1 The Multiemployer Pension Plan Amendments Act of 1980 (“MPPAA”), P.L. 96-364, 94 Stat. 1208

(1980), amended section 4001(a)(3) of ERISA to define “multiemployer plan” as a plan

2001-2 §4001(a)(3)

§4001(a)(15)

§4005(a)

§4005(e)

§4005(f)

§4006(a)

§4022

§4022A

§4041

§4041A

§4042

§4048(b)

§4061

§4063

§4209(c)

§4219(c)

§4232

§4245(f)

§4261

§4281(d)

§4303

 29 C.F.R. §4041A.21

[PBGC Letterhead]

March 16, 2001

Robert Rideout shared with me your February 6 letter to him and asked me to

respond to it. You ask whether the 

(the “Fund”) continues to be a multiemployer plan — both in general and particularly

with respect to PBGC premium payments — now that there is only one employer

required to make contributions to the Fund. You note that a second employer

participates in the Fund and makes contributions thereto, but is not required to do

so by a relevant collective bargaining agreement.1
(A) to which more than one employer is required to contribute,

(B) which is maintained pursuant to one or more collective bargaining agreements

between one or more employee organizations and more than one employer, and

(C) which satisfies such other requirements as the Secretary of Labor may prescribe by

regulation, except that, in applying this paragraph —

(i) a plan shall be considered a multiemployer plan on and after its 

termination date if the plan was a multiemployer plan under this paragraph

for the plan year preceding such termination, and

(ii) for any plan year which began before the date of the enactment of the

Multiemployer Pension Plan Amendments Act of 1980, the term “multiemployer

plan” means a plan described in section 414(f) of the Internal Revenue Code of

1954 as in effect immediately before such date . . . .

29 U.S.C. § 1301(a)(3). By contrast, a “single-employer plan” is defined as “any defined benefit plan . . . which

is not a multiemployer plan.” 29 U.S.C. § 1301(a)(15).

2 ERISA expressly permits a multiemployer plan to become another type of plan under

certain extremely narrow circumstances, none of which are raised by your inquiry. These are

discussed below.

2

In our view, a multiemployer plan retains its status as such even if the number

of employers required to contribute to the plan decreases to a single employer. This

is evident not only from the language of the statute and its implementing

regulations, but also from differences in design between the multiemployer and

single-employer statutory schemes.

Turning first to the language of ERISA, we note that there is no provision in

MPPAA that allows for a change in plan status from multiemployer to

single-employer, either before or after a plan terminates.2 To the contrary, the text

of MPPAA and its implementing regulations contemplate that under Title IV of ERISA, a

multiemployer plan will retain its multiemployer status until the last employer

incurs a complete withdrawal. This theme pervades the multiemployer rules on plan

termination, withdrawal liability, fiduciary responsibility, and guaranteed benefits.

For example, under section 4041A, a multiemployer plan termination does not

occur until the earlier of “the cessation of the obligationof all employers

to contribute under the plan” or passage of a plan amendment which provides for
3

“no credit . . . for service with any employer.” 29 U.S.C. § 1341A(a)(1), (2) (emphasis

added). Similarly, MPPAA sets the date of a termination caused by employer

withdrawal at the earlier of “the date the last employer withdraws” or the

“first day of the first plan year for whichno employer contributions

were required under the plan.” 29 U.S.C. § 1341A(b)(2) (emphasis added).

The withdrawal liability rules of MPPAA likewise contemplate that

continuation of multiemployer plan status does not require participation by more

than one employer. Section 4209(c), for example, ceases to apply in plan years after the

year “in which substantially all employers” withdraw from a plan. 29 U.S.C. § 1389(c). See

also section 4219(c), under which an employer’s withdrawal liability payments are to

be redetermined (without regard to the 20-year cap of section 4219(c)(1)(B)) if the

employer withdrew in concert with “substantially all employers.” 29 U.S.C. § 1399(c)(1)(D).

The provisions of MPPAA dealing with the responsibilities of the board of

trustees and other fiduciaries similarly contemplate a retention of multiemployer

status. The statute specifies that the duties of a plan administrator continue until

“the plan assets are distributed infull satisfaction of all

nonforfeitable benefits under the plan.” 29 U.S.C. § 1341A(c)(2) (emphasis

added). PBGC’s regulation on the powers and duties of a plan sponsor following a

mass withdrawal of “substantially all employers” further specifies that the plan

sponsor shall continue to administer the plan pursuant to the multiemployer plan

rules. 29 C.F.R. § 4041A.21. Neither the statutory or regulatory provisions would have

meaning if the plan ceased to be a multiemployer plan solely because a single employer

continued to have an obligation to contribute.

The guaranty provisions of ERISA also militate against a change in plan status.

Section 4022 specifies that the single-employer guaranty rules apply to a

single-employer plan “which terminates.” By contrast, under section 4022A, PBGC’s

guaranty of benefits under a multiemployer plan applies to a multiemployer plan

“which is insolvent” (regardless of whether it is terminated). Thus, for a plan to

transform from a multiemployer plan into a single-employer plan would not only

fundamentally alter the nature and timing of PBGC’s guaranty with respect to the

plan, it would also frustrate Congress’s clearly expressed intention that the

insurable events be different for the two types of plans. 29 U.S.C. § 1361. Furthermore,

because a multiemployer plan remains ongoing after it terminates, a posttermination

devolution by a multiemployer plan into a single-employer plan creates the
3

Section 4041's statement that it is the “exclusive” means of terminating a

single-employer plan also strongly implies that a plan subject to its provisions has not yet been

terminated.

4

Section 4063 of ERISA describes a somewhat analogous form of liability in the

single-employer context. See generally 29 U.S.C. § 1363(b).

4

anomalous possibility of a plan terminating twice, first as a multiemployer plan and

then as a single-employer plan.

3

Thus, under a textual analysis, it is plain that ERISA does not allow a

multiemployer plan to devolve into a single-employer plan. This conclusion is

buttressed by marked differences in the design and operation of the two regimes. A

multiemployer plan terminates by occurrence of one of the events specified in ERISA

§ 4041A(a), whereas a single-employer plan can only terminate in accordance with

sections 4041 and 4042. The date of plan termination for a single-employer plan is

determined differently from that of a multiemployer plan (compare section 4048(b)(1)

with section 4041A(b)), and just as a plan cannot terminate twice, it cannot have two

termination dates. When a multiemployer plan terminates, it generally does not

cease to exist but rather continues to collect contributions (and withdrawal

liability) until the plan is sufficient. By contrast, when a single-employer plan

terminates, it soon goes out of existence, and the employer obligation to contribute

ceases.

The contrast between the multiemployer and single-employer programs does

not stop there. The insurable event for a multiemployer plan is cash-flow insolvency,

in which event the plan must seek financial assistance from PBGC. 29 U.S.C. §§ 1322A(a)(2),

1361, 1426(f), 1431, 1441(d). The insurable event for a single-employer plan is termination

of the plan at a time when the plan’s assets are insufficient to pay benefits at the

guaranteed level. See 29 U.S.C. §§ 1322(a), 1341(b)(4), 1342(d)(1)(B)(iii), 1361; PBGC Op. Ltr. 91-1 (Jan.

14, 1991). When an employer withdraws from an underfunded multiemployer plan, it

generally owes withdrawal liability, a concept unknown to the single-employer

regime.4 Premiums, too, are calculated differently for multiemployer and

single-employer plans, and are allocated to separate funds, which may be used only

for the respective guaranty program under which the premiums were paid. 29 U.S.C. §§

1305(a), (e), (f), 1306(a), 1361. Finally, the nature and amount of PBGC’s guaranty is also

markedly different as between the two types of plans. 
5

It is also significant that Title IV of ERISA speaks directly to other possible

changes in plan status. Conversion of a covered plan to an individual account plan

constitutes a termination and thus subjects a plan to one or the other termination

regime, depending on whether the plan is a single employer plan,see 29 U.S.C. §§ 1341(e),

or multiemployer plan,see 29 U.S.C. § 1341A. Title IV also addresses mergers between

multiemployer plans and single-employer plans. 29 U.S.C. § 1412. Title IV originally

permitted certain plans that would become multiemployer plans under MPPAA’s new

definition irrevocably to elect single-employer plan treatment, so long as they did

so within one year after MPPAA’s enactment. 29 U.S.C. § 1453. These provisions describe

specific circumstances under which a covered multiemployer plan could become

another type of plan. That Congress attended to multiemployer plans changing

status in certain limited situations strongly implies that a multiemployer plan

cannot simply devolve into a single-employer plan in other situations, as when the

number of employers is reduced to fewer than two. As the Senate Committee on Labor

and Human Resources noted, MPPAA “clarifies that multiemployer status continues

after termination even if, for instance, the termination is a result of all employers

withdrawing from the plan.” Senate Comm. on Labor and Human Resources, 96th

Cong.,The Multiemployer Pension Plan Amendments Act

of 1980: Summary and Analysis of Consideration 11 (Comm.

Print 1980).

For the foregoing reasons, we conclude that a multiemployer plan does not

devolve into a single-employer plan as a result of a reduction to less than two the

number of employers required to contribute pursuant to a collective bargaining

agreement. I hope this is helpful.

Very truly yours,

/ s /

James J. Keightley

General Counsel