Pension Benefit Guaranty Corporation 

86-20 

September 29, 1986 

REFERENCE: 

 [*1] 4207 Reduction or Waiver of Complete Withdrawal Liability

29 USC 1461 Action Taken Before Regulations Prescribed

29 CFR 2647 Reduction or Waiver of Withdrawal Liability 

OPINION: 

This responds to your request for the opinion of the Pension Benefit Guaranty Corporation regarding the proper

application of our regulation on Reduction or Waiver of Withdrawal Liability, which went into effect on April 24, 1986

(51 FR 10300, March 25, 1986). 

Your first set of questions concerns the application of the regulation to employers that reentered the plan from which

they withdrew prior to the effective date of the final rule. You note that § 2647.8(a) of the regulation provides that the

rule applies to employers that completely withdrew after September 25, 1980, and were performing covered work under

the plan on April 24, 1986. Upon the application of such an employer, the plan is required to determine whether the

employer satisfies the requirements for abatement of its complete withdrawal liability under the regulation. That section

also provides that the general applicability of the rule to those employers shall not negate reasonable actions taken by

plans prior to the effective date of the rule pursuant [*2] to plan rules, validly adopted under section 405(a) of the

Multiemployer Pension Plan Amendments Act of 1980 (MPPAA), implementing the statutory abatement provision. 

You also observe that the preamble of the regulation explains that the purpose in making the rule retroactive was

to provide additional relief to employers and not to interfere with reasonable actions taken by plans. As an example, we

noted that if an employer reentered a plan and satisfied the regulation's requirements for abatement prior to the

regulation's effective date, and the plan had not adopted an interim rule, the employer would get the benefit of the

regulation. 

You assert that an employer that reentered a plan (prior to the issuance of the regulation) that had adopted reasonable

interim abatement rules is not eligible for waiver or reduction of withdrawal liability in the several fact situations you

hypothesize. 

Section 2647.8(a) applies only to employers that reentered (prior to the effective date of the regulation) a plan that

had not adopted reasonable rules implementing section 4207(a). Accordingly, an employer that reentered a plan (prior

to the effective date of the regulation) that had adopted [*3] reasonable abatement rules (pursuant to section 405(a))

is not eligible for reduction or waiver of its withdrawal liability pursuant to the regulation for that reentry. This is true

whether or not the employer was granted, or even applied for, abatement under the plan's rules. 

You also ask how the filing deadlines under the regulation apply to an employer that reentered the plan prior to the

effective date of the regulation. You note that § 2647.2(a) provides the general rule that applications for abatement must

be filed by the first scheduled withdrawal liability payment falling due after the employer resumes covered operations.

Section 2647.8(a) provides that employers that reentered, before the effective date of the regulation, the plan from which

they withdrew, shall be eligible for abatement under the regulation in accordance with the rules of § 2647.8(a). You

observe that § 2647.8(a) provides no deadline for filing an abatement application. You ask when employers that

reentered before the effective date of the regulation must apply for abatement. 

The language of § 2647.8(a) makes the filing deadline of § 2647.2(a) inapplicable to employers that reentered

before the effective [*4] date of the regulation. Since § 2647.8(a) provides no express filing deadline, we believe that

an application under that section should be considered timely if the employer files it within a reasonable time after its

reentry. A determination of what is a "reasonable" time should take into account the length of time it might take the

average employer to learn of the regulation (and specifically § 2647.8) and the length of time necessary to put together

and submit an application for abatement. This determination is made, in the first instance, by the plan sponsor. Any

disputes arising therefrom are to be resolved first through arbitration and then, if necessary, in the courts. 
Your final question concerns the obligation of an employer that is granted abatement to pay withdrawal liability for

the period prior to its reentry into the plan. You note that ERISA and the regulation generally are clear that withdrawal

liability must be paid in accordance with the schedule established by the plan, notwithstanding any dispute the employer

may have as to the existence or extent of the liability. You suggest, however, that § 2647.6(c)(2) of the regulation might

be read to postpone an employer's [*5] obligation to make pre-reentry withdrawal liability payments that are in arrears

at the time of reentry until the employer incurs a subsequent withdrawal. 

This is neither the intended meaning, nor, we believe, the better reading of § 2647.6(c)(2). That rule provides only

that the unfunded vested benefits allocable to a withdrawing employer for its previous withdrawal should be reduced to

reflect payments made against that prior liability. That rule is not authority for withholding payments due prior to

reentry. We believe § 2647.2(c)(1) and (c)(4) make clear that abatement relieves the obligation to make withdrawal

liability payments only with respect to payments due after reentry. 

I hope this has been of assistance. If you have further questions please contact the attorney handling this matter,

Steven Rothenberg, of the Corporate Policy and Regulations Department. His telephone number is (202) 956-5050. 

Edward R. Mackiewicz 

General Counsel