I dont believe we have done any plan terminations for PBGC covered plans yet. We are familiar with the process (notices, timing etc), but don't completely understand ERISA 4044.

ERISA 4044 deals with the allocation of assets upon plan termination. "Allocation priorities" seems to mean you do not have sufficient assets to pay all liabilities and therefore you allocate scarce assets based on certain priorities. We understand this for a non-covered plan, but a covered plan only has two options:

1 Standard termination - in this case assets must be sufficient to pay benefits and then why would you need allocation priorities?

2 Distress termination - in this case the PBGC takes over the plan and pays benefits up to the guaranteed level.

Any enlightenment would be greatly appreciated.

Oversimplified:
Standard termination means you pay all benefits accrued up till the freeze date. The plan will purchase annuities and/or make lump sum distributions. If plan assets are not currently sufficient, the sponsor agrees to fully fund any "shortfall". Read the instructions on the PBGC website. Scheduling is important.

Distress termination means the plan does not have sufficient assets, and the sponsor is unable to fund the shortfall. The instructions for a distress termination will use the word "bankruptcy" several times, so that you probably can't have a DT without also having a bankruptcy (I told you this was oversimplified).

I've had a couple of DT's, but the financial circumstances of the sponsor was so bad, that the PBGC did an "involuntary termination", the result of which is similar to a DT.