Bill Text - 113th Congress (2013-2014) - THOMAS (Library of Congress) Page 1 of 7

Bill Text
 113th Congress (2013-2014)

H.R.83.ENR
 

H.R.83 

Consolidated and Further Continuing Appropriations Act, 2015 (Enrolled Bill 

[Final as Passed Both House and Senate] - ENR) 

DIVISION P--OTHER RETIREMENT-RELATED MODIFICATIONS 

SEC. 1. SUBSTANTIAL CESSATION OF OPERATIONS. 

(a) In General- Subsection (e) of section 4062 of the Employee Retirement Income 

Security Act of 1974 (29 U.S.C. 1362) is amended to read as follows: 

`(e) Treatment of Substantial Cessation of Operations-

`(1) GENERAL RULE- Except as provided in paragraphs (3) and (4), if there is 

a substantial cessation of operations at a facility in any location, the employer 

shall be treated with respect to any single employer plan established and 

maintained by the employer covering participants at such facility as if the 

employer were a substantial employer under a plan under which more than 

one employer makes contributions and the provisions of sections 4063, 4064, 

and 4065 shall apply. 

`(2) SUBSTANTIAL CESSATION OF OPERATIONS- For purposes of this 

subsection: 

`(A) IN GENERAL- The term `substantial cessation of operations' means 

a permanent cessation of operations at a facility which results in a 

workforce reduction of a number of eligible employees at the facility 

equivalent to more than 15 percent of the number of all eligible 

employees of the employer, determined immediately before the earlier 

of--

`(i) the date of the employer's decision to implement such 

cessation, or 

`(ii) in the case of a workforce reduction which includes 1 or more 

eligible employees described in paragraph (6)(B), the earliest date 

12/30/2014
 

This is a truncated version of H.R. 83 that contains information related to PBGC operations. 

A full PDF copy of H.R. 83 can be found on the Government Printing Office (GPO) website.
 

Bill Text - 113th Congress (2013-2014) - THOMAS (Library of Congress) Page 2 of 7

on which any such eligible employee was separated from 

employment. 

`(B) WORKFORCE REDUCTION- Subject to subparagraphs (C) and (D), 

the term `workforce reduction' means the number of eligible employees 

at a facility who are separated from employment by reason of the 

permanent cessation of operations of the employer at the facility. 

`(C) RELOCATION OF WORKFORCE- An eligible employee separated 

from employment at a facility shall not be taken into account in 

computing a workforce reduction if, within a reasonable period of time, 

the employee is replaced by the employer, at the same or another 

facility located in the United States, by an employee who is a citizen or 

resident of the United States. 

`(D) DISPOSITIONS- If, whether by reason of a sale or other disposition 

of the assets or stock of a contributing sponsor (or any member of the 

same controlled group as such a sponsor) of the plan relating to 

operations at a facility or otherwise, an employer (the `transferee 

employer') other than the employer which experiences the substantial 

cessation of operations (the `transferor employer') conducts any portion 

of such operations, then--

`(i) an eligible employee separated from employment with the 

transferor employer at the facility shall not be taken into account 

in computing a workforce reduction if--

`(I) within a reasonable period of time, the employee is 

replaced by the transferee employer by an employee who is a 

citizen or resident of the United States; and 

`(II) in the case of an eligible employee who is a participant 

in a single employer plan maintained by the transferor 

employer, the transferee employer, within a reasonable 

period of time, maintains a single employer plan which 

includes the assets and liabilities attributable to the accrued 

benefit of the eligible employee at the time of separation 

from employment with the transferor employer; and 

`(ii) an eligible employee who continues to be employed at the 

facility by the transferee employer shall not be taken into account 

in computing a workforce reduction if--

`(I) the eligible employee is not a participant in a single 

employer plan maintained by the transferor employer, or 

`(II) in any other case, the transferee employer, within a 

reasonable period of time, maintains a single employer plan 

which includes the assets and liabilities attributable to the 

accrued benefit of the eligible employee at the time of 

separation from employment with the transferor employer. 

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`(3) EXEMPTION FOR PLANS WITH LIMITED UNDERFUNDING- Paragraph (1) 

shall not apply with respect to a single employer plan if, for the plan year 

preceding the plan year in which the cessation occurred--

`(A) there were fewer than 100 participants with accrued benefits under 

the plan as of the valuation date of the plan for the plan year (as 

determined under section 303(g)(2)); or 

`(B) the ratio of the market value of the assets of the plan to the 

funding target of the plan for the plan year was 90 percent or greater. 

`(4) ELECTION TO MAKE ADDITIONAL CONTRIBUTIONS TO SATISFY 

LIABILITY-

`(A) IN GENERAL- An employer may elect to satisfy the employer's 

liability with respect to a plan by reason of paragraph (1) by making 

additional contributions to the plan in the amount determined under 

subparagraph (B) for each plan year in the 7-plan-year period beginning 

with the plan year in which the cessation occurred. Any such additional 

contribution for a plan year shall be in addition to any minimum required 

contribution under section 303 for such plan year and shall be paid not 

later than the earlier of--

`(i) the due date for the minimum required contribution for such 

year under section 303(j); or 

`(ii) in the case of the first such contribution, the date that is 1 

year after the date on which the employer notifies the Corporation 

of the substantial cessation of operations or the date the 

Corporation determines a substantial cessation of operations has 

occurred, and in the case of subsequent contributions, the same 

date in each succeeding year. 

`(B) AMOUNT DETERMINED-

`(i) IN GENERAL- Except as provided in clause (iii), the amount 

determined under this subparagraph with respect to each plan 

year in the 7-plan-year period is the product of--

`(I) 1/7 of the unfunded vested benefits determined under 

section 4006(a)(3)(E) as of the valuation date of the plan (as 

determined under section 303(g)(2)) for the plan year 

preceding the plan year in which the cessation occurred; and 

`(II) the reduction fraction. 

`(ii) REDUCTION FRACTION- For purposes of clause (i), the 

reduction fraction of a single employer plan is equal to--

`(I) the number of participants with accrued benefits in the 

plan who were included in computing the workforce reduction 

under paragraph (2)(B) as a result of the cessation of 

operations at the facility; divided by 

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`(II) the number of eligible employees of the employer who 

are participants with accrued benefits in the plan, determined 

as of the same date the determination under paragraph (2) 

(A) is made. 

`(iii) LIMITATION- The additional contribution under this 

subparagraph for any plan year shall not exceed the excess, if any, 

of--

`(I) 25 percent of the difference between the market value of 

the assets of the plan and the funding target of the plan for 

the preceding plan year; over 

`(II) the minimum required contribution under section 303 

for the plan year. 

`(C) PERMITTED CESSATION OF ANNUAL INSTALLMENTS WHEN PLAN 

BECOMES SUFFICIENTLY FUNDED- An employer's obligation to make 

additional contributions under this paragraph shall not apply to--

`(i) the first plan year (beginning on or after the first day of the 

plan year in which the cessation occurs) for which the ratio of the 

market value of the assets of the plan to the funding target of the 

plan for the plan year is 90 percent or greater, or 

`(ii) any plan year following such first plan year. 

`(D) COORDINATION WITH FUNDING WAIVERS-

`(i) IN GENERAL- If the Secretary of the Treasury issues a funding 

waiver under section 302(c) with respect to the plan for a plan 

year in the 7-plan-year period under subparagraph (A), the 

additional contribution with respect to such plan year shall be 

permanently waived. 

`(ii) NOTICE- An employer maintaining a plan with respect to 

which such a funding waiver has been issued or a request for such 

a funding waiver is pending shall provide notice to the Secretary of 

the Treasury, in such form and at such time as the Secretary of 

the Treasury shall provide, of a cessation of operations to which 

paragraph (1) applies. 

`(E) ENFORCEMENT-

`(i) NOTICE- An employer making the election under this 

paragraph shall provide notice to the Corporation, in accordance 

with rules prescribed by the Corporation, of--

`(I) such election, not later than 30 days after the earlier of 

the date the employer notifies the Corporation of the 

substantial cessation of operations or the date the 

Corporation determines a substantial cessation of operations 

has occurred; 

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`(II) the payment of each additional contribution, not later 

than 10 days after such payment; 

`(III) any failure to pay the additional contribution in the full 

amount for any year in the 7-plan-year period, not later than 

10 days after the due date for such payment; 

`(IV) the waiver under subparagraph (D)(i) of the obligation 

to make an additional contribution for any year, not later 

than 30 days after the funding waiver described in such 

subparagraph is granted; and 

`(V) the cessation of any obligation to make additional 

contributions under subparagraph (C), not later than 10 days 

after the due date for payment of the additional contribution 

for the first plan year to which such cessation applies. 

`(ii) ACCELERATION OF LIABILITY TO THE PLAN FOR FAILURE TO 

PAY- If an employer fails to pay the additional contribution in the 

full amount for any year in the 7-plan-year period by the due date 

for such payment, the employer shall, as of such date, be liable to 

the plan in an amount equal to the balance which remains unpaid 

as of such date of the aggregate amount of additional contributions 

required to be paid by the employer during such 7-year-plan 

period. The Corporation may waive or settle the liability described 

in the preceding sentence, at the discretion of the Corporation. 

`(iii) CIVIL ACTION- The Corporation may bring a civil action in the 

district courts of the United States in accordance with section 4003 

(e) to compel an employer making such election to pay the 

additional contributions required under this paragraph. 

`(5) DEFINITIONS- For purposes of this subsection: 

`(A) ELIGIBLE EMPLOYEE- The term `eligible employee' means an 

employee who is eligible to participate in an employee pension benefit 

plan (as defined in section 3(2)) established and maintained by the 

employer. 

`(B) FUNDING TARGET- The term `funding target' means, with respect 

to any plan year, the funding target as determined under section 4006 

(a)(3)(E)(iii)(I) for purposes of determining the premium paid to the 

Corporation under section 4007 for the plan year. 

`(C) MARKET VALUE- The market value of the assets of a plan shall be 

determined in the same manner as for purposes of section 4006(a)(3) 

(E). 

`(6) SPECIAL RULES-

`(A) CHANGE IN OPERATION OF CERTAIN FACILITIES AND PROPERTYFor purposes of paragraphs (1) and (2), an employer shall not be 

treated as ceasing operations at a qualified lodging facility (as defined in 

section 856(d)(9)(D) of the Internal Revenue Code of 1986) if such 

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operations are continued by an eligible independent contractor (as 

defined in section 856(d)(9)(A) of such Code) pursuant to an agreement 

with the employer. 

`(B) AGGREGATION OF PRIOR SEPARATIONS- The workforce reduction 

under paragraph (2) with respect to any cessation of operations shall be 

determined by taking into account any separation from employment of 

any eligible employee at the facility (other than a separation which is 

not taken into account as workforce reduction by reason of 

subparagraph (C) or (D) of paragraph (2)) which-­

`(i) is related to the permanent cessation of operations of the 

employer at the facility, and 

`(ii) occurs during the 3-year period preceding such cessation. 

`(C) NO ADDITION TO PREFUNDING BALANCE- For purposes of section 

303(f)(6)(B) and section 430(f)(6)(B) of the Internal Revenue Code of 

1986, any additional contribution made under paragraph (4) shall be 

treated in the same manner as a contribution an employer is required to 

make in order to avoid a benefit reduction under paragraph (1), (2), or 

(4) of section 206(g) or subsection (b), (c), or (e) of section 436 of the 

Internal Revenue Code of 1986 for the plan year.'. 

(b) Effective Date­

(1) IN GENERAL- The amendment made by this section shall apply to a 

cessation of operations or other event at a facility occurring on or after the 

date of enactment of this Act. 

(2) TRANSITION RULE- An employer that had a cessation of operations before 

the date of enactment of this Act (as determined under subsection 4062(e) of 

the Employee Retirement Income Security Act of 1974 as in effect before the 

amendment made by this section), but did not enter into an arrangement 

with the Pension Benefit Guaranty Corporation to satisfy the requirements of 

such subsection (as so in effect) before such date of enactment, shall be 

permitted to make the election under section 4062(e)(4) of such Act (as in 

effect after the amendment made by this section) as if such cessation had 

occurred on such date of enactment. Such election shall be made not later 

than 30 days after such Corporation issues, on or after such date of the 

enactment, a final administrative determination that a substantial cessation of 

operations has occurred. 

(c) Direction to the Corporation- The Pension Benefit Guaranty Corporation shall 

not take any enforcement, administrative, or other action pursuant to section 4062 

(e) of the Employee Retirement Income Security Act of 1974, or in connection with 

an agreement settling liability arising under such section, that is inconsistent with 

the amendment made by this section, without regard to whether the action relates 

to a cessation or other event that occurs before, on, or after the date of the 

enactment of this Act, unless such action is in connection with a settlement 

agreement that is in place before June 1, 2014. The Pension Benefit Guaranty 

Corporation shall not initiate a new enforcement action with respect to section 

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4062(e) of such Act that is inconsistent with its enforcement policy in effect on 

June 1, 2014.