General rule
Determination of endangered and critical status
Endangered status
Critical status
Annual certification by plan actuary
In general
Actuarial projections of assets and liabilities
In general
Determinations of future contributions
Projected industry activity
Any projection of activity in the industry or industries covered by the plan, including future covered employment and contribution levels, shall be based on information provided by the plan sponsor, which shall act reasonably and in good faith.
Projections relating to critical status in succeeding plan years
Clauses (i) and (ii) (other than the 2nd sentence of clause (i)) may be disregarded by a plan actuary in the case of any certification of whether a plan will be in critical status in a succeeding plan year, except that a plan sponsor may not elect to be in critical status for a plan year under paragraph (4) in any case in which the certification upon which such election would be based is made without regard to such clauses.
Projections of critical and declining status
Penalty for failure to secure timely actuarial certification
Any failure of the plan’s actuary to certify the plan’s status under this subsection by the date specified in subparagraph (A) shall be treated for purposes of section 502(c)(2) of the Employee Retirement Income Security Act of 1974 as a failure or refusal by the plan administrator to file the annual report required to be filed with the Secretary under section 101(b)(1) of such Act.
Notice
In general
In any case in which it is certified under subparagraph (A) that a multiemployer plan is or will be in endangered or critical status for a plan year or in which a plan sponsor elects to be in critical status for a plan year under paragraph (4), the plan sponsor shall, not later than 30 days after the date of the certification, provide notification of the endangered or critical status to the participants and beneficiaries, the bargaining parties, the Pension Benefit Guaranty Corporation, and the Secretary of Labor. In any case in which a plan sponsor elects to be in critical status for a plan year under paragraph (4), the plan sponsor shall notify the Secretary of such election not later than 30 days after the date of such certification or such other time as the Secretary may prescribe by regulations or other guidance.
Plans in critical status
Model notice
The Secretary, in consultation with the Secretary of Labor, shall prescribe a model notice that a multiemployer plan may use to satisfy the requirements under clauses (ii) and (iii).
Notice of projection to be in critical status in a future plan year
In any case in which it is certified under subparagraph (A)(i) that a multiemployer plan will be in critical status for any of 5 succeeding plan years (but not for the current plan year) and the plan sponsor of such plan has not made an election to be in critical status for the plan year under paragraph (4), the plan sponsor shall, not later than 30 days after the date of the certification, provide notification of the projected critical status to the Pension Benefit Guaranty Corporation.
Election to be in critical status
Special rule
Critical and declining status
For purposes of this section, a plan in critical status shall be treated as in critical and declining status if the plan is described in one or more of subparagraphs (A), (B), (C), and (D) of paragraph (2) and the plan is projected to become insolvent within the meaning of section 418E during the current plan year or any of the 14 succeeding plan years (19 succeeding plan years if the plan has a ratio of inactive participants to active participants that exceeds 2 to 1 or if the funded percentage of the plan is less than 80 percent).
Plans receiving special financial assistance
If an eligible multiemployer plan receiving special financial assistance under section 4262 of the Employee Retirement Income Security Act of 1974 meets the requirements of subsection (k)(2), notwithstanding the preceding paragraphs of this subsection, the plan shall be deemed to be in critical status for plan years beginning with the plan year in which the effective date for such assistance occurs and ending with the last plan year ending in 2051.
Funding improvement plan must be adopted for multiemployer plans in endangered status
In general
Exception for years after process begins
Paragraph (1) shall not apply to a plan year if such year is in a funding plan adoption period or funding improvement period by reason of the plan being in endangered status for a preceding plan year. For purposes of this section, such preceding plan year shall be the initial determination year with respect to the funding improvement plan to which it relates.
Funding improvement plan
In general
Increase in plan’s funding percentage
Avoidance of accumulated funding deficiencies
No accumulated funding deficiency for the last plan year during the funding improvement period (taking into account any extension of amortization periods under section 431(d)).
Seriously endangered plans
In the case of a plan in seriously endangered status, except as provided in paragraph (5), subparagraph (A)(i)(II) shall be applied by substituting “20 percent” for “33 percent”.
Funding improvement period
In general
Seriously endangered plans
In the case of a plan in seriously endangered status, except as provided in paragraph (5), subparagraph (A) shall be applied by substituting “15-year period” for “10-year period”.
Coordination with changes in status
Plans no longer in endangered status
If the plan’s actuary certifies under subsection (b)(3)(A) for a plan year in any funding plan adoption period or funding improvement period that the plan is no longer in endangered status and is not in critical status, the funding plan adoption period or funding improvement period, whichever is applicable, shall end as of the close of the preceding plan year.
Plans in critical status
If the plan’s actuary certifies under subsection (b)(3)(A) for a plan year in any funding plan adoption period or funding improvement period that the plan is in critical status, the funding plan adoption period or funding improvement period, whichever is applicable, shall end as of the close of the plan year preceding the first plan year in the rehabilitation period with respect to such status.
Plans in endangered status at end of period
If the plan’s actuary certifies under subsection (b)(3)(A) for the first plan year following the close of the period described in subparagraph (A) that the plan is in endangered status, the provisions of this subsection and subsection (d) shall be applied as if such first plan year were an initial determination year, except that the plan may not be amended in a manner inconsistent with the funding improvement plan in effect for the preceding plan year until a new funding improvement plan is adopted.
Special rules for seriously endangered plans more than 70 percent funded
In general
Special rule after expiration of agreements
Notwithstanding subparagraph (A)(ii), if, for any plan year ending after the date described in subparagraph (A)(ii), the plan actuary certifies (at the time of the annual certification under subsection (b)(3)(A) for such plan year) that, based on the terms of the plan and collective bargaining agreements in effect at the time of that annual certification, the plan is not projected to be able to meet the requirements of paragraph (3)(A) (without regard to paragraphs (3)(B) and (4)(B)), paragraphs (3)(B) and (4)(B) shall continue to apply for such year.
Updates to funding improvement plans and schedules
Funding improvement plan
The plan sponsor shall annually update the funding improvement plan and shall file the update with the plan’s annual report under section 104 of the Employee Retirement Income Security Act of 1974.
Schedules
The plan sponsor shall annually update any schedule of contribution rates provided under this subsection to reflect the experience of the plan.
Duration of schedule
A schedule of contribution rates provided by the plan sponsor and relied upon by bargaining parties in negotiating a collective bargaining agreement shall remain in effect for the duration of that collective bargaining agreement.
Imposition of schedule where failure to adopt funding improvement plan
Initial contribution schedule
Subsequent contribution schedule
Date of implementation
The date specified in this subparagraph is the date which is 180 days after the date on which the collective bargaining agreement described in subparagraph (A) or (B) expires.
Funding plan adoption period
For purposes of this section, the term “funding plan adoption period” means the period beginning on the date of the certification under subsection (b)(3)(A) for the initial determination year and ending on the day before the first day of the funding improvement period.
Rules for operation of plan during adoption and improvement periods
Compliance with funding improvement plan
In general
A plan may not be amended after the date of the adoption of a funding improvement plan under subsection (c) so as to be inconsistent with the funding improvement plan.
Special rules for benefit increases
A plan may not be amended after the date of the adoption of a funding improvement plan under subsection (c) so as to increase benefits, including future benefit accruals, unless the plan actuary certifies that such increase is paid for out of additional contributions not contemplated by the funding improvement plan, and, after taking into account the benefit increase, the multiemployer plan still is reasonably expected to meet the applicable benchmark on the schedule contemplated in the funding improvement plan.
Special rules for plan adoption period
Rehabilitation plan must be adopted for multiemployer plans in critical status
In general
Exception for years after process begins
Paragraph (1) shall not apply to a plan year if such year is in a rehabilitation plan adoption period or rehabilitation period by reason of the plan being in critical status for a preceding plan year. For purposes of this section, such preceding plan year shall be the initial critical year with respect to the rehabilitation plan to which it relates.
Rehabilitation plan
In general
Updates to rehabilitation plan and schedules
Rehabilitation plan
The plan sponsor shall annually update the rehabilitation plan and shall file the update with the plan’s annual report under section 104 of the Employee Retirement Income Security Act of 1974.
Schedules
The plan sponsor shall annually update any schedule of contribution rates provided under this subsection to reflect the experience of the plan.
Duration of schedule
A schedule of contribution rates provided by the plan sponsor and relied upon by bargaining parties in negotiating a collective bargaining agreement shall remain in effect for the duration of that collective bargaining agreement.
Imposition of schedule where failure to adopt rehabilitation plan
Initial contribution schedule
Subsequent contribution schedule
Date of implementation
The date specified in this subparagraph is the date which is 180 days after the date on which the collective bargaining agreement described in clause (ii) or (iii) expires.
Rehabilitation period
In general
Emergence
In general
Plans with certain amortization extensions
Special emergence rule
Reentry into critical status
Rehabilitation plan adoption period
For purposes of this section, the term “rehabilitation plan adoption period” means the period beginning on the date of the certification under subsection (b)(3)(A) for the initial critical year and ending on the day before the first day of the rehabilitation period.
Limitation on reduction in rates of future accruals
Automatic employer surcharge
Imposition of surcharge
Each employer otherwise obligated to make a contribution for the initial critical year shall be obligated to pay to the plan for such year a surcharge equal to 5 percent of the contribution otherwise required under the applicable collective bargaining agreement (or other agreement pursuant to which the employer contributes). For each succeeding plan year in which the plan is in critical status for a consecutive period of years beginning with the initial critical year, the surcharge shall be 10 percent of the contribution otherwise so required.
Enforcement of surcharge
The surcharges under subparagraph (A) shall be due and payable on the same schedule as the contributions on which the surcharges are based. Any failure to make a surcharge payment shall be treated as a delinquent contribution under section 515 of the Employee Retirement Income Security Act of 1974 and shall be enforceable as such.
Surcharge to terminate upon collective bargaining agreement renegotiation
The surcharge under this paragraph shall cease to be effective with respect to employees covered by a collective bargaining agreement (or other agreement pursuant to which the employer contributes), beginning on the effective date of a collective bargaining agreement (or other such agreement) that includes terms consistent with a schedule presented by the plan sponsor under paragraph (1)(B)(i), as modified under subparagraph (B) of paragraph (3).
Surcharge not to apply until employer receives notice
The surcharge under this paragraph shall not apply to an employer until 30 days after the employer has been notified by the plan sponsor that the plan is in critical status and that the surcharge is in effect.
Surcharge not to generate increased benefit accruals
Notwithstanding any provision of a plan to the contrary, the amount of any surcharge under this paragraph shall not be the basis for any benefit accrual under the plan.
Benefit adjustments
Adjustable benefits
In general
Notwithstanding section 411(d)(6), the plan sponsor shall, subject to the notice requirement under subparagraph (C), make any reductions to adjustable benefits which the plan sponsor deems appropriate, based upon the outcome of collective bargaining over the schedule or schedules provided under paragraph (1)(B)(i).
Exception for retirees
Except in the case of adjustable benefits described in clause (iv)(III), the plan sponsor of a plan in critical status shall not reduce adjustable benefits of any participant or beneficiary whose benefit commencement date is before the date on which the plan provides notice to the participant or beneficiary under subsection (b)(3)(D) for the initial critical year.
Plan sponsor flexibility
The plan sponsor shall include in the schedules provided to the bargaining parties an allowance for funding the benefits of participants with respect to whom contributions are not currently required to be made, and shall reduce their benefits to the extent permitted under this title and considered appropriate by the plan sponsor based on the plan’s then current overall funding status.
Adjustable benefit defined
Normal retirement benefits protected
Except as provided in subparagraph (A)(iv)(III), nothing in this paragraph shall be construed to permit a plan to reduce the level of a participant’s accrued benefit payable at normal retirement age.
Notice requirements
In general
Content of notice
Form and manner
Benefit suspensions for multiemployer plans in critical and declining status
In general
Notwithstanding section 411(d)(6) and subject to subparagraphs (B) through (I), the plan sponsor of a plan in critical and declining status may, by plan amendment, suspend benefits which the sponsor deems appropriate.
Suspension of benefits
Suspension of benefits defined
For purposes of this subsection, the term “suspension of benefits” means the temporary or permanent reduction of any current or future payment obligation of the plan to any participant or beneficiary under the plan, whether or not in pay status at the time of the suspension of benefits.
Length of suspensions
Any suspension of benefits made under subparagraph (A) shall remain in effect until the earlier of when the plan sponsor provides benefit improvements in accordance with subparagraph (E) or the suspension of benefits expires by its own terms.
No liability
The plan shall not be liable for any benefit payments not made as a result of a suspension of benefits under this paragraph.
Applicability
For purposes of this paragraph, all references to suspensions of benefits, increases in benefits, or resumptions of suspended benefits with respect to participants shall also apply with respect to benefits of beneficiaries or alternative payees of participants.
Retiree representative
In general
In the case of a plan with 10,000 or more participants, not later than 60 days prior to the plan sponsor submitting an application to suspend benefits, the plan sponsor shall select a participant of the plan in pay status to act as a retiree representative. The retiree representative shall advocate for the interests of the retired and deferred vested participants and beneficiaries of the plan throughout the suspension approval process.
Reasonable expenses from plan
The plan shall provide for reasonable expenses by the retiree representative, including reasonable legal and actuarial support, commensurate with the plan’s size and funded status.
Special rule relating to fiduciary status
Duties performed pursuant to subclause (I) shall not be subject to section 4975. The preceding sentence shall not apply to those duties associated with an application to suspend benefits pursuant to subparagraph (G) that are performed by the retiree representative who is also a plan trustee.
Conditions for suspensions
Limitations on suspensions
Benefit improvements
In general
Equitable distribution of benefit improvements
Limitation
The projected value of the total liabilities for benefit improvements for participants and beneficiaries not in pay status by the date of the first day of the plan year in which the benefit improvements are proposed to take effect, as determined as of such date, may not exceed the projected value of the liabilities arising from benefit improvements for participants and beneficiaries with benefit commencement dates prior to the first day of such plan year, as so determined.
Equitable distribution of benefits
The plan sponsor shall equitably distribute any increase in total liabilities for benefit improvements in clause (i) to some or all of the participants and beneficiaries whose benefit commencement date is before the date of the first day of the plan year in which the benefit improvements are proposed to take effect, taking into account the relevant factors described in subparagraph (D)(vi) and the extent to which the benefits of the participants and beneficiaries were suspended.
Special rule for resumptions of benefits only for participants in pay status
The plan sponsor may increase liabilities of the plan through a resumption of benefits for participants and beneficiaries in pay status only if the plan sponsor equitably distributes the value of resumed benefits to some or all of the participants and beneficiaries in pay status, taking into account the relevant factors described in subparagraph (D)(vi).
Special rule for certain benefit increases
Additional limitations
Except for resumptions of suspended benefits described in clause (iii), the limitations on benefit improvements while a suspension of benefits is in effect under this paragraph shall be in addition to any other applicable limitations on increases in benefits imposed on a plan.
Definition of benefit improvement
For purposes of this subparagraph, the term “benefit improvement” means, with respect to a plan, a resumption of suspended benefits, an increase in benefits, an increase in the rate at which benefits accrue, or an increase in the rate at which benefits become nonforfeitable under the plan.
Notice requirements
In general
Content of notice
Form and manner
Other notice requirement
Any notice provided under clause (i) shall fulfill the requirement for notice of a significant reduction in benefits described in section 4980F.
Model notice
The Secretary of the Treasury, in consultation with the Pension Benefit Guaranty Corporation and the Secretary of Labor, shall in the guidance prescribed under clause (iii)(I) establish a model notice that a plan sponsor may use to meet the requirements of this subparagraph.
Approval process by the secretary of the treasury in consultation with the pension benefit guaranty corporation and the secretary of labor.—
In general
The plan sponsor of a plan in critical and declining status for a plan year that seeks to suspend benefits must submit an application to the Secretary of the Treasury for approval of the suspensions of benefits. If the plan sponsor submits an application for approval of the suspensions, the Secretary of the Treasury shall approve, in consultation with the Pension Benefit Guaranty Corporation and the Secretary of Labor, the application upon finding that the plan is eligible for the suspensions and has satisfied the criteria of subparagraphs (C), (D), (E), and (F).
Solicitation of comments
Not later than 30 days after receipt of the application under clause (i), the Secretary of the Treasury, in consultation with the Pension Benefit Guaranty Corporation and the Secretary of Labor, shall publish a notice in the Federal Register soliciting comments from contributing employers, employee organizations, and participants and beneficiaries of the plan for which an application was made and other interested parties. The application for approval of the suspension of benefits shall be published on the website of the Department of the Treasury.
Required action; deemed approval
section 704 of title 5The Secretary of the Treasury, in consultation with the Pension Benefit Guaranty Corporation and the Secretary of Labor, shall approve or deny any application for suspensions of benefits under this paragraph within 225 days after the submission of such application. An application for suspension of benefits shall be deemed approved unless, within such 225 days, the Secretary of the Treasury notifies the plan sponsor that it has failed to satisfy one or more of the criteria described in this paragraph. If the Secretary of the Treasury, in consultation with the Pension Benefit Guaranty Corporation and the Secretary of Labor, rejects a plan sponsor’s application, the Secretary of the Treasury shall provide notice to the plan sponsor detailing the specific reasons for the rejection, including reference to the specific requirement not satisfied. Approval or denial by the Secretary of the Treasury, in consultation with the Pension Benefit Guaranty Corporation and the Secretary of Labor, of an application shall be treated as final agency action for purposes of , United States Code.
Agency review
In evaluating whether the plan sponsor has met the criteria specified in clause (ii) of subparagraph (C), the Secretary of the Treasury, in consultation with the Pension Benefit Guaranty Corporation and the Secretary of Labor, shall review the plan sponsor’s consideration of factors under such clause.
Standard for accepting plan sponsor determinations
In evaluating the plan sponsor’s application, the Secretary of the Treasury shall accept the plan sponsor’s determinations unless it concludes, in consultation with the Pension Benefit Guaranty Corporation and the Secretary of Labor, that the plan sponsor’s determinations were clearly erroneous.
Participant ratification process
In general
No suspension of benefits may take effect pursuant to this paragraph prior to a vote of the participants of the plan with respect to the suspension.
Administration of vote
Not later than 30 days after approval of the suspension by the Secretary of the Treasury, in consultation with the Pension Benefit Guaranty Corporation and the Secretary of Labor, under subparagraph (G), the Secretary of the Treasury, in consultation with the Pension Benefit Guaranty Corporation and the Secretary of Labor, shall administer a vote of participants and beneficiaries of the plan. Except as provided in clause (v), the suspension shall go into effect following the vote unless a majority of all participants and beneficiaries of the plan vote to reject the suspension. The plan sponsor may submit a new suspension application to the Secretary of the Treasury for approval in any case in which a suspension is prohibited from taking effect pursuant to a vote under this subparagraph.
Ballots
Communication by plan sponsor
It is the sense of Congress that, depending on the size and resources of the plan and geographic distribution of the plan’s participants, the plan sponsor should take such steps as may be necessary to inform participants about proposed benefit suspensions through in-person meetings, telephone or internet-based communications, mailed information, or by other means.
Systemically important plans
In general
Recommendations
Not later than 30 days after a determination by the Secretary of the Treasury, in consultation with the Pension Benefit Guaranty Corporation and the Secretary of Labor, that the plan is systemically important, the Participant and Plan Sponsor Advocate selected under section 4004 of the Employee Retirement Income Security Act of 1974 may submit recommendations to the Secretary of the Treasury with respect to the suspension or any revisions to the suspension.
Systemically important plan defined
In general
For purposes of this subparagraph, a systemically important plan is a plan with respect to which the Pension Benefit Guaranty Corporation projects the present value of projected financial assistance payments exceeds $1,000,000,000 if suspensions are not implemented.
Indexing
For calendar years beginning after 2015, there shall be substituted for the dollar amount specified in item (aa) an amount equal to the product of such dollar amount and a fraction, the numerator of which is the contribution and benefit base (determined under section 230 of the Social Security Act) for the preceding calendar year and the denominator of which is such contribution and benefit base for calendar year 2014. If the amount otherwise determined under this item is not a multiple of $1,000,000, such amount shall be rounded to the next lowest multiple of $1,000,000.
Final authorization to suspend
In any case in which a suspension goes into effect following a vote pursuant to clause (ii) (or following a determination under clause (v) that the plan is a systemically important plan), the Secretary of the Treasury, in consultation with the Pension Benefit Guaranty Corporation and the Secretary of Labor, shall issue a final authorization to suspend with respect to the suspension not later than 7 days after such vote (or, in the case of a suspension that goes into effect under clause (v), at a time sufficient to allow the implementation of the suspension prior to the end of the 90-day period described in clause (v)(I)).
Judicial review
Denial of application
An action by the plan sponsor challenging the denial of an application for suspension of benefits by the Secretary of the Treasury, in consultation with the Pension Benefit Guaranty Corporation and the Secretary of Labor, may only be brought following such denial.
Approval of suspension of benefits
Timing of action
An action challenging a suspension of benefits under this paragraph may only be brought following a final authorization to suspend by the Secretary of the Treasury, in consultation with the Pension Benefit Guaranty Corporation and the Secretary of Labor, under subparagraph (H)(vi).
Standards of review
In general
section 706 of title 5A court shall review an action challenging a suspension of benefits under this paragraph in accordance with , United States Code.
Temporary injunction
A court reviewing an action challenging a suspension of benefits under this paragraph may not grant a temporary injunction with respect to such suspension unless the court finds a clear and convincing likelihood that the plaintiff will prevail on the merits of the case.
Restricted cause of action
A participant or beneficiary affected by a benefit suspension under this paragraph shall not have a cause of action under this title.
Limitation on action to suspend benefits
No action challenging a suspension of benefits following the final authorization to suspend or the denial of an application for suspension of benefits pursuant to this paragraph may be brought after one year after the earliest date on which the plaintiff acquired or should have acquired actual knowledge of the existence of such cause of action.
Special rule for emergence from critical status
Rules for operation of plan during adoption and rehabilitation period
Compliance with rehabilitation plan
In general
A plan may not be amended after the date of the adoption of a rehabilitation plan under subsection (e) so as to be inconsistent with the rehabilitation plan.
Special rules for benefit increases
A plan may not be amended after the date of the adoption of a rehabilitation plan under subsection (e) so as to increase benefits, including future benefit accruals, unless the plan actuary certifies that such increase is paid for out of additional contributions not contemplated by the rehabilitation plan, and, after taking into account the benefit increase, the multiemployer plan still is reasonably expected to emerge from critical status by the end of the rehabilitation period on the schedule contemplated in the rehabilitation plan.
Restriction on lump sums and similar benefits
In general
Exception
Subparagraph (A) shall not apply to a benefit which under section 411(a)(11) may be immediately distributed without the consent of the participant or to any makeup payment in the case of a retroactive annuity starting date or any similar payment of benefits owed with respect to a prior period.
Special rules for plan adoption period
Adjustments disregarded in withdrawal liability determination
Benefit reduction
Any benefit reductions under subsection (e)(8) or (f), or benefit reductions or suspensions while in critical and declining status under subsection (e)(9), unless the withdrawal occurs more than ten years after the effective date of a benefit suspension by a plan in critical and declining status, shall be disregarded in determining a plan’s unfunded vested benefits for purposes of determining an employer’s withdrawal liability under section 4201 of the Employee Retirement Income Security Act of 1974.
Surcharges
Any surcharges under subsection (e)(7) shall be disregarded in determining the allocation of unfunded vested benefits to an employer under section 4211 of the Employee Retirement Income Security Act of 1974 and in determining the highest contribution rate under section 4219(c) of such Act, except for purposes of determining the unfunded vested benefits attributable to an employer under section 4211(c)(4) of such Act or a comparable method approved under section 4211(c)(5) of such Act.
Contribution increases required by funding improvement or rehabilitation plan
In general
Any increase in the contribution rate (or other increase in contribution requirements unless due to increased levels of work, employment, or periods for which compensation is provided) that is required or made in order to enable the plan to meet the requirement of the funding improvement plan or rehabilitation plan shall be disregarded in determining the allocation of unfunded vested benefits to an employer under section 4211 of such Act and in determining the highest contribution rate under section 4219(c) of such Act, except for purposes of determining the unfunded vested benefits attributable to an employer under section 4211(c)(4) of such Act or a comparable method approved under section 4211(c)(5) of such Act.
Special rules
For purposes of this paragraph, any increase in the contribution rate (or other increase in contribution requirements) shall be deemed to be required or made in order to enable the plan to meet the requirement of the funding improvement plan or rehabilitation plan except for increases in contribution requirements due to increased levels of work, employment, or periods for which compensation is provided or additional contributions are used to provide an increase in benefits, including an increase in future benefit accruals, permitted by subsection (d)(1)(B) or (f)(1)(B).
Emergence from endangered or critical status
In the case of increases in the contribution rate (or other increases in contribution requirements unless due to increased levels of work, employment, or periods for which compensation is provided) disregarded pursuant to paragraph (3), this subsection shall cease to apply as of the expiration date of the collective bargaining agreement in effect when the plan emerges from endangered or critical status. Notwithstanding the preceding sentence, once the plan emerges from critical or endangered status, increases in the contribution rate disregarded pursuant to paragraph (3) shall continue to be disregarded in determining the highest contribution rate under section 4219(c) of such Act for plan years during which the plan was in endangered or critical status.
Simplified calculations
The Pension Benefit Guaranty Corporation shall prescribe simplified methods for the application of this subsection in determining withdrawal liability and payment amounts under section 4219(c) of such Act.
Expedited resolution of plan sponsor decisions
If, within 60 days of the due date for adoption of a funding improvement plan under subsection (c) or a rehabilitation plan under subsection (e), the plan sponsor of a plan in endangered status or a plan in critical status has not agreed on a funding improvement plan or rehabilitation plan, then any member of the board or group that constitutes the plan sponsor may require that the plan sponsor enter into an expedited dispute resolution procedure for the development and adoption of a funding improvement plan or rehabilitation plan.
Nonbargained participation
Both bargained and nonbargained employee-participants
In the case of an employer that contributes to a multiemployer plan with respect to both employees who are covered by one or more collective bargaining agreements and employees who are not so covered, if the plan is in endangered status or in critical status, benefits of and contributions for the nonbargained employees, including surcharges on those contributions, shall be determined as if those nonbargained employees were covered under the first to expire of the employer’s collective bargaining agreements in effect when the plan entered endangered or critical status.
Nonbargained employees only
In the case of an employer that contributes to a multiemployer plan only with respect to employees who are not covered by a collective bargaining agreement, this section shall be applied as if the employer were the bargaining party, and its participation agreement with the plan were a collective bargaining agreement with a term ending on the first day of the plan year beginning after the employer is provided the schedule or schedules described in subsections (c) and (e).
Definitions; actuarial method
Bargaining party
Funded percentage
Accumulated funding deficiency
The term “accumulated funding deficiency” has the meaning given such term in section 431(a).
Active participant
The term “active participant” means, in connection with a multiemployer plan, a participant who is in covered service under the plan.
Inactive participant
Pay status
Obligation to contribute
The term “obligation to contribute” has the meaning given such term under section 4212(a) of the Employee Retirement Income Security Act of 1974.
Actuarial method
Notwithstanding any other provision of this section, the actuary’s determinations with respect to a plan’s normal cost, actuarial accrued liability, and improvements in a plan’s funded percentage under this section shall be based upon the unit credit funding method (whether or not that method is used for the plan’s actuarial valuation).
Plan sponsor
In general
The term “plan sponsor” means, with respect to any multiemployer plan, the association, committee, joint board of trustees, or other similar group of representatives of the parties who establish or maintain the plan.
Special rule for section 404(c) plans
In the case of a plan described in section 404(c) (or a continuation of such plan), such term means the bargaining parties described in paragraph (1).
Benefit commencement date
The term “benefit commencement date” means the annuity starting date (or in the case of a retroactive annuity starting date, the date on which benefit payments begin).
Rules relating to eligible multiemployer plans
Plans applying for special financial assistance
In general
Such application shall be submitted in accordance with the requirements of such section, including any guidance issued thereunder by the Pension Benefit Guaranty Corporation.
Reinstatement of suspended benefits
In the case of a plan for which a suspension of benefits has been approved under subsection (e)(9), the application shall describe the manner in which suspended benefits will be reinstated in accordance with paragraph (2)(A) and guidance issued by the Secretary if the plan receives special financial assistance.
Amount of financial assistance
In general
Interest rate limit
For purposes of clause (i), the interest rate limit is the rate specified in section 430(h)(2)(C)(iii) (disregarding modifications made under clause (iv) of such section) for the month in which the application for special financial assistance is filed by the eligible multiemployer plan or the 3 preceding months, with such specified rate increased by 200 basis points.
Changes in assumptions
If a plan determines that use of one or more prior assumptions is unreasonable, the plan may propose in its application to change such assumptions, provided that the plan discloses such changes in its application and describes why such assumptions are no longer reasonable. The plan may not propose a change to the interest rate otherwise required under this subsection for eligibility or financial assistance amount.
Plans applying for priority consideration
In the case of a plan applying for special financial assistance under rules providing for temporary priority consideration, as provided in paragraph (4)(C), such plan’s application shall be submitted to the Secretary in addition to the Pension Benefit Guaranty Corporation.
Plans receiving special financial assistance
Reinstatement of suspended benefits
Restrictions on the use of special financial assistance
Special financial assistance received by the plan may be used to make benefit payments and pay plan expenses. Such assistance shall be segregated from other plan assets, and shall be invested by the plan in investment-grade bonds or other investments as permitted by regulations or other guidance issued by the Pension Benefit Guaranty Corporation.
Conditions on plans receiving special financial assistance
In general
The Pension Benefit Guaranty Corporation, in consultation with the Secretary, may impose, by regulation or other guidance, reasonable conditions on an eligible multiemployer plan receiving special financial assistance relating to increases in future accrual rates and any retroactive benefit improvements, allocation of plan assets, reductions in employer contribution rates, diversion of contributions and allocation of expenses to other benefit plans, and withdrawal liability.
Limitation
Assistance disregarded for certain purposes
Funding standards
Special financial assistance received by the plan shall not be taken into account for determining contributions required under section 431.
Insolvent plans
If the plan becomes insolvent within the meaning of section 418E after receiving special financial assistance, the plan shall be subject to all rules applicable to insolvent plans.
Ineligibility for suspension of benefits
The plan shall not be eligible to apply for a new suspension of benefits under subsection (e)(9)(G).
Eligible multiemployer plan
In general
Modified funded percentage
For purposes of subparagraph (A)(iii), the term “modified funded percentage” means the percentage equal to a fraction the numerator of which is current value of plan assets (as defined in section 3(26) of the Employee Retirement Income Security Act of 1974) and the denominator of which is current liabilities (as defined in section 431(c)(6)(D)).
Coordination with pension benefit guaranty corporation
Pub. L. 109–280, title II, § 212(a)120 Stat. 899Pub. L. 110–458, title I, § 102(b)(2)(A)122 Stat. 5101Pub. L. 113–235, div. O, title I128 Stat. 2776Pub. L. 115–141, div. U, title IV, § 401(a)(102)132 Stat. 1189Pub. L. 117–2, title IX, § 9704(d)135 Stat. 195(Added , , ; amended –(G), , , 5102; , §§ 102(b), 103(b), 104(b), 105(b), 106(b), 107(b), 109(b), title II, § 201(b)(1)–(6), , , 2778, 2780–2782, 2784, 2790, 2810–2822; –(107), , ; , , .)
Inflation Adjusted Items for Certain Years
section 401 of this titleFor inflation adjustment of certain items in this section, see Internal Revenue Notices listed in a table under .
Editorial Notes
References in Text
Pub. L. 93–40688 Stat. 829section 1001 of Title 29The Employee Retirement Income Security Act of 1974, referred to in text, is , , . Sections 3, 101, 103, 104, 502, 515, 4004, 4022A, 4201, 4203, 4211, 4212, 4219, 4233, 4245, and 4262 of the Act are classified to sections 1002, 1021, 1023, 1024, 1132, 1145, 1304, 1322a, 1381, 1383, 1391, 1392, 1399, 1413, 1426, and 1432, respectively, of Title 29, Labor. For complete classification of this Act to the Code, see Short Title note set out under and Tables.
Pub. L. 109–280The enactment of the Pension Protection Act of 2006, referred to in subsec. (e)(4)(B)(i)(II), means the enactment of , which was approved .
Pub. L. 113–235The date of enactment of the Multiemployer Pension Reform Act of 2014, referred to in subsec. (e)(9)(D)(vii)(III), is the date of enactment of div. O of , which was approved .
section 430 of Title 42Section 230 of the Social Security Act, referred to in subsec. (e)(9)(H)(v)(III)(bb), is classified to , The Public Health and Welfare.
Pub. L. 117–2The date of enactment of this subsection, referred to in subsec. (k)(3)(A)(ii), (iv), is the date of enactment of , which was approved .
Amendments
Pub. L. 117–2, § 9704(d)(1)2021—Subsec. (a)(4). , added par. (4).
Pub. L. 117–2, § 9704(d)(2)Subsec. (b)(7). , added par. (7).
Pub. L. 117–2, § 9704(d)(3)Subsec. (k). , added subsec. (k).
Pub. L. 115–141, § 401(a)(102)2018—Subsec. (b)(3)(A)(i). , substituted “in endangered status for such plan year, or would be in endangered status for such plan year but for paragraph (5), whether or not” for “in endangered status for such plan year, whether or not”.
Pub. L. 115–141, § 401(a)(103)Subsec. (b)(3)(B)(iv), (v). , redesignated cl. (iv), relating to projections of critical and declining status, as (v).
Pub. L. 115–141, § 401(a)(104)Subsec. (b)(3)(D)(iv). , inserted comma after “Labor”.
Pub. L. 115–141, § 401(a)(105)Subsec. (e)(8)(C)(iii). , substituted “The Secretary shall” for “the Secretary shall” in concluding provisions.
Pub. L. 115–141, § 401(a)(106)Subsec. (f)(3). , amended introductory provisions generally. Prior to amendment, text read as follows: “During the rehabilitation plan adoption period—”.
Pub. L. 115–141, § 401(a)(107)Subsec. (g)(1). , substituted “subsection (e)(9)” for “subsection (e)(9))”.
Pub. L. 113–235, § 201(b)(1)2014—Subsec. (a)(3). , added par. (3).
Pub. L. 113–235, § 104(b)(1)(A)Subsec. (b)(1). , substituted “the plan is not in critical status for the plan year and is not described in paragraph (5),” for “the plan is not in critical status for the plan year”.
Pub. L. 113–235, § 201(b)(3)Subsec. (b)(3)(A)(i). , substituted “, whether” for “and whether” and inserted “, and whether or not the plan is or will be in critical and declining status for such plan year” before “, and” at end.
Pub. L. 113–235, § 104(b)(3), which directed insertion of “, or would be in endangered status for such plan year but for paragraph (5),” after “endangered status for a plan year”, could not be executed because the phrase “endangered status for a plan year” did not appear in cl. (i).
Pub. L. 113–235, § 102(b)(2)(A), substituted “or for any of the succeeding 5 plan years, and” for “, and” at end.
Pub. L. 113–235, § 102(b)(2)(B)(i)Subsec. (b)(3)(B)(i). , substituted “Except as provided in clause (iv), in making the determinations” for “In making the determinations”.
Pub. L. 113–235, § 201(b)(4)Subsec. (b)(3)(B)(iv). , added cl. (iv) relating to projections of critical and declining status.
Pub. L. 113–235, § 102(b)(2)(B)(ii), added cl. (iv) relating to projections relating to critical status in succeeding plan years.
Pub. L. 113–235, § 102(b)(3)(A)(ii)Subsec. (b)(3)(D)(i). , inserted at end “In any case in which a plan sponsor elects to be in critical status for a plan year under paragraph (4), the plan sponsor shall notify the Secretary of the Treasury of such election not later than 30 days after the date of such certification or such other time as the Secretary of the Treasury may prescribe by regulations or other guidance.”
Pub. L. 113–235, § 102(b)(3)(A)(i), inserted “or in which a plan sponsor elects to be in critical status for a plan year under paragraph (4)” after “endangered or critical status for a plan year”.
Pub. L. 113–235, § 104(b)(2)(B)Subsec. (b)(3)(D)(iii). , added cl. (iii). Former cl. (iii) redesignated (iv).
Pub. L. 113–235, § 104(b)(2)(A)Subsec. (b)(3)(D)(iv). , (C), redesignated cl. (iii) as (iv) and substituted “clauses (ii) and (iii)” for “clause (ii)”.
Pub. L. 113–235, § 102(b)(3)(B), added cl. (iv).
Pub. L. 113–235, § 104(b)(2)(A)Subsec. (b)(3)(D)(v). , redesignated cl. (iv) as (v).
Pub. L. 113–235, § 102(b)(1)Subsec. (b)(4). , added par. (4).
Pub. L. 113–235, § 104(b)(1)(B)Subsec. (b)(5). , added par. (5).
Pub. L. 113–235, § 201(b)(2)Subsec. (b)(6). , added par. (6).
Pub. L. 113–235, § 105(b)(1)Subsec. (c)(3)(A)(i)(I). , substituted “of the first plan year for which the plan is certified to be in endangered status pursuant to paragraph (b)(3)” for “of such period”.
Pub. L. 113–235, § 105(b)(2)Subsec. (c)(3)(A)(ii). , substituted “the last plan year” for “any plan year”.
Pub. L. 113–235, § 107(b)(1)Subsec. (c)(7). , amended par. (7) generally. Prior to amendment, par. (7) related to imposition of default schedule where failure to adopt funding improvement plan.
Pub. L. 113–235, § 106(b)Subsec. (d). , amended subsec. (d) generally. Prior to amendment, subsec. (d) related to rules for operation of plan during adoption and improvement periods.
Pub. L. 113–235, § 107(b)(2)Subsec. (e)(3)(C). , amended subpar. (C) generally. Prior to amendment, subpar. (C) related to imposition of default schedule where failure to adopt rehabilitation plan.
Pub. L. 113–235, § 103(b)Subsec. (e)(4)(B). , amended subpar. (B) generally. Prior to amendment, subpar. (B) related to emergence of a plan from critical status.
Pub. L. 113–235, § 201(b)(5)Subsec. (e)(9). , added par. (9).
Pub. L. 113–235, § 109(b)(1), struck out par. (9) which related to adjustments disregarded in withdrawal liability determination.
Pub. L. 113–235, § 109(b)(2)(A)Subsec. (f)(3). , redesignated par. (4) as (3) and struck out former par. (3). Prior to amendment, text of par. (3) read as follows “Any benefit reductions under this subsection shall be disregarded in determining a plan’s unfunded vested benefits for purposes of determining an employer’s withdrawal liability under section 4201 of the Employee Retirement Income Security Act of 1974.”
Pub. L. 113–235, § 109(b)(2)(B)section 109(b)(2)(A) of Pub. L. 113–235Pub. L. 113–295, § 109(b)(2)(A)Subsec. (f)(4). , which directed amendment of par. (4) as redesignated by by substituting “During the period beginning on the date of the certification under subsection (b)(3)(A) for the initial critical year and ending on the date of the adoption of a rehabilitation plan—” for “During the rehabilitation plan adoption period—”, could not be executed because there was no par. (4) after the amendment by . See below.
Pub. L. 113–235, § 109(b)(2)(A), redesignated par. (4) as (3).
Pub. L. 113–235, § 109(b)(4)Subsec. (g). , added subsec. (g). Former subsec. (g) redesignated (h).
Pub. L. 113–235, § 201(b)(6)Subsec. (g)(1). , inserted “, or benefit reductions or suspensions while in critical and declining status under subsection (e)(9)), unless the withdrawal occurs more than ten years after the effective date of a benefit suspension by a plan in critical and declining status,” after “benefit reductions under subsection (e)(8) or (f)”.
Pub. L. 113–235, § 109(b)(3)Subsecs. (h) to (j). , redesignated subsecs. (g) to (i) as (h) to (j), respectively.
Pub. L. 110–458, § 102(b)(2)(A)2008—Subsec. (b)(3)(C). , substituted “section 101(b)(1)” for “section 101(b)(4)”.
Pub. L. 110–458, § 102(b)(2)(B)Subsec. (b)(3)(D)(iii). , substituted “The Secretary, in consultation with the Secretary of Labor” for “The Secretary of Labor”.
Pub. L. 110–458, § 102(b)(2)(C)(i)Subsec. (c)(3)(A)(ii). , substituted “section 431(d)” for “section 304(d)”.
Pub. L. 110–458, § 102(b)(2)(C)(ii)(I)Subsec. (c)(7)(A)(ii). , substituted “to adopt a contribution schedule with terms consistent with the funding improvement plan and a schedule from the plan sponsor,” for “to agree on changes to contribution or benefit schedules necessary to meet the applicable benchmarks in accordance with the funding improvement plan,”.
Pub. L. 110–458, § 102(b)(2)(C)(ii)(II)Subsec. (c)(7)(B). , added subpar. (B), and struck out former subpar. (B). Prior to amendment, text read as follows: “The date specified in this subparagraph is the earlier of the date—
“(i) on which the Secretary of Labor certifies that the parties are at an impasse, or
“(ii) which is 180 days after the date on which the collective bargaining agreement described in subparagraph (A) expires.”
Pub. L. 110–458, § 102(b)(2)(D)(i)(I)Subsec. (e)(3)(C)(i)(II). , substituted “to adopt a contribution schedule with terms consistent with the rehabilitation plan and a schedule from the plan sponsor under paragraph (1)(B)(i),” for “contribution or benefit schedules with terms consistent with the rehabilitation plan and the schedule from the plan sponsor under paragraph (1)(B)(i),”.
Pub. L. 110–458, § 102(b)(2)(D)(i)(II)Subsec. (e)(3)(C)(ii). , added cl. (ii) and struck out former cl. (ii). Prior to amendment, text read as follows: “The date specified in this clause is the earlier of the date—
“(I) on which the Secretary of Labor certifies that the parties are at an impasse, or
“(II) which is 180 days after the date on which the collective bargaining agreement described in clause (i) expires.”
Pub. L. 110–458, § 102(b)(2)(D)(ii)(I)Subsec. (e)(4)(A)(ii). , struck out “the date of” after “in effect on”.
Pub. L. 110–458, § 102(b)(2)(D)(ii)(II)Subsec. (e)(4)(B). , substituted “but taking” for “and taking”.
Pub. L. 110–458, § 102(b)(2)(D)(iii)Subsec. (e)(6). , substituted “the last sentence of paragraph (1)” for “paragraph (1)(B)(i)” in introductory provisions and “establish” for “established” in concluding provisions.
Pub. L. 110–458, § 102(b)(2)(D)(iv)(I)Subsec. (e)(8)(A)(i). , substituted “section 411(d)(6)” for “section 204(g)”.
Pub. L. 110–458, § 102(b)(2)(D)(iv)(II)Subsec. (e)(8)(C)(i)(II). , inserted “of the Employee Retirement Income Security Act of 1974” after “section 4212(a)”.
Pub. L. 110–458, § 102(b)(2)(D)(iv)(IV)Subsec. (e)(8)(C)(iii). , which directed substitution of “the Secretary” for “the Secretary of Labor” in last sentence, was executed by making the substitution for “The Secretary of Labor”, to reflect the probable intent of Congress.
Pub. L. 110–458, § 102(b)(2)(D)(iv)(III)Subsec. (e)(8)(C)(iii)(I). , substituted “the Secretary, in consultation with the Secretary of Labor” for “the Secretary of Labor”.
Pub. L. 110–458, § 102(b)(2)(D)(v)Subsec. (e)(9)(B). , substituted “the allocation of unfunded vested benefits to an employer” for “an employer’s withdrawal liability”.
Pub. L. 110–458, § 102(b)(2)(E)Subsec. (f)(2)(A)(i). , substituted “section 411(a)(9)” for “411(b)(1)(A)” and inserted at end “to a participant or beneficiary whose annuity starting date (as defined in section 417(f)(2)) occurs after the date such notice is sent,”.
Pub. L. 110–458, § 102(b)(2)(F)Subsec. (g). , inserted “under subsection (c)” after “for adoption of a funding improvement plan”.
Pub. L. 110–458, § 102(b)(2)(G)(i)Subsec. (i)(3). , substituted “section 431(a)” for “section 412(a)”.
Pub. L. 110–458, § 102(b)(2)(G)(ii)Subsec. (i)(9). , added par. (9) and struck out former par. (9). Prior to amendment, text read as follows: “In the case of a plan described under section 404(c), or a continuation of such a plan, the term ‘plan sponsor’ means the bargaining parties described under paragraph (1).”
Statutory Notes and Related Subsidiaries
Effective Date of 2014 Amendment
Pub. L. 113–235, div. O, title I, § 102(c)128 Stat. 2777
Pub. L. 113–235, div. O, title I, § 103(c)128 Stat. 2779
Pub. L. 113–235, div. O, title I, § 104(c)128 Stat. 2781
Pub. L. 113–235, div. O, title I, § 105(c)128 Stat. 2781
Pub. L. 113–235, div. O, title I, § 106(c)128 Stat. 2783
Pub. L. 113–235, div. O, title I, § 107(c)128 Stat. 2786
Pub. L. 113–235, div. O, title I, § 109(c)128 Stat. 2792
Pub. L. 113–235, div. O, title II, § 201(c)128 Stat. 2822
Effective Date of 2008 Amendment
Pub. L. 110–458Pub. L. 109–280section 112 of Pub. L. 110–458section 72 of this titleAmendment by effective as if included in the provisions of to which the amendment relates, except as otherwise provided, see , set out as a note under .
Effective Date
section 212(e) of Pub. L. 109–280section 412 of this titleSection applicable with respect to plan years beginning after 2007, with special rules for certain notices and certain restored benefits, see , set out as an Effective Date of 2006 Amendment note under .
Temporary Delay of Designation of Multiemployer Plans as in Endangered, Critical, or Critical and Declining Status
Pub. L. 117–2, title IX, § 9701135 Stat. 186
In General .—
Exception for Plans Becoming Critical During Election .—
Election and Notice.—
Election .—
Notice to participants.—
In general .—
Notice of endangered status .—
Temporary Extension of the Funding Improvement and Rehabilitation Periods for Multiemployer Pension Plans in Critical and Endangered Status for 2020 or 2021
Pub. L. 117–2, title IX, § 9702135 Stat. 188
In General .—
Definitions and Special Rules .—
Election .—
Definitions .—
Effective Date .—
Guidance
Pub. L. 113–235, div. O, title II, § 201(b)(7)128 Stat. 2822
Temporary Delay of Designation of Multiemployer Plans as in Endangered or Critical Status
Pub. L. 110–458, title II, § 204122 Stat. 5118
In General .—
Exception for Plans Becoming Critical During Election .—
Election and Notice.—
Election .—
Notice to participants.—
In general .—
Notice of endangered status .—
Temporary Extension of the Funding Improvement and Rehabilitation Periods for Multiemployer Pension Plans in Critical and Endangered Status for 2008 or 2009
Pub. L. 110–458, title II, § 205122 Stat. 5120
In General .—
Definitions and Special Rules .—
Election .—
Definitions .—
Effective Date .—
Special Rule for Certain Benefits Funded Under an Agreement Approved by the Pension Benefit Guaranty Corporation
section 206 of Pub. L. 109–280section 412 of this titleFor applicability of this section to a multiemployer plan that is a party to an agreement that was approved by the Pension Benefit Guaranty Corporation prior to , and that increases benefits and provides for certain withdrawal liability rules, see , set out as a note under .