Pension Benefit Guaranty Corporation 

85-23 

September 12, 1985 

REFERENCE: 

 [*1] 4219 Notice & Collection of Withdrawal Liability

4219(b) Notice and Collection of Withdrawal Liability - Assessment and Review

4219(c) Notice and Collection of Withdrawal Liability - Payment

4219(c)(5) Notice & Collection of Withdrawal Liability - Default 

OPINION: 

This responds to your request for the PBGC's interpretation of its requlation governing default for non-payment of

withdrawal liability under the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended by the

Multiemployer Pension Plan Amendments Act of 1980. 

ERISA Section 4219 establishes the rules for notice and collection of withdrawal liability due to a multiemployer

plan, including the assessment of interest for overdue and defaulted liability payments. Under Section 4219(b), a plan

sponsor assesses withdrawal liability by notifying the employer of the amount of the liability and schedule of payments

and demanding payment in accordance with the schedule. The first payment is payable no later than 60 days after the

date of the demand, even if the employer requests a review of or appeals the amount of the liability or the schedule of

payments (Section 4219(c)(2)). In the event of a default, a plan sponsor may, [*2] pursuant to Section 4219(c)(5),

require immediate payment of the outstanding balance of the employer's withdrawal liability plus accrued interest on the

total outstanding liability from the due date of the first missed payment. Under Section 4219(c)(5)(A), a default occurs

if the employer fails to make a withdrawal liability payment within 60 days after notice from the plan sponsor that the

payment is overdue. (Section 4219(c)(5)(B) provides that plan rules may define "default" to include additional events

that indicate a "substantial likelihood that an employer will be unable to pay its withdrawal liability.") 

The PBGC's regulation, at 29 C.F.R. § 2644.2(a) and (b), restates the statutory rules on when a withdrawal liability

payment is overdue and when a default occurs. Section 2644.2(c) establishes rules that "shall apply with respect to the

obligation to make withdrawal liability payments during the period for plan review and arbitration and with respect to

the failure to make such payments" (emphasis supplied). These rules provide, in part, that no default for non-payment

may be declared until the 61st day after the last of: (1) the expiration of the period for requesting [*3] plan review; (2)

if an employer requests plan review, expiration of the period for requesting arbitration; or (3) when arbitration is timely

initiated either by the plan or the employer or both, issuance of the arbitrator's final decision. (This limitation does not

apply to a default for a reason other than non-payment.) Your question is whether this regulatory limitation on default

declarations, which applies "during the period for plan review and arbitration" under the explicit terms of the regulation,

also applies during the 90-day period within which the employer may request plan review pursuant to Section

4219(b)(2)(A). 

The regulatory phrase at 29 C.F.R. § 2644.2(c), "during the period for plan review and arbitration," necessarily

encompasses the 90-day period for requesting plan review. A contrary interpretation would render inoperative in all

cases the first time limitation set forth in the regulation, i.e., the 61st day after the expiration of the period for requesting

plan review. Moreover, as was noted by the PBGC in its preamble to the final version oif the regulation at issue,

"declaring a default, and thus requiring immediate payment of withdrawal liability plus [*4] interest, is a very serious

remedy which ought not to be invoked while an employer is exercising its statutory right to contest the plan's

determination." 49 Fed. Reg. 22644 (1984). It follows that this "very serious remedy" may not be invoked before an

employer even has a full opportunity to request plan review and thereby initiate "its statutory right to contest the plan's

determination." Finally, the proposed version of the regulatory limitation on default declarations was described by the

PBGC as "reflect[ing] the Congressional intent that withdrawal liability should not be accelerated for non-payment of

installments before the arbitrator has issued a final decision." 48 Fed. Reg. 6559 (1983) (citations omitted). Any

interpretation of the PBGC's regulation that would permit default declarations during the 90-day period for requesting

plan review would frustrate that intent. 
I hope this has been of assistance to you. If you have further questions concerning this matter, please contact of my

staff at the above address or (202) 254-4889. 

Edward R. Mackiewicz 

General Counsel