Page 571 TITLE 29—LABOR § 1424

(4) Paragraph (1) shall not apply with respect

to a plan, other than a plan described in paragraph (3), for the period of consecutive plan

years in each of which the plan is in reorganization, beginning with a plan year in which occurs

the earlier of the date of the adoption or the effective date of any amendment of the plan which

increases benefits with respect to service performed before the plan year in which the adoption of the amendment occurred.

(e) Adjustment of vested benefits charge

In determining the minimum contribution requirement with respect to a plan for a plan year

under subsection (b) of this section, the vested

benefits charge may be adjusted to reflect a plan

amendment reducing benefits under section

412(c)(8) of title 26.

(f) Waiver of accumulated funding deficiency

(1) The Secretary of the Treasury may waive

any accumulated funding deficiency under this

section in accordance with the provisions of section 1083(a) of this title.

(2) Any waiver under paragraph (1) shall not be

treated as a waived funding deficiency (within

the meaning of section 1083(c) of this title).

(g) Statutory methods applicable for determinations

For purposes of making any determination

under this part, the requirements of section

1082(c)(3) of this title shall apply.

(Pub. L. 93–406, title IV, §4243, as added Pub. L.

96–364, title I, §104(2), Sept. 26, 1980, 94 Stat. 1252;

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

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

AMENDMENTS

1989—Subsecs. (d)(1)(B), (e). 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 1082, 1202, 1322a,

1396, 1422, 1424, 1425, 1426, 1461 of this title.

§ 1424. Overburden credit against minimum contribution requirement

(a) Applicability of overburden credit to determinations

For purposes of determining the minimum

contribution requirement under section 1423 of

this title (before the application of section

1423(b)(2) or (d) of this title) the plan sponsor of

a plan which is overburdened for the plan year

shall apply an overburden credit against the

plan’s minimum contribution requirement for

the plan year (determined without regard to section 1423(b)(2) or (d) of this title and without regard to this section).

(b) Determination of overburden status of plan

A plan is overburdened for a plan year if—

(1) the average number of pay status participants under the plan in the base plan year exceeds the average of the number of active participants in the base plan year and the 2 plan

years preceding the base plan year, and

(2) the rate of employer contributions under

the plan equals or exceeds the greater of—

(A) such rate for the preceding plan year,

or

(B) such rate for the plan year preceding

the first year in which the plan is in reorganization.

(c) Amount of overburden credit

The amount of the overburden credit for a

plan year is the product of—

(1) one-half of the average guaranteed benefit paid for the base plan year, and

(2) the overburden factor for the plan year.

The amount of the overburden credit for a plan

year shall not exceed the amount of the minimum contribution requirement for such year

(determined without regard to this section).

(d) Amount of overburden factor

For purposes of this section, the overburden

factor of a plan for the plan year is an amount

equal to—

(1) the average number of pay status participants for the base plan year, reduced by

(2) the average of the number of active participants for the base plan year and for each of

the 2 plan years preceding the base plan year.

(e) Definitions; determinative factors

For purposes of this section—

(1) The term ‘‘pay status participant’’

means, with respect to a plan, a participant

receiving retirement benefits under the plan.

(2) The number of active participants for a

plan year shall be the sum of—

(A) the number of active employees who

are participants in the plan and on whose behalf contributions are required to be made

during the plan year;

(B) the number of active employees who

are not participants in the plan but who are

in an employment unit covered by a collective bargaining agreement which requires

the employees’ employer to contribute to

the plan, unless service in such employment

unit was never covered under the plan or a

predecessor thereof, and

(C) the total number of active employees

attributed to employers who made payments

to the plan for the plan year of withdrawal

liability pursuant to part 1 of this subtitle,

determined by dividing—

(i) the total amount of such payments,

by

(ii) the amount equal to the total contributions received by the plan during the

plan year divided by the average number

of active employees who were participants

in the plan during the plan year.

The Secretary of the Treasury shall by regulation provide alternative methods of determining active participants where (by reason of irregular employment, contributions on a unit

basis, or otherwise) this paragraph does not

yield a representative basis for determining

the credit.
§ 1425 TITLE 29—LABOR Page 572

(3) The term ‘‘average number’’ means, with

respect to pay status participants for a plan

year, a number equal to one-half the sum of—

(A) the number with respect to the plan as

of the beginning of the plan year, and

(B) the number with respect to the plan as

of the end of the plan year.

(4) The average guaranteed benefit paid is 12

times the average monthly pension payment

guaranteed under section 1322a(c)(1) of this

title determined under the provisions of the

plan in effect at the beginning of the first plan

year in which the plan is in reorganization and

without regard to section 1322a(c)(2) of this

title.

(5) The first year in which the plan is in reorganization is the first of a period of 1 or

more consecutive plan years in which the plan

has been in reorganization not taking into account any plan years the plan was in reorganization prior to any period of 3 or more consecutive plan years in which the plan was not

in reorganization.

(f) Eligibility of plan for overburden credit for

plan year

(1) Notwithstanding any other provision of

this section, a plan is not eligible for an overburden credit for a plan year if the Secretary of

the Treasury finds that the plan’s current contribution base for the plan year was reduced,

without a corresponding reduction in the plan’s

unfunded vested benefits attributable to pay

status participants, as a result of a change in an

agreement providing for employer contributions

under the plan.

(2) For purposes of paragraph (1), a complete

or partial withdrawal of an employer (within the

meaning of part 1 of this subtitle) does not impair a plan’s eligibility for an overburden credit,

unless the Secretary of the Treasury finds that

a contribution base reduction described in paragraph (1) resulted from a transfer of liabilities

to another plan in connection with the withdrawal.

(g) Overburden credit where 2 or more multiemployer plans merge

Notwithstanding any other provision of this

section, if 2 or more multiemployer plans merge,

the amount of the overburden credit which may

be applied under this section with respect to the

plan resulting from the merger for any of the 3

plan years ending after the effective date of the

merger shall not exceed the sum of the used

overburden credit for each of the merging plans

for its last plan year ending before the effective

date of the merger. For purposes of the preceding sentence, the used overburden credit is that

portion of the credit which does not exceed the

excess of the minimum contribution requirement (determined without regard to any overburden requirement under this section) over the

employer contributions required under the plan.

(Pub. L. 93–406, title IV, §4244, as added Pub. L.

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

1255.)

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1202, 1422, 1423,

1461 of this title.

§ 1425. Adjustments in accrued benefits

(a) Amendment of multiemployer plan in reorganization to reduce or eliminate accrued benefits attributable to employer contributions

ineligible for guarantee of corporation; adjustment of vested benefits charge to reflect

plan amendment

(1) Notwithstanding sections 1053 and 1054 of

this title, a multiemployer plan in reorganization may be amended in accordance with this

section, to reduce or eliminate accrued benefits

attributable to employer contributions which,

under section 1322a(b) of this title, are not eligible for the corporation’s guarantee. The preceding sentence shall only apply to accrued benefits

under plan amendments (or plans) adopted after

March 26, 1980, or under collective bargaining

agreements entered into after March 26, 1980.

(2) In determining the minimum contribution

requirement with respect to a plan for a plan

year under section 1423(b) of this title, the vested benefits charge may be adjusted to reflect a

plan amendment reducing benefits under this

section or section 412(c)(8) of title 26, but only if

the amendment is adopted and effective no later

than 21

⁄2 months after the end of the plan year,

or within such extended period as the Secretary

of the Treasury may prescribe by regulation

under section 412(c)(10) of title 26.

(b) Reduction of accrued benefits; notice by plan

sponsors to plan participants and beneficiaries

(1) Accrued benefits may not be reduced under

this section unless—

(A) notice has been given, at least 6 months

before the first day of the plan year in which

the amendment reducing benefits is adopted,

to—

(i) plan participants and beneficiaries,

(ii) each employer who has an obligation

to contribute (within the meaning of section

1392(a) of this title) under the plan, and

(iii) each employee organization which, for

purposes of collective bargaining, represents

plan participants employed by such an employer,

that the plan is in reorganization and that, if

contributions under the plan are not increased, accrued benefits under the plan will

be reduced or an excise tax will be imposed on

employers;

(B) in accordance with regulations prescribed by the Secretary of the Treasury—

(i) any category of accrued benefits is not

reduced with respect to inactive participants

to a greater extent proportionally than such

category of accrued benefits is reduced with

respect to active participants,

(ii) benefits attributable to employer contributions other than accrued benefits and

the rate of future benefit accruals are reduced at least to an extent equal to the reduction in accrued benefits of inactive participants, and

(iii) in any case in which the accrued benefit of a participant or beneficiary is reduced

by changing the benefit form or the requirements which the participant or beneficiary

must satisfy to be entitled to the benefit,

such reduction is not applicable to—