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PBGC to Amend Multiemployer Plan Rules

Government Affairs


The Pension Benefit Guaranty Corporation (PBGC) has issued proposed amendments to its regulations on allocating unfunded vested benefits to withdrawing employers and notice, collection, and redetermination of withdrawal liability.

The PBGC says that these amendments are needed in order to implement statutory changes affecting the determination of an employer's withdrawal liability and annual withdrawal liability payment amount when the employer withdraws from a multiemployer plan. The proposed regulation would provide simplified methods for determining withdrawal liability and annual payment amounts. A multiemployer plan sponsor could adopt these simplified methods to satisfy the statutory requirements and to reduce administrative burden.

The proposed amendments would provide guidance and simplified methods by which plan sponsors can disregard:

  • reductions and suspensions of nonforfeitable benefits in determining the plan’s unfunded vested benefits for purposes of calculating withdrawal liability;
  • certain contribution increases if the plan is using the presumptive, modified presumptive and rolling-5 methods to determine the allocation of unfunded vested benefits to an employer; and
  • certain contribution increases for determining an employer’s annual withdrawal liability payment.

The proposed regulation also would add a new §4211.14 to the unfunded vested benefits allocation regulation to provide a choice of one simplified method for the numerator and two simplified methods for the denominator of the allocation fraction that a plan sponsor could adopt to satisfy the requirements of Section 305(g)(3) of ERISA to disregard contribution increases in determining the allocation of unfunded vested benefits. A plan amended to use one or more of the simplified methods in this section must also apply the rules to disregard surcharges under proposed §4211.4.

Applicability

The changes related to the simplified methods for determining an employer’s share of unfunded vested benefits and an employer’s annual withdrawal liability payment would be applicable to employer withdrawals from multiemployer plans that occur on or after the effective date of the final rule.

The changes related to the Multiemployer Pension Reform Act benefit suspensions and contribution increases for determining an employer’s withdrawal liability would apply to plan years beginning after Dec. 31, 2014, and to surcharges the obligation for which accrue on or after Dec. 31, 2014.

The PBGC is accepting comments on the proposed amendments through April 8, 2019.