§ 1384 TITLE 29—LABOR Page 546

(6) Nothing in this subsection shall be construed as a limitation on the amount of the

withdrawal liability of any employer.

(e) Date of complete withdrawal

For purposes of this part, the date of a complete withdrawal is the date of the cessation of

the obligation to contribute or the cessation of

covered operations.

(f) Special liability withdrawal rules for industries other than construction and entertainment industries; procedures applicable to

amend plans

(1) The corporation may prescribe regulations

under which plans in industries other than the

construction or entertainment industries may

be amended to provide for special withdrawal liability rules similar to the rules described in

subsections (b) and (c) of this section.

(2) Regulations under paragraph (1) shall permit use of special withdrawal liability rules—

(A) only in industries (or portions thereof) in

which, as determined by the corporation, the

characteristics that would make use of such

rules appropriate are clearly shown, and

(B) only if the corporation determines, in

each instance in which special withdrawal liability rules are permitted, that use of such

rules will not pose a significant risk to the

corporation under this subchapter.

(Pub. L. 93–406, title IV, §4203, as added Pub. L.

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

1218.)

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1053, 1341a, 1381,

1388, 1391, 1401 of this title; title 26 section 411.

§ 1384. Sale of assets

(a) Complete or partial withdrawal not occurring

as a result of sale and subsequent cessation

of covered operations or cessation of obligation to contribute to covered operations; continuation of liability of seller

(1) A complete or partial withdrawal of an employer (hereinafter in this section referred to as

the ‘‘seller’’) under this section does not occur

solely because, as a result of a bona fide, arm’slength sale of assets to an unrelated party (hereinafter in this section referred to as the ‘‘purchaser’’), the seller ceases covered operations or

ceases to have an obligation to contribute for

such operations, if—

(A) the purchaser has an obligation to contribute to the plan with respect to the operations for substantially the same number of

contribution base units for which the seller

had an obligation to contribute to the plan;

(B) the purchaser provides to the plan for a

period of 5 plan years commencing with the

first plan year beginning after the sale of assets, a bond issued by a corporate surety company that is an acceptable surety for purposes

of section 1112 of this title, or an amount held

in escrow by a bank or similar financial institution satisfactory to the plan, in an amount

equal to the greater of—

(i) the average annual contribution required to be made by the seller with respect

to the operations under the plan for the 3

plan years preceding the plan year in which

the sale of the employer’s assets occurs, or

(ii) the annual contribution that the seller

was required to make with respect to the operations under the plan for the last plan

year before the plan year in which the sale

of the assets occurs,

which bond or escrow shall be paid to the plan

if the purchaser withdraws from the plan, or

fails to make a contribution to the plan when

due, at any time during the first 5 plan years

beginning after the sale; and

(C) the contract for sale provides that, if the

purchaser withdraws in a complete withdrawal, or a partial withdrawal with respect to

operations, during such first 5 plan years, the

seller is secondarily liable for any withdrawal

liability it would have had to the plan with respect to the operations (but for this section) if

the liability of the purchaser with respect to

the plan is not paid.

(2) If the purchaser—

(A) withdraws before the last day of the fifth

plan year beginning after the sale, and

(B) fails to make any withdrawal liability

payment when due,

then the seller shall pay to the plan an amount

equal to the payment that would have been due

from the seller but for this section.

(3)(A) If all, or substantially all, of the seller’s

assets are distributed, or if the seller is liquidated before the end of the 5 plan year period

described in paragraph (1)(C), then the seller

shall provide a bond or amount in escrow equal

to the present value of the withdrawal liability

the seller would have had but for this subsection.

(B) If only a portion of the seller’s assets are

distributed during such period, then a bond or

escrow shall be required, in accordance with regulations prescribed by the corporation, in a

manner consistent with subparagraph (A).

(4) The liability of the party furnishing a bond

or escrow under this subsection shall be reduced,

upon payment of the bond or escrow to the plan,

by the amount thereof.

(b) Liability of purchaser

(1) For the purposes of this part, the liability

of the purchaser shall be determined as if the

purchaser had been required to contribute to the

plan in the year of the sale and the 4 plan years

preceding the sale the amount the seller was required to contribute for such operations for such

5 plan years.

(2) If the plan is in reorganization in the plan

year in which the sale of assets occurs, the purchaser shall furnish a bond or escrow in an

amount equal to 200 percent of the amount described in subsection (a)(1)(B) of this section.

(c) Variances or exemptions from continuation of

liability of seller; procedures applicable

The corporation may by regulation vary the

standards in subparagraphs (B) and (C) of subsection (a)(1) of this section if the variance

would more effectively or equitably carry out

the purposes of this subchapter. Before it promulgates such regulations, the corporation may

grant individual or class variances or exemp-
Page 547 TITLE 29—LABOR § 1385

tions from the requirements of such subparagraphs if the particular case warrants it. Before

granting such an individual or class variance or

exemption, the corporation—

(1) shall publish notice in the Federal Register of the pendency of the variance or exemption,

(2) shall require that adequate notice be

given to interested persons, and

(3) shall afford interested persons an opportunity to present their views.

(d) ‘‘Unrelated party’’ defined

For purposes of this section, the term ‘‘unrelated party’’ means a purchaser or seller who

does not bear a relationship to the seller or purchaser, as the case may be, that is described in

section 267(b) of title 26, or that is described in

regulations prescribed by the corporation applying principles similar to the principles of such

section.

(Pub. L. 93–406, title IV, §4204, as added Pub. L.

96–364, title I, §104(2), Sept. 26, 1980, 94 Stat. 1220;

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

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

AMENDMENTS

1989—Subsec. (d). 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.

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1391, 1401, 1405

of this title.

§ 1385. Partial withdrawals

(a) Determinative factors

Except as otherwise provided in this section,

there is a partial withdrawal by an employer

from a plan on the last day of a plan year if for

such plan year—

(1) there is a 70-percent contribution decline,

or

(2) there is a partial cessation of the employer’s contribution obligation.

(b) Criteria applicable

For purposes of subsection (a) of this section—

(1)(A) There is a 70-percent contribution decline for any plan year if during each plan

year in the 3-year testing period the employer’s contribution base units do not exceed 30

percent of the employer’s contribution base

units for the high base year.

(B) For purposes of subparagraph (A)—

(i) The term ‘‘3-year testing period’’ means

the period consisting of the plan year and

the immediately preceding 2 plan years.

(ii) The number of contribution base units

for the high base year is the average number

of such units for the 2 plan years for which

the employer’s contribution base units were

the highest within the 5 plan years immediately preceding the beginning of the 3-year

testing period.

(2)(A) There is a partial cessation of the employer’s contribution obligation for the plan

year if, during such year—

(i) 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, or

(ii) 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 obligation to

contribute ceased.

(B) For purposes of subparagraph (A), a cessation of obligations under a collective bargaining agreement shall not be considered to

have occurred solely because, with respect to

the same plan, one agreement that requires

contributions to the plan has been substituted

for another agreement.

(c) Retail food industry

(1) In the case of a plan in which a majority of

the covered employees are employed in the retail food industry, the plan may be amended to

provide that this section shall be applied with

respect to such plan—

(A) by substituting ‘‘35 percent’’ for ‘‘70 percent’’ in subsections (a) and (b) of this section,

and

(B) by substituting ‘‘65 percent’’ for ‘‘30 percent’’ in subsection (b) of this section.

(2) Any amendment adopted under paragraph

(1) shall provide rules for the equitable reduction of withdrawal liability in any case in which

the number of the plan’s contribution base

units, in the 2 plan years following the plan year

of withdrawal of the employer, is higher than

such number immediately after the withdrawal.

(3) Section 1388 of this title shall not apply to

a plan which has been amended under paragraph

(1).

(d) Continuation of liability of employer for partial withdrawal under amended plan

In the case of a plan described in section 404(c)

of title 26, or a continuation thereof, the plan

may be amended to provide rules setting forth

other conditions consistent with the purposes of

this chapter under which an employer has liability for partial withdrawal.

(Pub. L. 93–406, title IV, §4205, as added Pub. L.

96–364, title I, §104(2), Sept. 26, 1980, 94 Stat. 1221;

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

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

REFERENCES IN TEXT

This chapter, referred to in subsec. (d), was in the

original ‘‘this Act’’, meaning Pub. L. 93–406, known as

the Employee Retirement Income Security Act of 1974.

Titles I, III, and IV of such Act are classified principally to this chapter. For complete classification of

this Act to the Code, see Short Title note set out under

section 1001 of this title and Tables.