Pension Benefit Guaranty Corporation 

82-10 

March 26, 1982 

REFERENCE: 

 [*1] 4001(a)(3) Definitions. Multiemployer Plan

4041A Multiemployer Termination

4203 Complete Withdrawal

4219(c)(8) Notice & Collection of Withdrawal Liability - Cessation of Payments 

OPINION: 

 This is in reference to your Notice of Termination concerning the * * * Pension Plan (the "Plan") and to your

telephone conversations with * * * of the Office of the Executive Director. You have asked the Pension Benefit Guaranty

Corporation (the "PBGC") to authorize the distribution of all Plan assets in full satisfaction of all nonforfeitable benefits

under the Plan. You propose to purchase annuities from an insurance company for all participants, other than for those

participants whose nonforfeitable benefit has a value less than $1750. You propose to make a lump sum payment of the

entire nonforfeitable benefit under the Plan to those participants whose nonforfeitable benefit has a value less than $1750.

As we understand the pertinent facts, the Plan is a multiemployer plan, as defined in section 4001(a)(3) of the

Employee Retirement Income Security Act of 1974, as amended (the "Act"). The Plan has terminated under section

4041A(a)(2) of the Act as a result of the withdrawal of every employer from [*2] the Plan (within the meaning of section

4203) or the cessation of the obligation of all employers to contribute under the Plan ("termination by mass withdrawal").

The date of Plan termination is December 11, 1981. The Plan year is the period of twelve calendar months beginning

March 1 and ending the last day of February (Plan, section 1.10). 

Section 4041A of the Act governs the payment of benefits to participants in terminated plans. Section 4041A(c)

provides that the plan sponsor of a plan terminated by mass withdrawal shall -- "(1) limit the payment of benefits to

benefits which are nonforfeitable under the plan as of the date of the termination, and (2) pay benefits attributable to

employer contributions, other than death benefits, only in the form of an annuity, unless the plan assets are distributed

in full satisfaction of all nonforfeitable benefits under the plan." 

PBGC authorization of your proposed distribution in full satisfaction of all nonforfeitable benefits under the Plan

is not required. To make your proposed distribution, the plan sponsor of the Plan must determine each participant's entire

nonforfeitable benefit under the Plan and must ensure that each participant [*3] receives a distribution in a permissible

form for such amount. In this regard, we note that the purchase of annuities from an insurance company in satisfaction

of nonforfeitable benefits under a multiemployers plan terminated by mass withdrawal constitutes a permissible

distribution of plan assets under section 4041A. Similarly, payment of a lump sum to those participants whose entire

nonforfeitable benefit under the Plan has a value less than $1750 also constitutes a permissible distribution of plan assets

under section 4041A. 

We note that under section 4219(c)(8) "an employer's obligation to make withdrawal liability payments to the plan

ceases at the end of the plan year in which plan assets on hand (exclusive of withdrawal liability claims) are sufficient

to meet all obligations of the plan, as determined by the corporation." The PBGC has determined that for purposes of

section 4219(c)(8), a distribution of plan assets in full satisfaction of all nonforfeitable benefits under the plan establishes

that plan assets on hand (exclusive of withdrawal liability claims) are sufficient to meet all obligations of the plan. 

We request that if a distribution is made in full satisfaction [*4] of all nonforfeitable benefits under the plan, that

the PBGC be notified, within 60 days thereafter, of the date of the distribution. Please send such notification to the

Division of Case Classification and Control, Office of Program Operations (542), Pension Benefit Guaranty Corporation,

2020 K Street, N.W., Washington, D.C. 20006. This notification will enable the PBGC to remove the Plan from the

PBGC-1 and premium billing mailing list. 

Henry Rose 

General Counsel