Page 561 TITLE 29—LABOR § 1403

burse multiemployer plans for withdrawal liability payments which are due from employers and

which are determined to be uncollectible for

reasons arising out of cases or proceedings involving the employers under title 11, or similar

cases or proceedings. Participation in the supplemental program shall be on a voluntary

basis, and a plan which elects coverage under

the program shall pay premiums to the corporation in accordance with a premium schedule

which shall be prescribed from time to time by

the corporation. The premium schedule shall

contain such rates and bases for the application

of such rates as the corporation considers to be

appropriate.

(b) Discretionary supplemental program to reimburse for payments due from employers uncollectible for other appropriate reasons

The corporation may provide under the program for reimbursement of amounts of withdrawal liability determined to be uncollectible

for any other reasons the corporation considers

appropriate.

(c) Payment of cost of program

The cost of the program (including such administrative and legal costs as the corporation

considers appropriate) may be paid only out of

premiums collected under such program.

(d) Terms and conditions, limitations, etc., of

supplemental program

The supplemental program may be offered to

eligible plans on such terms and conditions, and

with such limitations with respect to the payment of reimbursements (including the exclusion of de minimis amounts of uncollectible employer liability, and the reduction or elimination of reimbursements which cannot be paid

from collected premiums) and such restrictions

on withdrawal from the program, as the corporation considers necessary and appropriate.

(e) Arrangements by corporation with private insurers for implementation of program; election of coverage by participating plans with

private insurers

The corporation may enter into arrangements

with private insurers to carry out in whole or in

part the program authorized by this section and

may require plans which elect coverage under

the program to elect coverage by those private

insurers.

(Pub. L. 93–406, title IV, §4222, as added Pub. L.

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

1240.)

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1082, 1305, 1306,

1403 of this title; title 26 section 412.

§ 1403. Withdrawal liability payment fund

(a) Establishment of or participation in fund by

plan sponsors

The plan sponsors of multiemployer plans may

establish or participate in a withdrawal liability

payment fund.

(b) Definitions

For purposes of this section, the term ‘‘withdrawal liability payment fund’’, and the term

‘‘fund’’, mean a trust which—

(1) is established and maintained under section 501(c)(22) of title 26,

(2) maintains agreements which cover a substantial portion of the participants who are in

multiemployer plans which (under the rules of

the trust instrument) are eligible to participate in the fund,

(3) is funded by amounts paid by the plans

which participate in the fund, and

(4) is administered by a Board of Trustees,

and in the administration of the fund there is

equal representation of—

(A) trustees representing employers who

are obligated to contribute to the plans participating in the fund, and

(B) trustees representing employees who

are participants in plans which participate

in the fund.

(c) Payments to plan; amount, criteria, etc.

(1) If an employer withdraws from a plan

which participates in a withdrawal liability payment fund, then, to the extent provided in the

trust, the fund shall pay to that plan—

(A) the employer’s unattributable liability,

(B) the employer’s withdrawal liability payments which would have been due but for section 1388, 1389, 1399, or 1405 of this title,

(C) the employer’s withdrawal liability payments to the extent they are uncollectible.

(2) The fund may provide for the payment of

the employer’s attributable liability if the

fund—

(A) provides for the payment of both the attributable and the unattributable liability of

the employer in a single payment, and

(B) is subrogated to all rights of the plan

against the employer.

(3) For purposes of this section, the term—

(A) ‘‘attributable liability’’ means the excess, if any, determined under the provisions

of a plan not inconsistent with regulations of

the corporation, of—

(i) the value of vested benefits accrued as

a result of service with the employer, over

(ii) the value of plan assets attributed to

the employer, and

(B) ‘‘unattributable liability’’ means the excess of withdrawal liability over attributable

liability.

Such terms may be further defined, and the

manner in which they shall be applied may be

prescribed, by the corporation by regulation.

(4)(A) The trust of a fund shall be maintained

for the exclusive purpose of paying—

(i) any amount described in paragraph (1)

and paragraph (2), and

(ii) reasonable and necessary administrative

expenses in connection with the establishment

and operation of the trust and the processing

of claims against the fund.

(B) The amounts paid by a plan to a fund shall

be deemed a reasonable expense of administering the plan under sections 1103(c)(1) and

1104(a)(1)(A)(ii) of this title, and the payments

made by a fund to a participating plan shall be

deemed services necessary for the operation of

the plan within the meaning of section 1108(b)(2)

of this title or within the meaning of section

4975(d)(2) of title 26.
§ 1404 TITLE 29—LABOR Page 562

(d) Application of payments by plan

(1) For purposes of this part—

(A) only amounts paid by the fund to a plan

under subsection (c)(1)(A) of this section shall

be credited to withdrawal liability otherwise

payable by the employer, unless the plan

otherwise provides, and

(B) any amounts paid by the fund under subsection (c) of this section to a plan shall be

treated by the plan as a payment of withdrawal liability to such plan.

(2) For purposes of applying provisions relating to the funding standard accounts (and minimum contribution requirements), amounts paid

from the plan to the fund shall be applied to reduce the amount treated as contributed to the

plan.

(e) Subrogation of fund to rights of plan

The fund shall be subrogated to the rights of

the plan against the employer that has withdrawn from the plan for amounts paid by a fund

to a plan under—

(1) subsection (c)(1)(A) of this section, to the

extent not credited under subsection (d)(1)(A)

of this section, and

(2) subsection (c)(1)(C) of this section.

(f) Discharge of rights of fiduciary of fund; standards applicable, etc.

Notwithstanding any other provision of this

chapter, a fiduciary of the fund shall discharge

the fiduciary’s duties with respect to the fund in

accordance with the standards for fiduciaries

prescribed by this chapter (to the extent not inconsistent with the purposes of this section),

and in accordance with the documents and instruments governing the fund insofar as such

documents and instruments are consistent with

the provisions of this chapter (to the extent not

inconsistent with the purposes of this section).

The provisions of the preceding sentence shall

supersede any and all State laws relating to fiduciaries insofar as they may now or hereafter

relate to a fund to which this section applies.

(g) Prohibition on payments from fund to plan

where certain labor negotiations involve employer withdrawn or partially withdrawn

from plan and continuity of labor organization representing employees continues

No payments shall be made from a fund to a

plan on the occasion of a withdrawal or partial

withdrawal of an employer from such plan if the

employees representing the withdrawn contribution base units continue, after such withdrawal,

to be represented under section 159 of this title

(or other applicable labor laws) in negotiations

with such employer by the labor organization

which represented such employees immediately

preceding such withdrawal.

(h) Purchase of insurance by employer

Nothing in this section shall be construed to

prohibit the purchase of insurance by an employer from any other person, to limit the circumstances under which such insurance would

be payable, or to limit in any way the terms and

conditions of such insurance.

(i) Promulgation of regulations for establishment

and maintenance of fund

The corporation may provide by regulation

rules not inconsistent with this section governing the establishment and maintenance of funds,

but only to the extent necessary to carry out

the purposes of this part (other than section 1402

of this title).

(Pub. L. 93–406, title IV, §4223, as added Pub. L.

96–364, title I, §104(2), Sept. 26, 1980, 94 Stat. 1241;

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

19, 1989, 103 Stat. 2445.)

REFERENCES IN TEXT

This chapter, referred to in subsec. (f), 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.

AMENDMENTS

1989—Subsecs. (b)(1), (c)(4)(B). 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 1002, 1082 of this

title; title 26 sections 194A, 412, 501, 4975.

§ 1404. Alternative method of withdrawal liability

payments

A multiemployer plan may adopt rules providing for other terms and conditions for the satisfaction of an employer’s withdrawal liability if

such rules are consistent with this chapter and

with such regulations as may be prescribed by

the corporation.

(Pub. L. 93–406, title IV, §4224, as added Pub. L.

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

1242.)

REFERENCES IN TEXT

This chapter, referred to in text, 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.

§ 1405. Limitation on withdrawal liability

(a) Unfunded vested benefits allocable to employer in bona fide sale of assets of employer

in arms-length transaction to unrelated

party; maximum amount; determinative factors

(1) In the case of bona fide sale of all or substantially all of the employer’s assets in an

arm’s-length transaction to an unrelated party

(within the meaning of section 1384(d) of this

title), the unfunded vested benefits allocable to

an employer (after the application of all sections of this part having a lower number designation than this section), other than an employer undergoing reorganization under title 11