What procedure does the PBGC follow in an involuntary distress termination?
When the PBGC seeks to terminate a plan involuntarily, it files suit in federal district court. In the lawsuit, the PBGC seeks to obtain a termination of the plan effective on a proposed termination date and to take over the plan and its assets as trustee. 7. If the PBGC takes over a defined benefit plan as a result of a distress termination, either voluntary or involuntary, what benefits are paid to participants and retirees? When a defined benefit plan is terminated in a distress termination, the covered employees cease to earn any additional benefits under the plan as of a specified termination date. The extent to which the plan will pay benefits that have accrued prior to the date of termination is determined according to specified rules that establish priorities and impose certain limits upon benefits guaranteed under the PBGC insurance system. Under these rules, the PBGC allocates plan assets to various categories of benefits in a stated order of priority until the assets are exh
