Page 567 TITLE 29—LABOR § 1421

(f) Agreement between plan sponsors of old plan

and new plan to transfer in compliance with

other statutory provisions; reduction of withdrawal liability of employer from old plan;

amount of withdrawal liability of employer

to new plan

(1) Notwithstanding subsections (b) and (e) of

this section, the plan sponsors of the old plan

and the new plan may agree to a transfer of assets and liabilities that complies with sections

1411 and 1414 of this title, rather than this section, except that the employer’s liability with

respect to the withdrawal from the old plan

shall be reduced under subsection (c) of this section as if assets and liabilities had been transferred in accordance with this section.

(2) If the employer withdraws from the new

plan within 240 months after the effective date

of a transfer of assets and liabilities described in

this section, the amount of the employer’s withdrawal liability to the new plan shall be the

greater of—

(A) the employer’s withdrawal liability determined under part 1 of this subtitle with respect to the new plan, or

(B) the amount by which the employer’s

withdrawal liability to the old plan was reduced under subsection (c) of this section, reduced by 5 percent for each 12-month period

following the effective date of the transfer and

ending before the date of the withdrawal from

the new plan.

(g) Definitions

For purposes of this section—

(1) ‘‘appropriate amount of assets’’ means

the amount by which the value of the nonforfeitable benefits to be transferred exceeds

the amount of the employer’s withdrawal liability to the old plan (determined under part

1 of this subtitle without regard to section

1391(e) of this title), and

(2) ‘‘certified change of collective bargaining

representative’’ means a change of collective

bargaining representative certified under the

Labor-Management Relations Act, 1947 [29

U.S.C. 141 et seq.], or the Railway Labor Act

[45 U.S.C. 151 et seq.].

(Pub. L. 93–406, title IV, §4235, as added Pub. L.

96–364, title I, §104(2), Sept. 26, 1980, 94 Stat. 1247;

amended Pub. L. 98–369, div. A, title V,

§558(b)(1)(A), July 18, 1984, 98 Stat. 899.)

REFERENCES IN TEXT

The Labor-Management Relations Act, 1947, referred

to in subsec. (g)(2), is act June 23, 1947, ch. 120, 61 Stat.

136, as amended, which is classified principally to chapter 7 (§141 et seq.) of this title. For complete classification of this Act to the Code, see section 141 of this title

and Tables.

The Railway Labor Act, referred to in subsec. (g)(2),

is act May 20, 1926, ch. 347, 44 Stat. 577, as amended,

which is classified principally to chapter 8 (§151 et seq.)

of Title 45, Railroads. For complete classification of

this Act to the Code, see section 151 of Title 45 and

Tables.

AMENDMENTS

1984—Subsec. (a). Pub. L. 98–369 substituted ‘‘September 25, 1980’’ for ‘‘April 28, 1980’’.

EFFECTIVE DATE

Section effective Sept. 26, 1980, see section 1461(e)(4)

of this title.

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 1461 of this title.

PART 3—REORGANIZATION; MINIMUM CONTRIBUTION

REQUIREMENT FOR MULTIEMPLOYER PLANS

§ 1421. Reorganization status

(a) Reorganization index of plan for plan year

greater than zero

A multiemployer plan is in reorganization for

a plan year if the plan’s reorganization index for

that year is greater than zero.

(b) Determination of reorganization index of

plan for plan year; applicable factors, definitions, etc.

(1) A plan’s reorganization index for any plan

year is the excess of—

(A) the vested benefits charge for such year,

over

(B) the net charge to the funding standard

account for such year.

(2) For purposes of this part, the net charge to

the funding standard account for any plan year

is the excess (if any) of—

(A) the charges to the funding standard account for such year under section 412(b)(2) of

title 26, over

(B) the credits to the funding standard account under section 412(b)(3)(B) of title 26.

(3) For purposes of this part, the vested benefits charge for any plan year is the amount

which would be necessary to amortize the plan’s

unfunded vested benefits as of the end of the

base plan year in equal annual installments—

(A) over 10 years, to the extent such benefits

are attributable to persons in pay status, and

(B) over 25 years, to the extent such benefits

are attributable to other participants.

(4)(A) The vested benefits charge for a plan

year shall be based on an actuarial valuation of

the plan as of the end of the base plan year, adjusted to reflect—

(i) any—

(I) decrease of 5 percent or more in the

value of plan assets, or increase of 5 percent

or more in the number of persons in pay

status, during the period beginning on the

first day of the plan year following the base

plan year and ending on the adjustment

date, or

(II) at the election of the plan sponsor, actuarial valuation of the plan as of the adjustment date or any later date not later

than the last day of the plan year for which

the determination is being made,

(ii) any change in benefits under the plan

which is not otherwise taken into account

under this subparagraph and which is pursuant

to any amendment—

(I) adopted before the end of the plan year

for which the determination is being made,

and

(II) effective after the end of the base plan

year and on or before the end of the plan

year referred to in subclause (I), and

(iii) any other event (including an event described in subparagraph (B)(i)(I)) which, as de-
§ 1421 TITLE 29—LABOR Page 568

termined in accordance with regulations prescribed by the Secretary, would substantially

increase the plan’s vested benefit charge.

(B)(i) In determining the vested benefits

charge for a plan year following a plan year in

which the plan was not in reorganization, any

change in benefits which—

(I) results from the changing of a group of

participants from one benefit level to another

benefit level under a schedule of plan benefits

as a result of changes in a collective bargaining agreement, or

(II) results from any other change in a collective bargaining agreement,

shall not be taken into account except to the extent provided in regulations prescribed by the

Secretary of the Treasury.

(ii) Except as otherwise determined by the

Secretary of the Treasury, in determining the

vested benefits charge for any plan year following any plan year in which the plan was in reorganization, any change in benefits—

(I) described in clause (i)(I), or

(II) described in clause (i)(II) as determined

under regulations prescribed by the Secretary

of the Treasury,

shall, for purposes of subparagraph (A)(ii), be

treated as a change in benefits pursuant to an

amendment to a plan.

(5)(A) For purposes of this part, the base plan

year for any plan year is—

(i) if there is a relevant collective bargaining agreement, the last plan year ending at

least 6 months before the relevant effective

date, or

(ii) if there is no relevant collective bargaining agreement, the last plan year ending at

least 12 months before the beginning of the

plan year.

(B) For purposes of this part, a relevant collective bargaining agreement is a collective bargaining agreement—

(i) which is in effect for at least 6 months

during the plan year, and

(ii) which has not been in effect for more

than 36 months as of the end of the plan year.

(C) For purposes of this part, the relevant effective date is the earliest of the effective dates

for the relevant collective bargaining agreements.

(D) For purposes of this part, the adjustment

date is the date which is—

(i) 90 days before the relevant effective date,

or

(ii) if there is no relevant effective date, 90

days before the beginning of the plan year.

(6) For purposes of this part, the term ‘‘person

in pay status’’ means—

(A) a participant or beneficiary on the last

day of the base plan year who, at any time

during such year, was paid an early, late, normal, or disability retirement benefit (or a

death benefit related to a retirement benefit),

and

(B) to the extent provided in regulations prescribed by the Secretary of the Treasury, any

other person who is entitled to such a benefit

under the plan.

(7) For purposes of paragraph (3)—

(A) in determining the plan’s unfunded vested benefits, plan assets shall first be allocated

to the vested benefits attributable to persons

in pay status, and

(B) the vested benefits charge shall be determined without regard to reductions in accrued

benefits under section 1425 of this title which

are first effective in the plan year.

(8) For purposes of this part, any outstanding

claim for withdrawal liability shall not be considered a plan asset, except as otherwise provided in regulations prescribed by the Secretary

of the Treasury.

(9) For purposes of this part, the term ‘‘unfunded vested benefits’’ means with respect to a

plan, an amount (determined in accordance with

regulations prescribed by the Secretary of the

Treasury) equal to—

(A) the value of nonforfeitable benefits

under the plan, less

(B) the value of assets of the plan.

(c) Payment of benefits to participants

Except as provided in regulations prescribed

by the corporation, while a plan is in reorganization a benefit with respect to a participant

(other than a death benefit) which is attributable to employer contributions and which has

a value of more than $1,750 may not be paid in

a form other than an annuity which (by itself or

in combination with social security, railroad retirement, or workers’ compensation benefits)

provides substantially level payments over the

life of the participant.

(d) Terminated multiemployer plans

Any multiemployer plan which terminates

under section 1341a(a)(2) of this title shall not be

considered in reorganization after the last day

of the plan year in which the plan is treated as

having terminated.

(Pub. L. 93–406, title IV, §4241, as added Pub. L.

96–364, title I, §104(2), Sept. 26, 1980, 94 Stat. 1249;

amended Pub. L. 101–239, title VII, §7891(a)(1),

Dec. 19, 1989, 103 Stat. 2445.)

AMENDMENTS

1989—Subsec. (b)(2)(A). Pub. L. 101–239 substituted

‘‘Internal Revenue Code of 1986’’ for ‘‘Internal Revenue

Code of 1954’’, which for purposes of codification was

translated as ‘‘title 26’’ thus requiring no change in

text.

EFFECTIVE DATE OF 1989 AMENDMENT

Amendment by Pub. L. 101–239 effective, except as

otherwise provided, as if included in the provision of

the Tax Reform Act of 1986, Pub. L. 99–514, to which

such amendment relates, see section 7891(f) of Pub. L.

101–239, set out as a note under section 1002 of this title.

EFFECTIVE DATE

Part, relating to multiemployer plan reorganization,

effective, with respect to each plan, on the first day of

the first plan year beginning on or after the earlier of

the date on which the last collective-bargaining agreement providing for employer contributions under the

plan, which was in effect on Sept. 26, 1980, expires,

without regard to extensions agreed to after Sept. 26,

1980, or three years after Sept. 26, 1980, see section

1461(e)(3) of this title.

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1202, 1301, 1412,

1415, 1423, 1426, 1461 of this title.
Page 569 TITLE 29—LABOR § 1423

§ 1422. Notice of reorganization and funding requirements

(a)(1) If—

(A) a multiemployer plan is in reorganization for a plan year, and

(B) section 1423 of this title would require an

increase in contributions for such plan year,

the plan sponsor shall notify the persons described in paragraph (2) that the plan is in reorganization and that, if contributions to the plan

are not increased, accrued benefits under the

plan may be reduced or an excise tax may be imposed (or both such reduction and imposition

may occur).

(2) The persons described in this paragraph

are—

(A) each employer who has an obligation to

contribute under the plan (within the meaning

of section 1381(h)(5) of this title), and

(B) each employee organization which, for

purposes of collective bargaining, represents

plan participants employed by such an employer.

(3) The determination under paragraph (1)(B)

shall be made without regard to the overburden

credit provided by section 1424 of this title.

(b) The corporation may prescribe additional

or alternative requirements for assuring, in the

case of a plan with respect to which notice is required by subsection (a)(1) of this section, that

the persons described in subsection (a)(2) of this

section—

(1) receive appropriate notice that the plan

is in reorganization,

(2) are adequately informed of the implications of reorganization status, and

(3) have reasonable access to information

relevant to the plan’s reorganization status.

(Pub. L. 93–406, title IV, §4242, as added Pub. L.

96–364, title I, §104(2), Sept. 26, 1980, 94 Stat.

1251.)

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1202, 1426, 1461

of this title.

§ 1423. Minimum contribution requirement

(a) Maintenance of funding standard account;

amount of accumulated funding deficiency

(1) For any plan year for which a plan is in reorganization—

(A) the plan shall continue to maintain its

funding standard account while it is in reorganization, and

(B) the plan’s accumulated funding deficiency under section 1082(a) of this title for

such plan year shall be equal to the excess (if

any) of—

(i) the sum of the minimum contribution

requirement for such plan year (taking into

account any overburden credit under section

1424(a) of this title) plus the plan’s accumulated funding deficiency for the preceding

plan year (determined under this section if

the plan was in reorganization during such

year or under section 1082(a) of this title if

the plan was not in reorganization), over

(ii) amounts considered contributed by employers to or under the plan for the plan

year (increased by any amount waived under

subsection (f) of this section for the plan

year).

(2) For purposes of paragraph (1), withdrawal

liability payments (whether or not received)

which are due with respect to withdrawals before the end of the base plan year shall be considered amounts contributed by the employer to

or under the plan if, as of the adjustment date,

it was reasonable for the plan sponsor to anticipate that such payments would be made during

the plan year.

(b) Determination of amount; applicable factors

(1) Except as otherwise provided in this section, for purposes of this part the minimum contribution requirement for a plan year in which a

plan is in reorganization is an amount equal to

the excess of—

(A) the sum of—

(i) the plan’s vested benefits charge for the

plan year, and

(ii) the increase in normal cost for the

plan year determined under the entry age

normal funding method which is attributable to plan amendments adopted while

the plan was in reorganization, over

(B) the amount of the overburden credit (if

any) determined under section 1424 of this

title for the plan year.

(2) If the plan’s current contribution base for

the plan year is less than the plan’s valuation

contribution base for the plan year, the minimum contribution requirement for such plan

year shall be equal to the product of the amount

determined under paragraph (1) (after any adjustment required by this part other than this

paragraph) and a fraction—

(A) the numerator of which is the plan’s current contribution base for the plan year, and

(B) the denominator of which is the plan’s

valuation contribution base for the plan year.

(3)(A) If the vested benefits charge for a plan

year of a plan in reorganization is less than the

plan’s cash-flow amount for the plan year, the

plan’s minimum contribution requirement for

the plan year is the amount determined under

paragraph (1) (determined before the application

of paragraph (2)) after substituting the term

‘‘cash-flow amount’’ for the term ‘‘vested benefits charge’’ in paragraph (1)(A).

(B) For purposes of subparagraph (A), a plan’s

cash-flow amount for a plan year is an amount

equal to—

(i) the amount of the benefits payable under

the plan for the base plan year, plus the

amount of the plan’s administrative expenses

for the base plan year, reduced by

(ii) the value of the available plan assets for

the base plan year determined under regulations prescribed by the Secretary of the Treasury,

adjusted in a manner consistent with section

1421(b)(4) of this title.

(c) Current contribution base; valuation contribution base

(1) For purposes of this part, a plan’s current

contribution base for a plan year is the number