965.Agreement to Cover Foreign Affiliates

965.1When is the agreement to cover foreign affiliates effective?

The agreement to cover foreign affiliates is effective on the first day of the calendar quarter in which the agreement is approved by the Internal Revenue Service; or the first day of the following calendar quarter. The American employer chooses the effective date of coverage.

965.2Can the agreement be amended?

The agreement may be amended to include any other foreign affiliate of the American employer. However, coverage of the new group is effective only as of the first day of the calendar quarter in which the agreement is amended.

965.3Can the agreement be terminated?

Effective June 15, 1989, an agreement to cover foreign affiliates may no longer be terminated by the employer.

Prior to June 15, 1989, a coverage agreement could be terminated by the American employer, but only after giving two years' notice of intention to terminate. Further, notice of intention to terminate could be given only after the agreement had been in existence for eight years. Thus, at least 10 years of Social Security coverage was assured. (However, the Secretary of the Treasury could terminate the agreement sooner.)

If, prior to June 15, 1989, an agreement was terminated in whole, the American employer may not again obtain coverage for any of its foreign affiliates. An agreement terminated with respect to one affiliate may not be reinstated with respect to that particular affiliate.