Pension Benefit Guaranty Corporation 

82-5 

February 18, 1982 

REFERENCE: 

4203 Complete Withdrawal

4205 Partial Withdrawals

4205(a)(1) Partial Withdrawals. Contribution Decline

4205(a)(2) Partial Withdrawals. Partial Cessation

4205(b) Partial Withdrawals. Cessation of Contributions

4212(c) Obligation to Contribute - Liability 

OPINION: 

 This is in response to your letter in which you asked the Pension Benefit Guraranty Corporation ("PBGC") to

explain several provisions of the Multiemployer Pension Plan Amendments Act of 1980 (the "Act") as they apply to the

transactions described in your letter. (Section references hereinafter are to the Employee Retirement Income Security

Act of 1974 ("ERISA") 29 U.S.C. § 1001 et seq., as amended by the Act). 

It is clear under the Act that the initial responsibility for determining whether any particular action constitutes a

withdrawal from a multiemployer plan, and the amount of any liability resulting therefrom, lies with the plan sponsor.

The Act further provides that any disputes between a plan sponsor and an employer on these issues are to be resolved

first through arbitration and, if necessary, in the courts. Given this scheme for enforcement of the [*2] Act, the PBGC

will ordinarily avoid interjecting itself in such a determination by issuing an opinion on the application of the law to

particular transactions. The PBGC will, however, continue its practice of answering general interpretive questions

regarding the Act. 

Your questions relate to whether there is a complete or partial withdrawal under the circumstances you outlined.

Section 4203 provides, inter alia, that a complete withdrawal occurs when an employer (1) permanently ceases to have

an obligation to contribute under the plan or (2) permanently ceases all covered operations under the plan. 

The rules governing partial withdrawals are contained in Section 4205. Since Section 4205(a)(1), which provides

for a partial withdrawal if there is a 70% contribution decline, does not apply to plan years beginning before April 29,

1982, there can be no partial withdrawal under this section until the end of the first plan year beginning on or after April

29, 1982. However, a contribution decline at the present time may result in a partial withdrawal under Section 4205(a)(1)

in a future plan year because the contribution decline is measured at the end of a 3-year test period, [*3] and the first

two years of that period can begin before April 29, 1982. 

Section 4205(a)(2) provides that a partial withdrawal occurs if there is partial cessation of the employer's

contribution obligation. Section 4205(b)(2)(A)(i) provides that there is a partial cessation of the employer's contribution

obligation if "the employer permanently ceases to have an obligation to contribute under one or more but fewer than all

collective bargaining agreements under which the employer has been obligated to contribute under the plan but continues

to perform work in the jurisdiction of the collective bargaining agreement of the type for which contributions were

previously required or transfers such work to another location" . Section 4205(b)(2)(A)(ii) provides that there is a partial

cessation if "an employer permanently ceases to have an obligation to contribute under the plan with respect to work

performed at one or more but fewer than all of its facilities, but continues to perform work at the facility of the type for

which the obliga tion to contribute ceased". Generally, a cessation of operations at a facility by an employer due to a

shutdown of the facility, under circumstances where [*4] the employer continues to contribute to the plan for other

facilities, will not constitute a partial withdrawal under Section 4205(b)(2)(A)(ii). 

Note that under Section 4212(c), if a principal purpose of any transaction is to evade or avoid liability under Part

1 of Subtitle E of Title IV of ERISA, that part shall be applied (and liability shall be determined and collected) without

regard to such transaction. 

I hope this response is helpful. If you have any further questions, please call me or * * * of my staff at (202) 254-
3010. 

Henry Rose 

General Counsel