§ 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—
Page 573 TITLE 29—LABOR § 1426

(I) any participant or beneficiary in pay

status on the effective date of the amendment, or the beneficiary of such a participant, or

(II) any participant who has attained

normal retirement age, or who is within 5

years of attaining normal retirement age,

on the effective date of the amendment, or

the beneficiary of any such participant;

and

(C) the rate of employer contributions for

the plan year in which the amendment becomes effective and for all succeeding plan

years in which the plan is in reorganization

equals or exceeds the greater of—

(i) the rate of employer contributions, calculated without regard to the amendment,

for the plan year in which the amendment

becomes effective, or

(ii) the rate of employer contributions for

the plan year preceding the plan year in

which the amendment becomes effective.

(2) The plan sponsors shall include in any notice required to be sent to plan participants and

beneficiaries under paragraph (1) information as

to the rights and remedies of plan participants

and beneficiaries as well as how to contact the

Department of Labor for further information

and assistance where appropriate.

(c) Recoupment by plan of excess benefit payment

A plan may not recoup a benefit payment

which is in excess of the amount payable under

the plan because of an amendment retroactively

reducing accrued benefits under this section.

(d) Amendment of plan to increase or restore accrued benefits previously reduced or rate of

future benefit accruals; conditions, applicable factors, etc.

(1)(A) A plan which has been amended to reduce accrued benefits under this section may be

amended to increase or restore accrued benefits,

or the rate of future benefit accruals, only if the

plan is amended to restore levels of previously

reduced accrued benefits of inactive participants

and of participants who are within 5 years of attaining normal retirement age to at least the

same extent as any such increase in accrued

benefits or in the rate of future benefit accruals.

(B) For purposes of this subsection, in the case

of a plan which has been amended under this

section to reduce accrued benefits—

(i) an increase in a benefit, or in the rate of

future benefit accruals, shall be considered a

benefit increase to the extent that the benefit,

or the accrual rate, is thereby increased above

the highest benefit level, or accrual rate,

which was in effect under the terms of the

plan before the effective date of the amendment reducing accrued benefits, and

(ii) an increase in a benefit, or in the rate of

future benefit accruals, shall be considered a

benefit restoration to the extent that the benefit, or the accrual rate, is not thereby increased above the highest benefit level, or accrual rate, which was in effect under the terms

of the plan immediately before the effective

date of the amendment reducing accrued benefits.

(2) If a plan is amended to partially restore

previously reduced accrued benefit levels, or the

rate of future benefit accruals, the benefits of

inactive participants shall be restored in at

least the same proportions as other accrued benefits which are restored.

(3) No benefit increase under a plan may take

effect in a plan year in which an amendment reducing accrued benefits under the plan, in accordance with this section, is adopted or first

becomes effective.

(4) A plan is not required to make retroactive

benefit payments with respect to that portion of

an accrued benefit which was reduced and subsequently restored under this section.

(e) ‘‘Inactive participant’’ defined

For purposes of this section, ‘‘inactive participant’’ means a person not in covered service

under the plan who is in pay status under the

plan or who has a nonforfeitable benefit under

the plan.

(f) Promulgation of rules; contents, etc.

The Secretary of the Treasury may prescribe

rules under which, notwithstanding any other

provision of this section, accrued benefit reductions or benefit increases for different participant groups may be varied equitably to reflect

variations in contribution rates and other relevant factors reflecting differences in negotiated levels of financial support for plan benefit

obligations.

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

96–364, title I, §104(2), Sept. 26, 1980, 94 Stat. 1257;

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

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

AMENDMENTS

1989—Subsec. (a)(2). 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 1053, 1202, 1322a,

1421, 1441, 1461 of this title.

§ 1426. Insolvent plans

(a) Suspension of payments of benefits; conditions, amount, etc.

Notwithstanding sections 1053 and 1054 of this

title, in any case in which benefit payments

under an insolvent multiemployer plan exceed

the resource benefit level, any such payments of

benefits which are not basic benefits shall be

suspended, in accordance with this section, to

the extent necessary to reduce the sum of such

payments and the payments of such basic benefits to the greater of the resource benefit level

or the level of basic benefits, unless an alternative procedure is prescribed by the corporation under section 1322a(g)(5) of this title.

(b) Determination of insolvency status for plan

year; definitions

For purposes of this section, for a plan year—