29 Cfr 2530.203-3

10/23/2020

29 CFR § 2530.203-3 - Suspension of pension benefits upon employment. | CFR | US Law | LII / Legal Information Institute

29 CFR § 2530.203-3 - Suspension of pension benefits
upon employment.
CFR

§ 2530.203-3 Suspension of pension benefits upon
employment.
(a) General. Section 203(a)(3)(B) of the Act provides that the right to the
employer-derived portion of an accrued pension benefit shall not be treated as
forfeitable solely because an employee pension benefit plan provides that the
payment of benefits is suspended during certain periods of reemployment
which occur subsequent to the commencement of payment of such benefits.
This section sets forth the circumstances and conditions under which such
benefit payments may be suspended. A plan may provide for the suspension
of pension benefits which commence prior to the attainment of normal
retirement age, or for the suspension of that portion of pension benefits which
exceeds the normal retirement benefit, or both, for any reemployment and
without regard to the provisions of section 203(a)(3)(B) and this regulation to
the extent (but only to the extent) that suspension of such benefits does not
affect a retiree's entitlement to normal retirement benefits payable after
attainment of normal retirement age, or the actuarial equivalent thereof.
(b) Suspension rules (1) General rule. A plan may provide for the permanent withholding of an
amount which does not exceed the suspendible amount of an employee's
accrued benefit for each calendar month, or for each four or five week
payroll period ending in a calendar month, during which an employee is
employed in “section 203(a)(3)(B) service” as described in § 2530.203-3(c).
(2) Resumption of payments. If benefit payments have been suspended
pursuant to paragraph (b)(1) of this section, payments shall resume no later
than the first day of the third calendar month after the calendar month in
which the employee ceases to be employed in section 203(a)(3)(B) service:
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29 CFR § 2530.203-3 - Suspension of pension benefits upon employment. | CFR | US Law | LII / Legal Information Institute

Provided, That the employee has complied with any reasonable procedure
adopted by the plan for notifying the plan that he has ceased such
employment. The initial payment upon resumption shall include the
payment scheduled to occur in the calendar month when payments resume
and any amounts withheld during the period between the cessation of
employment and the resumption of payments, less any amounts which are
subject to offset.
(3) Offset rules. A plan which provides for the permanent withholding of
benefits may deduct from benefit payments to be made by the plan
payments previously made by the plan during those calendar months or pay
periods in which the employee was employed in section 203(a)(3)(B)
service, Provided, That such deduction or offset does not exceed in any one
month 25 percent of that month's total benefit payment which would have
been due but for the offset (excluding the initial payment described in
paragraph (b)(2) of this section, which may be subject to offset without
limitation).
(4) Notification. No payment shall be withheld by a plan pursuant to this
section unless the plan notifies the employee by personal delivery or first
class mail during the first calendar month or payroll period in which the plan
withholds payments that his benefits are suspended. Such notification shall
contain a description of the specific reasons why benefit payments are being
suspended, a general description of the plan provisions relating to the
suspension of payments, a copy of such provisions, and a statement to the
effect that applicable Department of Labor regulations may be found in §
2530.203-3 of the Code of Federal Regulations. In addition, the suspension
notification shall inform the employee of the plan's procedure for affording a
review of the suspension of benefits. Requests for such reviews may be
considered in accordance with the claims procedure adopted by the plan
pursuant to section 503 of the Act and applicable regulations. In the case of
a plan which requires the filing of a benefit resumption notice as a condition
precedent to the resumption of benefits, the suspension notification shall
also describe the procedure for filing such notice and include the forms (if
any) which must be filed. Furthermore, if a plan intends to offset any
suspendible amounts actually paid during the periods of employment in
section 203(a)(3)(B) service, the notification shall identify specifically the
periods of employment, the suspendible amounts which are subject to
offset, and the manner in which the plan intends to offset such suspendible
amounts. Where the plan's summary plan description (SPD) contains
information which is substantially the same as information required by this
paragraph (b)(4), the suspension notification may refer the employee to
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29 CFR § 2530.203-3 - Suspension of pension benefits upon employment. | CFR | US Law | LII / Legal Information Institute

relevant pages of the SPD for information as to a particular item, provided
the employee is informed how to obtain a copy of the SPD, or relevant
pages thereof, and provided requests for referenced information are
honored within a reasonable period of time, not to exceed 30 days.
(5) Verification. A plan may provide that an employee must notify the
plan of any employment. A plan may request from an employee access to
reasonable information for the purpose of verifying such employment.
Furthermore, a plan may provide that an employee must, at such time and
with such frequency as may be reasonable, as a condition to receiving
future benefit payments, either certify that he is unemployed or provide
factual information sufficient to establish that any employment does not
constitute section 203(a)(3)(B) service if specifically requested by the plan
administrator. Once an employee has furnished the required certification or
information, the plan must forward, at the next regularly scheduled time for
payment of benefits, all payments which had been withheld pursuant to this
paragraph (b)(5) except to the extent that payments may be withheld and
offset pursuant to other provisions of this regulation.
(6) Status determination. If a plan provides for benefits suspension, the
plan shall adopt a procedure, and so inform employees, whereunder an
employee may request, and the plan administrator in a reasonable amount
of time will render, a determination of whether specific contemplated
employment will be section 203(a)(3)(B) service for purposes of plan
provisions concerning suspension of benefits. Requests for status
determinations may be considered in accordance with the claims procedure
adopted by the plan pursuant to section 503 of the Act and applicable
regulations.
(7) Presumptions.
(i) A plan which has adopted verification requirements described in
paragraph (b)(5) of this section, and which complies with the notice
requirements set forth in paragraph (b)(7)(ii) of this section may provide
that whenever the plan fiduciaries become aware that a retiree is
employed in section 203(a)(3)(B) service and the retiree has not complied
with the plan's reporting requirements with regard to that employment,
the plan fiduciaries may, unless it is unreasonable under the
circumstances to do so, act on the basis of a rebuttable presumption that
the retiree had worked a period exceeding the plan's minimum number of
hours for that month. In addition, a plan covering persons employed in
the building trades which has adopted verification requirements described
in paragraph (b)(5) of this section and which complies with the notice
requirements set forth in paragraph (b)(7)(ii) of this section may provide
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29 CFR § 2530.203-3 - Suspension of pension benefits upon employment. | CFR | US Law | LII / Legal Information Institute

that whenever the plan fiduciaries become aware that a retiree is
employed in section 203(a)(3)(B) service at a construction site and the
retiree has not complied with the plan's reporting requirements with
regard to that employment, then the plan fiduciaries may, unless it is
unreasonable under the circumstances to do so, act on the basis of a
rebuttable presumption that the retiree engaged in such employment for
the same employer in work at that site for so long before the work in
question as that same employer performed that work at that construction
site.
(ii) A plan which provides for a presumption described in paragraph (b)
(7)(i) of this section may employ such presumption only if the following
requirements are met. The plan must describe its employment verification
requirements and the nature and effect of such presumption in the plan's
summary plan description and in any communication to plan participants
which relates to such verification requirements (for example, employment
reporting reminders or forms), and retirees must be furnished such
disclosure, whether through receipt of the above communications or by
special distribution, at least once every 12 months.
(c) Section 202(a)(3)(B) service (1) Plans other than multiemployer plans. In the case of a plan other
than a multi-employer plan, as defined in section 3(37) of the Act, the
employment of an employee, subsequent to the time the payment of
benefits commenced or would have commenced if the employee had not
remained in or returned to employment, results in section 203(a)(3)(B)
service during a calendar month, or during a four or five week payroll period
ending in a calendar month, if the employee, in such month or payroll
period,
(i) Completes 40 or more hours of service (as defined in 29 CFR
2530.200b-2(a)(1) and (2)) for an employer which maintains the plan,
including employers described in § 2530.210 (d) and (e), as of the time
that the payment of benefits commenced or would have commenced if the
employee had not remained in or returned to employment; or
(ii) Receives from such employer payment for any such hours of service
performed on each of 8 or more days (or separate work shifts) in such
month or payroll period, Provided, That the plan has not for any purpose
determined or used the actual number of hours of service which would be
required to be credited to the employee under § 2530.200b-(2)(a).

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29 CFR § 2530.203-3 - Suspension of pension benefits upon employment. | CFR | US Law | LII / Legal Information Institute

(2) Multiemployer plans. In the case of a multiemployer plan, as defined
in section 3(37) of the Act, the employment of an employee subsequent to
the time the payment of benefits commenced or would have commenced if
the employee had not remained in or returned to employment results in
section 203(a)(3)(B) service during a calendar month, or during a four or
five week payroll period ending in a calendar month, if the employee, in
such month or payroll period:
- Completes 40 or more hours of service (as defined in § 2530.200b-2(a)(1)
and (2)) or
- Receives payment for any such hours of service performed on each of 8 or
more days (or separate work shifts) in such month or payroll period, Provided,
That the plan has not for any purpose determined or used the actual number
of hours of service which would be required to be credited to the employee
under § 2530.200(b)-(2)(a); in
- An industry in which employees covered by the plan were employed and
accrued benefits under the plan as a result of such employment at the time
that the payment of benefits commenced or would have commenced if the
employee had not remained in or returned to employment, and
- A trade or craft in which the employee was employed at any time under the
plan, and
- The geographic area covered by the plan at the time that the payment of
benefits commenced or would have commenced if the employee had not
remained in or returned to employment.

(i) Industry. The term “industry” means the business activities of the
types engaged in by any employers maintaining the plan.
E

.

One of the employers contributing to a multiemployer plan engages in
heavy construction, another in textile manufacturing, and another in
communications. Employee E began his career as an employee of an
employer engaged in heavy construction. Later E was employed by an
employer in communications. With both employers, E accrued benefits
under the plan. If E retires and then becomes reemployed in the same
trade or craft and in the same geographic area, employment by E in
either heavy construction, communications or textile manufacturing,
whether or not with an employer who contributes to the plan or in a
self-employed capacity, may be considered by the plan to be
employment in the same industry, assuming that employees covered by
the plan were accruing benefits as a result of employment in these
industries at the time E commenced receiving benefits. This is true even
though E did not previously accrue benefits as a result of employment
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29 CFR § 2530.203-3 - Suspension of pension benefits upon employment. | CFR | US Law | LII / Legal Information Institute

with an employer engaged in textile manufacturing because other
employees covered by the plan were employed in that industry and
were accruing benefits under the plan as a result of such employment at
the time when benefit payments to E commenced or would have
commenced if E had not returned to employment.
(ii) Trade or craft. A trade or craft is (A) a skill or skills, learned during a
significant period of training or practice, which is applicable in occupations in
some industry, (B) a skill or skills relating to selling, retailing, managerial,
clerical or professional occupations, or (C) supervisory activities relating to a
skill or skills described in (A) or (B) of this paragraph (c)(2)(ii). For purposes
of this paragraph (c)(2)(ii), the determination whether a particular job
classification, job description or industrial occupation constitutes or is included
in a trade or craft shall be based upon the facts and circumstances of each
case. Factors which may be examined include whether there is a customary
and substantial period of practical, on-the-job training or a period of related
supplementary instruction. Notwithstanding any other factor, the registration
of an apprenticeship program with the Bureau of Apprenticeship and Training
of the Employment Training Administration of the U.S. Department of Labor is
sufficient for the conclusion that a skill or skills which is the subject of the
apprenticeship program constitutes a trade or craft.
E
.
Participation in a multiemployer plan is limited solely to electricians.
Electrician E retired and then became reemployed as a foreman of
electricians. Because a “trade or craft” includes related supervisory
activities, E remains within his trade or craft for purposes of this section.
(iii) Geographic area covered by the plan.
(A) With the exception of a plan covering employees in a maritime
industry, the “geographic area covered by the plan” consists of any state
or any province of Canada in which contributions were made or were
required to be made by or on behalf of an employer and the remainder
of any Standard Metropolitan Statistical Area (SMSA) which falls in part
within such state, determined as of the time that the payment of
benefits commenced or would have commenced if the employee had not
returned to employment.
E
.
A multiemployer plan covers plumbers in Pennsylvania. All contributing
employers have always been located within Pennsylvania. Accordingly,
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29 CFR § 2530.203-3 - Suspension of pension benefits upon employment. | CFR | US Law | LII / Legal Information Institute

the “geographic area covered by the plan” consists of Pennsylvania and
any SMSAs which fall in part within Pennsylvania. Thus, for example, in
the case of the Philadelphia SMSA, Burlington, Camden and Gloucester
Counties in New Jersey are within the “geographic area covered by the
plan”.
(B) [Reserved - for definition of the geographic area covered by a plan
that covers employees in a maritime industry.]
For purposes of this paragraph (c)(2)(iii), contributions shall not include
amounts contributed: After December 31, 1978 by or on hehalf of an
employer where no contributions were made by or on behalf of that employer
before that date, if the primary purpose of such contribution is to allow for the
suspension of plan benefits in a geographic area not otherwise covered by the
plan; or with respect to isolated projects performed in states where plan
participants were not otherwise employed.
(3) Employment in a maritime industry. For plans covering employees
employed in a maritime industry, as defined in § 2530.200b-6, the standard
of “five or more days of service, as defined in § 2530.200b-7(a)(1)” shall be
used in lieu of the standard “40 or more hours of service”, for purposes of
determining whether an employee is employed in section 203(a)(3)(B)
service.
(d) Suspendable amount (1) Life annuity. In the case of benefits payable periodically on a monthly
basis for as long as a life (or lives) continues, such as a straight life annuity
or a qualified joint and survivor annuity, a plan may provide that an amount
not greater than the portion of a monthly benefit payment derived from
employer contributions may be withheld permanently for a calendar month,
or for a four or five week payroll period ending in a calendar month, in
which the employee is employed in section 203(a)(3)(B) service.
(2) Other benefit forms. In the case of benefits payable in a form other
than the form described in paragraph (d)(1) of this section, a plan may
provide for the permanent withholding of an amount of the employerderived portion of benefit payments for a calendar month, or for a four or
five week payroll period ending in a calendar month, in which the employee
is employed in section 203(a)(3)(B) service, not exceeding the lesser of (i) The amount of benefits which would have been payable to the
employee if he had been receiving monthly benefits under the plan since
actual retirement based on a single life annuity commencing at actual
retirement age; or

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(ii) The actual amount paid or scheduled to be paid to the employee for
such month. Payments which are scheduled to be paid less frequently
than monthly may be converted to monthly payments for purposes of this
paragraph (d)(2)(ii).
(Approved by the Office of Management and Budget under control number
1210-0048)
[46 FR 8903, Jan. 27, 1981, as amended at 46 FR 59245, Dec. 4, 1981; 46
FR 60572, Dec. 11, 1981; 49 FR 18295, Apr. 30, 1984]

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