4022 of ERISA). For this purpose, present value is determined using the rules of section 417(e) except that, if the plan provides a single sum distribution that is larger than the present value of the benefit determined using the rules of section 417(e), then that larger benefit is substituted for the present value of the participant's benefits before applying the 50 percent factor. Similar rules apply in any case in which a beneficiary is entitled to a prohibited payment. If an optional form of benefit that is otherwise available under the terms of the plan is not available as of the annuity starting date because it is a prohibited payment that cannot be paid under the preceding paragraph, then the plan must provide a participant who elects such an optional form with the option either to defer payment to a later date (to the extent permitted under applicable qualification requirements) or to bifurcate the benefit into unrestricted and restricted portions. If the participant elects to bifurcate the benefit, the plan must permit the participant to elect, with respect to the unrestricted portion, any optional form of benefit otherwise available under the plan with respect to the participant's entire benefit (whether or not the optional form of benefit with respect to the unrestricted portion is a prohibited payment). The unrestricted portion of the benefit is the lesser of
(i)50 percent of the benefit and
(ii)the benefit that has a present value that does not exceed 100 percent of the present value of the maximum PBGC guarantee with respect to the participant under section 4022 of ERISA. If the participant elects payment of the unrestricted portion of the benefit in the form of a prohibited payment, then the plan must permit the participant to elect payment of the restricted portion in any optional form of benefit under the plan that would have been permitted with respect to the participant's entire benefit other than a prohibited payment. A plan is also permitted (but not required) to offer optional forms of benefit that are solely available during the period section 436(d)(3) applies to the plan, such as an optional form of benefit that provides for the current payment of the unrestricted portion of the benefit, with a delayed commencement for the restricted portion of the benefit, subject to other applicable qualification requirements. A participant who receives a prohibited payment (or a series of prohibited payments under a single optional form of benefit) under the rule permitting certain prohibited payments cannot receive any additional payment that would be a prohibited payment until there is a plan year for which none of the limitations on accelerated distributions under section 436(d) apply. Benefits provided to a participant and any beneficiary are aggregated for purposes of determining the limited distribution under section 436(d)(3). The proposed regulations would also reflect the rules of section 436(d)(3)(B)(ii), which describes how this limited distribution is allocated among the beneficiaries of a participant. 4. *Exception for certain frozen plans.* In accordance with section 436(d)(4), the limitations under section 436(d) will not apply to a plan for any plan year if the terms of the plan, as in effect for the period beginning on September 1, 2005, provided for no benefit accruals with respect to any participants. However, if such a plan provides for any benefit accruals during a plan year, this exception will cease to apply for the plan as of the date those accruals start. 5. *Prohibited payment.* In accordance with section 436(d)(5), the proposed regulations would provide that the term “prohibited payment” means:
(i)Any payment for a month that is in excess of the monthly amount paid under a single life annuity (plus any social security supplements described in the last sentence of section 411(a)(9)), to a participant or beneficiary whose annuity starting date (as defined in section 417(f)(2)) occurs during any period that a limitation on accelerated benefit payments is in effect;
(ii)Any payment for the purchase of an irrevocable commitment from an insurer to pay benefits; and
(iii)Any other payment that is identified as a prohibited payment by the Commissioner in revenue rulings and procedures, notices and other guidance published in the Internal Revenue Bulletin (see § 601.601(d)(2) of this chapter). In addition, for purposes of applying the limitations on accelerated benefit payments under the requirements of section 436(d), the term *annuity starting date* means, as applicable—
(a)The first day of the first period for which an amount is payable as an annuity as described in section 417(f)(2)(A)(i);
(b)In the case of a benefit not payable in the form of an annuity, the first day on which all events have occurred (including the participant's election, the participant's severance from employment if the participant is below normal retirement age, and, if applicable, the participant's survival to the date as of which payment is made) which entitle the participant to such benefit as described in section 417(f)(2)(A)(ii);
(c)In the case of an amount payable on a retroactive annuity starting date, the benefit commencement date; and
(d)The date of any payment for the purchase of an irrevocable commitment from an insurer to pay benefits under plan. E. Limitation on Benefit Accruals In accordance with section 436(e), under the proposed regulations, a plan must provide that, in any case in which the plan's AFTAP for a plan year is less than 60 percent, benefit accruals under the plan will cease as of the applicable section 436 measurement date. If a plan must cease benefit accruals under this limitation, then the plan is also not permitted to be amended in a manner that would increase the liabilities of the plan by reason of an increase in benefits or establishment of new benefits. This rule applies regardless of whether an amendment would otherwise be permissible under section 436(c)(3) (involving certain amendments to increase benefits under a formula not based on a participant's compensation). This prohibition on additional benefit accruals will no longer apply for a plan year if the plan sponsor makes the contribution specified in section 436(e)(2), as described in paragraph F of this preamble. F. Rules Relating to Contributions Required To Avoid Benefit Limitations The proposed regulations provide rules regarding contributions by the plan sponsor to avoid benefit limitations under section 436. An employer sponsoring a plan that would otherwise be subject to the limitations of section 436 can avoid the application of those limits through one of four different techniques: 1) reducing the funding standard carryover balance and prefunding balance; 2) making additional contributions for a prior plan year that are not added to the prefunding balance; 3) making the specific contributions described in sections 436(b)(2), 436(c)(2), and 436(e)(2); and 4) providing security, as described in section 436(f)(1). As noted in this preamble, under the first of the techniques, if a plan sponsor elects to reduce the plan's funding standard carryover balance or the prefunding balance, this will have the effect of increasing the plan assets that are taken into account in determining the plan's FTAP and AFTAP and, thereby, will raise the AFTAP to a level so that the benefit limitations may no longer apply to the plan. Alternatively, if the deadline for making prior year contributions has not passed, the plan sponsor could utilize the second technique—making additional contributions for the prior plan year. If these additional contributions are not added to the prefunding balance, then the additional contributions will also have the effect of increasing the plan's FTAP and AFTAP. The third and fourth techniques for avoiding the application of the benefit limitations of section 436 are described in § 1.436-1(f) of the proposed regulations. Under the third technique, the plan sponsor makes additional contributions that are specifically designated at the time the contribution is used to avoid the application of a limitation under section 436(b), 436(c), or 436(e). The proposed regulations would provide for this designation to be provided to the plan's enrolled actuary and plan administrator in writing. Furthermore, the designation must be irrevocable, except as described below. If the contributions are made on a date other than the valuation date for the plan year, the contributions must be adjusted for interest (using the plan's effective interest rate, except as provided in the proposed regulations). These contributions are separate from any minimum required contributions required by section 430, and no prefunding balance or funding standard carryover balance under section 430(f) may be used as a contribution to avoid a section 436 benefit limitation. A plan sponsor that makes such a current year contribution will nonetheless fail to satisfy the minimum funding requirements if it does not make the minimum required contribution under section 430 for the year. In addition, as noted above, these contributions are not taken into account in determining whether a plan sponsor is making excess contributions for purposes of adding to the plan's prefunding balance. The fourth technique for a plan sponsor to avoid the application of the benefit limitations of section 436 is for the plan sponsor to provide security. In such a case, the AFTAP for the plan year is determined by treating as an asset of the plan any security provided by a plan sponsor by the valuation date for the plan year in a form meeting certain specified requirements. However, this security is not taken into account for any other purpose, including section 430. The only security permitted to be provided by a plan sponsor for this purpose is
(i)a bond issued by a corporate surety company that is an acceptable surety for purposes of section 412 of ERISA, or
(ii)cash or United States obligations that mature in three years or less that are held in escrow by a bank or insurance company. The regulations would reflect sections 436(f)(1)(C) and
(D)in specifying when the security is to be contributed to the plan and when it may be released. If the security is turned over to the plan, then that amount is treated as an employer contribution when it is turned over to the plan. The proposed regulations would provide that any such security turned over to the plan pursuant to the enforcement mechanism cannot be treated as a contribution to avoid or terminate the application of a section 436 benefit limitation under section 436(b)(2), 436(c)(2), or 436(e)(2). G. Presumed Underfunding for Purposes of Benefit Limitations The proposed regulations reflect the rules of section 436(h), which sets forth a series of presumptions that are used to apply the section 436 benefit limitations in situations where the plan's enrolled actuary has not yet issued a certification of the plan's AFTAP for the plan year. In addition, the proposed regulations also set forth rules for the application of the limitations prior to and during the period those presumptions apply to a plan, and describe the interaction of those presumptions with plan operations after the plan's enrolled actuary has issued a certification of the plan's AFTAP for the plan year. These rules are designed to encourage plans to obtain certifications in a timely manner, with a particular emphasis with respect to plans that have a greater likelihood of having a new section 436 benefit limitation apply because they had an AFTAP for the prior plan year that was near a threshold for a benefit limitation to apply. The proposed regulations would provide that, in any case in which a plan was subject to a benefit limitation on the last day of the prior plan year, the first day of the plan year is a section 436 measurement date and the AFTAP of the plan for the current plan year is presumed to be equal to the preceding year's certified AFTAP until the plan's enrolled actuary certifies the AFTAP of the plan for the current plan year. Because no plan could be subject to a benefit limitation for a plan year that precedes the plan year that begins in 2008, the section 436(h)(1) presumption generally will not apply to any plan before the first plan year beginning in 2009. In accordance with section 436(h)(3), the proposed regulations would provide that, if the enrolled actuary of the plan has not certified the AFTAP of the plan for the current plan year by the first day of the 4th month of the plan year and the AFTAP for the preceding year was certified to be at least 60 percent but less than 70 percent or at least 80 percent but less than 90 percent, then the first day of the 4th month of the current plan year is a section 436 measurement date, and the AFTAP of the plan is presumed to be equal to 10 percentage points less than the AFTAP of the plan for the preceding plan year. This presumption will apply until the earlier of the date the enrolled actuary certifies the AFTAP for the plan year or the first day of the 10th month of the plan year. In accordance with section 436(h)(2), the proposed regulations would provide that, in any case in which no certification of the specific AFTAP for the current plan year is made before the first day of the 10th month of such year, that date is a section 436 measurement date and, as of that date, the plan's AFTAP is conclusively presumed to be less than 60 percent. In such a case, the presumed AFTAP of under 60 percent for the current plan year will continue to apply under the rules of section 436(h)(1) for the next plan year, until such time as the enrolled actuary certifies the AFTAP for either the current plan year or the next plan year. The proposed regulations would provide rules that apply the section 436(h) presumptions for the plan year in cases in which the enrolled actuary's certification for the prior plan year is made on or after the first day of the 10th month of that prior plan year. If the date of the enrolled actuary's certification of the specific AFTAP for a plan year occurs on or after the date the conclusive presumption applies but on or before the last day of the plan year, the proposed regulations would provide that the certified percentage is disregarded for that plan year but is used for purposes of the presumption rule of section 436(h)(1) starting with the beginning of the following plan year (rather than continuing to apply the less-than-60 percent presumption that applied before the first day of that following plan year). If the date of the enrolled actuary's certification of the specific AFTAP for a plan year occurs after the end of the plan year but prior to the first day of the 4th month in the following plan year, the proposed regulations would provide that the certification date is treated as a section 436 measurement date for that following plan year and that, starting on that date, the plan's AFTAP is presumed to be the certified AFTAP for the prior year (rather than continuing to apply the less-than-60 percent presumption that applied before the certification). If the date of the enrolled actuary's certification of the specific AFTAP for a plan year occurs after the first day of the 4th month in the following plan year but before the first day of the 10th month, the proposed regulations would provide that the certification date also is a section 436 measurement date for that following plan year, and the plan's AFTAP for that following year beginning on that date is presumed to be the certified AFTAP for the prior year (rather than continuing to apply the less-than-60 percent presumption that applied before the certification). However, in such a case, if a 10 percentage point reduction in the AFTAP would have applied on the first day of the 4th month of that following plan year if the AFTAP for the prior plan year had been certified before that day, then the same 10 percentage point reduction applies on the date of the certification. These presumption rules based on the prior year AFTAP do not apply once a certification of the following year's AFTAP is issued by the plan's enrolled actuary. The enrolled actuary's certification of the AFTAP for a plan year must be made in writing, must be provided to the plan administrator, and must certify the plan's AFTAP for the plan year. As an alternative to certifying a specific number for the plan's AFTAP, the regulations would provide that the enrolled actuary is permitted to certify during the first nine months of a plan year that the plan's AFTAP for that year is within a percentage “range” that is either
(i)60 percent or higher, but less than 80 percent,
(ii)80 percent or higher, or
(iii)100 percent or higher. The proposed regulations would provide that such a “range” certification ends the application of the presumptions provided that the enrolled actuary follows up with a certification of the specific AFTAP before the first day of the 10th month of that year and that the certified specific AFTAP is within the range of the earlier certification. If this “range” certification alternative is followed, the plan is treated as having a certified AFTAP at the smallest value within the applicable range. Thus, for example, if the enrolled actuary certified that the AFTAP was more than 60 percent but less than 80 percent, then the plan is treated as having an AFTAP of 60 percent for purposes of applying the limitations of section 436(b) until the earlier of the date of the specific AFTAP certification or the first day of the 10th month of the plan year. In such a case, if the plan has an unpredictable contingent event or a plan amendment that increases liability for benefits, unpredictable contingent event benefits cannot be paid and the plan amendment cannot take effect unless the plan sponsor makes a contribution described in section 436(b)(2) or 436(c)(2), as applicable. If the plan sponsor makes a contribution under section 436(b)(2) or section 436(c)(2), the proposed regulations would provide that the contribution is recharacterized as a regular employer contribution that is taken into account under section 430 for the current plan year to the extent it is determined that the contribution was not needed to avoid the application of the benefit limit, based on the subsequent calculation of the specific AFTAP. The proposed regulations would specify that the enrolled actuary is generally not permitted to certify the AFTAP based on a value of assets that includes contributions receivable for the prior year that have not actually been made as of the date of the certification. However, this rule would not apply to certifications that are made for plan years beginning before January 1, 2009. Thus, for a certification with respect to 2008, the enrolled actuary is permitted to take in account contributions for 2007 that are reasonably expected but have not yet been made by the plan sponsor at the time of the certification. However, if the plan sponsor does not make those contributions, the enrolled actuary's certification will be incorrect, which will result in a failure to satisfy section 401(a)(29) and section 436 if the difference constitutes a material change. If the enrolled actuary for the plan provides a certification of the AFTAP for the plan year (including a range certification) and that certified percentage is superseded by a subsequent determination of the AFTAP for that plan year, that later percentage must be applied and a determination must be made whether the change in the applicable percentage is a material change or an immaterial change. For this purpose, the proposed regulations would specify that there is a material change if plan operations with respect to benefits that are addressed by section 436, taking into account any actual contributions and elections under section 430(f) made by the plan sponsor based on the prior certified percentage, would have been different based on the subsequent determination of the plan's AFTAP for the plan year. Thus, for example, if after the actuary certifies the plan's AFTAP for a plan year, the plan sponsor elects to add excess contributions for the prior plan year to the plan's prefunding balance, this would have the effect of reducing the plan's AFTAP, and such a change could be a material change. The proposed regulations would specify that an immaterial change is a change in an AFTAP that is not a material change. In addition, the proposed regulations would provide that if the difference between the AFTAP for a plan year and the later revised determination of that percentage is the result of additional contributions for the preceding year that are made by the plan sponsor after the date of the enrolled actuary's certification or results from the plan sponsor's election to reduce the prefunding or funding standard carryover balance after the date of the certification, such change is always treated as an immaterial change (regardless of whether it would otherwise affect the application of the section 436 benefit limitations). In the case of a material change where the plan was operated in accordance with the prior certification of the AFTAP for the plan year, the plan will not have satisfied the requirements of section 401(a)(29) and section 436. In the case of a material change where the plan was operated in accordance with the subsequent certification of the AFTAP during the period of time the prior certification applied, then the plan will not have been operated in accordance with its terms. In addition, in the case of a material change, the rules requiring application of a presumed AFTAP under section 436(h) continue to apply from and after the date of the prior certification until the date of the subsequent certification. In the case of an immaterial change, the revised percentage applies prospectively but it does not change the inapplicability of the presumptions under section 436(h) for the plan year prior to the date of the subsequent certification. H. Coordination Between Presumptions and Determination of AFTAP 1. *Periods during which a presumption applies to the plan.* A plan must provide that, for any period during which a presumption under section 436(h) applies to the plan, the limitations applicable under sections 436(b), 436(c), 436(d), and 436(e) apply to the plan as if the actual AFTAP for the year were the presumed AFTAP. During that period, the rules relating to the deemed election to reduce the funding standard carryover balance and the prefunding balance must be applied based on the presumed percentage with respect to the applicable limitations. Thus, a plan's prefunding balance and funding standard carryover balance must be reduced if the reduction would be sufficient to avoid the applicable limitation. The proposed regulations provide rules for determining the amount of the reduction in balances. If the presumed AFTAP for the plan year changes during the year because of application of the presumption in section 436(h)(3), the rules regarding the deemed election to reduce funding balances must be reapplied based on the new presumed AFTAP. This reapplication of the deemed election may require an additional reduction in funding balances if the amount of the reduction in funding balances that is necessary to reach the applicable threshold to avoid the application of the limitation under section 436(d) or 436(e) is greater than the amount that was initially reduced. 2. *Periods prior to certification where no presumption applies.* If no presumptions under section 436(h) apply to a plan for a period and the plan's enrolled actuary has not yet issued the certification of the plan's AFTAP for the plan year, the plan is not permitted to limit the payment of unpredictable contingent event benefits or the accrual of benefits based on an expectation that the limitations under section 436(d) or 436(e) will apply to the plan once the enrolled actuary's certification of the AFTAP is issued. In addition, the proposed regulations would provide that, if no presumptions under section 436(h) apply to a plan during a period and the plan's enrolled actuary has not yet issued a certification of the plan's AFTAP for the plan year, the limitations under sections 436(b) and 436(c) that apply to unpredictable contingent event benefits and certain plan amendments, respectively, during that period must be applied following the special rules described below in paragraph H.3. of this preamble. Thus, if after application of those rules the plan would be treated as having an AFTAP below the applicable threshold under section 436(b) or 436(c), the limitation will apply unless the plan sponsor makes a contribution to avoid application of the applicable benefit limitations described in section 436(b)(2) or 436(c)(2). In such case, following the certification of the AFTAP for the current plan year by the plan's enrolled actuary, the proposed regulations would provide that those contributions are recharacterized as employer contributions under section 430 for the current plan year to the extent they exceed the amount necessary to avoid application of the applicable limitation under section 436(b) or 436(c) based on the certified percentage. 3. *Periods prior to certification—special rules for unpredictable contingent event benefits and plan amendments that increase liability.* The proposed regulations would provide that, during the pre-certification period, the rules relating to the deemed election to reduce the funding standard carryover balance and the prefunding balance must be applied based on the plan's presumed AFTAP. The proposed regulations would provide rules for determining the amount of the reduction in those balances that would apply in such a situation and provide that, in making such determination, the presumed adjusted funding target is increased to take into account the benefits attributable to the unpredictable contingent event or the plan amendment described in section 436(b) and 436(c), respectively. For this purpose, if no presumption applies under the rules of section 436(h) (for example, because the plan's actual AFTAP for the prior year was certified to be at least 80 percent), then that prior year's actual AFTAP is substituted for the presumed AFTAP for the plan year in determining the presumed adjusted funding target. In the case of a plan that is not a collectively bargained plan with a funding standard account carryover balance or a prefunding balance, the deemed election rules do not apply for purposes of sections 436(b) and 436(c), and the plan sponsor is permitted (but not required) to reduce those balances in order to increase the adjusted plan assets that are compared to the presumed AFTAP. If, after application of such funding balance reductions and the other calculations set forth in the proposed regulations, the plan's AFTAP (taking into account the additional benefits) is less than the applicable threshold under section 436(b) or 436(c), as applicable, then the plan is not permitted to provide any benefits attributable to the unpredictable contingent event or plan amendment unless the plan sponsor makes a contribution that would allow payment of unpredictable contingent event benefits or would permit a plan amendment increasing benefit liabilities to go into effect under the rules of section 436(b)(2) or 436(c)(2). If, after application of such funding balance reductions, the plan's AFTAP (taking into account the additional benefits) is greater than or equal to the applicable threshold under section 436(b) or 436(c), as applicable, then the plan is not permitted to limit the payment of unpredictable contingent event benefits under section 436(b) or to restrict a plan amendment increasing liability for benefits from taking effect under section 436(c) based on an expectation that those limitations will apply to the plan once the enrolled actuary's certification is issued. 4. *Limitations based on AFTAP.* The proposed regulations would provide that, on and after the date the enrolled actuary for the plan issues a certification of the AFTAP for the current plan year, the plan must apply that certified percentage (however, if the certification is issued on or after the first day of the 10th month of the current plan year but before the first day of the following plan year, the certified percentage applies under the presumption rules beginning on the first day of that following plan year). For example, the plan sponsor must apply the certified AFTAP for a plan year to an unpredictable contingent event that occurs or a plan amendment that is effective on or after the date of the enrolled actuary's certification during the plan year. Thus, the plan administrator must determine if the AFTAP is at or above the applicable threshold, taking into account the increase in the funding target that would be attributable to the unpredictable contingent event or plan amendment if the unpredictable contingent event benefits or the increase in liability attributable to the plan amendment were taken into account. After the AFTAP for a plan year is certified by the plan's enrolled actuary, with respect to the application of limitations under sections 436(d) and 436(e) (accelerated benefit payments and benefit accruals, respectively) for the plan year, the deemed election to reduce funding balances must be reapplied based on the actual funding target for the year (provided the certification is issued by the first day of the 10th month). This reapplication of the deemed election may require an additional reduction in funding balances if the amount of the reduction in funding balances that is necessary to reach the applicable threshold to avoid the application of those limitations is greater than the amount of a prior reduction for the plan year. The proposed regulations would also reflect section 436(d)(2), which provides that no prohibited payments under section 436(d)(5) are permitted to be paid by a plan during any period in which the plan sponsor is a debtor in a case under title 11, United States Code, or any similar Federal or State law, if the plan's enrolled actuary has not yet certified the plan's AFTAP for the plan year to be at least 100 percent. Thus, the presumptions do not apply for purposes of section 436(d)(2). The proposed regulations would provide that the enrolled actuary's certification of the AFTAP does not affect the application of the limitation under section 436(d) for participants with annuity starting dates before the certification. Similarly, the enrolled actuary's certification for the plan year does not affect the application of the limitation under section 436(e) of this section prior to the date of that certification. With respect to the impact of the enrolled actuary's certification of the AFTAP for a plan year on periods prior to the certification, the proposed regulations would provide that the certification does not affect the application of limitations under sections 436(b) and 436(c) for periods prior to the date the certification is issued, regardless of the extent to which the certified percentage varies from the presumed percentage. Notwithstanding the foregoing, in the case of a plan that, for a plan year, did not provide benefits attributable to an unpredictable contingent event or plan amendment based on the preceding year's certified AFTAP (and where sufficient contributions under section 436(b)(2) or 436(c)(2) were not made), the plan must provide any benefits that were not so provided if those benefits would be permitted under the rules of section 436 based on the certified AFTAP, taking into account the increase in the funding target that would be attributable to the unpredictable contingent event benefits or increase in liability due to the plan amendment. A special rule applies if a plan is providing benefits with respect to one or more unpredictable contingent events occurring within the plan year or amendments taking effect within the plan year. In such a case, the restrictions on unpredictable contingent event benefits and plan amendments are applied with respect to a subsequent unpredictable contingent event or amendment by treating the increase in the funding target attributable to the subsequent event or amendment as if it included the increases in the funding target attributable to all such earlier events or amendments. I. Determination of Funding Target Attainment Percentage For purposes of section 436, the *funding target* means the funding target under section 430(d) or section 430(i), as applicable to the plan for a plan year. For purposes of section 436, the *funding target attainment percentage*
(FTAP)for any plan year is the fraction (expressed as a percentage), the numerator of which is the value of net plan assets, and the denominator of which is the plan's funding target (determined without regard to the at-risk rules under section 430(i) even in the case of a plan that is in at-risk status). For this purpose, pursuant to section 430(f)(4), the value of net plan assets for the plan year is generally determined by subtracting the plan's funding standard carryover balance and prefunding balance (if any) for the plan year from the value of plan assets. The *adjusted funding target attainment percentage* (AFTAP) for any plan year is the fraction (expressed as a percentage), the numerator of which is the adjusted plan assets and the denominator of which is the adjusted funding target. The adjusted plan assets equals the net plan assets, increased by the aggregate amount of purchases of annuities for employees other than highly compensated employees (as defined in section 414(q)) which were made by the plan during the preceding 2 plan years. The proposed regulations would provide that the adjusted funding target equals the funding target for the plan year (determined without regard to the at-risk rules under section 430(i)), increased by the aggregate amount of purchases of annuities for employees other than highly compensated employees (as defined in section 414(q)) which were made by the plan during the preceding 2 plan years. If the FTAP for a plan year, determined without regard to the section 430(f)(4) subtraction of the funding standard carryover balance and the prefunding balance from the value of plan assets, would be 100 percent or more, then, for purposes of section 436 (but not section 430(d)), the value of net plan assets used in the determination of the FTAP and the AFTAP is determined without regard to any subtraction of funding balances under section 430(f)(4). The proposed regulations would reflect the transition rule of section 436(j)(3)(B) under which a plan is permitted to phase up to 100 percent for purposes of the preceding sentence. The proposed regulations would also provide that, in the case of the first plan year beginning in 2008, the FTAP for the preceding plan year is determined as a fraction (expressed as a percentage), the numerator of which is the value of net plan assets, and the denominator of which is the plan's current liability determined pursuant to section 412(l)(7) on the valuation date for the last plan year that begins before 2008 (the 2007 plan year). For this purpose, the value of plan assets is determined under section 412(c)(2) as in effect for the 2007 plan year, except that the value of plan assets prior to subtraction of the plan's funding standard account credit balance described below can neither be less than 90 percent of the fair market value of plan assets nor greater than 110 percent of the fair market value of plan assets on the valuation date for that plan year. If a plan has a funding standard account credit balance as of the valuation date for the 2007 plan year, that balance must be subtracted from the asset value described above as of that date unless the value of plan assets is greater than or equal to 90 percent of the plan's current liability determined under section 412(l)(7) on the valuation date for the 2007 plan year. In the case of the first plan year beginning in 2008, for purposes of determining the AFTAP for the 2007 plan year, the proposed regulations provide that the adjusted funding target is equal to the current liability determined pursuant to section 412(l)(7) on the valuation date for the 2007 plan year, increased by the aggregate amount of purchases of annuities for employees other than highly compensated employees (as defined in section 414(q)) which were made by the plan during the preceding 2 plan years. In any case in which the plan's enrolled actuary has not issued a certification of the AFTAP of the plan for the 2007 plan year using this rule, the AFTAP of the plan for the first plan year beginning in 2008 is presumed to be less than 60 percent until the AFTAP of the plan for the 2007 plan year has been certified or the AFTAP of the plan for the first plan year beginning in 2008 has been certified. This rule applies for purposes of sections 436(b) and 436(c) at the beginning of the first plan year beginning in 2008 and applies for purposes of sections 436(d) and 436(e) as of the first day of the 4th month of the first plan year beginning in 2008. The special rules permitting range certifications for plan years beginning after 2007 do not apply to the 2007 plan year. However, if the employer makes an election to reduce some or all of the funding standard carryover balance as of the first day of the first plan year beginning in 2008 in accordance with proposed § 1.430(f)-1(e), then the present value (determined as of the valuation date for the prior year using the valuation interest rate for that prior year) of the amount so reduced is not treated as part of the funding standard account credit balance when that balance is subtracted from the value of net plan assets. Thus, an employer's election to reduce the funding standard carryover balance in 2008 will have the effect of reducing the amount that must be subtracted from the assets in determining the 2007 AFTAP for purposes of applying the presumptions under section 436(h)(3) as of the first day of the 4th month of the plan year beginning in 2008. Proposed Legislation As of the date of issuance of these proposed regulations, bills have been introduced in the House of Representatives and the Senate that would exclude mandatory cash-out distributions under section 411(a)(11) from application of the accelerated payments limitation under section 436(d) and that would provide the Treasury Department with authority to address application of the presumptions under section 436(h) to plans that have valuation dates that are later than the first day of the plan year. 5 Proposed § 1.436-1(d)(6) and § 1.436-1(h)(5), respectively, are reserved in order to accommodate such changes. 5 H.R. 3361 (August 3, 2007) and S. 1974 (August 2, 2007), at sections 2(c)(1)(C), 2(c)(2)(C), 2(c)(1)(F), and 2(c)(2)(F). Section 1107 of PPA '06 and Code Section 411(d)(6) Under section 1107 of PPA '06, a plan sponsor is permitted to delay adopting a plan amendment pursuant to statutory provisions under PPA '06 (or pursuant to any regulation issued under PPA '06) until the last day of the first plan year beginning on or after January 1, 2009 (January 1, 2011 in the case of governmental plans). As described in Rev. Proc. 2007-44, 2007-28 IRB 54, this amendment deadline applies to both interim and discretionary amendments that are made pursuant to PPA '06 statutory provisions or any regulation issued under PPA '06. See § 601.601(d)(2) of this chapter. If section 1107 of PPA '06 applies to an amendment of a plan, section 1107 provides that the plan does not fail to meet the requirements of section 411(d)(6) by reason of such amendment, except as provided by the Secretary of the Treasury. 6 For example, section 411(d)(6) relief would be available for plan amendments that would prohibit single sum or other accelerated distributions if the plan's AFTAP was less than 60 percent, in accordance with section 436(d) and § 1.436-1(d) of the proposed regulations. Plan sponsors should note that the IRS and the Treasury Department are reviewing whether sample plan amendments should be issued with respect to section 436 and the § 1.436-1 regulations. 6 Except to the extent permitted under section 411(d)(6) and the § 1.411(d)-4 regulations, or under a statutory provision such as section 1107 of PPA '06, section 411(d)(6) prohibits a plan amendment that decreases a participant's accrued benefits or that has the effect of eliminating or reducing an early retirement benefit or retirement-type subsidy, or eliminating an optional form of benefit, with respect to benefits attributable to service before the amendment. However, an amendment that eliminates or decreases benefits that have not yet accrued does not violate section 411(d)(6), provided the amendment is adopted and effective before the benefits accrue. ERISA Notice to Participants and Beneficiaries Under section 101(j) of ERISA, as amended by PPA '06, the plan administrator of a single employer plan is required to provide a written notice to participants and beneficiaries within 30 days after: • The date the plan has become subject to a restriction described in the ERISA provisions that are parallel to paragraphs
(b)and
(d)of Code section 436; • In the case of a plan that is subject to the ERISA provisions that are parallel to paragraph
(e)of Code section 436, the valuation date for the plan year for which the plan's AFTAP is less than 60 percent (or, if earlier, the date the AFTAP is presumed to be less than 60 percent under the ERISA provisions that parallel the presumption rules in paragraph
(h)of Code section 436); and • At such other time as may be determined by the Secretary of the Treasury. The notice is required to be provided in writing, except that the notice may be in electronic or other form to the extent that such form is reasonably accessible to the recipient. Effective/Applicability Dates 1. Section 1.430(f)-1 In general, these regulations under section 430(f) are proposed to apply to plan years beginning on or after January 1, 2008. However, in the case of a plan for which the effective date of section 430 is delayed in accordance with sections 104 through 106 of the Pension Protection Act of 2006, Public Law 109-280, 120 Stat. 780, the regulations under section 430(f) are proposed to apply to plan years beginning on or after the effective date of section 430 with respect to the plan. Unlike section 436, section 430 and the regulations under section 430(f) do not include a delayed effective date for collectively bargained plans. 2. Section 1.436-1 In general, the regulations under section 436 are proposed to apply to plan years beginning on or after January 1, 2008. However, in the case of a plan for which the effective date of section 436 is delayed in accordance with sections 104 through 106 of the Pension Protection Act of 2006, Public Law 109-280, 120 Stat. 780, the regulations under section 436 are proposed to apply to plan years beginning on or after the effective date of section 436 with respect to the plan. In addition, in the case of a collectively bargained plan maintained pursuant to one or more collective bargaining agreements between employee representatives and one or more employers ratified before January 1, 2008, the regulations under section 436 would not apply to plan years beginning before the earlier of:
(1)the later of the date on which the last collective bargaining agreement relating to the plan terminates (determined without regard to any extension thereof agreed to after August 17, 2006), or the first day of the first plan year to which the proposed regulations under section 436 would otherwise apply, or
(2)January 1, 2010. For this purpose, any plan amendment made pursuant to a collective bargaining agreement relating to the plan which amends the plan solely to conform to any requirement under the proposed regulations would not be treated as a termination of the collective bargaining agreement. The determination of whether a plan is a collectively bargained plan is the same as described above in paragraph II.A.5 of this preamble with respect to a plan sponsor's deemed election to reduce funding balances. 3. Reliance on Proposed Regulations For periods following the issuance of these proposed regulations and before final regulations are issued, these proposed regulations may be relied upon for plan qualification purposes, provided that such reliance is on a consistent and reasonable basis. 4. Effect on Plans Subject to Section 402 of PPA '06 The IRS and the Treasury Department are reviewing the applicability of section 436 and the funding balance rules of section 430(f) to plans that have made elections under section 402 of PPA '06 (taking into account the amendments to section 402 of PPA '06 by section 6615 of the U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007 (Public Law 110-28)) and any special rules for such plans will be addressed in future guidance. Special Analyses It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations. It is hereby certified that the collection of information imposed by these proposed regulations will not have a significant economic impact on a substantial number of small entities. Accordingly, a regulatory flexibility analysis is not required. The estimated burden imposed by the collection of information contained in these proposed regulations is 0.75 hours per respondent. Moreover, most of this burden is attributable to the requirement for a qualified defined benefit plan's enrolled actuary to provide a timely certification of the plan's AFTAP for each plan year to avoid certain benefit restrictions, which is imposed by section 436(h) of the Code. In addition, these proposed regulations provide for several written elections to be made by the plan sponsor upon occasion; these written elections will require minimal time to prepare. Pursuant to section 7805(f) of the Code, these regulations have been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its 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 (one signed and eight
(8)copies) or electronic comments that are submitted timely to the IRS. The IRS and Treasury Department specifically request comments on the clarity of the proposed regulations and how they may be made easier to understand. All comments will be available for public inspection and copying. A public hearing will be scheduled if requested in writing by any person who timely submits written comments. If a public hearing is scheduled, notice of the date, time, and place of the public hearing will be published in the **Federal Register** . Drafting Information The principal authors of these regulations are Lauson C. Green and Linda S.F. Marshall, Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). However, other personnel from the IRS and the Treasury Department participated in the development of these regulations. List of Subjects in 26 CFR Part 1 Income taxes, Reporting and recordkeeping requirements. 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 * * * **Par. 2.** Section 1.430(f)-1 is added to read as follows: § 1.430(f)-1 Effect of prefunding balance and funding standard carryover balance.
(a)*In general* —(1) *Overview* . This section provides rules relating to the application of prefunding balances and funding standard carryover balances under section 430(f). Section 430 and this section apply to single employer defined benefit plans (including multiple employer plans) that are subject to section 412, but do not apply to multiemployer plans (as defined in section 414(f)). Paragraph
(b)of this section sets forth rules regarding a plan sponsor's election to maintain a funding standard carryover balance or a prefunding balance. Paragraph
(c)of this section provides rules under which those balances must be subtracted from plan assets. Paragraph
(d)of this section describes a plan sponsor's election to use those balances to offset the minimum required contribution. Paragraph
(e)of this section describes a plan sponsor's election to reduce those balances (which will affect the determination of the value of plan assets for purposes of sections 430 and 436). Paragraph
(f)of this section sets forth rules regarding elections under this section. Paragraph
(g)of this section contains examples. Paragraph
(h)of this section contains effective/applicability dates and transitional provisions.
(2)*Special rules for multiple employer plans.* In the case of a multiple employer plan to which section 413(c)(4)(A) applies, the rules of this section are applied separately for each employer under the plan, as if each employer maintained a separate plan. Thus, each employer under such a multiple employer plan may have a separate funding standard carryover balance and a prefunding balance for the plan. In the case of a multiple employer plan to which section 413(c)(4)(A) does not apply (that is, a plan described in section 413(c)(4)(B) that has not made the election for section 413(c)(4)(A) to apply), the rules of this section are applied as if all participants in the plan were employed by a single employer.
(b)*Election to maintain balances* —(1) *Prefunding balance* —(i) *In general.* A plan sponsor is permitted to maintain a prefunding balance for a plan. A prefunding balance maintained for a plan consists of a beginning balance of zero, increased by the amount of excess contributions to the extent the employer elects to do so as described in paragraph (b)(1)(ii) of this section, and decreased to the extent provided in paragraph (b)(1)(iii) of this section. The prefunding balance is adjusted further for investment return and interest as provided in paragraphs (b)(3) and (b)(4) of this section.
(ii)*Increases* —(A) *In general.* If the plan sponsor of a plan elects to add to the plan's prefunding balance, as of the first day of each plan year following the first effective plan year for the plan, the prefunding balance is increased by the amount so elected by the plan sponsor for the plan year. The amount added to the prefunding balance cannot exceed the interest-adjusted excess contributions for the preceding plan year determined under paragraph (b)(1)(ii)(B) of this section.
(B)*Interest-adjusted excess contribution.* For purposes of this paragraph (b)(1)(ii), the interest-adjusted excess contribution for the preceding plan year is the amount, increased with interest in accordance with the rules of paragraph (b)(1)(iv)(A) of this section, of the excess, if any, of— ( *1* ) The present value of the employer contributions (other than contributions to avoid or terminate benefit limitations described in § 1.436-1(f)(2)) to the plan for the preceding plan year determined under the rules of paragraph (b)(1)(iv)(B) of this section; over ( *2* ) The minimum required contribution for the preceding plan year (determined without regard to any election to offset the minimum required contribution under paragraph
(d)of this section for the preceding plan year).
(iii)*Decreases.* The prefunding balance of a plan is decreased (but not below zero) by the sum of—
(A)As of the first day of each plan year after the first effective plan year for the plan, any amount of the prefunding balance that was used under paragraph
(d)of this section to offset the minimum required contribution of the plan for the preceding plan year; and
(B)As of the first day of each plan year, any reduction in the prefunding balance under paragraph
(e)of this section for the plan year.
(iv)*Adjustments for interest* —(A) *Adjustment of excess contribution.* The amount of the excess contribution for the preceding year (as determined under paragraph (b)(1)(ii)(B) of this section) is increased for interest accruing for the period between the valuation date for the preceding plan year and the first day of the current year. For this purpose, interest is determined by using the plan's effective interest rate under section 430(h)(2)(A) for the preceding plan year.
(B)*Determination of present value.* The present value of the contributions described in paragraph (b)(1)(ii)(B)( *1* ) of this section is determined as of the valuation date for the preceding plan year, using the plan's effective interest rate under section 430(h)(2)(A) for the preceding plan year.
(2)*Funding standard carryover balance* —(i) *In general.* A funding standard carryover balance is only permitted to be maintained by a plan that had a positive balance in the funding standard account under section 412(b) as of the end of the pre-effective plan year for the plan. The funding standard carryover balance as of the beginning of the first effective plan year for the plan is the positive balance in the funding standard account under section 412(b) as of the end of the pre-effective plan year for the plan, decreased to the extent provided in paragraph (b)(2)(ii) of this section and adjusted further for investment return and interest as provided in paragraphs (b)(3) and (b)(4) of this section.
(ii)*Decreases.* The funding standard carryover balance of a plan is decreased (but not below zero) by the sum of—
(A)As of the first day of each plan year after the first effective plan year for the plan, any amount of the funding standard carryover balance that was used under paragraph
(d)of this section to offset the minimum required contribution of the plan for the preceding plan year; and
(B)As of the first day of each plan year, any reduction in the funding standard carryover balance under paragraph
(e)of this section for the plan year.
(3)*Adjustments for investment experience.* In determining a plan's prefunding balance under paragraph (b)(1) of this section or a plan's funding standard carryover balance under paragraph (b)(2) of this section as of the first day of a plan year, the balance must be adjusted to reflect the actual rate of return on plan assets for the preceding plan year. This adjustment is applied to the balance after subtracting amounts used to offset the minimum required contribution for the preceding plan year pursuant to paragraph
(d)of this section and after any reduction of balances for that preceding plan year under paragraph
(e)of this section. For this purpose, the actual rate of return on plan assets for the preceding plan year is determined on the basis of fair market value and must take into account the amount and timing of all contributions, distributions, and other plan payments made during that period.
(4)*Valuation date other than the first day of the plan year* —(i) *In general.* If a plan's valuation date is not the first day of the plan year, solely for purposes of applying paragraphs (c), (d), and
(e)of this section, the plan's prefunding balance and funding standard carryover balance (if any) determined under this paragraph
(b)are increased to the valuation date using the plan's effective interest rate under section 430(h)(2)(A) for the plan year.
(ii)*Special rule for adjustments for investment experience.* For purposes of applying the rules regarding the adjustments for investment experience in paragraph (b)(3) of this section, in the case of a plan with a valuation date that is not the first day of the plan year, the amount of the funding balances that must be subtracted from plan assets under paragraph
(d)of this section (because they are used to offset the minimum required contribution for the plan year) must be adjusted to the first day of the plan year using the effective interest rate under section 430(h)(2)(A) for that year.
(c)*Effect of balances on plan assets* —(1) *In general.* In the case of any plan with a prefunding balance or a funding standard carryover balance, the amount of those balances must be subtracted from the value of plan assets for purposes of sections 430 and 436, except as provided in paragraphs (c)(2), (c)(3), and (c)(4) of this section.
(2)*Subtraction of balances in determining new shortfall amortization base—(i) Prefunding balance.* For purposes of determining whether a plan is exempt from the requirement to establish a new shortfall amortization base under section 430(c)(5), the amount of the prefunding balance is subtracted from the value of plan assets only if an election under paragraph
(d)of this section to use the prefunding balance to offset the minimum required contribution is made for the plan year.
(ii)*Funding standard carryover balance.* For purposes of determining whether a plan is exempt from the requirement to establish a new shortfall amortization base under section 430(c)(5), the funding standard carryover balance is not subtracted from the value of plan assets regardless of whether any portion of either the funding standard carryover balance or the prefunding balance is used to offset the minimum required contribution for the plan year under paragraph
(d)of this section.
(3)*Special rule for certain binding agreements with PBGC.* If there is in effect for a plan year a binding written agreement with the Pension Benefit Guaranty Corporation
(PBGC)which provides that all or a portion of the prefunding balance or funding standard carryover balance (or both balances) is not available to offset the minimum required contribution for a plan year, that specified amount is not subtracted from the value of plan assets for purposes of determining the funding shortfall under section 430(c)(4). For example, if a PBGC agreement provides that $5 million of a plan's balances is unavailable to offset the minimum required contribution for a plan year, the sum of the plan's prefunding balance and funding standard carryover balance is $20 million, and the plan's assets are $100 million, the value of plan assets for purposes of determining the funding shortfall under section 430(c)(4) is reduced by $15 million ($20 million less $5 million) to $85 million. For purposes of this paragraph (c)(3), an agreement with the PBGC is taken into account with respect to a plan year only if the agreement was executed prior to the valuation date for the plan year.
(4)*Exception for section 436(j) and
(k)special adjustment rules.* See section 436(j) and
(k)and § 1.436-1(j)(2)(ii) and
(iii)for exceptions from the requirement to subtract the prefunding and funding standard carryover balances from plan assets in determining a plan's funding target attainment percentage for purposes of section 436.
(d)*Election to apply balances against minimum required contribution* —(1) *In general.* Subject to the limitations provided in paragraphs (d)(2) and (d)(3) of this section, in the case of any plan year in which the plan sponsor elects to use all or a portion of the prefunding balance or the funding standard carryover balance to offset the minimum required contribution for the current plan year, the minimum required contribution for the plan year (determined after taking into account any waiver under section 412(c)) is offset as of the valuation date for the plan year by the amount so used.
(2)*Requirement to use funding standard carryover balance before prefunding balance.* To the extent that a plan has a funding standard carryover balance greater than zero, no amount of the plan's prefunding balance may be used to offset the minimum required contribution. Thus, a plan's funding standard carryover balance must be exhausted before the plan's prefunding balance may be applied under paragraph (d)(1) of this section to offset the minimum required contribution.
(3)*Limitation for underfunded plans.* An election to apply a funding standard carryover balance or a prefunding balance under paragraph (d)(1) of this section is not available for a plan year if the plan's prior year funding ratio is less than 80 percent. For purposes of this paragraph (d)(3), except as provided in paragraph (h)(5) of this section, the plan's prior year funding ratio is the fraction (expressed as a percentage)—
(i)The numerator of which is the value of plan assets on the valuation date for the preceding plan year, reduced by the amount of any prefunding balance (but not the amount of any funding standard carryover balance); and
(ii)The denominator of which is the funding target of the plan for the preceding plan year (determined without regard to section 430(i)(1)).
(e)*Election to reduce balances* —(1) *In general.* A plan sponsor may make an election for a plan year to reduce any portion of a plan's prefunding balance and funding standard carryover balance under this paragraph (e). If such an election is made, the amount of those balances that must be subtracted from plan assets pursuant to paragraph (c)(1) of this section will be smaller and, accordingly, the plan assets taken into account for purposes of sections 430 and 436 will be larger. Thus, this election to reduce a plan's prefunding balance and funding standard carryover balance is taken into account in the determination of plan assets for the plan year and applies for all purposes under sections 430 and 436, including for purposes of determining the plan's prior year funding ratio under paragraph (d)(3) of this section for the following plan year. See also section 436(f)(3) and § 1.436-1(a)(5) for a rule under which the plan sponsor is deemed to make the election described in this paragraph (e).
(2)*Coordination between prefunding balance and funding standard carryover balance.* To the extent that a plan has a funding standard carryover balance greater than zero, no election under paragraph (e)(1) of this section is permitted to be made that reduces the plan's prefunding balance. Thus, a plan must exhaust its funding standard carryover balance before it is permitted to make an election under paragraph (e)(1) of this section with respect to its prefunding balance.
(f)*Elections* —(1) *Method of making elections.* Any election under this section by the plan sponsor must be made by providing written notification of the election to the plan's enrolled actuary and the plan administrator. The written notification must set forth the relevant details of the election, including the specific amounts involved in the election with respect to the prefunding balance and funding standard carryover balance.
(2)*Timing of elections* —(i) *General rule.* Except as provided in paragraph (f)(2)(ii) of this section, any election under this section must be made on or before the due date (with extensions) for the filing of the plan's Form 5500 “Annual Return/Report of Employee Benefit Plan” for the plan year to which the election relates (or, in the case of a plan not required to file a Form 5500 for the plan year, on or before the last day of the seventh month after the end of the plan year to which the election relates). For this purpose, an election to add to the prefunding balance relates to the plan year for which excess contributions were made. For example, in the case of a plan required to file a Form 5500, an election to add to the prefunding balance as of the first day of the 2010 plan year (in an amount not in excess of the 2009 interest-adjusted excess contributions under the rules of paragraph (b)(1)(ii) of this section) must be made no later than the due date for filing the 2009 Form 5500 even though the election is reported on the 2010 Form 5500 (Schedule SB).
(ii)*Election to reduce balances.* Any election under paragraph
(e)of this section to reduce the prefunding balance or funding standard carryover balance for a plan year (for example, in order to avoid a benefit restriction under section 436) must be made by the end of the plan year to which the election relates.
(3)*Irrevocability of elections.* A plan sponsor's election under this section with respect to the plan's funding standard carryover balance or prefunding balance is irrevocable (and must be unconditional).
(4)*Plan sponsor* —(i) *In general.* For purposes of the elections described in this section, except as provided in paragraph (f)(4)(ii) of this section, any reference to the plan sponsor means the employer or employers responsible for making contributions to or under the plan.
(ii)*Certain multiple employer plans.* For purposes of the elections described in this section, in the case of plans that are multiple employer plans to which section 413(c)(4)(A) does not apply, any reference to the plan sponsor means the plan administrator within the meaning of section 414(g).
(g)*Examples.* The following examples illustrate the application of this section: Example 1.
(i)Plan P is a defined benefit plan with a plan year that is the calendar year and a valuation date of January 1. The funding standard carryover balance of Plan P is $25,000 as of the beginning of the 2008 plan year. The sponsor of Plan P, Sponsor S, does not elect in 2008, pursuant to paragraph (e)(1) of this section, to reduce any portion of the funding standard account carryover balance prior to the determination of the value of plan assets. The actual rate of return on plan P's assets in 2008 is 2%. The effective interest rate in 2008 for plan P is 6%. The minimum required contribution for Plan P under section 430 for 2008 is $100,000. The prior year funding ratio for Plan P for 2008, as determined under paragraph (h)(5) of this section, is not less than 80%.
(ii)Sponsor S makes a contribution to Plan P of $150,000 on December 1, 2008, for the 2008 plan year and makes no other contributions for the 2008 plan year. Because this contribution was made on a date other than the valuation date for the 2008 plan year, the contribution must be adjusted to reflect interest that would otherwise have accrued between the valuation date and the date of the contribution, at the effective rate of interest for the 2008 plan year. The amount of the contribution after adjustment is $142,198, determined as $150,000 discounted for 11 months of compound interest at an effective annual interest rate of 6%.
(iii)The excess of employer contributions for 2008 over the minimum required contribution for 2008, as of the valuation date, is $42,198 ($142,198 less $100,000). Accordingly, the increase in Plan P's prefunding balance as of January 1, 2009, cannot exceed $44,730 (which is the excess contribution of $42,198 adjusted for 12 months of interest at an effective interest rate of 6%).
(iv)Furthermore, if Sponsor S does not elect to apply any portion of the funding standard carryover balance toward the minimum contribution in 2008, the funding standard carryover balance as of January 1, 2009, is $25,500 (which is the funding standard account balance as of January 1, 2008, adjusted for investment experience at an effective interest rate of 2%). Example 2.
(i)The facts are the same as in *Example 1* except that the contribution of $150,000 is made on February 1, 2009, for the 2008 plan year.
(ii)The amount of the contribution after adjustment is $140,824, which is determined as $150,000 discounted for 13 months of interest at an effective interest rate of 6%. Accordingly, the increase in Plan P's prefunding balance as of January 1, 2009, cannot exceed $43,273 (which is the excess contribution of $40,824 adjusted for 12 months of interest at an effective interest rate of 6%). Example 3.
(i)The facts are the same as in *Example 1* except that Sponsor S contributes $85,000 to Plan P on January 1, 2008, for the 2008 plan year and makes no other contributions to Plan P for the 2008 plan year. In addition, Sponsor S elects to use $15,000 of the funding standard carryover balance to offset P's minimum required contribution in 2008, pursuant to paragraph (d)(1) of this section.
(ii)With respect to the 2009 plan year, the adjustment for investment experience under paragraph (b)(3) of this section for the funding standard carryover balance for the preceding plan year is $200, determined as the actual rate of return on plan assets for 2008 as applied to the 2008 funding standard carryover balance after reduction for the amount of that balance used under paragraph (d)(1) of this section (that is, $25,000 less $15,000, multiplied by the actual rate of return of 2%).
(iii)The funding standard carryover balance, as of January 1, 2009, is $10,200, determined as the 2008 funding standard carryover balance less the amount used to offset the 2008 minimum required contribution, adjusted for investment experience during the 2008 year ($25,000 less $15,000 plus $200). Example 4.
(i)The facts are the same as in *Example 3* except that Sponsor S contributes $90,000 (instead of $85,000) to Plan P on January 1, 2008, for the 2008 plan year.
(ii)Notwithstanding the fact that the amount that Sponsor S contributed to Plan P exceeds the minimum required contribution ($85,000) after it has been offset as a result of the use of the funding standard carryover balance, the maximum amount that Sponsor S may add to the prefunding balance as of January 1, 2009, is $0. This is because the maximum amount that may be added to the prefunding balance is the excess of $90,000 over $100,000. See paragraphs (b)(1)(ii)(A) and
(B)of this section. Example 5.
(i)Plan Q is a defined benefit plan with a plan year that is the calendar year and a valuation date of July 1. The funding standard carryover balance of Plan Q is $50,000 as of January 1, 2009, the beginning of the 2009 plan year. The prefunding balance of Plan Q as of the beginning of the 2009 plan year is $0. The actual rate of return on plan Q's assets in 2009 is 10%. The effective interest rate for Plan Q for 2009 is 5%. The funding ratio for Plan Q in 2008 is 85%, as determined under paragraph (d)(3) of this section. Thus, the prior year funding ratio for 2009 is not less than 80%.
(ii)Pursuant to paragraph (b)(4) of this section, the funding standard carryover balance is increased to $51,235 as of July 1, 2009 (that is, an increase to reflect 6 months of interest at an effective interest rate of 5%). Sponsor T does not elect in 2009 to reduce any portion of the funding standard carryover balance pursuant to paragraph
(e)of this section. The funding standard carryover balance ($51,235) is subtracted from the value of plan assets, as of July 1, 2009, prior to the determination of the minimum funding contribution and, accordingly, $51,235 is the maximum amount that may be applied against the minimum required contribution.
(iii)The minimum required contribution for Plan Q for 2009 is $200,000. Sponsor T makes a contribution to Plan T of $190,000 on July 1, 2009, for the 2009 plan year, and makes no other contributions for the 2009 plan year. Sponsor T elects to use $10,000 of the funding standard carryover balance to offset Plan Q's minimum required contribution in 2009. Accordingly, the value of the funding standard carryover balance as of July 1, 2009, prior to adjustment for investment experience, is $41,235 (that is, $51,235 less $10,000).
(iv)The value of the funding standard carryover balance as of January 1, 2010, is determined by first discounting the value as of July 1, 2009, after amounts have been used to offset the minimum required contribution, to January 1, 2009, at the effective interest rate and then crediting this so determined amount with a full year's investment experience at a rate equal to the actual rate of return. Thus, the July 1, 2009, value of $41,235 is discounted for 6 months of interest, at an effective interest rate of 5%, to obtain a January 1, 2009, value of $40,241. Accordingly, the value of the funding standard carryover balance as of January 1, 2010, is $44,265 (that is, $40,241 increased with one year's investment return at a rate of 10%).
(h)*Effective/applicability date and transition rules* —(1) *General effective/applicability date.* Except as provided in paragraph (h)(2) of this section, this section applies to plan years beginning on or after January 1, 2008.
(2)*Plans with delayed effective date.* In the case of a plan for which the effective date of section 430 is delayed in accordance with sections 104 through 106 of the Pension Protection Act of 2006, Public Law 109-280, 120 Stat. 780, this section applies to plan years beginning on or after the effective date of section 430 with respect to the plan.
(3)*First effective plan year.* For purposes of this section, the first effective plan year for a plan is the first plan year to which this section applies under paragraph (h)(1) or (h)(2) of this section.
(4)*Pre-effective plan year.* For purposes of this section, the pre-effective plan year for a plan is the last plan year beginning before the first effective date applicable under paragraph (h)(1) or (h)(2) of this section. Thus, except for plans with a delayed effective date under paragraph (h)(2) of this section, the pre-effective plan year for a plan is the last plan year beginning before January 1, 2008.
(5)*Special lookback rule for pre-effective plan year's funding ratio* —(i) *Plan assets.* For purposes of determining a plan's prior year funding ratio pursuant to paragraph (d)(3) of this section for the first effective plan year, the value of plan assets on the valuation date of the preceding plan year is determined under section 412(c)(2) as in effect for that pre-effective plan year, except that—
(A)If the value of plan assets is less than 90 percent of the fair market value of plan assets for the pre-effective plan year on that date, for this purpose such value is considered to be 90 percent of the fair market value; and
(B)If the value of plan assets is greater than 110 percent of the fair market value of plan assets on the valuation date for the pre-effective plan year on that date, for this purpose such value is considered to be 110 percent of the fair market value.
(ii)*Funding target.* For purposes of determining a plan's prior year funding ratio pursuant to paragraph (d)(3) of this section for the first effective plan year, the funding target of the plan for the preceding plan year is equal to the plan's current liability under section 412(l)(7) on the valuation date for the plan's pre-effective plan year. **Par. 3.** Section 1.436-1 is added to read as follows: § 1.436-1 Limits on benefits and benefit accruals under single employer defined benefit plans.
(a)*General rules* —(1) *Qualification requirement* . Section 401(a)(29) provides that a defined benefit pension plan that is subject to section 412 and that is not a multiemployer plan (within the meaning of section 414(f)) is a qualified plan only if it satisfies the requirements of section 436. This section provides rules relating to funding-based limitations on certain benefits under section 436, and the requirements of section 436 are satisfied only if the plan meets the requirements of this section beginning with the plan's first effective plan year. This section applies to single employer defined benefit plans (including multiple employer plans), but does not apply to multiemployer plans.
(2)*Organization of the regulation.* Paragraph
(b)of this section describes a limitation on shutdown benefits and other unpredictable contingent event benefits. Paragraph
(c)of this section describes limitations on plan amendments increasing liabilities. Paragraph
(d)of this section describes limitations on accelerated benefit payments. Paragraph
(e)of this section describes limitations on benefit accruals. Paragraph
(f)of this section provides rules relating to methods to avoid benefit limitations. Paragraph
(g)of this section provides rules for the operation of the plan in relation to benefit limitations under section 436. Paragraph
(h)of this section describes related presumptions regarding underfunding that apply for purposes of the benefit limitations under section 436. Paragraph
(j)of this section contains definitions. Paragraph
(k)of this section contains effective/applicability date provisions.
(3)*Special rules for certain plans* —(i) *New plans* . The limitations described in paragraphs (b), (c), and
(e)of this section do not apply to a plan for the first 5 plan years of the plan. For purposes of applying this rule, plan years of a plan are aggregated with plan years of a predecessor plan in accordance with section 414(a) or § 1.415(f)-1(c).
(ii)*Multiple employer plans* . In the case of a multiple employer plan to which section 413(c)(4)(A) applies, this section applies separately with respect to each employer under the plan, as if each employer maintained a separate plan. Thus, the benefit limitations under this section 436 could apply differently to participants who are employees of different employers under such a multiple employer plan. In the case of a multiple employer plan to which section 413(c)(4)(A) does not apply (that is, a plan described in section 413(c)(4)(B) that has not made the election for section 413(c)(4)(A) to apply), this section applies as if all participants in the plan were employed by a single employer.
(4)*Treatment of plan as of close of prohibited or cessation period* —(i) *Resumption of benefit payments and accruals* —(A) *Resumption of accelerated payments* . If a limitation on accelerated benefit payments under paragraph
(d)of this section applied to a plan as of a section 436 measurement date, but that limit no longer applies to the plan as of a later section 436 measurement date, then the prohibition on paying accelerated benefits under the plan does not apply to benefits with annuity starting dates that are on or after that later section 436 measurement date. Any amendment to eliminate the payment of accelerated benefit payments for periods in which they are not restricted under section 436 is subject to the rules of section 411(d)(6).
(B)*Resumption of benefit accruals* . Unless the plan provides otherwise, benefit accruals under the plan resume effective as of the section 436 measurement date on which benefit accruals are no longer restricted under paragraph
(e)of this section.
(ii)*Missed benefit payments and accruals* —(A) *Option to amend plan to restore benefits* . A plan is permitted to be amended to provide participants who had an annuity starting date within a period during which the rules of paragraph
(d)of this section applied to the plan with the opportunity to have a new election under which the form of benefit previously elected may be modified, subject to applicable qualification requirements. A participant who makes such a new election is treated as having a new annuity starting date under section 417. Similarly, a plan is permitted to be amended to provide that any benefit accruals which were limited under the rules of paragraph
(e)of this section are credited under the plan when the limitation no longer applies, subject to applicable qualification requirements. Any such plan amendment with respect to a new annuity starting date or crediting of benefit accruals is subject to the requirements of section 436(c) and paragraph
(c)of this section.
(B)*Automatic plan provisions to restore benefits* . A plan is permitted to provide that participants who had an annuity starting date within a period during which the rules of paragraph
(d)of this section applied to the plan are automatically provided with the opportunity to have a new annuity starting date (which would constitute a new annuity starting date under section 417) under which the form of benefit previously elected may be modified, subject to applicable qualification requirements, once the rules of paragraph
(d)of this section cease to apply. In addition, a plan is permitted to provide for the automatic restoration of benefit accruals that had been limited under section 436(e) as of the section 436 measurement date that the limitation ceases to apply, as described in paragraph (a)(4)(ii)(A) of this section. However, if a plan provides for the automatic restoration of those benefit accruals and the period of the limitation exceeds 12 months, the plan will be treated as having adopted, effective as of the section 436 measurement date on which the limitation ceases to apply, a plan amendment that has the effect of increasing liabilities under the plan. Such an amendment is subject to the limitations of paragraph
(c)of this section.
(iii)*Shutdown and other unpredictable contingent event benefits* —(A) *In general* . If any unpredictable contingent event benefits under paragraph
(b)of this section are limited with respect to an unpredictable contingent event, that limitation applies to all such benefits that otherwise would have been paid to any plan participant with respect to that unpredictable contingent event.
(B)*Benefits not paid* . Notwithstanding paragraph (a)(4)(iii)(A) of this section, a plan is permitted to be amended to provide that any unpredictable contingent event benefits that were limited under the rules of paragraph
(b)of this section will be paid or reinstated as of the section 436 measurement date on which the limitation no longer applies, subject to applicable qualification requirements. Such a plan amendment is subject to the requirements of section 436(c) and paragraph
(c)of this section. A plan is not permitted to provide for restoration of any such unpredictable contingent event benefits without an amendment that complies with section 436(c).
(iv)*Example.* The following example illustrates the application of this paragraph (a)(4): Example.
(i)Plan T is a non-collectively bargained defined benefit plan with a plan year that is the calendar year and a valuation date of January 1. As of January 1, 2011, Plan T does not have a funding standard carryover balance or a prefunding balance. Plan T's sponsor is not in bankruptcy. Beginning January 1, 2011, Plan T is subject to the restriction on accelerated benefit distributions under paragraph (d)(3) of this section based on a presumed adjusted funding target attainment percentage (AFTAP) of 75%, and can therefore only pay a portion (generally 50%) of the accelerated benefit distributions otherwise payable to participants who commence benefit payments while the restriction is in effect.
(ii)U is a participant in Plan T. Participant U retires on February 1, 2011, and elects to receive benefits in the form of a single sum. However, because U elected a form of payment that is a prohibited payment that is not permitted to be paid under paragraph (d)(3)(i) of this section, U elects in accordance with paragraph (d)(3)(ii) of this section to receive 50% of his benefit in a single sum and the remainder as an immediately commencing straight life annuity.
(iii)On March 1, 2011, the enrolled actuary for the Plan certifies that the AFTAP for 2011 is 80%. Accordingly, beginning March 1, 2011, Plan T is no longer subject to the restriction under paragraph (d)(3) of this section.
(iv)Effective March 1, 2011, Plan T is amended to provide that a participant whose benefits were restricted under paragraph (d)(3) of this section may elect within a specified period on or after March 1, 2011, a new annuity starting date and receive the remainder of his or her pension benefits in an accelerated form of payment. Plan T's enrolled actuary determines that the AFTAP, taking into account the amendment, is still 80%. The amendment is permitted to take effect because Plan T has an AFTAP of 80% taking into account the amendment, and is therefore neither subject to the restriction on plan amendments in paragraph
(c)of this section nor the restrictions on accelerated benefit payments under paragraphs (d)(1) and (d)(3) of this section. Accordingly, Participant U may elect, subject to otherwise applicable qualification rules, including spousal consent, to receive the remainder of his benefits in the form of a single sum on or after March 1, 2011.
(5)*Deemed election to reduce funding balances* —(i) *Limitations on accelerated benefit payments.* If a benefit limitation under paragraph
(d)of this section would (but for this paragraph (a)(5)) apply to a plan, the employer is treated as having made an election under section 430(f) to reduce the prefunding balance or funding standard carryover balance by such amount as is necessary for the adjusted funding target attainment percentage to be at or above the applicable threshold (60, 80, or 100 percent, as the case may be) in order for the benefit limitation not to apply to the plan. In such a case, the employer is treated as having made that election on the section 436 measurement date as of which the benefit limitation would otherwise apply (without regard to whether a participant is eligible for or requests a payment that is a prohibited payment described in paragraph (d)(5) of this section).
(ii)*Other limitations for collectively bargained plans* —(A) *General rule.* In the case of a collectively bargained plan to which a benefit limitation under paragraph (b), (c), or
(e)of this section would (but for this paragraph (a)(5)) apply, the employer is treated as having made an election under section 430(f) to reduce the prefunding balance or funding standard carryover balance by such amount as is necessary for the adjusted funding target attainment percentage to be at or above the applicable threshold in order for the benefit limitation not to apply to the plan, taking into account the unpredictable contingent event benefits or plan amendment, as applicable. In such a case, the employer is treated as having made that election on the date as of which the applicable benefit limitation would otherwise apply.
(B)*Treatment of plans with both collectively bargained and non-collectively bargained employees* . In the case of a plan with respect to which collective bargaining agreements apply to some, but not all, of the plan participants, the plan is considered a collectively bargained plan for purposes of this paragraph (a)(5)(ii) if at least 25 percent of the participants in the plan are members of collective bargaining units for which the benefit levels under the plan are specified under a collective bargaining agreement.
(iii)*Exception for insufficient funding balances* —(A) *In general* . Paragraphs (a)(5)(i) and (a)(5)(ii) of this section apply with respect to a benefit limitation for any plan year only if the application of those paragraphs would result in the corresponding benefit limitation not applying for such plan year. Thus, if the plan's prefunding and funding standard carryover balances were reduced to zero and the resulting increase in plan assets taken into account would still not increase the plan's adjusted funding target attainment percentage enough to reach the threshold percentage applicable to the benefit limitation, the deemed election to reduce those balances pursuant to paragraph (a)(5)(i) or (a)(5)(ii) of this section does not apply.
(B)*Presumed adjusted funding target attainment percentage less than 60 percent* . If a plan is presumed to have an adjusted funding target attainment percentage of less than 60 percent under paragraph (h)(3) of this section, then the plan is treated as if the funding standard carryover balance and the prefunding balance are insufficient to increase the adjusted funding target attainment percentage to the threshold percentage of 60 percent. Accordingly, paragraphs (a)(5)(i) and (a)(5)(ii) of this section do not apply to such a plan.
(iv)*Example.* The following example illustrates the application of this paragraph (a)(5): Example.
(i)Plan W is a collectively bargained, single-employer defined benefit plan sponsored by Sponsor X, with a plan year that is the calendar year and a valuation date of January 1. Sponsor X is not in bankruptcy.
(ii)The enrolled actuary for Plan W issues a certification on March 1, 2010, that the 2010 AFTAP is 81%. Sponsor X adopts an amendment on March 25, 2010, to increase benefits under a formula based on participant compensation, with an effective date of May 1, 2010. (Because the formula is based on compensation, the exception in paragraph (c)(3) of this section for increases with respect to a formula not based on compensation does not apply.) The plan's enrolled actuary determines that the plan's AFTAP for 2010 would be 75% if the benefits attributable to the plan amendment were taken into account. This percentage is below the 80% threshold for the plan amendment limitation under paragraph
(c)of this section.
(iii)Because the AFTAP would be below the 80% threshold if the benefits attributable to the plan amendment were taken into account, Sponsor X is deemed to have made an election under paragraph (a)(5)(ii) of this section to reduce Plan W's prefunding balance and funding standard carryover balance by the amount necessary for the AFTAP to reach the 80% threshold (reflecting the increase in funding target attributable to the plan amendment) in order for the limitation under paragraph
(c)of this section not to apply.
(iv)In this case, provided the reduction in funding balances is sufficient for the limitation not to apply, the plan amendment will go into effect on its effective date (May 1). See paragraph
(f)of this section for other methods to avoid benefit limitations (where, for example, the amount necessary for a benefit limitation not to apply for a plan year exceeds the aggregate funding balances).
(b)*Limitation on shutdown benefits and other unpredictable contingent event benefits* —(1) *In general* . A plan that contains an unpredictable contingent event benefit satisfies section 436(b) and this section only if it provides that the benefit will not be paid to a plan participant during a plan year if the adjusted funding target attainment percentage for the plan year—
(i)Is less than 60 percent; or
(ii)Is 60 percent or more, but would be less than 60 percent if the benefits attributable to the unpredictable contingent event were taken into account in determining the adjusted funding target attainment percentage.
(2)*Exemption* —(i) *In general* . The prohibition on payment of unpredictable contingent event benefits under paragraph (b)(1) of this section ceases to apply with respect to a plan year, effective as of the first day of the plan year, upon payment by the plan sponsor of the contribution described in paragraph (f)(2) of this section.
(ii)*Prior unpredictable contingent event* . Unpredictable contingent event benefits attributable to an unpredictable contingent event that occurred within a period during which no limitation under this paragraph
(b)applied to the plan are not affected by the limitation described in this paragraph
(b)as it applies in a subsequent period. For example, if a plant shutdown occurs in 2010 and the plan's funded status is such that shutdown benefits related to that shutdown are not subject to the limitation described in this paragraph
(b)for that calendar plan year, this paragraph
(b)will not apply to restrict payment of those shutdown benefits even if another shutdown occurs in 2012 that results in shutdown benefits related to that later shutdown being restricted under this paragraph
(b)(where the plan's adjusted funding target attainment percentage for 2012 is less than 60 percent taking into account the liability attributable to those shutdown benefits).
(3)*Unpredictable contingent event* . For purposes of this section, an *unpredictable contingent event benefit* means any benefit or increase in benefits to the extent the benefit or increase would not be payable but for the occurrence of an unpredictable contingent event. For this purpose, an *unpredictable contingent event* means a plant shutdown (whether full or partial) or similar event, or an event other than the attainment of any age, performance of any service, receipt or derivation of any compensation, or the occurrence of death or disability. Thus, for example, if a plan provides for an unreduced early retirement benefit upon the occurrence of an event other than the attainment of any age, performance of any service, receipt or derivation of any compensation, or the occurrence of death or disability, then that unreduced early retirement benefit is an unpredictable contingent event benefit to the extent of any portion of the benefit that would not be payable but for the occurrence of the event, even if the remainder of the benefit is payable without regard to the occurrence of the event. Similarly, if a plan includes a benefit payable upon the presence of circumstances specified in the plan (other than the attainment of any age, performance of any service, receipt or derivation of any compensation, or the occurrence of death or disability), but not upon a severance from employment that does not include those circumstances, the plan is providing an unpredictable contingent event benefit.
(c)*Limitations on plan amendments increasing liability for benefits* —(1) *In general* . Except as provided in this paragraph (c), a plan satisfies section 436(c) and this section only if the plan provides that no amendment to the plan that has the effect of increasing liabilities of the plan by reason of increases in benefits, establishment of new benefits, changing the rate of benefit accrual, or changing the rate at which benefits become nonforfeitable takes effect if the adjusted funding target attainment percentage for the plan year is—
(i)Less than 80 percent; or
(ii)Is 80 percent or more, but would be less than 80 percent if the benefits attributable to the amendment were taken into account in determining the adjusted funding target attainment percentage.
(2)*Exemption* . The limitations on plan amendments in paragraph (c)(1) of this section cease to apply and the amendment is permitted to take effect as of the later of the first day of the plan year or the effective date of the amendment upon payment by the plan sponsor of the contribution described in paragraph (f)(2) of this section.
(3)*Exception for certain benefit increases* —(i) *In general* . The limitation on plan amendments under paragraph (c)(1) of this section does not apply to any amendment that provides for an increase in benefits under a formula that is not based on a participant's compensation, but only if the rate of increase in benefits does not exceed the contemporaneous rate of increase in average wages of participants covered by the amendment. The determination of the rate of increase in average wages is made by taking into consideration the net increase in average wages from the period of time beginning with the effective date of the most recent benefit increase applicable to all of those participants who are covered by the current amendment and ending on the effective date of the current amendment.
(ii)*Application to terminated participants* . If an amendment applies to both currently employed and terminated participants, all such participants must be included in determining the increase in average wages of the participants covered by the amendment. For this purpose, terminated participants are treated as having no increase or decrease in wages for the period after severance from employment.
(iii)*Separate amendments for different plan populations* . In lieu of a single amendment that applies to both currently employed participants and terminated participants as described in paragraph (c)(3)(ii) of this section, the employer could adopt two amendments—one that increases benefits for currently employed participants and another one that increases benefits for terminated participants. In that case, the two amendments are considered separately in determining the increase in average wages, and the exception in this paragraph (c)(3) from application of the section 436(c) limitation would apply separately to each amendment (so that an amendment providing for increases in benefits for currently employed participants could go into effect, but an amendment providing for increases in benefits for terminated participants who received no increase in wages from the employer during the period over which the increase in average wages is determined could not go into effect).
(4)*Exception for statutorily required vesting* . To the extent that any amendment results in (or is made pursuant to) a mandatory increase in the vesting of benefits under the Code or ERISA (such as vesting rate increases pursuant to statute, plan termination amendments under section 411(d)(3), and amendments that lead to vesting increases required by top heavy rules under section 416), that amendment does not constitute an amendment that changes the rate at which benefits become nonforfeitable for purposes of section 436(c) and this paragraph (c).
(d)*Limitations on accelerated benefit payments* —(1) *Funding percentage less than 60 percent* —(i) *In general* . A plan satisfies the requirements of section 436(d)(1) and this paragraph (d)(1) only if the plan provides that, if the plan's adjusted funding target attainment percentage for a plan year is less than 60 percent, the plan will not pay any prohibited payment with an annuity starting date on or after the applicable section 436 measurement date.
(ii)*Request for prohibited distribution* . If a participant or beneficiary requests a distribution that is prohibited under paragraph (d)(1)(i) of this section, the plan must permit the participant or beneficiary to elect another form of benefit available under the plan or to defer payment to a later date to the extent permitted under applicable qualification requirements.
(2)*Bankruptcy* . A plan satisfies the requirements of section 436(d)(2) and this paragraph (d)(2) only if the plan provides that the plan will not pay any prohibited payment with an annuity starting date that is during any period in which the plan sponsor is a debtor in a case under title 11, United States Code, or similar Federal or State law, except for payments made with an annuity starting date within a plan year that is on or after the date on which the enrolled actuary of the plan certifies that the plan's adjusted funding target attainment percentage for that plan year is not less than 100 percent. The rules of paragraph (d)(1)(ii) of this section apply if payments are prohibited under this paragraph (d)(2).
(3)*Limited payment if percentage at least 60 percent but less than 80 percent* —(i) *In general* . A plan satisfies the requirements of section 436(d)(3) and this paragraph (d)(3) only if the plan provides that, in any case in which the plan's adjusted funding target attainment percentage for a plan year is 60 percent or more but is less than 80 percent, a participant or beneficiary is permitted to elect the payment of a benefit with an annuity starting date on or after the applicable section 436 measurement date in the form of a prohibited payment only if the present value, determined in accordance with section 417(e)(3), of the portion of the payment that is greater than the amount of the straight life annuity under the plan (as described in paragraph (d)(5)(i)(A) of this section) does not exceed the lesser of—
(A)50 percent of the present value of the benefits, determined in accordance with section 417(e)(3) (or, if greater, 50 percent of the amount of any single sum that would be payable without regard to this paragraph (d)); or
(B)100 percent of the PBGC guarantee amount described in paragraph (d)(3)(iv) of this section.
(ii)*Bifurcation if optional form unavailable* —(A) *General rule* . If an optional form of benefit that is otherwise available under the terms of the plan is not available as of the annuity starting date because of the application of paragraph (d)(3)(i) of this section, then the plan must provide a participant or beneficiary who elects such an optional form with the option either to defer payment to a later date (to the extent permitted under applicable qualification requirements) or to bifurcate the benefit into unrestricted and restricted portions. If the participant or beneficiary elects to bifurcate the benefit, the plan must permit the participant or beneficiary to elect, with respect to the unrestricted portion, any optional form of benefit otherwise available under the plan with respect to the participant's or beneficiary's entire benefit (whether or not the optional form of benefit with respect to the unrestricted portion is a prohibited payment). In such a case, if the participant or beneficiary elects payment of the unrestricted portion of the benefit described in paragraph (d)(3)(ii)(B) of this section in the form of a prohibited payment, the plan must permit the participant or beneficiary to elect payment of the restricted portion described in paragraph (d)(3)(ii)(C) of this section in any optional form of benefit under the plan that is not a prohibited payment and that would have been permitted with respect to the participant's or beneficiary's entire benefit. A plan is also permitted to offer optional forms of benefit that are solely available during the period this paragraph (d)(3) applies to the plan, such as an optional form of benefit that provides for the current payment of the unrestricted portion of the benefit, with a delayed commencement for the restricted portion of the benefit, subject to other applicable qualification requirements.
(B)*Unrestricted portion of the benefit* . The unrestricted portion of the benefit is the lesser of— ( *1* ) 50 percent of the benefit; and ( *2* ) The portion of the benefit that has a present value equal to the PBGC guarantee amount described in paragraph (d)(3)(iv) of this section.
(C)*Restricted portion of the benefit* . The restricted portion of the benefit is the portion of the benefit that is not described in paragraph (d)(3)(ii)(B) of this section.
(iii)*One-time application* —(A) *In general* . A plan satisfies the requirements of this paragraph
(d)only if the plan provides that, in the case of a participant who receives a prohibited payment (or series of prohibited payments under a single optional form of benefit) pursuant to paragraph (d)(3)(i) or
(ii)of this section, the participant cannot thereafter receive any additional prohibited payment during any period of consecutive plan years to which the limitations under either this paragraph (d)(3), paragraph (d)(1) of this section, or paragraph (d)(2) of this section apply.
(B)*Treatment of beneficiaries* . For purposes of this paragraph (d)(3), benefits provided to a participant and any beneficiary (including an alternate payee, as defined in section 414(p)(8)) are aggregated. If the accrued benefit of a participant is allocated to such an alternate payee and one or more other persons, the unrestricted amount under paragraphs (d)(3)(i) and (d)(3)(ii) of this section is allocated among such persons in the same manner as the accrued benefit is allocated, unless a qualified domestic relations order (as defined in section 414(p)(1)(A)) with respect to the participant or the alternate payee provides otherwise.
(iv)*Present value of PBGC maximum benefit guarantee* . The amount described in this paragraph (d)(3)(iv) is, with respect to a participant, the present value (determined under guidance prescribed by the Pension Benefit Guaranty Corporation, using the interest and mortality assumptions under section 417(e)) of the maximum benefit guarantee under section 4022 of the Employee Retirement Income Security Act of 1974, as amended.
(v)*Examples.* The following examples illustrate the application of this paragraph (d)(3): Example 1.
(i)Plan A is subject to the restriction on accelerated benefit distributions under paragraph (d)(3) of this section for the 2010 plan year, and can therefore only pay a portion of the accelerated benefit payments otherwise payable to participants whose annuity starting date occurs while the restriction applies.
(ii)Participant P is not married, and retires at age 65 during 2010, while the restriction under paragraph (d)(3) of this section applies to Plan A. P's accrued benefit is $10,000 per month, payable commencing at age 65 as a straight life annuity. Plan A provides for an optional single sum payment (subject to the restrictions under section 436) equal to the present value of the participant's accrued benefit using actuarial assumptions under section 417(e). P's single sum payment, determined without regard to this paragraph (d), is calculated to be $1,416,000, payable at age 65.
(iii)The PBGC guaranteed monthly benefit for a straight life annuity payable at age 65 in 2010 (for purposes of this example) is $4,500. The present value of the PBGC guaranteed benefit using actuarial assumptions under section 417(e) is $637,200.
(iv)Because Participant P retires during a period when the restriction in paragraph (d)(3) of this section applies to Plan A, only a portion of the benefit can be paid in the form of a single sum. P elects a single sum payment. Because a single sum payment is a prohibited payment, a determination must be made whether the payment can be paid under paragraph (d)(3)(i) of this section. In this case, because the portion of Participant P's benefit that is greater than a straight life annuity exceeds the lesser of 50% of the benefit otherwise payable, or the present value of the PBGC guaranteed benefit, it cannot be paid under paragraph (d)(3)(i) of this section. Accordingly, the maximum single sum that Participant P can receive is $637,200 (that is, the lesser of 50% of $1,416,000 or $637,200).
(v)Pursuant to paragraph (d)(3)(ii) of this section, the plan must offer P the option to bifurcate the benefit into restricted and unrestricted portions. The unrestricted portion is a monthly straight life annuity of $4,500, which can be paid in a single sum of $637,200. If P elects to receive the unrestricted portion of the benefit in the form of a single sum, then, with respect to the $5,500 restricted portion, the plan must permit P to elect any form of benefit that would otherwise be permitted with respect to the full $10,000 that is not a prohibited payment. Alternatively, the plan could permit P to elect to defer commencement of the restricted portion, subject to applicable qualification rules. Example 2.
(i)The facts are the same as in *Example 1* . In addition, Plan A provides an optional form of payment (subject to any benefit restrictions under section 436) that consists of a partial payment equal to the total return of employee contributions to the plan accumulated with interest, with an annuity payment for the remainder of the participant's benefit.
(ii)Participant Q is not married, and retires at age 65 during 2010, while Plan A is subject to the restriction under paragraph (d)(3) of this section. Participant Q has an accrued benefit equal to a straight life annuity of $3,000 per month. Under the optional form described in paragraph
(i)of this *Example 2,* Q may elect a partial payment of $99,120 (representing the return of employee contributions accumulated with interest) plus a straight life annuity of $2,300 per month. The present value of Participant Q's accrued benefit, using actuarial assumptions under section 417(e), is $424,800. The present value of the PBGC guarantee payable at age 65 in the form of a straight life annuity is determined to be $637,200 for the purposes of this *Example 2* .
(iii)Under the bifurcation approach of paragraph (d)(3)(ii) of this section, Q can receive the partial single sum payment available under the terms of Plan A as long as the amount of the single sum does not exceed the unrestricted portion of the benefit under paragraph (d)(3)(ii)(B) of this section. The unrestricted portion of Q's benefit is the lesser of 50% of the benefit otherwise payable, or the present value of the PBGC guaranteed benefit. Accordingly, the maximum single sum that Q can receive is $212,400 (that is, the lesser of 50% of $424,800, or $637,200).
(iv)Because the present value of the portion of Q's benefit that is greater than the straight life annuity ($99,120) is less than the lesser of 50% of the present value of benefits (50% of $424,800) and $637,200 (100% of the PBGC guaranteed benefit), the optional form described in paragraph
(i)of this *Example 2* is permitted to be paid under paragraph (d)(3)(i) of this section.
(4)*Exception for cessation of benefit accruals.* This paragraph
(d)does not apply to a plan for a plan year if the terms of the plan, as in effect for the period beginning on September 1, 2005, provided for no benefit accruals with respect to any participants. If a plan that is described in this paragraph (d)(4) provides for benefit accruals during any time after September 1, 2005, this paragraph (d)(4) ceases to apply for the plan as of the date any benefits accrue under the plan.
(5)*Prohibited payment* —(i) *In general.* For purpose of this paragraph (d), the term *prohibited payment* means—
(A)Any payment for a month that is in excess of the monthly amount paid under a straight life annuity (plus any social security supplements described in the last sentence of section 411(a)(9)) to a participant or beneficiary whose annuity starting date occurs during any period that a limitation under this paragraph
(d)is in effect;
(B)Any payment for the purchase of an irrevocable commitment from an insurer to pay benefits; and
(C)Any other payment that is identified as a prohibited payment by the Commissioner in revenue rulings and procedures, notices and other guidance published in the Internal Revenue Bulletin (see § 601.601(d)(2) of this chapter).
(ii)*Annuity starting date.* Solely for purposes of applying the limitations on accelerated benefit payments under this paragraph (d), the term *annuity starting date* means, as applicable—
(A)The first day of the first period for which an amount is payable as an annuity as described in section 417(f)(2)(A)(i);
(B)In the case of a benefit not payable in the form of an annuity, the first day on which all events have occurred (including the participant's election, the participant's severance from employment if the participant is below normal retirement age, and, if applicable, the participant's survival to the date as of which payment is made) which entitle the participant to such benefit as described in section 417(f)(2)(A)(ii);
(C)In the case of an amount payable on a retroactive annuity starting date, the benefit commencement date; and
(D)The date of any payment for the purchase of an irrevocable commitment from an insurer to pay benefits under plan.
(6)*Involuntary distributions under section 411(a)(11).* [Reserved].
(e)*Limitation on benefit accruals for plans with severe funding shortfalls* —(1) *In general.* A plan satisfies the requirements of section 436(e) and this paragraph
(e)only if it provides that, in any case in which the plan's adjusted funding target attainment percentage for a plan year is less than 60 percent, benefit accruals under the plan will cease as of the applicable section 436 measurement date. If a plan is required to cease benefit accruals under this paragraph (e), then the plan is not permitted to be amended in a manner that would increase the liabilities of the plan by reason of an increase in benefits or establishment of new benefits. The preceding sentence applies regardless of whether an amendment would otherwise be permissible under paragraph (c)(3) of this section.
(2)*Exemption.* The prohibition on additional benefit accruals under a plan described in paragraph (e)(1) of this section ceases to apply with respect to any plan year, effective as of the first day of the plan year, upon payment by the plan sponsor of the contribution described in paragraph (f)(2) of this section.
(f)*Methods to avoid benefit limitations* —(1) *In general.* This paragraph
(f)sets forth rules relating to employer contributions and other methods to avoid the application of section 436 limitations under a plan for a plan year. In general, there are four methods a plan sponsor may utilize to avoid or terminate one or more of the benefit limitations under this section for a plan year. Two of these methods (where the plan sponsor elects to reduce the prefunding balance or funding standard carryover balance and where the plan sponsor makes additional contributions under section 430 for the prior plan year within the time period provided by section 430(j)(1) which are not added to the prefunding balance) involve increasing the amount of plan assets which are taken into account in determining the adjusted funding target attainment percentage. The other two methods (making a contribution that is specifically designated as a current year contribution to avoid application of a benefit limitation under paragraph (b), (c), or
(e)of this section, and providing security under section 436(f)(1)) are described in paragraphs (f)(2) and (f)(3) of this section, respectively.
(2)*Current year contributions to avoid or terminate benefit limitations* —(i) *General rules* —(A) *Amount of contribution* —(1) *In general.* This paragraph (f)(2) sets forth rules regarding contributions to avoid the application of section 436 limitations under a plan for a plan year that apply to unpredictable contingent event benefits, plan amendments that increase liabilities for benefits, and benefit accruals. ( *2* ) *Interest adjustment.* Any contribution made by a plan sponsor pursuant to this paragraph (f)(2) on a date other than the valuation date for the plan year must be adjusted with interest at the plan's effective interest rate under section 430(h)(2)(A) for the plan year. If the plan's effective interest rate for the plan year has not been determined at the time of the contribution, then this interest adjustment must be made using the highest of the three segment rates as applicable for the plan year under section 430(h)(2)(C). In such a case, if the effective interest rate for the year under section 430(h)(2)(A) is subsequently determined to be less than that highest rate, the excess is recharacterized as a section 430 contribution for the current plan year.
(B)*Prefunding balance or funding standard carryover balance may not be used.* No prefunding balance or funding standard carryover balance under section 430(f) may be used as a contribution described in this paragraph (f)(2). However, a plan sponsor is permitted to elect to reduce the funding standard carryover balance or the prefunding balance in order to increase the adjusted funding target attainment percentage for a plan year. See paragraph (a)(5) of this section for a rule mandating such a reduction in certain situations.
(ii)*Section 436 contributions separate from minimum required contributions* —(A) *In general.* The contributions described in this paragraph (f)(2) are contributions described in section 436(b)(2), (c)(2), and (e)(2), and are separate from any minimum required contributions under section 430. Thus, if a plan sponsor makes a contribution described in this paragraph (f)(2) for a plan year but does not make the minimum required contribution for the plan year, the plan will fail to satisfy the minimum funding requirements under section 430 for the plan year. In addition, a contribution described in this paragraph (f)(2) is disregarded in determining the prefunding balance under section 430(f)(6) and § 1.430(f)-1(b)(1)(i).
(B)*Designation requirement.* Any contribution made by a plan sponsor pursuant to this paragraph (f)(2) must be designated as such at the time the contribution is used to avoid or terminate the limitations under this paragraph (f)(2) and, except as specifically provided in paragraph
(g)or
(h)of this section, cannot subsequently be recharacterized with respect to any plan year as a contribution to satisfy a minimum required contribution obligation, or otherwise. The designation must be made in accordance with the rules and procedures that otherwise apply to elections under § 1.430(f)-1(f) with respect to funding balances.
(iii)*Contribution for unpredictable contingent event benefits.* In the case of a contribution to avoid the application of the limitation on benefits attributable to an unpredictable contingent event under section 436(b)—
(A)If the adjusted funding target attainment percentage for the plan year determined without taking into account the liability attributable to the unpredictable contingent event benefits is less than 60 percent, then the amount of the contribution under section 436(b)(2) is equal to the amount of the increase in the funding target of the plan for the plan year if the benefits attributable to the unpredictable contingent event were included in the determination of the funding target.
(B)If the adjusted funding target attainment percentage for the plan year determined without taking into account the liability attributable to the unpredictable contingent event benefits is 60 percent or more, then the amount of the contribution under section 436(b)(2) is the amount that would be sufficient to result in an adjusted funding target attainment percentage for the plan year of 60 percent if— ( *1* ) The benefits attributable to the unpredictable contingent event were included in the determination of the funding target; and ( *2* ) The contribution were included as part of the assets of the plan.
(iv)*Contribution for plan amendments increasing liability for benefits.* In the case of a contribution to avoid the application of the limitation on benefits attributable to a plan amendment under 436(c)—
(A)If the adjusted funding target attainment percentage for the plan year determined without taking into account the liability attributable to the plan amendment is less than 80 percent, then the amount of the contribution under section 436(c)(2) is equal to the amount of the increase in the funding target of the plan for the plan year if the liabilities attributable to the amendment were included in the determination of the funding target.
(B)If the adjusted funding target attainment percentage for the plan year determined without taking into account the liability attributable to the plan amendment is 80 percent or more, then the amount of the contribution under section 436(c)(2) is the amount that would be sufficient to result in an adjusted funding target attainment percentage for the plan year of 80 percent if— ( *1* ) The liabilities attributable to the plan amendment were included in the determination of the funding target; and ( *2* ) The contribution were included as part of the assets of the plan.
(v)*Contribution required for continued benefit accruals.* In the case of a contribution to avoid the application of the limitation on accruals under section 436(e), the amount of the contribution under section 436(e)(2) is equal to the amount sufficient to result in an adjusted funding target attainment percentage for the plan year of 60 percent if the contribution were included as part of the assets of the plan.
(3)*Security to increase adjusted funding target attainment percentage* —(i) *In general.* For purposes of avoiding benefit limitations under section 436, a plan sponsor may provide security in the form described in paragraph (f)(3)(ii) of this section. In such a case, the adjusted funding target attainment percentage for the plan year is determined by treating as an asset of the plan any security provided by a plan sponsor by the valuation date for the plan year in a form meeting the requirements of paragraph (f)(3)(ii) of this section. However, this security is not taken into account as a plan asset for any other purpose, including section 430.
(ii)*Form of security.* The forms of security permitted under paragraph (f)(3)(i) of this section are limited to—
(A)A bond issued by a corporate surety company that is an acceptable surety for purposes of section 412 of the Employee Retirement Income Security Act of 1974, as amended; or
(B)Cash, or United States obligations which mature in 3 years or less, held in escrow by a bank or an insurance company.
(iii)*Enforcement.* Any form of security provided under paragraph (f)(3)(i) of this section must provide—
(A)That it will be paid to the plan upon the earliest of— ( *1* ) The plan termination date as defined in section 4048 of ERISA; ( *2* ) If there is a failure to make a payment of the minimum required contribution for any plan year beginning after the security is provided, the due date for the payment under section 430(j)(1) or 430(j)(3); or ( *3* ) If the plan's adjusted funding target attainment percentage is less than 60 percent (without regard to any security provided under this paragraph (f)(3)) for a consecutive period of 7 years, the valuation date for the last year in the 7-year period; and
(B)That the plan administrator must notify the surety, bank, or insurance company that issued or holds the security of any event described in paragraph (f)(3)(iii)(A) of this section within 10 days of its occurrence.
(iv)*Release of security.* The form of security is permitted to provide that it will be released (and any amounts thereunder will be refunded together with any interest accrued thereon) as provided in the agreement governing the escrow, but such release is not permitted until the plan's enrolled actuary has certified that the plan's adjusted funding target attainment percentage for a plan year is at least 90 percent (without regard to any security provided under this paragraph (f)(3)).
(v)*Contribution of security to plan.* Any amount of security provided under this paragraph (f)(3) that is subsequently turned over to the plan (whether pursuant to the enforcement mechanism of paragraph (f)(3)(iii) of this section or after its release under paragraph (f)(3)(iv) of this section) is treated as a contribution by the plan sponsor under section 430 when contributed and, if turned over pursuant to paragraph (f)(3)(iii) of this section, is not a contribution under paragraph (f)(2) of this section.
(4)*Examples.* The following examples illustrate the application of this paragraph (f): Example 1.
(i)Plan Z is a non-collectively bargained defined benefit plan with a plan year that is the calendar year and a valuation date of January 1. Plan Z's sponsor is not in bankruptcy and did not purchase any annuities in 2009 or 2010. As of January 1, 2011, Plan Z does not have a funding standard carryover balance or a prefunding balance. As of that date, Plan Z has plan assets (and adjusted plan assets) of $2,000,000 and a funding target (and an adjusted funding target) of $2,550,000. On March 1, 2011, the enrolled actuary for the plan certifies that the AFTAP as of January 1, 2011, is 78.43%. The effective rate of interest for Plan Z for the 2011 plan year is 5.5%.
(ii)On May 1, 2011, the plan sponsor amends Plan Z to increase benefits. The enrolled actuary for the plan determines that the present value, as of January 1, 2011, of the increase in funding target due to this amendment is $400,000. Because the AFTAP prior to the plan amendment is less than 80%, Plan Z is subject to the restriction on plan amendments in paragraph
(c)of this section, and the amendment cannot take effect unless the employer utilizes one of the methods described in paragraph
(f)of this section to avoid benefit limitations.
(iii)In order for this amendment to be permitted to become effective, the plan sponsor makes a contribution described in paragraph (f)(2) of this section. Because the AFTAP prior to the amendment was less than 80%, the provisions of paragraph (f)(2)(iv)(A) of this section apply. The amount of the contribution as of January 1, 2011, needed to avoid the restriction on plan amendments under paragraph
(c)of this section is equal to the amount of the increase in funding target attributable to the amendment, or $400,000. Under the provisions of paragraph (f)(2)(iv)(A) of this section, this contribution is required even though, if the contribution were included as part of the plan assets and the liability attributable to the plan amendment were included in the funding target, the AFTAP would be 81.36% (because the adjusted plan assets would have been $2,400,000 and the adjusted funding target would have been $2,950,000 (that is, adjusted plan assets of $2,000,000 plus the contribution of $400,000 as of January 1, 2011; divided by the adjusted funding target of $2,550,000 increased to reflect the additional $400,000 in the funding target attributable to the plan amendment)).
(iv)However, because the contribution is not paid until May 1, 2011, the necessary contribution amount must be adjusted to reflect interest that would otherwise have accrued between the valuation date and the date of the contribution, at Plan Z's effective rate of interest for the 2011 plan year. The amount of the required contribution after adjustment is $407,203, determined as $400,000 increased for 4 months of compound interest at an effective annual interest rate of 5.5%.
(v)A contribution of $407,203 is made on May 1, 2011, and is designated as a contribution under paragraph (f)(2) of this section. Accordingly, the contribution is not applied toward minimum funding requirements under section 430, and is not eligible for inclusion in the prefunding balance under § 1.430(f)-1(b)(1). Since this contribution meets the requirements of paragraph (f)(2) of this section, the plan amendment can take effect. Example 2.
(i)The facts are the same as in *Example 1* , except that the plan is in at-risk status under section 430(i). The funding target determined under section 430(i) is $2,600,000, and the funding target determined without regard to section 430(i) is $2,550,000.
(ii)On May 1, 2011, the plan sponsor amends Plan Z to increase benefits. The plan's enrolled actuary determines that the present value as of January 1, 2011 of the increase in the funding target due to the amendment (taking into account the at-risk status of the plan) is $440,000. Because the AFTAP prior to the plan amendment is less than 80%, Plan Z is subject to the restriction on plan amendments in paragraph
(c)of this section, and the amendment cannot take effect unless the employer utilizes one of the methods described in paragraph
(f)of this section to avoid benefit limitations.
(iii)In order for this amendment to be permitted to become effective, the plan sponsor makes a contribution described in paragraph (f)(2) of this section. Because the AFTAP prior to the amendment was less than 80%, the provisions of paragraph (f)(2)(iv)(A) of this section apply. The amount of the contribution as of January 1, 2011, needed to avoid the restriction on plan amendments under paragraph
(c)of this section is equal to the amount of the increase in funding target attributable to the amendment, or $440,000. Under the provisions of paragraph (f)(2)(iv)(A) of this section, this contribution is required even though, if the contribution were included as part of the plan assets and the liability attributable to the plan amendment were included in the funding target, the AFTAP would exceed 80%.
(iv)However, because the contribution is not paid until May 1, 2011, the necessary contribution amount must be adjusted to reflect interest that would otherwise have accrued between the valuation date and the date of the contribution, at Plan Z's effective rate of interest for the 2011 plan year. The amount of the required contribution after adjustment is $447,923, determined as $440,000 increased for 4 months of compound interest at an effective annual interest rate of 5.5%.
(v)A contribution of $447,923 is made on May 1, 2011, and is designated as a contribution under paragraph (f)(2) of this section. Accordingly, the contribution is not applied toward minimum funding requirements under section 430, and is not eligible for inclusion in the prefunding balance under § 1.430(f)-1(b)(1). Since this contribution meets the requirements of paragraph (f)(2) of this section, the plan amendment can take effect. Example 3.
(i)The facts are the same as in *Example 1* , except that the enrolled actuary for the plan does not issue the certification of the 2011 AFTAP until September 1, 2011. Prior to October 1, 2010, the enrolled actuary had certified the 2010 AFTAP to be 82%. The highest of the three segment rates applicable to the 2011 plan year under section 430(h)(2)(C) is 6%.
(ii)Because the enrolled actuary has not certified the actual AFTAP as of January 1, 2011, and the amendment is scheduled to take effect after April 1, 2011, the rules of paragraph (h)(2)(ii) of this section apply. Accordingly, the AFTAP for 2011 (prior to reflecting the effect of the amendment) is presumed to be 10 percentage points lower than the 2010 AFTAP, or 72%. Because this presumed AFTAP is less than 80%, the restriction on plan amendments in paragraph
(c)of this section applies, and the plan amendment cannot take effect.
(iii)In order to allow the plan amendment to take effect, the plan sponsor decides to make a contribution under paragraph (f)(2) of this section on May 1, 2011. Because the presumed AFTAP was less than 80% prior to reflecting the plan amendment, the rules of section (f)(2)(iv)(A) apply, and the amount of the contribution under section 436(c)(2) is the amount of the increase in the funding target for the year if the plan amendment were included in the determination of the funding target. Accordingly, an additional contribution of $400,000 is required as of January 1, 2011, to avoid the restriction on plan amendments under paragraph
(c)of this section.
(iv)However, since the contribution is not made until May 1, 2011, the amount of the required contribution must be adjusted to reflect interest that would otherwise have accrued between the valuation date and the date of the contribution. Since the effective interest rate has not yet been determined, the interest adjustment is based on the highest of the three segment rates applicable for the 2011 plan year under section 430(h)(2)(C), or 6%. The amount of the required contribution after adjustment is $407,845, determined as $400,000 increased for 4 months of compound interest at the highest segment interest rate for 2011, or 6%.
(v)Once the plan's effective interest rate has been determined, if that rate for the year is less than 6%, the amount of excess interest previously contributed is recharacterized as a section 430 contribution for the current plan year.
(g)*Rules of operation for periods prior to and after certification* —(1) *In general.* Section 436(h) and paragraph
(h)of this section set forth a series of presumptions that apply before the enrolled actuary for a plan issues a certification of the plan's adjusted funding target attainment percentage for a plan year. This paragraph
(g)sets forth rules for the application of limitations under sections 436(b), 436(c), 436(d), and 436(e) prior to and during the period those presumptions apply to a plan, and describes the interaction of those presumptions with plan operations after the plan's enrolled actuary has issued a certification of the plan's adjusted funding target attainment percentage for the plan year. Paragraph (g)(2) of this section sets forth rules that apply to periods during which a presumption under section 436(h) applies. Paragraph (g)(3) of this section sets forth rules that apply to periods during which no presumptions under section 436(h) apply but which are prior to the enrolled actuary's certification of the plan's adjusted funding target attainment percentage for the plan year. Paragraph (g)(4) of this section sets forth rules that apply after the enrolled actuary's certification of the plan's adjusted funding target attainment percentage for a plan year. Paragraph (g)(5) of this section sets forth additional rules that apply prior to the enrolled actuary's certification of the adjusted funding target attainment percentage for a plan year with respect to the limitations on unpredictable contingent event benefits and plan amendments that increase liabilities under paragraphs
(b)and
(c)of this section, respectively. Paragraph (g)(6) of this section sets forth rules for multiple unpredictable contingent events and amendments during a plan year. Paragraph (g)(7) of this section sets forth examples of the application of this paragraph (g).
(2)*Periods prior to certification during which a presumption applies—(i) Plan must follow presumptions.* A plan must provide that, for any period during which paragraph (h)(1), (2), or
(3)of this section applies to the plan, the limitations applicable under paragraphs (b), (c), (d), and
(e)of this section apply to the plan as if the actual adjusted funding target attainment percentage for the year were the presumed adjusted funding target attainment percentage determined under the rules of paragraph
(h)of this section.
(ii)*Determination of amount of reduction in balances* —(A) *Valuation date adjustment.* During the period described in this paragraph (g)(2), the rules of paragraph (a)(5) of this section (relating to the deemed election to reduce the funding standard carryover balance and the prefunding balance) must be applied based on the presumed percentage with respect to the limitations under paragraphs (b), (c), (d), and
(e)of this section. In order to determine the amount of the reduction in those balances that would apply in such a situation, a presumed adjusted funding target must be established, which is then compared to the interim value of adjusted plan assets as of the valuation date for the current plan year. For this purpose, the interim value of adjusted plan assets is equal to the value of adjusted plan assets as of the valuation date, determined without regard to future contributions, future elections to add to the prefunding balance for the prior year, and future elections (including deemed elections under paragraph (a)(5) of this section) to reduce the prefunding and funding standard carryover balances for the current plan year, and the presumed adjusted funding target is equal to the interim value of adjusted plan assets for the plan year divided by the presumed adjusted funding target attainment percentage.
(B)*Change in presumed percentage in 4th month.* If the presumed adjusted funding target attainment percentage for the plan year changes during the year because of application of the presumption in paragraph (h)(2) of this section, the rules regarding the deemed election to reduce funding balances described in paragraph (a)(5) of this section must be reapplied based on the new presumed adjusted funding target attainment percentage. This will typically occur on the first day of the 4th month of a plan year, but could happen later if the enrolled actuary's certification of the adjusted funding target attainment percentage for a plan year occurs after the first day of the 4th month of the following plan year. In order to perform this reapplication, a new adjusted funding target must be determined based on the new presumed adjusted funding target attainment percentage and must be compared to an updated interim value of adjusted plan assets. For this purpose, the new presumed adjusted funding target is redetermined based on the new presumed adjusted funding target attainment percentage, and is compared to the adjusted plan assets updated to take into account the plan sponsor's contributions made for the prior plan year and section 430(f) elections with respect to the plan's prefunding and funding standard carryover balances since the earlier determination of the interim plan assets. This reapplication of the deemed election may require an additional reduction in funding balances if the amount of the reduction in funding balances that is necessary to reach the applicable threshold to avoid the application of the limitation under paragraph
(d)or
(e)of this section is greater than the amount that was initially reduced. Prior reductions of funding balances continue to apply in accordance with the rules of paragraph (g)(4)(i)(C) of this section.
(iii)*Bankruptcy of plan sponsor.* Pursuant to section 436(d)(2), during any period in which the plan sponsor of a plan is a debtor in a case under title 11, United States Code, or any similar Federal or State law (as described in paragraph (d)(2) of this section), if the plan's enrolled actuary has not yet certified the plan's adjusted funding target attainment percentage for the plan year to be at least 100 percent, no prohibited payments within the meaning of paragraph (d)(5) of this section may be paid. Thus, the presumption rules of paragraph
(h)of this section do not apply for purposes of section 436(d)(2) and this paragraph (g)(2)(iii).
(iv)*Application to unpredictable contingent events and plan amendments.* For purposes of applying the limitations under paragraphs
(b)and
(c)of this section during the period described in this paragraph (g)(2), the presumed adjusted funding target under paragraph (g)(2)(ii) of this section is adjusted to reflect the increase in the funding target that would be attributable to the unpredictable contingent event or the plan amendment if the unpredictable contingent event benefits or the increase in liability attributable to the plan amendment were taken into account. See paragraph (g)(5)(i) of this section for related rules regarding funding balances that apply in the case of unpredictable contingent event benefits or plan amendments increasing benefit liabilities.
(3)*Periods prior to certification during which no presumption applies* —(i) *Accelerated benefit payments and benefit accruals.* If no presumptions under section 436(h) apply to a plan during a period and the plan's enrolled actuary has not yet issued the certification of the plan's actual adjusted funding target attainment percentage for the plan year, the plan is not permitted to limit the payment of accelerated benefits under paragraph
(d)of this section or the accrual of benefits under paragraph
(e)of this section based on an expectation that those paragraphs will apply to the plan once an actuarial certification is issued. However, see paragraph (g)(2)(iii) of this section for a restriction on prohibited payments during any period in which the plan sponsor of a plan is a debtor in a case under title 11, United States Code, or any similar Federal or State law.
(ii)*Unpredictable contingent event benefits and plan amendments increasing benefit liability* —(A) *In general.* If no presumptions under section 436(h) apply to a plan during a period and the plan's enrolled actuary has not yet issued a certification of the plan's adjusted funding target attainment percentage for the plan year, the limitations on unpredictable contingent event benefits under paragraph
(b)of this section or plan amendments increasing benefit liability under paragraph
(c)of this section during that period must be applied following the rules of paragraph (g)(5) of this section, based on the preceding year's certified adjusted funding target attainment percentage. Thus, if after application of those rules the plan would be treated as having an adjusted funding target attainment percentage below the applicable threshold under paragraph
(b)or
(c)of this section (taking into account the increase in the funding target attributable to the unpredictable contingent event benefits or the increase in liability attributable to the plan amendment), the unpredictable contingent event benefits are not permitted to be paid, and the plan amendment is not permitted to go into effect, unless the contribution described in paragraph (g)(5)(ii) of this section is made.
(B)*Recharacterization of contributions to avoid benefit limitations.* If, pursuant to paragraph (g)(3)(ii)(A) of this section, the plan sponsor makes contributions described in paragraph (g)(5)(ii) of this section to avoid application of the applicable benefit limitations, then, after the certification of the adjusted funding target attainment percentage for the current plan year is issued by the plan's enrolled actuary, those contributions are recharacterized as employer contributions under section 430 for the current plan year to the extent they exceed the amount necessary to avoid application of the applicable limitation under paragraph
(b)or
(c)of this section based on the certified percentage.
(4)*Periods after certification of adjusted funding target attainment percentage* —(i) *Plan must follow certified percentage* —(A) *In general.* The rules of paragraphs (g)(2) and (g)(3) of this section no longer apply for a plan year on and after the date the enrolled actuary for the plan issues a certification of the adjusted funding target attainment percentage of the plan for the current plan year, provided that the certification is issued before the first day of the 10th month of the plan year. Thus, for example, the plan must provide that paragraph
(d)of this section applies for distributions with annuity starting dates on and after the date of that certification using the certified adjusted funding target attainment percentage of the plan for the plan year. Similarly, the plan must provide that any prohibition on accruals under paragraph
(e)of this section as a result of the enrolled actuary's certification that the adjusted funding target attainment percentage of the plan for the plan year is less than 60 percent is effective as of the date of the certification and that any prohibition on accruals ceases to be effective on the date the enrolled actuary issues a certification that the adjusted funding target attainment percentage of the plan for the plan year is at least 60 percent. In addition, in the case of a plan that has been issued a certification of the plan's adjusted funding target attainment percentage for a plan year by the plan's enrolled actuary, the plan sponsor must comply with the requirements of paragraphs
(b)and
(c)of this section for an unpredictable contingent event that occurs or a plan amendment that is effective on or after the date of the enrolled actuary's certification. Thus, the plan administrator must determine if the adjusted funding target attainment percentage is at or above the applicable threshold, taking into account the increase in the funding target that would be attributable to the unpredictable contingent event or plan amendment if the unpredictable contingent event benefits or the increase in liability attributable to the plan amendment were taken into account.
(B)*Application of rule for deemed election to reduce funding balances.* After the adjusted funding target attainment percentage for a plan year is certified by the plan's enrolled actuary, the deemed election to reduce funding balances under paragraph (a)(5) of this section must be reapplied based on the actual funding target for the year (provided the certification is issued before the first day of the 10th month of the plan year). This reapplication of the deemed election may require an additional reduction in funding balances if the amount of the reduction in funding balances that is necessary to reach the applicable threshold to avoid the application of the limitations under paragraph
(d)or
(e)of this section is greater than the amount that was reduced under paragraph (g)(2) or (g)(3) of this section.
(C)*Prior reductions continue to apply.* If the amount of the reduction in funding balances that is necessary to reach the applicable threshold to avoid the application of the benefit limitation is less than the amount that was reduced under paragraph (g)(2) or (g)(3) of this section, then the prior reduction continues to apply. Similarly, if the amount of the reduction in funding balances that is necessary to reach the applicable threshold to avoid the application of the corresponding benefit limitation exceeds the amount of the funding balances, then the prior reduction continues to apply and no further reduction under paragraph (a)(5) of this section is provided.
(ii)*Applicability to prior periods* —(A) *In general.* Except as provided in paragraph (g)(4)(ii)(B) of this section, the enrolled actuary's certification of the adjusted funding target attainment percentage for the plan for the plan year does not affect the application of the limitation under paragraph
(b)of this section with respect to unpredictable contingent events that occur during the periods to which paragraphs (g)(2) and (g)(3) of this section apply. Except as provided in paragraph (g)(4)(ii)(B) of this section, the enrolled actuary's certification of the adjusted funding target attainment percentage for the plan for the plan year does not affect the application of the limitation under paragraph
(c)of this section to a plan amendment that increases liability for benefits where the amendment is first effective during the periods to which paragraphs (g)(2) and (g)(3) apply. The enrolled actuary's certification of the adjusted funding target attainment percentage for the plan for the plan year does not affect the application of the limitation under paragraph
(d)of this section for distributions with annuity starting dates before the certification. Similarly, the enrolled actuary's certification of the adjusted funding target attainment percentage for the plan for the plan year does not affect the application of the limitation under paragraph
(e)of this section prior to the date of that certification. See paragraph (a)(4) of this section for rules relating to the period of time after benefits cease to be limited.
(B)*Special rule for unpredictable contingent event benefits and plan amendments that increase liability.* If a plan does not pay benefits attributable to an unpredictable contingent event or plan amendment because of the application of paragraph (g)(5)(ii) of this section, the plan must provide for benefits that were not previously paid (or accrued) if such benefits would be permitted under the rules of section 436 based on the certified actual adjusted funding target attainment percentage, taking into account the increase in the funding target that would be attributable to the unpredictable contingent event benefits or increase in liability due to the plan amendment.
(5)*Additional rules regarding limitations on unpredictable contingent event benefits and certain plan amendments based on presumed adjusted funding target prior to certification* —(i) *Reduction in funding balances* —(A) *Mandatory reduction for collectively bargained plans.* During the period described in paragraph (g)(2) or (g)(3) of this section, the rules of paragraph (a)(5) of this section (relating to the deemed election to reduce the funding standard carryover balance and the prefunding balance) must be applied based on the presumed percentage. In order to determine the amount of the reduction in those balances that would apply to a collectively bargained plan during that period with respect to an unpredictable contingent event or a plan amendment that increases liability for benefits, the rules of paragraph (g)(2)(ii) of this section are applied, except that the presumed adjusted funding target is increased to take into account the benefits attributable to the unpredictable contingent event or the plan amendment. For this purpose, if no presumption applies under the rules of paragraph
(h)of this section (for example, because the plan's actual adjusted funding target attainment percentage for the prior year was certified to be at least 80 percent), then that prior year's actual adjusted funding target attainment percentage is substituted for the presumed adjusted funding target attainment percentage for the plan year in determining the presumed adjusted funding target.
(B)*Optional reduction for plans that are not collectively bargained plans.* A plan sponsor of a plan that is not a collectively bargained plan (and, thus, is not required to reduce the funding standard account carryover balance and the prefunding balance under the rules of paragraph (a)(5) of this section) is permitted to reduce those balances in order to increase the interim value of adjusted plan assets (as defined in paragraph (g)(2)(ii)(A) of this section) that is compared to the presumed adjusted funding target determined under this paragraph (g)(5)(i).
(ii)*Plans funded below the threshold.* If, after application of paragraph (g)(5)(i) of this section, the ratio of the interim value of adjusted plan assets (as defined in paragraph (g)(2)(ii)(A) of this section) to the presumed adjusted funding target determined under that paragraph is less than the applicable threshold under section 436(b) or 436(c), as applicable, then the plan is not permitted to provide any benefits attributable to the unpredictable contingent event or plan amendment unless the plan sponsor makes a contribution that would allow payment of unpredictable contingent event benefits or would permit a plan amendment increasing benefit liabilities to go into effect under the rules of paragraph (b)(2) or (c)(2) of this section.
(iii)*Plans funded at or above the threshold.* If, after application of paragraph (g)(5)(i) of this section, the ratio of the interim value of adjusted plan assets (as defined in paragraph (g)(2)(ii)(A) of this section) to the presumed adjusted funding target is greater than or equal to the applicable threshold under section 436(b) or 436(c), as applicable, then the plan is not permitted to limit the payment of unpredictable contingent event benefits described in paragraph
(b)of this section nor is the plan permitted to restrict a plan amendment increasing benefit liability described in paragraph
(c)of this section from becoming effective based on an expectation that the limitations under paragraph
(b)or
(c)of this section will apply to the plan once an actuarial certification is received.
(6)*Application to multiple events and amendments.* For purposes of this paragraph (g), if a plan is providing benefits with respect to one or more unpredictable contingent events occurring within the plan year or amendments taking effect within the plan year, then paragraphs
(b)and
(c)of this section are applied with respect to a subsequent unpredictable contingent event or amendment by treating the increase in the funding target attributable to the subsequent event or amendment as if it included the increases in the funding target attributable to all such earlier events or amendments.
(7)*Examples.* The following examples illustrate the application of this paragraph (g). Unless otherwise indicated, these examples are based on the following facts: each plan has a plan year that is the calendar year and a valuation date of January 1; the first effective plan year is 2008; the plan sponsor is not in bankruptcy; and no annuity purchases have been made from the plan. No plan is in at-risk status for the years discussed in the examples. *Example 1.*
(i)As of January 1, 2011, Plan A has assets of $3,300,000 and a prefunding balance of $300,000. Plan A has no funding standard carryover balance. Beginning on January 1, 2011, Plan A's AFTAP for 2011 is presumed to be 75%, under the rules of paragraph
(h)of this section and based on the certified AFTAP for 2010.
(ii)Based on Plan A's presumed AFTAP of 75%, Plan A would be subject to the restriction on prohibited payments in paragraph (d)(3) of this section as of January 1, 2011. However, under the provisions of paragraph (a)(5) of this section, if the prefunding balance is large enough, Plan A's sponsor is deemed to elect to reduce the prefunding balance to the extent needed to avoid this restriction.
(iii)The amount needed to avoid the restriction in paragraph (d)(3) of this section is determined by comparing the presumed adjusted funding target for Plan A with the interim value of adjusted plan assets as of the valuation date. The interim value of plan assets for Plan A is $3,000,000 (that is, the asset value of $3,300,000 reduced by the prefunding balance of $300,000). The presumed adjusted funding target for Plan A is the interim value of the adjusted plan assets divided by the presumed AFTAP, or $4,000,000 (that is, $3,000,000 divided by 75%).
(iv)In order to avoid the restriction on prohibited payments in paragraph (d)(3) of this section, Plan A's presumed AFTAP must be increased to 80%. This requires an increase in Plan A's adjusted plan assets of $200,000 (that is, 80% of the presumed adjusted funding target of $4,000,000, minus the interim value of the adjusted plan assets of $3,000,000). Plan A's prefunding balance as of January 1, 2011, is reduced by $200,000 under the deemed election provisions of paragraph (a)(5) of this section. Accordingly, Plan A's prefunding balance is $100,000 (that is, $300,000 minus $200,000) and the interim value of adjusted plan assets is increased to $3,200,000 (that is, $3,300,000 minus the reduced prefunding balance of $100,000). Plan A must pay the full amount of the accelerated benefit distributions elected by participants with an annuity starting date of January 1, 2011, or later. *Example 2.*
(i)The facts are the same as in *Example 1.* As of April 1, 2011, the enrolled actuary for Plan A has not certified the 2011 AFTAP. Therefore, beginning April 1, 2011, Plan A's AFTAP is presumed to be 65%, 10 percentage points lower than the 2010 AFTAP, in accordance with paragraph (h)(2) of this section. Under the provisions of paragraph (g)(2)(ii)(B) of this section, the deemed election to reduce funding balances described in paragraph (a)(5) of this section must be reapplied based on the new presumed AFTAP.
(ii)In accordance with paragraph (g)(2)(ii)(B) of this section, a new adjusted funding target must be determined based on the new presumed AFTAP and must be compared to an updated interim value of adjusted plan assets. The new presumed AFTAP is equal to the interim value of adjusted plan assets as of the valuation date of $3,000,000, without reflecting the deemed election to reduce the prefunding balance that was made under paragraph (a)(5) of this section. The new presumed adjusted funding target is $3,000,000 divided by the presumed AFTAP of 65%, or $4,615,385.
(iii)In order to avoid the restriction on prohibited payments in paragraph (d)(3) of this section, Plan A's presumed AFTAP must be increased to 80%. This requires an additional increase in Plan A's adjusted plan assets of $492,308 (that is, 80% of the new presumed adjusted funding target of $4,615,385, minus the updated interim value of the adjusted plan assets of $3,200,000, reflecting the deemed reduction in Plan A's prefunding balance).
(iv)Plan A's remaining prefunding balance as of January 1, 2011, is only $100,000, which is not enough to avoid the restriction on prohibited payments under paragraph (d)(3) of this section. Accordingly, unless Plan A's sponsor utilizes one of the methods described in paragraph
(f)of this section to avoid the restriction, Plan A is subject to the restriction on prohibited payments in paragraph (d)(3) of this section and cannot pay accelerated benefit distributions elected by participants with an annuity starting date of April 1, 2011, or later.
(v)Plan A's prefunding balance remains at $100,000 because, under paragraph (a)(5)(iii) of this section, the deemed reduction rules do not apply if the prefunding balance is not large enough to increase the adjusted value of plan assets enough to avoid the restriction. However, the earlier deemed reduction of $200,000 continues to apply because all elections (including deemed elections) to reduce a plan's funding standard carryover balance or prefunding balance are irrevocable and must be unconditional. *Example 3.*
(i)The facts are the same as in *Example 2.* On July 1, 2011, the enrolled actuary for Plan A calculates the actual adjusted funding target as $3,700,000 as of January 1, 2011. Therefore, the 2011 AFTAP would have been 81.08% without reducing the prefunding balance (that is, plan assets of $3,300,000 minus the prefunding balance of $300,000, divided by the adjusted funding target of $3,700,000), and Plan A would not have been subject to the restrictions under paragraph (d)(3) of this section.
(ii)However, paragraph (g)(4)(i)(C) of this section requires that any prior reductions in the prefunding or funding standard carryover balances continue to apply, and so Plan A's prefunding balance remains at the reduced amount of $100,000 as of January 1, 2011. The enrolled actuary certifies that the 2011 AFTAP is 86.49% (that is, plan assets of $3,300,000 reduced by the prefunding balance of $100,000, divided by the adjusted funding target of $3,700,000). *Example 4.*
(i)Plan B is a collectively bargained plan with assets of $2,500,000 and a prefunding balance of $150,000 as of January 1, 2011. Plan B has no funding standard carryover balance. Beginning on January 1, 2011, Plan B's AFTAP for 2011 is presumed to be 83% under the rules of paragraph (g)(3) of this section and based on the certified AFTAP for 2010.
(ii)On January 10, 2011, Plan B's sponsor amends the plan to increase benefits effective on February 1, 2011. The amendment would increase Plan B's funding target by $350,000. Under the rules of paragraph (g)(5) of this section, the presumed adjusted funding target is calculated, and then the presumed adjusted funding target is increased to take into account the benefits attributable to the plan amendment.
(iii)Plan B's interim value of adjusted plan assets as of the valuation date is $2,350,000 (that is, $2,500,000 minus the prefunding balance of $150,000). Prior to reflecting the amendment, Plan B's presumed adjusted funding target as of January 1, 2011, is $2,831,325, which is equal to the interim value of adjusted plan assets as of the valuation date of $2,350,000, divided by the presumed AFTAP of 83%. Increasing Plan B's presumed adjusted funding target by $350,000 to reflect the amendment results in a presumed adjusted funding target of $3,181,325 and a presumed AFTAP of 73.87% (that is, the interim value of adjusted plan assets as of the valuation date of $2,350,000 divided by the presumed adjusted funding target of $3,181,325).
(iv)Because Plan B's presumed AFTAP was over 80% prior to taking the amendment into account but less than 80% when the amendment is reflected, section 436(c) and paragraph
(c)of this section prohibit the plan amendment from taking effect unless the adjusted plan assets are increased so that the presumed AFTAP (reflecting the increase due to the amendment) is increased to 80%. This would require an additional amount of $195,060 (that is, 80% of the presumed adjusted funding target of $3,181,325 less the interim value of adjusted plan assets of $2,350,000).
(v)Plan B's prefunding balance of $150,000 is not large enough for Plan B to avoid the restriction on plan amendments, and therefore the deemed election to reduce the prefunding balance under paragraph (a)(5) of this section does not apply and the amendment cannot take effect. Example 5.
(i)The facts are the same as in *Example 4* , except that Plan B's sponsor decides to make a contribution on February 1, 2011, to avoid the benefit limitation as provided in paragraph (f)(2) of this section. Pursuant to paragraph (f)(2)(i)(A)( *2* ) of this section, Plan B's effective rate of interest for 2011 is treated as 5.25%.
(ii)The amount of the contribution as of January 1, 2011, needed to avoid the restriction on plan amendments under paragraph
(c)of this section is $195,060. However, because the contribution is not paid until February 1, 2011, the necessary contribution amount must be adjusted to reflect interest that would otherwise have accrued between the valuation date and the date of the contribution, at Plan B's effective rate of interest for the 2011 plan year. The amount of the required contribution after adjustment is $195,894, determined as $195,060 increased for one month of compound interest at an effective annual interest rate of 5.25%.
(iii)As of April 1, 2011, the enrolled actuary for the plan has not certified the 2011 AFTAP. Therefore, beginning April 1, 2011, Plan A's presumed AFTAP is presumed to be 73%, 10 percentage points lower than the 2010 AFTAP, in accordance with paragraph (h)(2) of this section. However, paragraph (g)(2)(ii)(B) of this section does not require reapplication of the deemed election if necessary to avoid the application of benefit restrictions under paragraph
(c)of this section. Therefore, since the effective date of the plan amendment occurred prior to April 1, 2011, no additional reduction in the prefunding balance is required and no additional contribution is required for the plan amendment to remain in effect.
(iv)On July 1, 2011, the enrolled actuary for the plan calculates the actual adjusted funding target, prior to taking the plan amendment into account, as $2,700,000 and certifies the actual AFTAP for 2011 (prior to taking the amendment into account) as 87.04% (that is, adjusted assets of $2,350,000 divided by the adjusted funding target of $2,700,000). Reflecting the $350,000 increase in funding target due to the plan amendment would increase the adjusted funding target to $3,050,000 and would decrease Plan B's AFTAP to 77.05%.
(v)Based on the certified AFTAP, the amount necessary to avoid the benefit restriction under paragraph
(c)of this section is $90,000 (that is, 80% of the adjusted funding target reflecting the plan amendment (or $3,050,000), minus the adjusted value of plan assets of $2,350,000). This amount must be adjusted for interest between the valuation date and the date the contribution was made using the effective interest rate for Plan B. Therefore, the amount required on the payment date of February 1, 2011, is $90,385 (that is, $90,000 adjusted for compound interest for one month at Plan B's effective interest rate of 5.25% per year).
(vi)Under paragraph (g)(3)(ii)(B) of this section, the contribution made under paragraph (g)(5)(ii) of this section is recharacterized as an employer contribution under section 430 to the extent that it exceeds the amount necessary to avoid application of the restriction on plan amendments under paragraph
(c)of this section. Therefore, $105,509 (that is, the $195,894 actual contribution paid on February 1, 2011, minus the $90,385 required contribution based on the actual certified AFTAP) is recharacterized as an employer contribution under section 430 for the 2011 plan year. As such, it may be applied toward the minimum required contribution for 2011, or the plan sponsor can elect to credit the contribution to Plan B's prefunding balance to the extent that the contributions for the 2011 plan year exceed the minimum required contribution. Example 6.
(i)The facts are the same as in *Example 5* , except that on July 1, 2011, the enrolled actuary for Plan B calculates the actual adjusted funding target (before reflecting the plan amendment) as $3,000,000 and certifies the actual AFTAP as 78.33% prior to reflecting the plan amendment (that is, adjusted plan assets of $2,350,000 divided by the actual adjusted funding target of $3,000,000). Based on the provisions of paragraph
(c)of this section, because the AFTAP prior to reflecting the amendment is less than 80%, the contribution required to avoid the restriction on plan amendments would have been the amount equal to the increase in funding target due to the plan amendment, or $350,000.
(ii)However, according to paragraph (g)(4)(ii)(A) of this section, the enrolled actuary's certification of the 2011 AFTAP does not affect the application of the limitation under paragraph
(c)of this section regardless of the extent to which the certified percentage varies from the presumed percentage, because the amendment to Plan B was effective prior to the date of the certification. Therefore, it is not necessary for Plan B's sponsor to contribute an additional amount in order for the plan amendment to remain in effect.
(h)*Presumed underfunding for purposes of benefit limitations* —(1) *Presumption of continued underfunding* —(i) *In general.* This paragraph (h)(1) applies to a plan for which a limitation under paragraph (b), (c), (d), or
(e)of this section applied to the plan on the last day of the plan year preceding the current plan year. If this paragraph (h)(1) applies to a plan, the first day of the plan year is a section 436 measurement date and the presumed adjusted funding target attainment percentage for the plan is the percentage under paragraph (h)(1)(ii) or
(iii)of this section, whichever applies to the plan, beginning on that first day until it is changed under this paragraph (h).
(ii)*Rule where preceding year certification issued during preceding year.* In any case in which the plan's enrolled actuary has issued a certification under paragraph (h)(4) of this section of the adjusted funding target attainment percentage for the plan year preceding the current year before the first day of the current year, the adjusted funding target attainment percentage of the plan for the current plan year is presumed to be equal to the preceding year's actual adjusted funding target attainment percentage until the plan's enrolled actuary issues a certification of the adjusted funding target attainment percentage of the plan for the current plan year under paragraph (h)(4) of this section or until changed under paragraph (h)(2) or (h)(3) of this section.
(iii)*No certification for preceding year issued during preceding year* —(A) *Deemed percentage under 60 percent.* In any case in which the plan's enrolled actuary has not issued a certification under paragraph (h)(4) of this section of the adjusted funding target attainment percentage of the plan for the plan year preceding the current year during that prior plan year, the adjusted funding target attainment percentage of the plan for the current plan year is presumed to be less than 60 percent until changed under paragraph (h)(1)(iii)(B) of this section or where the plan's enrolled actuary issues the certification of the adjusted funding target attainment percentage for the current year under paragraph (h)(4) of this section.
(B)*Enrolled actuary's certification in first 3 months of following year.* In any case in which the plan's enrolled actuary has issued the certification under paragraph (h)(4) of this section of the adjusted funding target attainment percentage of the plan for the plan year preceding the current year on or after the first day of the current year but before the first day of the 4th month of that year, the date of that prior year certification is a new section 436 measurement date for the plan year. In such a case, until it is changed by a certification of the current year's adjusted funding target attainment percentage under paragraph (h)(4) of this section or otherwise changed under paragraph (h)(2) or (h)(3) of this section, the presumed percentage for the current year beginning on the date of certification is equal to the certified percentage for the preceding year.
(2)*Presumption of underfunding after first day of 4th month for nearly underfunded plans* —(i) *In general.* This paragraph (h)(2) applies to a plan for which the actual adjusted funding target attainment percentage for the plan year preceding the current plan year was certified for that prior plan year to be at least 60 percent but less than 70 percent, or was certified for that prior plan year to be at least 80 percent but less than 90 percent, and where the enrolled actuary for the plan has not issued a certification of the adjusted funding target attainment percentage for the plan year by the first day of the 4th month of the plan year. If this paragraph (h)(2) applies to a plan, the presumed adjusted funding target attainment percentage for the plan is the percentage under paragraph (h)(2)(ii) or
(iii)of this section, as applicable.
(ii)*Presumed adjusted funding target attainment percentage.* If this paragraph (h)(2) applies to a plan, and the date of the enrolled actuary's certification under paragraph (h)(4) of this section for the plan year preceding the current year occurred before the first day of the 4th month of the current plan year, then, commencing on the first day of the 4th month of the current plan year and continuing until the earlier of the date the enrolled actuary issues a certification under paragraph (h)(4) of this section of the adjusted funding target attainment percentage for the plan year or the first day of the 10th month of the plan year as described in paragraph (h)(3) of this section—
(A)The adjusted funding target attainment percentage of the plan as of the valuation date for the plan year is presumed to be equal to 10 percentage points less than the actual adjusted funding target attainment percentage of the plan for the preceding plan year; and
(B)The first day of the 4th month of the plan year is treated as a section 436 measurement date.
(iii)*Certification for prior year.* If this paragraph (h)(2) applies to a plan, and the date of the enrolled actuary's certification under paragraph (h)(4) of this section of the actual adjusted funding target attainment percentage for the plan year preceding the current year occurs on or after the first day of the 4th month of the current plan year, then, commencing on the date of that prior year certification and continuing until the earlier of the date the enrolled actuary issues a certification under paragraph (h)(4) of this section of the adjusted funding target attainment percentage for the plan year or the first day of the 10th month of the plan year as described in paragraph (h)(3) of this section—
(A)The adjusted funding target attainment percentage of the plan as of the valuation date for the plan year is presumed to be equal to 10 percentage points less than the actual adjusted funding target attainment percentage of the plan for the preceding plan year; and
(B)The date of the prior year certification is treated as a section 436 measurement date.
(3)*Presumption of underfunding on and after first day of 10th month* —(i) *Section 436 measurement date.* In any case in which no certification of the specific adjusted funding target attainment percentage for the current plan year under paragraph (h)(4) of this section is made with respect to the plan before the first day of the 10th month of the plan year, then that first day is treated as a section 436 measurement date.
(ii)*Presumed percentage under 60 percent.* In any case in which no certification of the specific adjusted funding target attainment percentage for the current plan year under paragraph (h)(4) of this section is made with respect to the plan before the first day of the 10th month of the plan year, the plan's adjusted funding target attainment percentage is presumed to be less than 60 percent beginning on that date and continuing through the remainder of the plan year.
(4)*Certification of adjusted funding target attainment percentage* —(i) *Rules generally applicable to certifications* —(A) *In general.* The enrolled actuary's certification referred to in this section must be made in writing, must be provided to the plan administrator, and, except as provided in paragraph (h)(4)(ii) of this section, must certify the plan's adjusted funding target attainment percentage for the plan year (including setting forth the aggregate amount of annuity purchases taken into account under paragraph (j)(3)(ii) of this section).
(B)*Determination of plan assets.* For purposes of making any determination of the adjusted funding target attainment percentage under this section, the determination is not permitted to take into account assets that have not been contributed to the plan by the certification date. For example, the enrolled actuary's certification of the adjusted funding target attainment percentage for a plan year cannot take into account contributions that are expected to be made after the certification date. Notwithstanding the foregoing, for plan years beginning before January 1, 2009, the enrolled actuary's certification of the adjusted funding target attainment percentage is permitted to take into account employer contributions for the prior plan year that are reasonably expected to be made for that prior plan year but have not been contributed by the date of the enrolled actuary's certification. See paragraph (h)(4)(iii) of this section for rules relating to changes in the certified percentage.
(ii)*Special rules for certification within range* —(A) *In general.* Under this paragraph (h)(4)(ii), the plan's enrolled actuary is permitted to certify during the first nine months of a plan year that the plan's adjusted funding target attainment percentage for that plan year either is 60 percent or higher (but is less than 80 percent), is 80 percent or higher, or is 100 percent or higher. If the enrolled actuary has issued such a range certification for a plan year and the enrolled actuary subsequently issues a certification of the specific adjusted funding target attainment percentage for the plan before the first day of the 10th month of that plan year, the certification of the specific adjusted funding target attainment percentage is treated as a change in the applicable percentage to which paragraph (h)(4)(iii) of this section applies. If the enrolled actuary has issued a range certification for a plan year but no specific certification of the adjusted funding target attainment percentage of the plan for the plan year is issued by the plan's enrolled actuary before the first day of the 10th month of that plan year, then the rules of paragraph (h)(3) of this section apply and the change in the applicable percentage to under 60 percent on that date is treated as a change in the applicable percentage which is subject to the rules of paragraph (h)(4)(iii) of this section.
(B)*Effect of range certification* —( *1* ) *Before certification of specific percentage.* If a plan's enrolled actuary issues a range certification pursuant to this paragraph (h)(4)(ii), then, for all purposes under this section (for example, applying the limitations of sections 436(b) and (c), making contributions described in sections 436(b)(2), 436(c)(2), and 436(e)(2), and the mandatory reduction of funding balances under paragraph (a)(5) of this section), the plan is treated as having a certified percentage at the smallest value within the applicable range. ( *2* ) *On and after certification of specific percentage.* Once the certification of the specific adjusted funding target attainment percentage is issued by the plan's enrolled actuary (before the first day of the 10th month of the plan year), that certified percentage applies for all purposes of this section on and after the date of that certification. If the plan sponsor made section 436 contributions to avoid application of a benefit limitation during the period a range certification was in effect, those section 436 contributions will be recharacterized as employer contributions under section 430 to the extent the contributions exceed the amount necessary to avoid application of a limitation based on the specific adjusted funding target attainment percentage as certified by the plan's enrolled actuary before the first day of the 10th month of the plan year.
(iii)*Change of certified percentage* —(A) *Application of new percentage.* If the enrolled actuary for the plan provides a certification of the adjusted funding target attainment percentage of the plan for the plan year under this paragraph (h)(4) (including a range certification) and that certified percentage is superseded by a subsequent determination of the adjusted funding target attainment percentage for that plan year, that later percentage must be applied.
(B)*Determination of materiality* —( *1* ) *In general.* With respect to the effect of that subsequent determination of the adjusted funding target attainment percentage on the plan for the period during which the plan's operation was based on the prior percentage, a determination must be made whether the change in the applicable percentage is a material change or an immaterial change. ( *2* ) *Definition of material change.* For this purpose, there is a material change in a plan's certified adjusted funding target attainment percentage if plan operations with respect to benefits that are addressed by section 436, taking into account any actual contributions and elections under section 430(f) made by the plan sponsor based on the prior certified percentage, would have been different based on the subsequent determination of the plan's adjusted funding target attainment percentage for the plan year. However, if the difference between the adjusted funding target attainment percentage for a plan year and the later revised determination of that percentage is the result of additional contributions for the preceding year that are made by the plan sponsor after the date of the enrolled actuary's certification or results from the plan sponsor's election to reduce the prefunding balance or funding standard carryover balance after the date of the certification, such change is not treated as a material change. ( *3* ) *Definition of immaterial change.* An immaterial change is any change in an adjusted funding target attainment percentage for a plan year that is not a material change.
(C)*Effect of change in percentage* —( *1* ) *Material change.* In the case of a material change where the plan was operated in accordance with the prior certification of the adjusted funding target attainment percentage for the plan year, the plan will not have satisfied the requirements of section 401(a)(29) and section 436. In the case of a material change where the plan was operated in accordance with the subsequent certification of the adjusted funding target attainment percentage during the period of time the prior certification applied, then the plan will not have been operated in accordance with its terms. In addition, in the case of a material change, the rules requiring application of a presumed adjusted funding target attainment percentage under paragraphs (h)(1) through (h)(3) of this section continue to apply from and after the date of the prior certification until the date of the subsequent certification. ( *2* ) *Effect of immaterial change.* If the enrolled actuary for a plan provides a certification of the adjusted funding target attainment percentage of the plan for the plan year under this paragraph (h)(4) and that certified percentage is superseded by a subsequent determination of the adjusted funding target attainment percentage for that plan year that does not result in a material change under paragraph (h)(4)(iii)(B) of this section, the revised percentage does not change the inapplicability of the presumptions under paragraphs (h)(1), (2), and
(3)of this section prior to the date of the later certification.
(5)*Application to plan with valuation date after first day of plan year.* [Reserved].
(6)*Examples of application of paragraphs (h)(1), (h)(2), and (h)(3) of this section.* The following examples illustrate the application of paragraphs (h)(1), (h)(2), and (h)(3) of this section. Unless otherwise indicated, the examples in this section are based on the information in this paragraph. Each plan is a non-collectively bargained defined benefit plan with a plan year that is the calendar year and a valuation date of January 1. The first effective plan year is 2008. The plan does not have a funding standard carryover balance or a carryforward balance as of any of the dates mentioned, and the plan sponsor does not elect to utilize any of the methods in paragraph
(f)of this section to avoid applicable benefit restrictions. No range certification under paragraph (h)(4) of this section has been issued. The plan sponsor is not in bankruptcy. Example 1.
(i)On July 15, 2010, the adjusted funding target attainment percentage (“AFTAP”) for Plan T is certified to be 65%. Based on this AFTAP, Plan T is subject to the restriction on prohibited payments in paragraph (d)(3) of this section for the remainder of 2010.
(ii)Beginning January 1, 2011, Plan T's AFTAP for 2011 is presumed to be equal to the AFTAP for 2010, or 65%, under the provisions of paragraph (h)(1)(ii) of this section. Accordingly, the restriction on accelerated benefit distributions in paragraph (d)(3) of this section continues to apply.
(iii)On March 1, 2011, the enrolled actuary for the plan certifies that the actual AFTAP for 2011 is 80%. Therefore, beginning March 1, 2011, Plan T is no longer subject to the restriction under paragraph (d)(3) of this section, and so Plan T resumes paying the full amount of any accelerated benefit distributions elected by participants with an annuity starting date of March 1, 2011, or later. Example 2.
(i)The facts are the same as in *Example 1,* except that the enrolled actuary for the plan does not certify the AFTAP for 2011 until June 1, 2011. Accordingly, Plan T's AFTAP for 2011 is presumed to be equal to the AFTAP for 2010 of 65% from January 1, 2011, through March 31, 2011, and Plan T is subject to the restriction on accelerated benefit distributions under paragraph (d)(3) of this section during this period.
(ii)Beginning April 1, 2011, the provisions of paragraph (h)(2)(ii) of this section apply because the enrolled actuary for the plan still has not certified the actual AFTAP as of January 1, 2011. Under the provisions of paragraph (h)(2)(ii) of this section, the AFTAP for Plan T is presumed to be 10 percentage points lower, or 55%, beginning April 1, 2011. Accordingly, Plan T is now subject to the restriction in paragraph (d)(1) of this section, and so cannot pay any accelerated benefit distributions otherwise payable to plan participants who have annuity starting dates on or after April 1, 2011.
(iii)On June 1, 2011, the enrolled actuary for the plan certifies that the AFTAP for 2011 for Plan T is 66%. Accordingly, Plan T is no longer subject to the restriction under paragraph (d)(1) of this section, but it is subject to the restriction under paragraph (d)(3) of this section.
(iv)Since Plan T is no longer subject to the restriction on payment of accelerated benefit distributions under paragraph (d)(1) of this section, Plan T must resume paying the accelerated benefit distributions, as restricted under paragraph (d)(3) of this section, for participants who elect benefits in accelerated forms of payment and who have an annuity starting date of June 1, 2011, or later. Example 3.
(i)The facts are the same as in *Example 1* , except that the enrolled actuary for the plan does not certify the 2011 AFTAP until November 15, 2011. Beginning October 1, 2011, Plan T is conclusively presumed to have an AFTAP of less than 60%, in accordance with the provisions of paragraph (h)(3) of this section. Accordingly, Plan T is subject to the restriction in paragraph (d)(1) of this section, and cannot pay any accelerated benefit distributions to participants whose annuity starting date occurs on or after October 1, 2011.
(ii)On November 15, 2011, the enrolled actuary for the plan certifies that the AFTAP for 2011 is 72%. However, because the certification occurred after October 1, 2011, the certification does not constitute a new section 436 measurement date, and Plan T continues to be subject to the restrictions on accelerated benefit distributions and benefit accruals under paragraphs (d)(1) and
(e)of this section.
(iii)Beginning January 1, 2012, the 2012 AFTAP for Plan T is presumed to be equal to the 2011 AFTAP of 72%. Because the presumed 2012 AFTAP is between 70% and 80% and, therefore, paragraph (h)(2) of this section (which provides for a 10 percentage point reduction in a plan's AFTAP in certain cases) will not apply, the presumed AFTAP will remain at 72% until the plan's enrolled actuary certifies the AFTAP for 2012 or until paragraph (h)(3) of this section applies on the first day of the 10th month of the plan year. Because the presumed AFTAP is 72%, Plan T is no longer subject to the restrictions on accelerated benefit distributions under paragraph (d)(1) of this section, and Plan T must resume paying accelerated benefit distributions, as restricted under paragraph (d)(3) of this section, that are elected by participants with annuity starting dates on or after January 1, 2012. Similarly, Plan T is no longer subject to the restriction on benefit accruals under paragraph
(e)of this section, and benefit accruals resume under Plan T beginning January 1, 2012, unless Plan T provides otherwise. Example 4.
(i)The facts are the same as in *Example 3* , except that the enrolled actuary for the plan does not issue a certification of the AFTAP for 2011 for Plan T until February 1, 2012.
(ii)Beginning on January 1, 2012, the presumptions in paragraph (h)(1)(iii) of this section apply for the 2012 plan year. Because the enrolled actuary for the plan has not certified the AFTAP for 2011, the presumed AFTAP as of October 1, 2011, continues to apply for the period beginning January 1, 2012. Therefore, the AFTAP as of January 1, 2012, is presumed to be less than 60%, and Plan T continues to be subject to the restriction on accelerated benefit distributions in paragraph (d)(1) and the restriction on benefit accruals under paragraph
(e)of this section.
(iii)On February 1, 2012, the enrolled actuary for the plan certifies that the AFTAP for 2011 for Plan T is 65%. Because the enrolled actuary for the plan has not issued a certification of the AFTAP for 2012, the provisions of paragraph (h)(1)(iii)(B) of this section apply. Accordingly, the certification date for the 2011 AFTAP (February 1, 2012) is a section 436 measurement date and 65% is the presumed AFTAP for 2012 beginning on that date.
(iv)Because the presumed AFTAP is over 60% but less than 80%, the full restriction on accelerated benefit distributions under paragraph (d)(1) of this section no longer applies; however the partial restriction on accelerated benefit distributions under paragraph (d)(3) of this section applies beginning on February 1, 2012. Therefore, Plan T must pay a portion of accelerated benefit distributions elected by participants with annuity starting dates on or after February 1, 2012. Furthermore, based on the presumed AFTAP of 65%, the restriction on benefit accruals under paragraph
(e)of this section no longer applies, and unless Plan T provides otherwise, benefit accruals will resume as of February 1, 2012. Example 5.
(i)The facts are the same as in *Example 3* , except that the enrolled actuary for the plan does not issue a certification of the actual AFTAP for Plan T as of January 1, 2011, until May 1, 2012.
(ii)Beginning on January 1, 2012, the presumptions in paragraph (h)(1)(iii) of this section apply for the 2012 plan year. Because the enrolled actuary for the plan has not certified the actual AFTAP as of January 1, 2011, the presumed AFTAP as of October 1, 2011, continues to apply for the period beginning January 1, 2012. Therefore, the AFTAP as of January 1, 2012, is presumed to be less than 60%, and Plan T continues to be subject to the restriction on accelerated benefit distributions in paragraph (d)(1) of this section and the restriction on benefit accruals under paragraph
(e)of this section.
(iii)Since the enrolled actuary for the plan has not issued a certification of the actual AFTAP as of January 1, 2011, the rules of paragraph (h)(2)(iii) of this section apply beginning April 1, 2012, and the AFTAP is presumed to remain less than 60%. Plan T continues to be subject to the restriction on accelerated benefit distributions and benefit accruals under paragraphs (d)(1) and
(e)of this section.
(iv)On May 1, 2012, the enrolled actuary for the plan certifies that the actual AFTAP for 2011 for Plan T is 65%. Because the enrolled actuary for the plan has not issued a certification of the actual AFTAP as of January 1, 2012, the provisions of paragraph (h)(2)(ii) of this section apply. Accordingly, on May 1, 2012, the 2012 AFTAP is presumed to be 10 percentage points less than the 2011 AFTAP, or 55%, so that the restrictions under paragraphs
(d)and
(e)of this section continue to apply. Example 6.
(i)The enrolled actuary for Plan V certifies the plan's AFTAP for 2010 to be 69%. Based on this AFTAP, Plan V is subject to the restriction in paragraph (d)(3) of this section, and can only pay a portion (generally 50%) of accelerated benefit distributions otherwise due to plan participants who commence benefits while the restriction is in effect. The enrolled actuary for the plan does not issue a certification of the AFTAP for 2011 until June 1, 2011.
(ii)Beginning January 1, 2011, Plan V's 2011 AFTAP is presumed to be equal to the 2010 AFTAP, or 69%, under the provisions of paragraph (h)(1)(ii) of this section. Accordingly, the restriction on accelerated benefit distributions in paragraph (d)(3) of this section continues to apply from January 1, 2011, through March 31, 2011, and Plan T may only pay a portion of accelerated benefit distributions otherwise due to participants who commence benefit payments during this period.
(iii)Beginning April 1, 2011, the provisions of paragraph (h)(2)(ii) of this section apply. Under those provisions, the AFTAP beginning April 1, 2011, is presumed to be 10 percentage points lower than the presumed 2011 AFTAP, or 59%. Because Plan V's presumed AFTAP for 2011 is less than 60%, the restriction on the payment of accelerated benefit distributions under paragraph (d)(1) of this section and the restriction on benefit accruals under paragraph
(e)of this section apply. Accordingly, Plan V cannot pay any accelerated benefit distributions to participants with an annuity starting date on or after April 1, 2011, and benefit accruals cease as of March 31, 2011.
(iv)On June 1, 2011, Plan V's enrolled actuary certifies that the plan's AFTAP for 2011 is 71%. Therefore, the restrictions on accelerated benefit distributions and benefit accruals in paragraphs (d)(1) and
(e)of this section no longer apply, but the partial restriction on benefit payments in paragraph (d)(3) of this section does apply. Accordingly, Plan V begins paying a portion of the accelerated benefit distributions elected by participants with an annuity starting date on or after June 1, 2011, and benefit accruals previously restricted under paragraph
(e)of this section resume effective June 1, 2011, unless Plan V provides otherwise.
(v)Participants who were not able to elect an accelerated form of payment during the period from April 1, 2011, through May 31, 2011, would be able to elect a new starting date with a partial distribution of accelerated benefits effective June 1, 2011, if Plan V contained a preexisting provision permitting such an election after the restriction in paragraph (d)(1) of this section no longer applies. This is permitted because, under paragraph (a)(4)(ii)(A) of this section, a preexisting provision of this type is not considered a plan amendment and is therefore not subject to the plan amendment restriction in paragraph
(c)of this section even though Plan V's AFTAP for 2011 is less than 80%.
(vi)Benefit accruals for the period beginning April 1, 2011, through May 31, 2011, would be automatically restored if Plan V contained a preexisting provision to retroactively restore benefit accruals restricted under paragraph
(e)of this section after the restriction no longer applies. This is permitted because under paragraph (a)(4)(ii)(A) of this section, a preexisting provision of this type is not considered to be a plan amendment and is therefore not subject to the plan amendment restriction in paragraph
(c)of this section even though Plan V's AFTAP for 2011 is less than 80%, because the period of the restriction did not exceed 12 months.
(7)*Examples of application of paragraph (h)(4) of this section.* The following examples illustrate the application of paragraph (h)(4) of this section: Example 1.
(i)Plan Y is a non-collectively bargained defined benefit plan with a plan year that is the calendar year and a valuation date of January 1. Plan Y does not have a funding standard carryover balance or a prefunding balance. Plan Y's sponsor is not in bankruptcy. In June of 2010, the actual AFTAP for 2010 for Plan Y is certified as 65%. On the last day of the 2010 plan year, Plan Y is subject to the restrictions in paragraph (d)(3) of this section.
(ii)The enrolled actuary for the plan issues a range certification on March 21, 2011, certifying that the AFTAP for 2011 is at least 60% and less than 80%. Because the certification was issued before the first day of the 4th month of the plan year, the 10 percentage point reduction in the presumed AFTAP under paragraph (h)(2) of this section does not apply. In addition, because the enrolled actuary for the plan has certified that the AFTAP is within this range, Plan Y is not subject to the full restriction on accelerated benefit payments in paragraph (d)(1) of this section or the restriction on benefit accruals under paragraph
(e)of this section.
(iii)On August 1, 2011, the enrolled actuary for the plan certifies that the actual AFTAP as of January 1, 2011, is 75.86%. This AFTAP falls within the previously certified range. Thus, the change is immaterial under paragraph (h)(4)(iii) of this section and the new certification does not change the applicability or inapplicability of the restrictions in this section. Example 2.
(i)The facts are the same as in *Example 1* , except that the plan sponsor makes an additional contribution for the 2010 plan year on September 1, 2011, that is not added to the prefunding balance. Reflecting this contribution, the enrolled actuary for the plan issues a revised certification stating that the AFTAP for 2011 is 81%, and Plan Y is no longer subject to the restriction on accelerated benefit payments under paragraph (d)(3) of this section on that date.
(ii)Although the revised certification changes the applicability of the restriction under paragraph (d)(3) of this section, the change is not a material change under paragraph (h)(4)(iii)(B)( *2* ) of this section because it changed only because of additional contributions for the preceding year made by the plan sponsor after the date of the enrolled actuary's initial certification.
(i)[Reserved].
(j)*Definitions.* For purposes of this section—
(1)*Funding target.* For purposes of section 436, the *funding target* means the funding target under section 430(d) or 430(i), as applicable to the plan for the plan year.
(2)*Funding target attainment percentage* —(i) *In general.* For purposes of section 436, the *funding target attainment percentage* for any plan year is the fraction (expressed as a percentage), the numerator of which is the value of net plan assets for the plan year, and the denominator of which is the plan's funding target for the plan year (but determined without regard to the at-risk rules under section 430(i) even in the case of a plan that is in at-risk status). For this purpose, pursuant to section 430(f)(4), the value of net plan assets for the plan year is generally determined by subtracting the plan's funding standard carryover balance and prefunding balance (if any) for the plan year from the value of plan assets. A plan with a value of net plan assets for a plan year of zero is treated as having a funding target attainment percentage of zero, regardless of the amount of the plan's funding target.
(ii)*Application to plans that are fully funded without regard to subtraction of funding balances from plan assets* —(A) *In general.* If the funding target attainment percentage for a plan year, determined without regard to the section 430(f)(4) subtraction of the funding standard carryover balance and the prefunding balance from the value of plan assets, would be 100 percent or more, then, solely for purposes of section 436 and this section (but not section 430(d)), the value of net plan assets used in the determination of the funding target attainment percentage described in this paragraph (j)(2) (and the adjusted funding target attainment percentage described in paragraph (j)(3) of this section) is determined without regard to any subtraction of funding balances under section 430(f)(4).
(B)*Transition rule.* Paragraph (j)(2)(ii)(A) of this section is applied to plan years beginning after 2007 and before 2011 by substituting for “100 percent” the applicable percentage determined in accordance with the following table: In the case of a plan year beginning in calendar year: The applicable percentage is: 2008 92 2009 94 2010 96
(C)*Limitation.* Paragraph (j)(2)(ii)(B) of this section does not apply with respect to any plan year after 2008 unless the funding target attainment percentage (determined without regard to the section 430(f)(4) subtraction of the funding standard carryover balance and the prefunding balance from the value of plan assets) of the plan for each preceding plan year (after 2007) was not less than the applicable percentage with respect to such preceding plan year determined under paragraph (j)(2)(ii)(B) of this section.
(iii)*Special rules for first effective plan year* —(A) *In general.* In the case of the plan's first effective plan year, the funding target attainment percentage under section 436 for the plan's pre-effective plan year is determined as the fraction (expressed as a percentage), the numerator of which is the net plan assets determined under paragraph (j)(2)(iii)(B) of this section, and the denominator of which is the plan's current liability determined pursuant to section 412(l)(7) on the valuation date for the plan's pre-effective plan year.
(B)*General determination of value of net plan assets* —( *1* ) *In general.* The value of net plan assets for purposes of this paragraph (j)(2)(iii) is determined under section 412(c)(2) as in effect for the plan's pre-effective plan year, except that the value of plan assets prior to subtracting the plan's funding standard account credit balance described in paragraph (j)(2)(iii)(B)( *2* ) of this section can neither be less than 90 percent of the fair market value of plan assets nor greater than 110 percent of the fair market value of plan assets on the valuation date for that plan year. ( *2* ) *Subtraction of credit balance.* If a plan has a funding standard account credit balance as of the valuation date for the plan's pre-effective plan year, that balance is subtracted from the net asset value described in paragraph (j)(2)(iii)(B)( *1* ) of this section as of that valuation date. However, the subtraction does not apply if the value of plan assets determined in paragraph (j)(2)(iii)(B)( *1* ) of this section is greater than or equal to 90 percent of the plan's current liability as of the valuation date for the plan determined under paragraph (j)(2)(iii)(A) of this section. ( *3* ) *Effect of funding standard carryover balance reduction for first effective plan year.* Notwithstanding paragraph (j)(2)(iii)(B)( *2* ) of this section, if, for the first effective plan year, the employer has made an election to reduce some or all of the funding standard carryover balance as of the first day of that year in accordance with § 1.430(f)-1(e), then the present value (determined as of the valuation date for the pre-effective plan year using the valuation interest rate for that pre-effective plan year) of the amount so reduced is not treated as part of the funding standard account credit balance when that balance is subtracted from the asset value under paragraph (j)(2)(iii)(B)( *2* ) of this section.
(3)*Adjusted funding target attainment percentage* —(i) *In general.* The *adjusted funding target attainment percentage* for any plan year is the fraction (expressed as a percentage), the numerator of which is the adjusted plan assets described in paragraph (j)(3)(ii) of this section and the denominator of which is the adjusted funding target described in paragraph (j)(3)(iii) of this section.
(ii)*Adjusted plan assets.* The adjusted plan assets equals the net plan assets (determined under paragraph (j)(2) of this section), increased by the aggregate amount of purchases of annuities for employees other than highly compensated employees (as defined in section 414(q)) which were made by the plan during the preceding 2 plan years.
(iii)*Adjusted funding target* —(A) *In general.* The adjusted funding target equals the funding target for the plan year (determined in accordance with paragraph (j)(1) of this section but without regard to the at-risk rules under section 430(i)), increased by the aggregate amount of purchases of annuities for employees other than highly compensated employees (as defined in section 414(q)) which were made by the plan during the preceding 2 plan years.
(B)*Special rule for first effective plan year.* In the case of the plan's first effective plan year, for purposes of determining the adjusted funding target attainment percentage for the pre-effective plan year, the adjusted funding target is equal to the current liability determined pursuant to section 412(l)(7) as of the plan's valuation date for the pre-effective plan year, increased by the aggregate amount of purchases of annuities for employees other than highly compensated employees (as defined in section 414(q)) which were made by the plan during the preceding 2 plan years.
(iv)*Special rule where current liability not certified for pre-effective plan year.* In any case in which the plan's enrolled actuary has not issued a certification under paragraph (h)(4)(i) of this section of the adjusted funding target attainment percentage of the plan for the pre-effective plan year, the adjusted funding target attainment percentage of the plan for the first effective plan year is presumed to be less than 60 percent until the adjusted funding target attainment percentage of the plan for the pre-effective plan year has been certified. The preceding sentence applies for purposes of paragraphs
(b)and
(c)of this section at the beginning of the first effective plan year and applies for purposes of paragraphs
(d)and
(e)of this section as of the first day of the 4th month of the first effective plan year. See paragraph
(h)of this section for rules that apply after the adjusted funding target percentage for the plan has been certified for either the pre-effective plan year or the first effective plan year.
(4)*Section 436 measurement date.* The section 436 measurement date is the date that is used to stop or start the application of the limitations of sections 436(d) and 436(e), and is also used for calculations with respect to applying the limitations of paragraphs
(b)and
(c)of this section. See paragraph
(h)of this section regarding section 436 measurement dates that result from application of the presumptions under that paragraph
(h)of this section.
(5)*Examples.* The following examples illustrate the application of this paragraph (j): Example 1.
(i)Plan S is a non-collectively bargained defined benefit plan with a plan year that is the calendar year and a valuation date of January 1. The first effective plan year is 2008.
(ii)As of January 1, 2008, Plan S has a value of plan assets (equal to the market value of assets) of $2,100,000 and a funding standard carryover balance of $200,000. During 2006, assets from Plan S were used to purchase a total of $100,000 in annuities for employees other than highly compensated employees. No annuities were purchased during 2007. On May 1, 2008, the enrolled actuary for the plan determines that the funding target as of January 1, 2008, is $2,500,000.
(iii)The adjusted value of assets for Plan S as of January 1, 2008, is $2,000,000 (that is, plan assets of $2,100,000 plus annuity purchases of $100,000 minus the funding standard carryover balance of $200,000). The adjusted funding target is $2,600,000 (that is, the funding target of $2,500,000, increased by the annuity purchases of $100,000).
(iv)Based on the above adjusted plan assets and adjusted funding target, the AFTAP as of January 1, 2008, would be 76.92%. Since the AFTAP is less than 80% but is at least 60%, Plan S is subject to the restrictions in paragraph (d)(3) of this section. Example 2.
(i)The facts are the same as in *Example 1* , except that it is reasonable to expect that the plan sponsor will make a contribution of $80,000 to Plan S for the 2007 plan year by September 15, 2008. This amount is in excess of the minimum required contribution for 2007. The plan sponsor elects to reduce the funding standard carryover balance by $80,000.
(ii)Because it is reasonable to expect that the $80,000 will be contributed by the plan sponsor, that amount is taken into account when the enrolled actuary certifies the 2008 AFTAP under the special rule in paragraph (h)(4)(i)(B) of this section for plan years beginning before 2009. Accordingly, the enrolled actuary for the plan certifies the 2008 AFTAP as 80% (that is, adjusted plan assets of $2,080,000, reflecting the $80,000 in contributions receivable, divided by the adjusted funding target of $2,600,000).
(iii)The ability to take contributions into account before they are actually paid to the plan is available only for plan years beginning before 2009. Furthermore, if the employer does not actually make the contribution and the difference between the incorrect certification and the corrected AFTAP constitutes a material change, the plan will have violated section 401(a)(29) or will not have been operated in accordance with its terms. Example 3.
(i)Plan R is a defined benefit plan with a plan year that is the calendar year and a valuation date of January 1. The first effective plan year for Plan R is 2008. The valuation interest rate for the 2007 plan year for Plan R is 7%. The fair market value of assets of Plan R as of January 1, 2007, is $1,000,000. The actuarial value of assets of Plan R as of January 1, 2007, is $1,200,000. The current liability of Plan R as of January 1, 2007, is $1,500,000. The funding standard account credit balance as of January 1, 2007, is $80,000. The funding standard carryover balance of Plan R is $50,000 as of the beginning of the 2008 plan year. The sponsor of Plan R, Sponsor T, elects in 2008 to reduce the funding standard carryover balance in accordance with § 1.430(f)-1 by $45,000.
(ii)Pursuant to paragraph (j)(2)(iii)(B)( *1* ) of this section, the asset value used to determine the funding target attainment percentage
(FTAP)for the 2007 plan year is limited to 110% of the fair market value of assets on January 1, 2007, or $1,100,000 (110% of $1,000,000).
(iii)Pursuant to paragraph (j)(2)(iii)(B)( *2* ) of this section, the funding standard account credit balance as of January 1, 2007, is subtracted from the asset value used to determine the FTAP for the 2007 plan year. However, pursuant to paragraph (j)(2)(iii)(B)( *3* ) of this section, the present value of the amount by which Sponsor T elected to reduce the funding standard carryover balance in 2008 is not subtracted.
(iv)The present value, determined at an interest rate of 7%, of the $45,000 reduction in the funding standard account carryover balance elected by Sponsor T in 2008 is $42,056. Thus, $42,056 is not subtracted from the 2007 plan year asset value. Accordingly, the funding standard account credit balance that is subtracted from the 2007 plan year asset value is $37,944 (that is, $80,000 less $42,056).
(v)Thus, the asset value that is used to determine the FTAP for the 2007 plan year is $1,100,000 less $37,944, or $1,062,056. Accordingly, for purposes of this section, the FTAP for the 2007 plan year for Plan R is 70.8% (that is, $1,062,056 divided by $1,500,000).
(k)*Effective/applicability dates* —(1) *In general.* In general, this section applies to plan years beginning on or after January 1, 2008.
(2)*Plans with delayed effective/applicability date.* In the case of a plan for which the effective date of section 436 is delayed in accordance with sections 104 through 106 of the Pension Protection Act of 2006, Public Law 109-280, 120 Stat. 780, this section applies to plan years beginning on or after the effective date of section 436 with respect to the plan.
(3)*Collective bargaining exception* —(i) *In general.* In the case of a collectively bargained plan that is maintained pursuant to one or more collective bargaining agreements between employee representatives and one or more employers ratified before January 1, 2008, this section does not apply to plan years beginning before the earlier of—
(A)The date described in paragraph (k)(3)(ii) of this section; or
(B)January 1, 2010.
(ii)*Termination of collective bargaining agreement.* The date described in this paragraph (k)(3)(ii) is the later of—
(A)The date on which the last collective bargaining agreement relating to the plan terminates (determined in accordance with paragraph (k)(3)(iii) of this section and without regard to any extension thereof agreed to after August 17, 2006); or
(B)The first day of the first plan year to which this section would (but for this paragraph (k)(3)) apply.
(iii)*Treatment of certain plan amendments.* Any plan amendment made pursuant to a collective bargaining agreement relating to the plan which amends the plan solely to conform to any requirement added by section 436 is not treated as a termination of the collective bargaining agreement.
(iv)*Treatment of plans with both collectively bargained and non-collectively bargained employees.* In the case of a plan with respect to which a collective bargaining agreement applies to some, but not all, of the plan participants, the plan is considered a collectively bargained plan for purposes of this paragraph (k)(3) if it is considered a collectively bargained plan under the rules of paragraph (a)(5)(ii)(B) of this section.
(4)*First effective plan year.* For purposes of this section, the first effective plan year for a plan is the first plan year to which this section applies under paragraph (k)(1), (k)(2), or (k)(3) of this section.
(5)*Pre-effective plan year.* For purposes of this section, the pre-effective plan year for a plan is the last plan year beginning before the first effective date applicable under paragraph (k)(1), (k)(2), or (k)(3) of this section. Thus, except for plans with a delayed effective date under paragraph (k)(2) or (k)(3) of this section, the pre-effective plan year for a plan is the last plan year beginning before January 1, 2008. Kevin M. Brown, Deputy Commissioner for Services and Enforcement. [FR Doc. 07-4262 Filed 8-28-07; 8:45 am]
Connectionstraces to 8
9 references not yet in our index
  • 34 CFR 350.13
  • 34 CFR 350.40(a)
  • 34 CFR 350.40(b)
  • 34 CFR 350
  • 26 CFR 1
  • Pub. L. 109-280
  • 120 Stat. 780
  • Rev. Proc. 2007-44
  • Pub. L. 110-28
Citation graph
cites case law
Rules and Regulations
Notice of proposed priorities for DRRPs, RRTCs, and RERCs
Fed. Reg.Notices
C.F.R.§ 75.105
Fed. Reg.Proposed Rules
Fed. Reg.Notices
U.S.C.§ 762
U.S.C.§ 3507
U.S.C.§ 6103
U.S.C.§ 7805
Cite34 CFR 350.13
Cite34 CFR 350.40(a)
Cite34 CFR 350.40(b)
Cite34 CFR 350
Cites 17 · showing 12Cited by 0 across 0 sources
★   the supreme law of the land   ★
Don't Tread on Me
E Pluribus Unum — out of many, one

"If you don't know your rights, you don't have any."

Marginalia · a citizen's law index
A research desk, not legal advice. Always read the cited source before relying on a summary.
Questions or an issue? support@self-law.org
disclaimerMarginalia is a research index, not a law firm. Nothing on this site is legal, tax, or financial advice and no attorney–client relationship is formed by using it. Statutes, regulations, and case law change; summaries, search results, AI output, and member posts may be incomplete, out of date, or wrong. Any interpretation drawn from material on this site should be validated by a licensed attorney in your jurisdiction before you act on it.